June 23, 2015 Sujeev Shakya

Setting the Agenda

We love festivals in Nepal. And just as every other event is turned into a festival, the upcoming donor conference has also become one. But we seem to have forgotten that it is not about getting high-profile guests. Rather, it is important to get people who matter. Therefore, as someone who understands the intricacies of Very Important Person security, it is good that the Indian Prime Minister Narendra Modi will not be attending the June 25 donor conference—Kathmandu will not have to be shut down needlessly.

Nepal has received unprecedented support from the international community after the earthquake, and the support continues to pour in. It has now become increasingly important for the government of Nepal to rise above petty coalition politics and ministerial territorial rights so that the international community can continue to support the country.

Waiver and Accountability

Nepal currently owes over $3.4 billion in external debt to multilateral and bilateral agencies apart from another $2 billion of internal debt payable. A campaign has already begun to push for a waiver on loans payable. Kul Chandra Gautam and members from his alma mater, Dartmouth College, have already started a petition campaign by writing to the current World Bank President Jim Yong Kim, who was formerly the President of Dartmouth College. Nepal owes the World Bank $2 billion out of its $3.4 billion in external debt. The waiver of future debt servicing obligations will, therefore, surely help Nepal raise additional money.

In the next fiscal year alone, Nepal will be paying around $200 million to international agencies as principal and interest on borrowings. This is one of the lowest hanging fruit where the lending community can waive debt servicing for Nepal. Since this is within the Government of Nepal’s accounting, the money can just be transferred from a debt service account to a grant account at the Ministry of Finance.

This is regardless of the fact that the government has not been able to do enough in terms of ensuring accountability of relief materials and funds. The media has been flooded with stories of capture of resources by politically affiliated groups and how different officials have taken advantage of this situation. Even if those stories are exceptions and not the norm, the government has done little to assure citizens and international community that it is in charge.

The reluctance of political parties in and outside government to think beyond the All Party Mechanism has cast doubt on their intentions. They have never been keen to push for local elections or professionally managed setups. A system that is designed to tick the right boxes and benefit the right group of people will surely not help the accountability discourse. At the conference, it would be good to hear what the government plans to do on accountability. Simultaneously, it would be good to listen to the plans of the international community as well. Institutions like the Accountability Lab, along with other agencies, could fulfill the role of watchdogs. However, if the government is able to make a strong commitment that can be put into action, it will send a stronger message to the world.

Charity and Investment

One international agency was reported to have sold the ‘One million people face food insecurity risk in Nepal’ story and raised $3 million out of the pledged $23 million. Meanwhile, Facebook raised $18 million, and companies like Google will be spending more than some of the international agencies in Nepal. While it is important to get bilateral and multilateral organisations on board, the government must also find different ways to encourage new-age global philanthropic agencies to contribute to rebuilding Nepal. These new-age institutions and foundations, which include technology companies, are not interested in the seminar/conference, media-hogging way of doing things. They like to get things done quickly and make an impact. Having interacted with several of these institutions inside and outside Nepal post-quake, it is very clear there has to be a separate mechanism within the government to deal with them. May be a few dedicated persons in the new mechanism could be the way to encourage and interact with these low-key, high-spending potential foundations.

As of now, Nepal and much of the international community has been mostly on rebuilding infrastructures. More thought needs to be put into what can be done for the affected people after they have a shelter. It is important to see how investments can also be made along with grants and loans. For instance, along with the loans and grants that the World Bank  provides, it should also consider what its private sector arms, such as the International Finance Corporation, can do. We cannot use reconstruction as an excuse for Nepalis to relapse into rent-seeking and begging-bowl mentality. We need to generate more employment as well as entrepreneurs so that they can build better lives for themselves. We also need the private sector to really focus on building better businesses rather than trying to find more excuses to get tax breaks, interest waivers and other facilities that will turn them into people waiting for handouts rather than entrepreneurs. Even before the earthquake struck, Nepal needed to inject over $2-4 billion of private capital each year to ensure growth towards a middle-income country by 2030. We now have the opportunity to expedite that project.

Move On

The government will now be judged in terms of whether it enforces strict building codes, or whether it will give away public and semi-public open spaces to private developers who generally work in conjunction with political forces. The government will also need to reform archaic laws related to the reconstruction of heritage sites, like not allowing any modern building materials. Huge reforms are needed in making finance accessible to entrepreneurs—big, small and micro.

It is time for Nepal to change and it could begin walking in that direction by taking small steps forward. The starting point could be conducting the International Conference on Nepal’s Reconstruction in a business-like manner, shunning age-old protocol systems and doing away practices like handing over the ‘token of love’.

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