Friday, February 8, 2008

DFID strikes back; Insists aid works in Nepal

Bella Bird, the head of DFID Nepal, has reacted in response to a news stroy, published in major dailies in Nepal, about the ineffectiveness of aid to spur poverty reduction and income generation activities in Nepal.

He argues that aid is working in Nepal and "we can do better." He cites contribution of aid in health budget (almost half of it) and the role played by health aid to eradicating polio in 2005. The progress in the fight against tuberculosis, maternal death, infant mortality, etc. is partly due to donor's assistance. No doubts in it.

He further cites the improvements seen in education and infrastructure sector. Almost 90% of Nepali children now attend school. More villages are being linked with cities by roads.

Bird is largely dissatisfied with news stories and editorials published in leading dailies that cited a new report on the insignificant role played by aid in Nepal.

The news report that the newspapers cited said that aid's role in fostering income generating activities was not significant. I think the report was written in a very myopic perspective. Returns from investment in public goods like health, education, and infrastructure is not seem immediately. It takes years to realize the benefit of such investments in the lives of people. And, just looking at the date of eight to ten years does not warrant such a forceful conclusion.

As argued by Bird, it is a tremendous success that we eradicated polio from Nepal. And no one can argue it is not because of donor's assistance and expertise in this sector. Of course, there have been lapses and no visible results and cases of corruption in some donor funded projects. But this does not mean that all the projects are the same.

We do need donor assistance. But it has to be better harmonized so that the neediest people get it. We still need to come up with a system to negate rent-seeking behavior among politicians and bureaucrats to better utilize donor assistance. Aid definitely helps if it is directly invested in the neediest sector, i.e. without cumbersome bureaucratic hassles.