Views of a Nepali Economist

(Un)developing Nepal

Ernesto Sirolli, an expert in international development, likes to tell a story. He worked in Zambia in the 1970s with an Italian international development organization. One day, his team found an amazingly fertile valley but saw that it was not cultivated. Noticing an opportunity to “teach” the locals how to utilize that land, his team distributed tomato seeds to the locals and asked them to plant the seeds. The locals were not interested. His team thought that maybe the locals were looking for some incentive from the rich Italians. So, they decided to pay wages to the locals to grow tomatoes. That did the trick, and the locals got to work.

After some time, the valley was filled with tons of red Italian tomatoes hanging from their plants. One morning, everyone woke up to see hundreds of hippos from a nearby river come to the valley and eat all the tomatoes and the plants. When Ernesto’s team looked at the farmers with horror, the local farmers replied, “That’s why we don’t do agriculture in this valley.” The point is that the Italians did not bother to ask why the locals had not cultivated the valley. They simply assumed that the locals did not know any better, and needed some “lessons” on agriculture from the wise Europeans. The current state of development work in Nepal has similar problems, and some more.

First, the development sector’s incentives are not aligned properly. Budget and programming for a project is often determined by the parliament or some ministerial committee of the donor government. The donor’s staffs put too much pressure on local Nepali implementing institutions to spend the budget within a specified timeframe. Often, the Nepali institution knows that activities designed by the donor will not produce results. The donor’s holier-than-thou attitude scares them from alerting the donor of any shortcomings. So, they remain silent and spend the money because an inability to spend is taken by the donor as a signal of the local organization’s inability to perform.

Misaligned incentives stifle innovation and savings. For example, a local organization becomes efficient and innovative and save $70,000 out of the $500,000 budget it is given for a program. It asks the donor if it could use that savings on a similar program that it believes is worthy of those funds. Does it get commended for its efficiency and innovation? Does the donor permit the local organization to divert that savings to another worthwhile project or cause? We would like to say ‘yes’, but it rarely happens. It is more likely that the donor will note that the local organization does not have the capacity or ability to spend the money it is given. It is more likely that this evaluation will result in no future work for the local organization from that donor.

Second, the development sector in Nepal is very myopic. It is riddled with short-term projects. Even when programs are long-term, the donor judges the program based on immediate short-term output or short-term participation rates. As a result, programs on peacebuilding or good governance, which take a long time to gestate and produce results, are often deemed unworthy because immediate results are not visible. Judgment based on participation rates allows the program to create perverse incentives in order to get better results. There are programs that provide incentives such as per-diem or similar compensations to people who use the programs in order to boost participation rates.

For example, a paralegal program in Nepal works to resolve people’s disputes locally. To attract participation in the program, people get paid Rs 500 if they approach the program to resolve their dispute. However, such incentives backfire. I have met people who have told me they faked a dispute on a Friday morning, approached the program on the afternoon, accepted the program’s suggestions to “mend their difference,” and together went to a local bar in the evening to spend the money each of them received.

Third, local knowledge is either ignored or deemed inferior by donors. There is an excessive top-down control over projects and resources because donors do not trust local Nepali organizations. Plans and programs are designed and resource allocations are determined abroad. The role for local organizations is limited to implementing the activities, and simply checking the various boxes that the donor wants checked. This is especially true of most UN programs and projects. Very little local knowledge input is utilized in designing programs.

The top-down approach and distrust of locals completely ignores the reality that locals know the conditions and problems better. Instead, we have parachute consultants, who consider themselves “experts” on this or that issue, dropping in from abroad to design local programs. They aren’t much interested in listening to what the locals have to say, and are more interested in instructing the locals what to do. They believe they know better. I’m not implying all of them are evil or intentionally obnoxious. Some of them are guided by benevolent ignorance, like the Italians who were so excited to teach Zambians how to grow tomatoes that they forgot to ask the locals why they hadn’t cultivated the obviously fertile valley. Donors should note that dismissing local knowledge results in program failure.  

Fourth, many development programming ideas are either outdated or repeated to an extent of being counterproductive. Donors compete against one another to launch the same program in the same districts. Their efforts would be much more productive if they collaborate or create a basket fund to which everyone contributes, and a joint team runs the program. There have been some efforts on that front in recent years. Governments of the UK, Denmark and Switzerland recently created a “Governance Facility” that aims to exercise collaboration on peacebuilding and local governance programming. If that brings good results, it could show others the way in those fields. But, there is scope for so much more. More donors need to follow suit.

Also, most development organizations still utilize outdated tools and concepts. Their reliance on logframes and short-term result capturing matrices is counterproductive in areas of long-term development needs. When they are not utilizing outdated tools, they create new ones simply for the sake of it. A few years ago, the World Bank proposed a list of 22 social accountability tools, and launched a project called PRAN to train Nepalis to use the tools. However, those are too many tools, and even the World Bank would agree that PRAN was not a successful project.

The World Bank’s approach is akin to throwing the kitchen sink at a problem and hoping that something works. The approach needs to be more focused. I find that only three of those tools—Right to Information, Public Audit, and Public Expenditure Tracking System—actually produce decent outcomes. Others may find a couple more that work. It would be harsh to say the rest of those tools are useless, but they don’t appear very solid. New approaches to solving problems are always welcome, but they should have a lasting characteristic instead of simply appearing to be another fad that the development industry churns out once every decade.

Finally, most development programs suffer from poor institutional learning. A management change results in loss of years of learning. A decade-long program suddenly comes to an end, and all those years of knowledge and wisdom are not transferred to others. Sometimes, poor human resource policies make the matter worse. For example, local staff in Nepal’s JICA office may be seasoned veterans with decades of development work experience, but they have to report to recent Japanese college graduates on a one- or two-year term that can only be understood as an “exposure” posting. A long-term commitment of human and other resources is critical for institutional learning and its continued transfer.