9-15 June 2017 #862

Muddy road to middle-income

David Seddon
Many commentators, including Swarnim Wagle (Guest Editorial last week, #861) may have got carried away by the first local elections in 20 years in deciding to elevate Nepal to a middle-income country by 2030.

The economic growth rate this year reflects the very poor performance after the earthquakes, and the Blockade. The economy is still heavily reliant on the performance of the agricultural sector, which in turn depends on favourable rainfall. The trade deficit continues to widen, especially with India. Infrastructure looks promising, but Nepal remains poorly connected to its external markets. Skills training and domestic job creation are woefully inadequate, and Nepal loses its most productive people abroad.

The disruption and added expenditure of the elimination of DDCs and VDCs with which Nepalis have grown familiar for several decades, and the creation of entirely new local bodies and provincial administrations, will far outweigh any potential benefits to be derived from the massive transfer of funds to local bodies.

The risk of local elite capture of these funds or, alternatively, of continuing control from the centre, raises real questions about whether this ‘re-structuring’ will prove effective, or even genuinely democratic. Wagle’s idea that this change means that ‘parts of Singha Durbar will now be located in every Nepali village’, may come to be so, but not in the way he presumably anticipates.

He identifies five D’s which he sees as positive elements in Nepal’s rosy future, but Distance will remain a major problem for Nepal. Demography means a continuing need every year to create hundreds of thousands of jobs. Democracy remains an issue, with the people offered limited choice from a few major parties, none of which has a clear and coherent strategy for the radical transformation that is so badly needed.

Digitisation is indeed potentially revolutionary, but so far it has not been effectively harnessed. The Diaspora is a reflection of the failure of Nepal over the last century to create a suitable environment for investment and employment for millions of its most enterprising and ambitious citizens. Luckily, many of them do send remittances back home, but until Nepal itself creates suitable pre-conditions, they will be reluctant to commit their own hard-earned savings to invest.

Nepalis are right to be excited about having a voice in their own future through local, parliamentary and provincial elections, if these all come to pass. But realism, and willingness to act, rather than un-mitigated optimism must be the watchword. I have confidence in the ordinary people of Nepal, but much less in those who preside over them.

David Seddon is co-author of Nepal in Crisis: Growth and Stagnation at the Periphery (1980).

Read also:

Nepal 2030, Swarnim Wagle

White Swans, Editorial

Taking politics out of the economy, Om Astha Rai

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