The fact that a major multilateral donor took the strategic decision to stop the provision of grants to Nepal should be something to cheer about. After all the Government of Nepal has set a very ambitious plan to graduate the country from being “Least” to “just” being a “Developing” country within less than a decade. Having an international development partner appreciating the macro economic landscape of Nepal to such extent to decide to do away with grants should be seen as a major milestone in the national development of Nepal. Instead what we see is et Finance Minister Ram Sharat Mahat begging for more grants from the Asian Development Bank Vice President, Wencai Zhang, who was last week in town.
The reason is that the Bank positively thinks that Nepal has reached a situation in which loans are a far better fit for its own development. No more need of handouts but rather soft loans.
Positively enough it seems that the ADB will decline the request even if Mahat wants ADB to reactivate its grants program to the social sector particularly on the overall attempt of the Government to design and implement a strong and much needed social security model.
Despite the good intentions, here we have a classic case of means that does not justify the ends. It is true that the government must do much more to address the living conditions of millions of citizens that are still disenfranchised and far below any poverty line based on simple principles like human dignity and respect for those who are lagging behind. It is certainly commendable that the Government is asking for the assistance of foreign development partners to strengthen the social security system but at the same time we should start thinking that taxation is the king. A clear pathway out of poverty and underdevelopment must necessarily rely more and more on internal revenue system rather than mere assistance from outside the country. What we need here is more foreign investment and less international grants. We need more soft loans than foreign driven projects funded by international donors. While oftentimes international non-governmental organizations are criticized for not being value for money and unaccountable, the same multilateral and bilateral institutional donors have been setting up their own “castles in the sand” projects that more or less operate like INGOs. Fancy houses in fancy neighborhoods for fancy people employed there.
I am not entirely against this system, after all I was part of it. Many INGOs and projects directly funded by donors are doing quite good despite the fact that there is not in place a real evaluation mechanism that can ascertain which one of them deserves more funding and scaling up. This is a pity because oftentimes media and general people tend to throw the baby away with the bath water.
Nepal needs some sort of bold decisions that can set a new course. We need to initiate a pathway towards the change. It is encouraging to learn that the country wants to graduate its international assistance status with a clear time line but at the same time new measures must be taken to change the course now. There is urgency to run away from a logic of “business as usual”. Nepal needs a different way of doing things and donors could be much more strongly coordinated and intelligently contribute to a new ambitious project of national development and prosperity.
Donors should be clear that their tax payers funded grants will be judged, among others, against one simple but essential benchmark: being able to reach the targets set in their multi years planning. Once the job is done, donors then need to have the foresight to shut down their shops and move somewhere else.
Unfortunately in order to set an ambitious plan for change, you need political leadership with the audacity to set a new pace. We need political leaders with the guts to bring this change. We cannot leave civil servants, even those honest and transparent in charge of the national development process. In the absence of a strong government, the legislature should take the lead. Civil society should play a role but the change must be at the political level.
It will be interesting to see if the country really implements a federal model not just in name but in deeds, and how coordination of development work will be organized and shared between center and states. Modi just announced the scrapping of the National Planning Commission. Nepal should give thought to this too.
Meanwhile the decision taken by ADB shows how donors can be part of the solution. Come on Nepal starts thinking about standing up on your own.
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