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June 2017 Economy and Policy

Published on: 2017-06-14 10:26:33     496 times read    0  Comments
Foreign Aid Dynamics

The people who have most benefitted from this were and are the people employed by the foreign currencies.

--BY VAIJAYANTI KHARE

Success is a pathless territory, Success means different things to different players, Success is the amount of funds given, Success is the number of persons employed, Success is measurable in change, Success is the volume of reports generated, Success is the years of engagement, Success is not always the function of relevance, impact and generation of product, service and income. All this is mostly true of the foreign aid sector. 

Nepal has not just seen the presence of, it thrives on the presence of, the foreign aid sector for more than fifty years. This relationship between the donors or aid partners and the country has evolved, sadly and largely, to feed their agenda, rather than the larger good they both claim to serve. It has led to the formation of regulation institutions, new organisations, new trends of employability, new consumption habits.  More and more countries and more and more donor entities from the countries engage with Nepal in aid, whether for development or humanitarian or economic activities.  And they too thrive on this relationship, obviously. This presence is like spaghetti within spaghettis. 

There is no gainsaying the fact that Nepal’s government is heavily reliant on development aid. Successive governments in Nepal have relied on development aid for decades. Even during the years of monarchy, one must add. Since 2005, official development assistance (ODA) averaged 34 percent of all government expenses. 

International groups take pleasure (and perhaps, pride!) in their emphasis on “Nepal remains one of the poorest and least developed countries in the world”, that “Nepal is corrupt and lacks capabilities”, so on and so forth, and yet, decades of international aid have not produced better governance in Nepal, or taken it off the ‘poorest’ list. With a per capita GNI of $730, Nepal ranks 145th out of 188 countries in the 2015 Human Development Index (HDI). The Bertelsmann Transformation Index (BTI), a governance assessment tool covering 129 countries, rates Nepal at 3.0 and 3.3 on a 1-10 scale in the “resource efficiency” and “steering capability” criteria. Both ratings have dropped by 0.3 in the BTI 2016 released in February this year. The country clearly lacks a coordinated long-term approach for economic growth. 

So, at quick glance, the question of ‘Success’ of the foreign aid dynamics looms large.  Success is a chimera, or a shape-shifter. It has many names, forms, and connotations, different at different times even to the same people and organisations.

As a small consolation, though, there are small indications that foreign aid plays a role in political and economic change. In the BTI 2016, Nepal receives a respectable score of 6 in the indicator “effective use of (international) support”. This rating reflects a better performance than that of Bosnia and Herzegovina, Lebanon and Thailand. Easy to say, then, that the international assistance has been utilised for development agenda. It has helped towards the Millennium Development Goals, following the second MDG there is some success in achieving universal primary education, and following the fourth MDG in reducing child mortality indicates that primary education and health are quite the favourites of foreign aid. 

Some data says that between 2005-2012, roughly 12 percent of all ODA was directed to the health sector, and, according to the World Bank, between 40-50 percent of total government expenditure on health consisted of ODA. Education was the choice of ODA with a 17 percent, nearly equivalent to the percentage of foreign aid spent on infrastructure.  Data also shows that between 2000-2013, the under-five mortality rate reduced by more than half, a rough 40 per 1000 live births. Life expectancy at birth has increased from 62 to 68 years. Literacy rate of people aged between 15 and 24 stands at 86 percent (2015), a significant improvement compared to 70.1 percent in 2000. Primary school enrolment rose up to 98 percent and primary completion stood at 100 percent in 2014, says some data. 

Community forestry is quoted as one of the success stories of foreign aid. It was in the late 1980s that a Nepal-Australia forestry project, basically a re-discovery of the traditional commons managing arrangements, changed into a donor funded scale activity. The new Forest Act, 1993 clearly brought in the users’ rights as the inalienable property of villagers. Currently, the record shows more than 19,000 community forests. This has improved the crown cover of the landscape. 

