Talk Program on Nepal-US Cooperation

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Talk Program on Nepal-US Cooperation

On November 6, 2019 the Institute of Foreign Affairs organized a talk program on “Nepal-US Cooperation: How can Nepal ensure sustainable economic growth”.

Edited Speech of Ms. Samantha Custer on Nepal-US Cooperation 

She presented her paper on US-Nepal Cooperation: How Can Nepal Structure Foreign Assistance to Ensure Sustainable Economic Growth Assistance.' She introduced herself as a researcher and academician, and stated that she had already worked for governments and international organizations to weigh in how overseas investments are targeted, monitored, and evaluated.

Primarily, she focused her presentation on sustainable goals in which she mentioned how Nepal can ensure these goals. Raising the issue of child mortality, she stated that poorer countries receive more aid on average. Child mortality is decreasing on average as it varies more within than among countries. She further added that according to national level data there is wider variation in child mortality within each country, while talking about comparatively Cameroon and Nigeria.

Her presentation further focused on the aid provided by the developed countries to developing countries. As the major target of international aid is to focus on the needy people, she claimed that the foreign aid in US dollars reach vulnerable groups. The amount mainly focuses on the people and communities who are at risk from shocks. However, she raised question if the aid projects had benefitted for disabled people or not. It is seen that without better tools to track the inclusiveness of their investments, governments and their development partners are unknowingly leaving these groups behind. Meanwhile, she also discussed about the application process of foreign aid to children under 5, which has highly reduced the child mortality in Malaria Hotspots. Though there is no visible impact of bed-net distribution program in Democratic Republic of Congo nationally, it has reduced child mortality locally by 16%, she claimed. She provided the example of Nigeria and the Democratic Republic of Congo where 35% of the children under 5 are dying from Malaria.

As Infrastructure is crucial to sustainable, balanced and inclusive growth, the presentation also focused on infrastructure and the global sustainable goals. Infrastructure can be a gateway to inclusive growth and improved service delivery, & environmental sustainability. Infrastructure assets include physical structures including roads, rail, ports, electricity, water supply as well as digital development like phone, internet, radio and television. Almost US $6 trillion per year is needed for what infrastructure investment globally. The global south accounts for roughly two-thirds, US$4 trillion, of all estimated infrastructure investment needs. South Asia lags behind in infrastructures related with the implementation aspect of sustainable development goals. Without improvements in critical infrastructure, Nepal and other South Asian countries will struggle to realize several goals. Smart infrastructure investments are needed for Nepal to realize development that is inclusive and sustainable. To spur growth for all in Nepal, Nepal needs to direct 10-15% of its GDP annually for infrastructure to put itself on a path to middle-income status by 2030 (WB, 2019).

The G-20 identified six principles to reduce investment barriers while ensuring quality infrastructure for everyone. There is need to maximize economic, environmental, and social impacts of infrastructure investments for local communities, ensure value-for-money and affordability to not only build but maintain infrastructure in the long-term, design infrastructure with an eye toward mitigating negative byproducts in the short- and long-term, invest in infrastructure that will be resilient to disaster, ensure no one is left behind and promote inclusive access to, and benefits from, infrastructure, strengthen institutions to govern how infrastructure projects are designed, procured, and implemented. She had further discussed the challenges of Infrastructure-Led Growth in Asia: Back-door negotiations create opportunities for collusion that drive up costs and decrease public benefits (Ex. Bangladesh, Sri Lanka, the Maldives), opaque amounts in terms of investment decreases public trust, triggers instability, and increases risk of graft (Ex. Malaysia, the Maldives, Sri Lanka), lack of transparency and consultation with private sector and civil society stakeholders increases risks of under-utilized white elephant projects (Ex. Malaysia).

Direct engagement of citizens in the project increases accountability. Making all external project financing transparent and accessible for citizens and civil society at a granular level supports monitoring (Ex. the Philippines), involving citizens in the identification of public infrastructure priorities and design of new projects (Ex. the Philippines) ensures supply in line with demand and engaging citizens with information helps monitor and report on successful completion of physical infrastructure projects (Ex. the Philippines)

Moreover, engagement of the private sector and academia also helps to privatize the economy, remove burdensome legislation, and promote fair competition crowds-in private sector dollars and lowers costs (Ex. Uzbekistan). Encouraging joint ventures between domestic and foreign firms can generate positive spillover effects to the economy (Ex. Kazakhstan), boosting investigative journalism (Ex. the Philippines) and academic engagement in evaluating impacts of investments increases awareness and accountability. Big Picture: Trends and challenges in directing public investments to ensure development for all, Deep Dive: Pitfalls to avoid & lessons to learn from infrastructure-led growth in the Asia-Pacific, bringing Things Together: Ensuring Nepal gets the most from its foreign assistance.

To set Nepal up for long term success, she suggested to invest in planning processes that fully account for total costs and benefits across the life-cycle of the project, strengthen procurement processes to spark fair and open competition, transparent selection and budgeting, lower transaction costs and barriers to entry for private sector investment (Ex. FDI and banking regulations), works of local communities to identify priorities and monitoring impact ,ensure financing terms match the potential economic, social, and environmental returns of the project itself, institute a minimum required level of spillover benefits for the local economy from infrastructure investments (Ex. jobs, contracts, suppliers, tech transfer), require that financing terms & progress of foreign assistance projects are publicly accessible; explicitly assess likely social & environmental benefits/costs in pre-project appraisals and ex-post evaluations.

The Ministry of Finance of Nepal publishes top-line data infrastructure financing in particular sectors, though there are limited project-level details, AidData produces the world’s most comprehensive project-level database on Chinese official finance investments globally. It is meant to find and aggregate sub-national data on aid and outcome measures from anywhere in the world into a simple-to-use spreadsheet for the resources to evaluate impacts. And it is also to estimate the social, environmental, and economic impacts of infrastructure projects with geospatial data for the resources to evaluate impacts.

While thanking IFA for being the part of the discussion, she claimed that AidDATA University is the second oldest university in US. As she worked with different partners being an independent expert or researchers with new tools, analyzing the data she mainly shared that while researching, she mainly focused on three important elements, they are, global view, Asia Pacific region and the prevailing situation. Global view is a big challenge of policy-level research that we face and come to sustainable development around the world, she stated.

She is very thankful to IFA as IFA is trying to support policymakers to ensure that foreign assistance is to enhance sustainable development. She said this is how we think about success.