18-24 April 2014 #703

Banking on the Bank

Making the restructured World Bank more relevant to Nepal
Bihari K Shrestha
After nearly two years leading the World Bank, Jim Yong Kim is overseeing a major restructuring to counter its “creeping irrelevance”. The problem is structural: its six regions have been operating more as six regional banks, and “knowledge wasn’t moving from one region to another”. The Bank is also seen as being “too slow and bureaucratic” and “risk averse”, and that it is “happier building metro systems in China than getting its hands dirty in Afghanistan”.

The restructuring process has already claimed the jobs of its three most senior officials, and requires all its top managers to reapply for their own positions. The Bank is expected to adopt 14 global practices like agriculture, poverty, finance and water. Specifically, Kim has set two objectives: end extreme poverty and boost incomes of the poorest 40 per cent in all developing countries.

The Bank has been in Nepal for nearly half a century but there is little to show for it. Not all of it is the Bank’s fault. While Nepal is widely applauded for poverty reduction that has been achieved more through remittance receipts than its own economic performance, it still remains the poorest in Asia with a huge infrastructure deficit.

The country is today drained of most of its workforce, the trade deficit is worse than ever, unemployment and under-employment remain high, health and education services lack quality. Under-five malnutrition, a major indicator of the country’s health status, is still high. And 70 per cent of the children enrolled in school ten years ago have been ‘lost in transit’ – they never showed up for the recent SLC exams.

Nepal has been a world class performer in community forestry despite the World Bank. Its multimillion dollar forestry project in the 1970s didn’t yield results, and it took the devolution of ownership to local forestry user groups for forests to be restored.

Similarly, Nepal also managed to come up from the bottom of the pile to be ranked among the topmost performers in the world in achieving the MDGs in child survival and maternal mortality rate reduction. This too happened due to the empowerment of the mothers’ groups and their female community health volunteers at the grassroots, beginning 1988.

While both these successes were based on domestic innovations through the decentralisation initiative of the much demonised Panchayat regime, donors to Nepal including the World Bank willfully failed to emulate and replicate these successes across other sectors of development. Worse, two major donor agencies, the UNDP and the DANIDA, even contributed to wrecking Nepal’s grassroots-based decentralisation initiative in their pernicious bid to appropriate this agenda for themselves during much of the 1990s. Their baby, the so-called Local Self-Governance Act of 1999, distorted the sanctity of user groups, leading to the anarchy and corruption that pervades local bodies today. By and large, the donor agencies with their high-handedness and lack of accountability to authority has been more of a detriment for Nepal.

While Kim banks on the Bank being “faster”, equipped with “better knowledge” and “easier to work with” as a result of the restructuring, he should be wary of politicians (who are mostly corrupt) and bureaucrats (who are given to telling the Bank what it wants to hear as long as it means more loans and grants).

In the interest of the poorest 40 per cent in Nepal, the Bank’s restructuring in Washington must be guided by the following do’s:

** build on Nepal’s successful experiences

** build institutions owned and managed by users themselves

** ensure verifiable accountability as condition for disbursement

** make resources accessible to the 40 per cent at the bottom

And the don’ts:

** don’t be arrogant

** don’t think you know everything, there is a lot Nepal can teach you

Bihari Krishna Shrestha is an anthropologist and retired civil servant.

Read also:

New leader in old Bank CAREY L BIRON

Unbundling the World Bank AJAYA DIXIT

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