Small, but covering a wide range, are the results of more than forty years of aid patterns from Germany. Began as GTZ, German Technical Co-operation and evolved into GIZ. Under the banner of Promoting Local Governance and Civil Society, best practices identified during the four decades have been replicated within the scope of other projects and national programmes. Personal aspects and experiences of this dynamic over the long years have not been captured by formal reports. So, the good Germans, ever meticulous and ever the perfectionists as they are, came up with a Knowledge Map: a way of mapping experiences, lessons learned and good practices that may further contribute to the success of other development processes. The second element of this map is a documentation of the changing context in which the cooperation took place. The many political and administrative changes that happened over the course of the collaboration influenced the strategies, course of action as well as priorities. As many public reports as possible were collected, to represent the different projects and programmes. While this is not a complete documentation it provides insight into the successes and experiences throughout the cooperation. 

Not surprisingly then, the German partnership has been by far the most evolving one. They were the first to give ‘economic sense’ to their aid and assistance, a big differentiator from the likes of USAID and DFID that actually breed dependence and near-zero capability building.  Recently both have begun making inroads into economic activity like manufacturing, warehousing and such to augment their funds. 

The GTZ success story begins with the Small Business Promotion Project (SBPP) in 1983, implemented for a period of 12 years in IV phases.  As a foreign aid programme this was quite new in the Nepali business environment due to its programme modality. It was designed as an integrated programme comprising core functions targeted at small and microenterprises: Business Startup, Business Expansion and Growth, Revolving Fund for Loan and Capacity Building of Intermediary Organization. The SBPP developed, tested and disseminated several training and business counseling packages through its seven field offices: Dharan, Pokhara, Butwal, Bhairawa, Chitwan and Nepalgunj, and the head office in Kathmandu. Another successful programme was the Micro-Enterprise Creation and Development (MECD), a customised programme for micro-entrepreneurs. The 1984 Industrial Enterprise Development Centre evolved into the Industrial Enterprise Development Institute (IEDI) in 1996. The enterprise development approach pioneered by the project is being replicated across similar projects in Asia, Africa and South America.

DFID has increased its budget in Nepal significantly in recent years, from £55.93 million in 2012-13 to £104.7 million in 2013-14. In 2014-15 the figure reached £86 million. DFID claims that this indicates that in the last four years it has had a major impact. The activities lined with success are: build or maintain over 4,000 km of roads in remote areas, provide over 350,000 people with safe latrines, improve the livelihoods of nearly 500,000 people through work on forestry, and ensure that over three million people are better able to withstand the effects of climate change and natural disasters. The programmes mainly focus on inequality, women and girls and climate change. The latest Operational Plan (2014-15 and 2015-16) as well as committing ‘DFID Nepal to increase their economic development work and strengthening those institutions that underpin growth’ also lays stress on ‘support to women and girls and marginalised groups’.  

DFID Nepal has reduced the number of ‘project lines’ in its budget from 32 in 2012 to around 20 in 2014-15. The average annual spending per ‘line’ has risen from around £1.65m to roughly £4m. This partnering decided to move out of primary education, largely because there were other donors perhaps capable of stepping up that area of work. 

Time is the storyteller, Time is the keeper, Time is the circle. And it alone can tell whither goes foreign aid in Nepal. Each player of this dynamic marks Time differently, marks Success differently. The people who have most benefitted from this dynamic of time and success were and are the people employed by the foreign currencies. Each ‘cycle’ of foreign aid project has seen disillusions and promises; the ones getting off this dim-wagon and the new ones getting on this glitter-wagon. And so, the foreign aid dynamics go on. 

New buzzwords and new initiatives are added on each ‘time’, to buy more time for relevance and success, by all the aid partners, the donor community and the implementing partners, at different times. The end-user or beneficiary is far away and exists only as totems and mascots to bag the money, literally. Sustainability, economic independence, governance strength and an all-round growth is a ‘fickle and trickle’ in the success narratives of the foreign aid dynamics.

Vaijayanti Khare is known for her dynamic engagements in the corporate, academic, social and development fields in Kathmandu over the past decade. Her writings are a reflection of her hands-on work, insights, studies, success and challenges.


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