Asia Times: Foreign aid no answer to Nepalese poverty


	May 09, 2000	atimes.com

India/Pakistan

Foreign aid no answer to Nepalese poverty
By Suman Pradhan

KATHMANDU - Nepal is still to make proper use of the multi-billion dollar aid it gets, say two new reports by multilateral donors that advise the Himalayan nation to rely less on the government to reduce poverty.

The assessments by the UN Development Program (UNDP) and the Asian Development Bank (ADB) have been welcomed by development economists who agree that foreign aid is no answer to raising living standards in one of the world's poorest nations.

Rather, mainly rural Nepal needs to move self-rule out of the national parliament to its remote hamlets to make better use of development funds, they say, in agreement with a suggestion made by the reports. ''It is clear that in spite of the millions spent so far, poverty alleviation measures failed to make an impact because policy-makers did not pay attention to the relations between local empowerment and success of anti-poverty programs,''says Jagdish Pokharel, a member of the National Planning Commission. ''With these findings, we are now committed to ensure that linkages are taken into account.''

The UNDP report indicates that instead of asking donors for more money, this nation of nearly 23 million people should pay more attention to grass-roots democracy which it said is crucial for the success of anti-poverty schemes. ''The new feature of Nepal's anti-poverty efforts is the link with an ambitious program of decentralization and local empowerment,'' it says in its global Poverty Report 2000.

The ADB, though more optimistic about Nepal's economic future, does not disagree. ''The government needs to develop more focused strategies to reduce poverty,'' it says in its annual Asian Development Outlook 2000 released in April.

Many development experts agree that Nepal's three decades of autocratic rule were a drag on economic development. This is why the more than $4 billion pumped into the country in the past four decades for reducing poverty has failed to do so.

Current statistics show that half of Nepal's citizens are poor, earning less than a dollar a day. Last year, the national planning body admitted that despite decades of foreign development aid, the proportion of poor people had grown. Nepal's ruling establishment has often attributed this to donor rigidity in the use of aid dollars. Media commentators in turn blame corruption and misplaced priorities for aid ineffectiveness. ''This has to do more with the lack of commitment on the part of the government than donor agencies,'' notes the English language daily, The Kathmandu Post.

Foreign aid is said to have added to Nepal's foreign debt. It has been estimated that more than half the annual government revenue goes to foreign debt servicing. On average, each citizen is calculated to owe more than $100 to foreign creditors.

But more and more experts now think that the answer lies in effective grassroots democracy. They blame the absence of genuine democracy till 1990 for the ineffectiveness of foreign aid in all these years. For 30 years from 1960, when foreign aid began coming, the monarch ruled with an iron fist. Corruption in high places is alleged to have flourished. Aid money was also used for big projects that really did not help the needy.

Although multiparty rule was established a decade ago, political observers say that democracy still has a long way to go in Nepal. They cite the slow progress toward decentralizing governance in the form of self-rule bodies at the village level. ''There a high degree of political participation in Nepal, but not much else,'' admits Madhav Kumar Nepal, former deputy prime minister and leader of the main opposition Communist Party of Nepal (Marxist-Leninist). ''Large sections of society find themselves marginalized from processes that affect them.''

This, together with chronic poverty, is why Nepal is in the grip of a violent rebellion by radical left cadres in its rural districts. While the Maoist rebels are demanding the total abolition of monarchy, political analysts say their real motivation is the marginalization of the rural peasantry.

Nepal's rulers, meanwhile, are holding out the promise of tackling corruption which is popularly blamed for the country's economic ills. The government recently announced that foreign donors will fund its financial reform program, which aims to combat misuse of public money.

In a recent public opinion poll by the local group Media Services International, eight out of 10 people quizzed saying that corruption in high places has increased.

(Inter Press Service)

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