The donor conclave : Lessons to learn

Once again the donors have held a meeting in Kathmandu to listen to government’s request for financial assistance for rebuilding Nepal after almost a dozen’s years of insurgency in the country. While this may seem a historic achievement at national reconciliation, there is need for the donors to learn from their own experiences in Nepal before they go through the ritual of generous pledging of aid money.

In 1987 an investigation team appointed by the government under the leadership of a parliament member found that the appraisal document for each of the three successive World Bank loans extended to the Nepal Drinking Water Corporation since 1972 promised 24-hour water supply to the denizens of Kathmandu. But the inquiry itself was necessitated by the fact that large sections of the Kathmanduites, mainly in the core city areas, were reeling under severe water shortage even as the corporation was seeking government approval for hiking water tariff, one of the conditions laid down by the Bank. The problem was that while the lender was painting an optimistic picture of the situation largely to push the Bank loan to the government, it also looked the other way even as the organisation was being devastated by rampant corruption unleashed by officials and politicians related to it. For the visiting Bank officials “successful lending” carried a premium in their upward mobility.

Around the same time, the Bank had also commissioned a mission in preparation for extending a $50 million Structural Adjustment Loan to Nepal. At the time, the Ministry of Forest, a government agency traditionally enjoying the notoriety of being corrupt all the way down to the villages, was dragging its feet in devolving authority to user groups in the communities as required by the Decentralisation Act of 1982. In sheer desperation, a government official responsible for decentralisation successuflly persuaded the World Bank team to use user management of forest as one of the conditionalities for the loan. Since the all-powerful Ministry of Finance needed the money, it prevailed over its forestry counterpart, and the forestry legislation was amended in April 1988 inducting the forest user groups and thus, paving the way for the dramatic revival of Nepal’s forest wealth.

One of the lessons of this experience is that policy planning and institutional development is much more important than the flow of financial resources for the development of the country. One of the major fault lines in Nepal’s democracy is that politicians thrive in politics only by usisng money power in elections which directly results in political and bureaucratic corruption, the aforementioned wrecking of the water authority being one such instance. However, where the beneficiaries themselves are exclusively empowered as in the case of the forest user groups, there is good governance at work — inclusive organisation, universal participation in decision-making, transparency of management and accountability of leaders — that only results in accelerated and sustainable development in the communities. Such institutions are also conflict-resistant. For instance, the Maoists wrecked a number of VDCs but could not harm the forest user groups.

The point here is that the success of community forestry can be replicated all across the development sectors in the country, only if the highly diverse donor community — many among them chronically suffering from the penchant for distinctiveness — get their act together. In specific terms they should learn from Nepal’s successes such as the community forestry and work out a common blueprint in concert with Nepali professionals and work in tandem with each other towards those ends. Otherwise, they would be doing more harm than good — something known as killing with kindness — as is in evidence in the case of the

so-called Local Self Governance Act of Nepal.

While the politicians who came to power after 1990 popular revolt, euphoric about their own “democratic” credentials and impatient with anything “Panchayat”, weakened the decentralisation policy, one bilateral and one multilateral donor fiercely competed against each other in the mid-90s wrecking it further in the process. The resulting Local Self Governance Act of 1999 that should have been the blueprint for sustainable and accelerated development of rural Nepal in particular now remains the sorry witness to the continuous deterioration of its life and economy. As the Act stands, its major lacunae have been that the vital institution of user groups remains dis-empowered in the communities, giving free rein to the politicians and officials with vested interest.

Donor money not guided by professional competence and integrity does more harm than good to the country. Even as Nepal goes through its worst-ever crisis in history, how could this have happened despite the sustained flow of generous foreign aid to it for more than half a century?

Shrestha is a former additional secretary