Building New Nepal: What is needed?

Ultimately, we have to develop politically centralized, economically inclusive and administratively decentralized powerful institutions to realize the ‘Peaceful, Prosperous and Just’ Nepal

The devastating April 25 earthquake and powerful aftershocks have shaken every sector of Nepalese economy. The recent post disaster need assessment (PDNA) report estimated a physical property damage of Rs. 517 billion and income loss of Rs. 189 billion requiring Rs. 670 billion for reconstruction and rehabilitation. In the meantime, the donor’s conference on June 25 managed to get assurances of Rs. 440 billion, the amount more than two-thirds of the required fund to fully recover from the disaster. If those committed funds were realized and mobilized properly, it would be sufficient enough to reconstruct and rehab more resiliently, and thus, would not affect government’s regular programs only due to the scarcity of resources.

After the mega disaster, major political parties are inching the deals on constitution. If it happens so, Nepal will be in historical phase of state restructuring. Furthermore, this greatest natural disaster has also given a golden opportunity to rebuild new Nepal and transform the livelihood and development into the new course. Nevertheless, if the past experience and existing capacity of the government is to be taken into account, it is very hard to believe that Nepal will enter into the new phases of development post-disaster.

The popular book “Why Nations Fail” authored by Daron Acemoglu and James A. Robinson in 2012 has thoroughly analyzed the reasons behind the success of a country. They insisted that countries differ in their economic success because of the role of the institutions (political and economic), and how the incentives are shared among the businesses, individuals, and politicians.

The authors pointed out that being “much common institutionally with most nations in sub-Saharan Africa”, Nepal is still the poorest countries in the world today despite numerous possibilities and at the Asian strategic position. The authors concluded that “Nations fail economically because of extractive institutions and these institutions keep poor countries poor and prevent them from embarking on a path to economic growth.”

Thus, institutions, which comprise four factors, namely physical, financial, informational and human resources, are the major weapons of development. Out of those, human resource is the most dominant one as it manages, distributes and uses other resources. It is empirically evident that individual talents are the utmost need of today at every level of society, along with an institutional framework to transform those talents into a positive force.

As an example, the emerging Asian nations such as South Korea, Malaysia and Singapore, identified and developed right talents at home and abroad in politics, administration, industries, health and education; and established a strong institutional framework to mobilize them effectively.

Except few cases of self-effort at the offer of foreign government and institutions, Nepal is far behind in developing dynamic capacity of the human, especially as per the institution’s need. Instead, the short-term courses offered by international organizations are generally perceived as an opportunity (of motivation) to the employees rather than learning and skill development.

Due to this, the institutions fail to nominate the right person, individuals not obliged to lean during the course, and, for sure, institutions won’t be able to assign the job at the area of expertise. Thus, institutions are being unable to impart, update and develop the emerging skills to their most valuable manpower thereby resulting in inefficiency and status quo that generates ineffective outcomes.

Even if we have policies, programs and structures, many local and international institutions as well as entrepreneurs are not fully confident in domestic institutions. More specifically, what we lack is institutions that formulate right strategies, programs and projects and implement them as planned; that are able to maintain the system of governance in a transparent, free and fair manner; that would be able to deliver services to underprivileged groups, poor and destitute; institutions which general public believe that they will get services without the need of privileged access and personal connections; every individual will get protection, support and facilities to conduct legal business and profession of his/her interest and capacity without any personal influence, among others. What have dampened these are weak political, economic, administrative and social institutions, as indicated by Mr. Acemoglu and Mr. Robinson.

Nepal should be able to reap this golden opportunity brought by devastation without delay, in establishing institutions that are not extractive. As the most crucial factor is human resource, identifying and developing the world-class skills and abilities required at home for the medium to long-term should be the topmost priority. Besides, if we make institutions to which every Nepalese do trust fully, the country will be able to get back those skilled and educated talents abroad.

We need to establish a strong mechanism of assigning responsibilities purely based upon the merit, skills and interests. Ultimately, we have to develop politically centralized, economically inclusive and administratively decentralized powerful institutions to realize the ‘Peaceful, Prosperous and Just’ Nepal.