Policy lessons from Nepal

This week completes over six months of formal engagement with Nepal’s development sector. On the sidelines of the second Nepal Investment Summit which is being held for the second time, after the first one in the 1990s, there seems to be a recognition of need for investment in economic growth of the country. There is also a pressure on the government to take faster decisions on proposed projects.

I first visited this country in 2008. Early observations were with an eye of a traveler from the neighbouring country. Last year, work led to understanding Nepal’s development context (and challenges) better. Here are a couple of policy lessons that emerge from this experience:

1. Influence of geopolitics on public policy: This link is under appreciated  in policy literature, in my opinion. Domestic policies in Nepal’s case are significantly influenced by factors emerging outside the country. The choices for low income countries (LICs) in the current global context are by far limited. It is well acknowledged that infrastructure like roads, electricity, healthcare etc are vital for improvement in basic quality of life which then is likely to translate into economic growth. In low income countries like Neopal, most of this vital infrastructure is poor. To get this built should (and is) a national priority. This is where LICs have tough choices to make because their own investment and expertise potential is low. These must be supported by someone else. If these are aid agencies then they are driven by the aid providing country’s strategic agenda. If the support comes from multilateral agencies then these come with conditionalities (as Latin American and Asian countries very well know by now). If the support comes from regional powers (in Nepal’s case India and China) then the geopolitical considerations take the center-stage. Nepalese attempts at improving its economic growth are limited by the rate at which it builds highways, electricity generation and supply among other things. Japanese agencies have helped fund some of the highways over the last decade. One Belt One Road (OBOR) project proposed by China is another strategic project which awaits Nepalese government’s approval. On the southern side, India continues its support to build postal highways and other roads leading into Nepal from Indian border. The progress on all of these highways which are important for Nepal’s domestic trade are influenced by changing nature of relationship with its neighbours. A basic core of policies driven by domestic context and demands appears to be weak in Nepal. Our discussions with civil society groups reveals that the national policies on water and sanitation too are influenced by aid agencies and their financial support. This is what I mean by influence of geopolitics on public policy. 
2. Governance capacity gaps are more debilitating than financial capacity in the long run : The common refrain for state of affairs – poor infrastructure, weak state capacity, governance issues etc, is that LICs lack financial resources to fix them. This need not be true. Answers to efficiency and service delivery do not emerge from national exchequer.
3. Often times, strengthening democracy is a necessary condition in societies with diverse ethnic and social groups: At ATREE@20 conference last month in Bengaluru, Kamal Bawa sat listening to the presentations on conservation and development. The tension between development aspirations and conservation was a key theme. Towards the end, Bawa remarks that only an authoritarian regime can decisively and conclusvely act towards the environmental, conservation and development challenges. Democracies aren’t as capable. I could see that Bawa was acknowledging the strength of a democratic system and at the same time speaking of its strong limitation in being able to address the challenges in a short span of time. In its long drawn process of addressing societal and environmental challenges. However, what democracies come up with are equitable solutions, if not entirely sustainable.

Though on a tangential topic, this insight is useful as one sees Nepal struggling with laying a foundation for a strong democracy since the democratic Constitution of 1990. Until democratic form of governance finds its root, there might not be an end to the frequent clashes and shutdowns of various regions that are fighting for rights and representation.

Journalist Prashant Jha writes that “instability has remained the norm, with a government canging every nine months.Nepal democratic trajectory is framed succintly in his book “Battles of the New Republic” –

From war to peace, from monarchy to republicanism, from being a Hindu kingfom to secularism, from being unitary to a potentially federal state, and from a narrow hill-centric notion of nationalism to an inclusive sense of citizenship – Nepal’s transformation was, and is, among the most ambitious political experiments in recent years in South Asia.

4. Public policy in fragile states must engage with and respond to political reality:

While some debate whether there can be any semblance of policy in a fragile state (politically), I argue that if it engages with political reality and respond to it within the extremely short time that an incumbent government has, that can lead to a minimal core of polcies. Every incoming party tends to pick up reins from the past and improvise on it. If the template is engineered such that it formalises priorities, there might be hope for continuity. This is arguably difficult. For instance, labour policy in Nepal can benefit from this. Almost every government in the last decade has seen its youth migrate to Middle East, South Asia, South East Asia and to Europe for work, any kind of work. The country now earns substantially from remittances. A policy to regulate and channelize remittances and at the same time care for its migrating workers’ rights in distant lands, could have earned the government a major support group. As it now stands, the migration is largely driven by distress at home.

The above are visceral responses to the state of public policy in Nepal. On a deeper engagement, it could be true that some or all of these are unfounded. However, it helps my learning that I put them here as they emerge in the head.

A way forward for aid agencies that work in Nepal could be to look at interventions that enhance governance and policy-making capacities of the government as a priority. This involves the danger of transplanting ideas from elsewhere into a different context and see things getting messed up, however, this is arguable. There still exists a core set of ideas that are useful and effective in helping an economy make best use of its resources and enhance living conditions of its people.