Views of a Nepali Economist

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I found an excellent piece in The Economist about Aid and how it has fostered and encouraged corruption in Nepal. The direct link to the article is here. Some excerpts below:

The most visible abuses are in local government. Each year municipalities receive funds designated for development which are equal to about 10% of the government total budget. A group of 14 foreign donors, chaired by the Asian Development Bank and Britain’s Department for International Development (DFID), is contributing $200m over four years under a scheme called the Local Government and Community Development Programme (LGCDP).

On how corruption is occurring, the article gives an example:

...buildings paid for but never built, or simply repainted and passed off as new. The same roads were supposedly rebuilt—as if from scratch—every year. A commonly reported trick is to record as one item the construction of a road from A to B and then again, on a separate line, the road from B to A.

Local NGOs applying for grants are said to pay “commissions” of up to 50%. Gross irregularities are alleged everywhere in tendering processes, which sometimes involve violence between rival party cadres. Local governments often pass most of their annual budgets in the last two weeks of the financial year, the better to avoid scrutiny.

There are some genuine officials who wish to curb and even prevent corruption, but their efforts are overshadowed or even circumvented by higher powers to be. For example:

In the southern plains, an area called the Terai, even senior officials estimate that as much as 60 to 90% of all funds are misused. “If I take action against corruption,” said the chief government officer in one Terai district, “there will be a mob outside and inside my office.”

In hill districts informants estimate that between 25 and 50% of all development funds are misused. Here the Maoist former rebels, who back the new government, are the strongest single faction. The misappropriations help pay for a constant cycle of political rallies as well as the upkeep of their paramilitary organisation, the Young Communist League.

The Aid and Corruption scenario in Nepal has become so bad that even foreign donors and I/NGOs are embroiled in it. For example, here's what they claim:

Officials at the United Nations Development Programme and DFID argue that accounts of widespread malpractice are merely anecdotal and unsupported by data. On the contrary, they say, their project is a relative success.

Now, I'm not very aware of how DFID or UNDP do things in Nepal. But, as a researchers who reads the "Request for Proposals" that get published by such organisations in our national dailies, I have noticed some patterns that suggest corruption within such organisations.

Every time an RFP is published by foreign donors like UNDP and SNV, you can basically conclude that they have already decided on who is going to get the project. How? Because the RFP gets published today, and the deadline for submitting the proposal is a week from today. It asks for at least 5 or 6 individuals who have experiences of around 5 to 7 years on the relevant fields.

An organization that wishes to write and submit the proposal requires more than a week's time to gather such experienced consultants and write the proposal and submit it. This practice is most noticeable in the RFP's issued by the UNDP. Usually, their RFPs have too many requirements and formalities that cannot be well serviced in a week's time.

Similarly, SNV has an RFP out in the newspaper this week for a baseline and value chain analysis of some agricultural products. The proposal is due in a week. This means it is safe to assume that SNV has already chosen who to award the project to. It's simply fulfilling the institutional formalities by issuing the RFP in Nepalese national dailies.

These kind of practices among the donors themselves suggest that even they have become corrupt. Therefore, the moral high ground that they sit on, while demanding the Nepalese officials, bureaucrats and governments to be corruption free, is no longer there. They've got mud on their shirts, too.

And, here's more on that:

There is a well-recognised annual bonanza in Kathmandu, as agencies scramble to spend what remains of their budgets before the end of each year. Despite their profligate reputation most say they almost never detect malpractice in the projects they fund. Senior donor officials present their dilemma differently. They say working in such countries always involves the risk of further fraud and they claim it would be ineffective to push anti-corruption measures on the government harder than they already do. And for them to withdraw from a difficult working environment would betray the poor people who depend upon their support.

As a researcher who has observed how these INGOs do business in Nepal for over a year now, I refuse to believe that last sentence. It is a lie. I believe that the INGOs operate in Nepal like a business. Yes, they serve people, but they serve their own interests as well.

Labels: corruption, foreign aid, INGOs, SNV, UNDP