Give it anyway

The old debate over whether foreign aid to poor countries is best routed through government channels or whether donors should be allowed to directly implement their chosen projects and programs has not been settled. Post-2006 Nepal has also been witness to this often raucous debate. On Tuesday, Deputy Prime Minister and Minister for Foreign Affairs Kamal Thapa weighed in on it during a briefing to the international community. Thapa requested all donor countries to use government channels for their support and to "firmly recognize the national leadership and ownership in development efforts." This is important, he said, because channeling of "such precious resources through non-transparent agencies, NGOs and other entities" could result in "such support being used in unproductive sector in an unaccounted and non-transparent manner." Many donor representatives who were in the audience must have flinched. Most of them don't trust the government of Nepal with their funds. The chances of their funds being spent in "unproductive sector" and in a "non-transparent manner," they would argue, are much higher if they hand their development funds to Nepal government than if they spend the money themselves.


To buttress their claim they like to point how the country consistently ranks among the most corrupt in the world; how the government has badly botched reconstruction efforts following last year's earthquakes; how people in Gorkha and Sindhupalchowk otherwise wouldn't be left shivering out in the bitter cold. As damning is the fact that every year only 20 percent of the country's development budget actually gets spent. These are valid concerns. Our government channels are porous, often ineffective and easily abused. The question, in that case, is whether the donors will get more bang for their precious buck if they spent the money themselves. Unfortunately, if our government's record on spending foreign aid is bad, that of the donors is no better, if not worse. Otherwise, how can the rotten practice of taking back as much as 80 percent of project cost in the form of exorbitant fees paid to consultants hired from the donating countries be justified? There are many qualified people in Nepal who are as capable, and they will do the job for much less. Yet they are routinely ignored. Isn't this preference for white skin a blatant case of discrimination? And isn't repatriating your foreign aid cheating?

True, there are loopholes in the way Nepal government administers foreign aid. But the effort of Nepal's friends abroad should be directed at trying to plug these loopholes, rather than bypass government channels altogether. They can for instance demand proper, audited records of all expenses incurred by government agencies. They can similarly make their aid contingent on measurable outcomes. The only way foreign aid will be effective in the long run is if the host government can, with the help of this aid, be in a position to set clear development goals and consistently achieve them. A functioning and accountable government, studies show, is the most reliable way out of poverty for poor countries. Our donors are trying to invert this logic on its head by insisting on piecemeal, out-of-pocket spending on handpicked projects.

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