How USAID cut affects Nepal

Just few days into office, President Donald Trump has brought about a work-stop to ongoing USAID supported projects and complete stop to new grants or aids.

The executive order was justified under Trump’s ‘America First’ promise, and it has shaken up recipient countries, including Nepal.

Since 1951, USAID has provided $1.5 billion in aid to Nepal. The breakdown for recent years is $105.94 million for 2020-21 and US$ 125 million in 2018-19. In 2022, USAID and Nepal signed a five-year Development Objective Agreement worth $659 million (pictured, above).

Some of the key sectors where USAID has supported and supports Nepal with aid include health, education, agriculture, infrastructure; economic growth, humanitarian aid and women and children empowerment. All of these projects will be affected, and grants disbursement suspended.

According to USAID’s Country Development Cooperation Strategy (December 2020-December 2025), the overall goal of the USAID’s development cooperation in Nepal is to realise ‘A more self-reliant, prosperous, and inclusive Nepal that delivers improved democratic governance and health and education outcomes.’

Four identified development objectives are:

i) More Effective, Participatory, and Equitable Democratic Ecosystem

ii) Broad-Based and Inclusive Economic Growth Fostered

iii) Inclusive Health and Education Systems Strengthened

iv) More Equitable and Improved Natural Resources and Disaster Risk.

Under these development goal and objectives as per the data available under Government of Nepal’s Aid Management Platform (AMP) there are currently USAID supported 21 key projects ongoing in Nepal.

These 21 projects with some data missing totals a commitment of $178,140,467 from 2021-2029 in Nepal. Of these commitments $89,115,031 (about half) have already been disbursed. With Trump’s executive order the rest of the 50% is now going to be on hold until the review is completed and further decisions are made by the new US administration.

Most development goals of USAID in Nepal are embedded with key principles like ‘equity’ and ‘inclusive’. With the Trump government’s aversion to the previous emphasis on Gender, Equity, Inclusion and Accessibility (GEIA) principles, projects focusing on those issues will be hit hardest.

USAID upheld policies and actions that promoted equal access and opportunities for all people, with an emphasis on the Tarai, gender issues, family health and through contractors on human rights and democracy.

The impact on Nepal’s development aid will be substantial, affecting livelihoods in incomes generated by USAID supported projects. Individual independent consulants already received notices over the weekend that the work they were doing under a USAID contract is subject to work-stop now.

The question is whether the 5-year Country Development Cooperation Strategy for Nepal that finishes by end-2025 will go ahead. And when the new post-2025 Strategy is formulated, it is certain that the Trump’s administration will not entertain GDEI, which so far has been people-centered and not political.

Kishor Pradhan is an independent development consultant concentrating on development information and knowledge management issues. kishorpradhanktm@gmail.com