The Destorted Path

For Nepal, the need for foreign aid is acute. The country is backward in every field. Two out of every five Nepalese live in abject poverty. The per capita income hovers at around US dollars 220, which is one of the lowest in the world. Most of the people in the country earn less than a dollar a day, a criterion designed to determine the degree of absolute poverty.

Development planners are of the opinion that foreign aid should not be heavily depended on as it would hamper the proper utilization of internal resources and give rise to nonchalant attitudes. More dangerously, it would give rise to the dependency syndrome, which is not a healthy signal for any country.

In this backdrop, the question on the appropriateness of foreign aid to the developing countries like Nepal has cropped up. It is true that Nepal is poor in the mobilization of internal resources due to inadequate capital and lack of technical knowhow. But it is obvious that five decades of foreign aid have not brought about any remarkable improvement in the economic scenario of the country. This shows that there must be something amiss in the utilization of aid money. Donor countries and agencies would certainly take into account their interests in the aid to the developing countries. They would sometimes dictate the course of action for the operation of the projects run through their aid. And the hapless recipients cannot help but accept such diktats for fear of losing the aid. As such, such projects may operate in accordance with the wishes of the donors, something which may even run counter to development models adopted by the recipients.

Moreover, in our context most of the aid money is used to procure costly equipment, vehicles and buildings, and to pay consultancy fees to the technicians/consultants brought along by the donors themselves. And to add the last straw to the scene, corruption is always there, which hampers the proper use of the aid money. As a result, most of the foreign aided projects are in a shamble now.

In recent times, the patterns of foreign aid have also changed, with loans outweighing grants, which implies that a huge chunk of the budget will have to be earmarked for debt servicing.

Foreign aid has not been used in a transparent manner. There lacks a proper accounting system of recording the movement of foreign aid. So the donors countries and agencies have equally shown interest in the proper use of aid money. The World Bank has linked the granting of aid to its proper use and satisfactory progress in socio-economic development.

In this context, it would be prudent for Nepal to determine priority sectors where foreign aid can bring about satisfactory progress. And the ad-hoc selection of projects for self-interest should be abandoned. A scientific accounting and audit system, an effective management information system, a hierarchy specifying rights, duties and responsibilities and the like should be in place. Additionally, a relevant policy should be formulated without any delay so as to streamline foreign aid.

Has the massive inflow of external resources contributed to combating poverty and achieving growth in economy?

If the available evidences are to be believed, the answer is a definite NO. This massive inflow of foreign resources has created minimum impact and economy has more or less remained stagnant. Moreover, there are many who argue that foreign aid inflow in Nepal is very low compared to many other countries.

The only thing external resources have done is to expand dependency culture to the very core of Nepalese lifestyle. The situation has become like that of a drug addict who needs even larger dose of drugs just to sustain life. Persistent poverty in the Nepalese context should be viewed as a reflection of its dependency on foreign resources. The donor initiative and resources have killed the very capacity of Nepalese bureaucratic machinery to initiate and implement development projects and programmes.

It has paralyzed the very core of our administrative machinery and institutionalised corruption in the political and administrative system. If we review our past development efforts we do not find any large scale development programmes and projects that is implemented by Nepalese administrative machinery and internal resources alone. Capacity building, technology transfer through foreign assistance has been a mere rhetoric.

Nepalese elites have become mere intermediaries between the donors and the poor mass on whose name foreign aid flows. The elites which include politicians, bureaucrats, commission agents, consultants, advisors and project managers are only beneficiaries whose lifestyle and living standard resembles that of the people of developed West, while the masses continue to languish on chronic deprivation. Poverty has become the begging bowl of Nepalese elites who thrive on growing foreign aid dependency.

Dependency culture has become so much entrenched on our psyche that we have internalised it in the very core of our development planning through the extension of grant in system to Village Development Council and District Development Councils and Members of Parliament without developing effective mechanism to implement, monitor and evaluate the development programmes. Growing foreign aid dependency has also contributed to retard the economic liberalisation process by creating comfortable balance of payment situation in the country despite the not too encouraging performance of the trade sectors.

Underdevelopment and poverty on the threshold of this new millennium are manifestations of our failure, lack of commitment and sincerity towards our state. The threat of economic, social and political collapse seems very much imminent, as economy has remained more or less stagnant and ineffective to appease the needs of the growing mass. The foreign aid, instead of contributing to the growth of economy, has perpetuated the dependency culture, institutionalised corruption and polarized the people who have access to the resources and those who do not have. It is now time to seriously realise that without mobilising the internal resources, it is impossible to achieve sustained and broad based economic development.