Foreign aid more fragmented than before, says dev report

KATHMANDU, APR 26 -

Despite government efforts to funnel it into high-priority projects, foreign aid has become more scattered than before. Nepal’s benefactors are currently engaged with an average of 11 counterpart ministries, compared to nine in the previous fiscal, according to the government’s Development Cooperation Report 2011-12.

The United Nations Country Team has the largest number of projects (220) and is engaged with 25 counterpart ministries or agencies. The Asian Development Bank (ADB) comes second with 87 projects and 15 ministries or agencies. The European Union is involved in 72 projects that are related to 16 ministries or agencies while the World Bank Group and the United Kingdom are involved in 42 projects each and are engaged with 17 and 16 ministries or agencies respectively.

Government officials and experts said that fragmentation of aid had resulted in higher spending on administration and less on groundwork, besides leading to delayed projects.

“When resources are fragmented, it increases management overhead costs, duplication and leads to wastage of resources,” said Jagadish Chandra Pokharel, former vice-chairman of the National Planning Commission (NPC). “The concept of sector wide approach (SWAP) and umbrella programme was introduced to stop fragmentation of resources.” The report said that big donors were involved in many small projects which should be better focused on areas of comparative advantage (donor’s expertise), potentially through larger contributions to programme assistance or SWAPs, in order to avoid duplication of aid.

“The government does not tell donors to engage in projects where there is comparative advantage,” stated the report. “Very little attention is given to concentrating resources in sectors where donors have comparative advantage.”

Former finance secretary Rameshore Khanal said the main reason behind the increased aid fragmentation was the Finance Ministry’s inability to ensure timely approval of donor-funded programmes and projects. “As donors have to spend resources to show their own performance in Nepal, they are increasingly opting to implement projects through non-governmental organisations and other local agencies,” he said.

The number of foreign-aided projects started to decline ever since Nepal’s Tenth Plan began in 2001.aid from Pg 1

Aid has also been fragmented due to political interference and the donor tendency to crowd easy areas. Despite sector-wide approaches under operation, large scale aid fragmentation is visible in the Ministry of Education and the Ministry of Health and Population (MoHP).

Comparatively, fragmentation is alarming in technical assistance, an area that development partners and relevant ministries could bring

to a manageable size after consultations, said the report. Given this context, the World Bank has started to look into pooled funding. “After the report’s publication, some donors have agreed to reduce the number of projects in the coming days,” said Madhu Marasini, chief of the international economic cooperation coordination division at the Ministry of Finance.

Pokharel said aid fragmentation could be reduced by encouraging donors to spend their money in certain geographical areas and joint programmes. For smaller donors, concentrating on geographical areas is the best as they can also show their identity through the projects they are funding, which they cannot do through joint programmes, he said.

Source: The Kathmandu Post