Foreign aid syndromes

DILLI RAJ KHANAL

Lately, a long-term Multi Stakeholder Forestry Program (MSFP), funded by three bilateral donors, has become highly controversial after decisions to award a relatively new organization, and, at the same time one of these donors formed non-profitable company called “Rupantaran”. Many civil society groups and development practitioners are questioning the entire selection processes including eligibility of such an unproven and inexperienced organization. The Labor and Economic Relation Committee (LERC) of the Legislature Parliament is also examining the matter. It is also reported that even the Finance Secretary told the LERC that the direct involvement of donors in the projects and programs bypassing the government is unjustified and added that it is against the commitments and spirit of Paris Declaration 2005 on Aid Effectiveness.

As is well known, ownership, mutual accountability, alignment, harmonization and managing for results are the five constituents set under aid effectiveness agenda. Understandably, such an agenda was not due to the overnight changes in the donors’ aid behavior. It was rather an outcome of many years’ pressures of the people at large from both developing and developed countries alike. The poor outcome or misuse of aid primarily driven by donors’ political and economic interest is aggravating frustration and anger among the people in developing countries. People of the developed countries also want that the tax paid by them is used more effectively for enhancing socio-economic development and improving the living conditions of the people in aid recipient poor countries. After 2005, two high level meetings, one in Accra in 2008 and another in Busan at the end of 2011 were organized in which not only progresses and gaps were discussed but also future course of actions were agreed upon by development partners. The important feature of 2008 meeting was such that it identified the gaps especially on ownership and accountability issues and stressed on the need of engaging various stakeholders, including parliamentarians, local representatives and civil society groups for strengthening, internalization and democratization of ownership, key for improved accountable system and better results. Such a new focus was due to the growing evidence that in the name of internalization of ownership engagement or in some cases manipulation of bureaucracy was practiced. Similarly, despite thrust on mutual accountability, donors were found to be escaping from joint responsibilities, especially in cases where there were projects and programs failures. The recent Busan meeting has further committed the partnership for effective development cooperation. As an offshoot, it stresses on the need of deepening, extending and operationalising the democratic ownership of development policies and processes and promises to strengthen efforts to achieve concrete and sustainable results. In these backgrounds, unlike the latest incidence challenging the commitments, some concrete moves were expected as past evidence of Nepal were showing no perceptible changes in the aid behavior including its governance.

Some studies carried out in 2008 corroborating the earlier study findings have shown that there is very weak relationship between aid and long term growth in Nepal as the empirical analysis revealed that in the post-aid effectiveness period also policy conditions have remained almost intact which again have accompanied by fixation of projects and programs primarily on donors’ interest. It was diagnosed that major chunk of aid was either diverted to the consumption type activities or re-siphoned to the aid giving countries themselves through aid-tying practices. Interesting findings are found in an aid-effectiveness status study of OECD 2008 too. It shows that the progress on mutual accountability is very slow. Even while treating PRSP solely as domestic ownership, it finds no significant improvement in this area as well. Similarly, problem of coordination in technical aid, slow progress in strengthening predictability, continued fragmentation in aid with many stand-alone projects, vertical funding, direct implementation, moves away from country Public Financial Management (PFM) and procurement systems were the major problems identified by a Country Evaluation Report 2010 of the government.

A field survey based study 2011 focused on democratic ownership and accountability finds serious lapses in these areas. As indicated by the study, the policy conditions are still intact. The legislative parliament is excluded from the entire aid screening processes. Thus, unless the above problems are addressed mutually to make aid compatible with commitments, aid effectiveness will be a mirage as the controversy surrounding selection of executing agency of forestry project additionally exemplifies. As an offshoot, this will need sincere efforts at strengthening home grown development strategy backed by fully democratic and accountable institutionalized system at different levels for creating favorable internal conditions that could immensely contribute to discourage or check lack of compliance of many donors to their own commitments at the international forums.