Friday, May 6, 2011

South-South aid to Nepal

The share of South-South aid (i.e. aid flow between developing countries) in total ODA committed to Nepal is increasing. Total ODA amounted to around US$1 billion in 2009.  Most of the ODA Nepal receives is from Northern donors. The five Southern donors are China, India, OPEC Fund, Saudi Development Fund, and Kuwait. India is by far the largest Southern donor (over 67 percent of total South-South aid commitment). Overall, it contributes about 10 percent of the total ODA received by Nepal. [India is allowed to directly spend up to NRs 50 million (around 0.7 million USD) in development/welfare activities without informing the Nepalese authorities.]

South-South aid commitment to Nepal (US$ million)
Fiscal year 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11
China 0.14 0.14 12.07 1.39 36.60 29.41 35.48
India 8.65 4.75 61.91 38.61 95.45 100.70 92.55
OPEC Fund 4.99 7.90 7.23 3.14 - - 8.11
Saudi Development Fund 5.30 0.89 1.25 3.06 3.45 6.01 3.57
Kuwait 3.96 0.91 - - - - -
Total 19.08 13.68 82.46 43.37 135.49 136.12 139.71
Share of South-South aid in total aid commitments (%) 4.12 2.97 14.61 6.97 14.83 12.48 11.49

The above table is adapted from Chandra Ghimire’s forthcoming paper (New Age of South-South Development Cooperation: A Case Study of Nepal). He is a joint-secretary at Ministry of Commerce & Supplies (MoCS). Exchange rate used is USD 1= NRs 72. (Note: Read Ghimire’s paper when it is publicly available. It has valuable information about South-South donors and aid received by Nepal.)

Infrastructure sector receives the biggest share of South-South aid. It received 83 percent of total South-South aid commitment over FY 2006/07-2010/11. Trade and industry, and finance and agriculture received 7 percent each. Social sector received 3 percent.


Here is excerpt from a previous blog post about foreign aid to Nepal:

Foreign Aid to Nepal (total, million, current US$)
BA & ODA 1960-2008 1992-1999 2000-2008
Net bilateral flows 7582 2002 3116
Net ODA and Official Aid received 11732 3205 4289
Net ODA per capita (current US$) 561 147 160
GDP 159823 34859 70847
Net bilateral flows (% of GDP) 4.74 5.74 4.4
Net ODA (% of GDP) 7.34 9.19 6.05

Top bilateral donors (1960-2008):

  • Japan has been the largest bilateral donor so far (1960-2008): US$ 2.06 billion
  • Followed by the UK (1960-2008): US$ 1.03 billion
  • Followed by Germany and the US (1960-2008): US$ 974 million and US$ 940 million
  • Other top donors are European nations; the Scandinavian countries are very generous
  • In this decade (2000-2008), top donors have jacked up bilateral assistance.

Average annual bilateral flows have been increasing. On average (annual), it was US$ 346 million between 2000 and 2008. The average annual net ODA flows during the same period was US$ 477 million.

Net ODA per capita (current US$) has been US$ 561 between 1960 and 2008, and US$ 147 over 1992-1999, and US$ 160 over 2000-2008.

  • Net bilateral flows between 1990 and 2008 have been 4.74 % of GDP.
  • Net bilateral flows between 2000 and 2008 have been 4.40 % of GDP.
  • Net ODA between 2000 and 2008 have been 6.05 % of GDP.


Over the period 2007-08, humanitarian aid sector received the highest amount, followed by economic infrastructure & services, health and population and so on…. It looks like the Southern donors are more interested in investing in infrastructure and productive sectors.

(Note that total ODA figure depends on which database you are looking at. But, there isn’t much variation if you just look at the shares from various sources.)

Now, the effectiveness of aid received by Nepal is another question. Here is discussion (needs update now) on the issue.

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