-Kushal Pokharel
A view of Kathmandu covered in smog: Nepal needs to invest $15.25 billion, or the equivalent of nearly half its annual GDP, to attain U.N. Sustainable Development Goals. © Reuters
As one of the poorest countries in Asia, Nepal has been a recipient of international development aid since support from the U.S. began arriving seven decades ago as part of Washington’s global Point Four Program at the beginning of the Cold War.
The aid context has gotten complicated in recent years. In part, this is because of Nepal’s conversion into a federal democratic republic under its 2015 constitution. The resulting three-tier structure of federal, provincial and local authorities created demand for more external financing, given the need to bolster the institutional capacity of subnational administrations.
At the same time, the government has calculated that it needs to invest around 2.02 trillion Nepali rupees ($15.25 billion) a year to attain the U.N.’s Sustainable Development Goals. This figure represents nearly half the country’s annual gross domestic product.
Over the last decade, meanwhile, Nepal’s donors have increasingly provided support through home-country consultancies contracted to manage the programs locally. This arrangement has reduced the share of aid funds that actually reaches communities in Nepal, while also disconnecting local civic organizations from the donors’ activities, generating distrust and reducing opportunities for civic discussion.
Overall, this new approach has done more harm than good, according to the scholars who contributed to the 2018 book, “Aid, Technology and Development: The Lessons from Nepal.” They argue that remittances have had a bigger impact on reducing poverty in recent years than the development aid Nepal has received.
One issue they highlight has been shifting donor priorities as different development concepts win favor globally, whether promoting import-substitution strategies versus export-oriented growth or championing state-led over market-led approaches, or most recently, in championing climate change adaptation and mitigation efforts.
For lessons in how Nepal can better work with donors in the future, it is worthwhile to look back at previous success achieved with international development aid in the areas of community forestry and maternal and child health.
At the heart of achievements in both areas was a focus on the empowerment of grassroots citizens and community organizations.
In the case of maternal and child health, citizens were mobilized through community-based mothers’ groups and female community health volunteers. Both also helped to channel resources from donors.
In this way, the aid program was able to reach remote villages to raise awareness about preventive health, including safer birthing practices, family planning and hygiene. The groups facilitated an innovative cash transfer program that encouraged women to safely give birth in clinics.
Mahouts ride on elephants in Chitwan, Nepal: Increasing community ownership of forests enabled the country to rebound from three decades of forest destruction. © Reuters
By putting the community at the center of the program, this approach proved more effective than working through formal government channels. As a result, deaths per 1,000 live births in Nepal are now down to 23 from 111 as of 1988.
In the case of the country’s forests, the government developed a plan with the Asian Development Bank and the Finnish International Development Agency to empower woodlands users by transferring management of forest areas to local communities.
With increasing community ownership and control, community forestry user groups worked wholeheartedly to control wildfires, improve grazing management, reduce illegal encroachment and protect native species. As a result, the country rebounded from three decades of forest destruction in just one decade while improving local living standards and reducing poverty.
The question of what makes development aid work better is pertinent. The Organisation for Economic Co-operation and Development recommends building on a strong legal and political foundation with a clear national level vision of the purpose of development cooperation. It advocates setting up mechanisms to assess the impact of development policies, establish accountability and improve project management.
As evidenced by Nepal’s experience over past decades, development cooperation works well when the meaningful participation of local community and grassroots institutions is ensured. With local governments emerging as the first point of contact for the general public in a federal system, forging partnerships among local authorities, donors and community organizations that can hold together throughout a project management cycle from planning to implementation is important.
In a nutshell, understanding and analyzing donors’ interests and priorities, and tailoring their support to in-country needs remains key to effectively channeling development aid. However, in recent years, the reluctance of Nepal’s central government and donors to replicate the community empowerment model in new development projects has resulted in dismal outcomes.
A consistent policy focus on decentralized community governance and sustained financial commitments from donors and the government enabled Nepal to achieve great success before. It is time for Nepal’s benefactors to go back to this effective formula.
Kushal Pokharel is a research fellow at the South Asia Institute of Advanced Studies in Kathmandu. He also serves in the research faculty of the Silver Mountain School of Hotel Management.
“Views expressed here are personal and not associated with any affiliated organisations”
This blog article was first published at NIKKEI ASIA July 27, 2023.
