27 June - 3 July 2014 #713

Where is the peace dividend?

Nepal is doing well, but not quite well enough

In sharp contrast to the squalour, state neglect and rampant corruption we see around us every day in Nepal, the Multi-dimensional Poverty Report for 2014 released by the Oxford Poverty and Human Development Initiative (OPHI) shows that Nepal has made dramatic progress in reducing poverty, and has much lower levels of destitution than Afghanistan, and even India. ‘Destitution’ measures those among the poor who score below the cutoff in one-third of indicators like education, nutrition or mortality rates. The report cites Nepal has made the fastest improvement among all developing countries, not just in South Asia.

Since 2009, Nepal has improved its Multi-dimensional Poverty Index (MPI) from 65 per cent of the population to 44 per cent. And one in every five Nepalis is destitute, compared to 38 per cent in Afghanistan and 28.5 per cent in India. And although India has reduced its multi-dimensional poverty, eight Indian states still have more poor people than 28 of the poorest African countries.

Another recent report by the World Bank Group commended Nepal for halving the number of people living below the income threshold of $1.25 a day from 53% to 25% in seven years. And yet another document, the 2014 Human Development Report by UNDP titled 'Beyond Geography' also highlights the progress Nepal has made in development indicators and reducing poverty, but recommends greater efforts in addressing regional imbalance, exclusion and taking advantage of the demographic dividend.

The danger about all this flood of good news is that it may make our policy-makers, planners and politicians even more complacent. Like all statistics, Nepal’s progress in MPI and other poverty indices hide persistent inequality, uneven development, high dropout rates among girls and an unacceptable level of child malnutrition.

Nepal is doing well, but not quite well enough. The single most ominous alarm bell was the SLC high school exam results last week in which more than half the students did not get through, effectively labeling more than 370,000 young Nepalis ‘failures’. Added to similar numbers from previous years, this country has stigmatised millions of its young as ‘worthless’ over the past years.

Primary school enrollment is up, of course, and female literacy has doubled in 20 years. So, we are doing all right quantitatively in the input side. But the qualitative outcome is disastrous, as shown by the SLC results. As in previous years, there has been a lot of hand-wringing and lamenting over the failure rate, but the annual outrage has already tapered off. And soon, we will all forget about it till next year’s results.

If Nepal is to build on its dramatic development achievements, there has to be urgent emphasis on human capital. This ‘soft’ sector is much more important for the future of the country than ‘hard’ sectors like infrastructure, the government’s current priority. Roads and airports can always be built later, but we are raising an entire generation of underachievers. Investments in human capital must go hand-in-hand with improving connectivity.

The World Bank and the Asian Development Bank have gone along with the government’s infatuation with infrastructure. You don’t need a hydropower engineer to tell you that meeting electricity demand through generation capacity is the single most important investment the country can make to spur economic growth and maintain the rate of poverty reduction.

Mapping Poverty Rates at the Sub-national Level. Nepal MPI = 0.217

‘Inclusive, sustainable growth’ has become the new buzzword, and the World Bank report looks at the obstacles preventing Nepal from harnessing its full potential, and names political stability and policy continuity as the main constraints.

Nothing there that we didn’t know already. The economy has been held hostage by politics for too long, and real progress will only happen when our rulers pull themselves up by their bootstraps and improve governance. The shameful greed that propels elected members of the Constituent Assembly to demand Rs 50 million in pork barrel funds in the new budget, however, doesn’t augur well.

Amidst all the indications of governance failure, the only hopeful sign is the dramatic improvement in poverty reduction and development despite conflict, instability, corruption and greed. Imagine how much ahead we would be if the political leadership could finally get its act together to reap the peace dividend.

Read also:

First the good news, Kunda Dixit

It’s the economy, Scott H Delisi

Peace dividend for quality education, Kul Chandra Gautam

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