Let's begin with the good: on 7 December, the boss assembled a who's who of Nepali businesspeople at Soaltee Crowne Plaza for the first-ever Awards for Business Excellence. The black-tie event was a peer-to-peer celebration with Prime Minister Surya Bahadur Thapa giving away awards to those judged the best entrepreneurs, businesspeople, companies and management students.

The good work that verifiably transparent and accountable small, medium, large and multinational companies are capable of doing in Nepal by providing jobs, making use of resources to create value, providing goods and services and being good corporate citizens was lauded. The event carried a symbolic value-it showed that even in difficult political times, Nepali businesses could celebrate their successes with each other.

The sour note came on Tuesday when the Nepal office of Swiss Agency for Development and Cooperation (SDC) sent out letters informing all and sundry that they were discontinuing their support of the Small Industries Promotion Program (SIPP). This seven-year-old project with a first-rate team of professionals has worked hard to strengthen numerous chambers of commerce and small and medium businesses across Nepal's semi-urban towns. SDC's abrupt decision came as a shock. Not least because they recently sent SIPP staff to expensive overseas training programs to learn the latest techniques on business strategy applicable to poverty alleviation in Nepal.

At any rate, SDC's formal letter stated that support to SIPP was being stopped because "the breakdown of the ceasefire in August 2003 created-after months of hope-again an unfavourable environment for economic growth and social development." It went on to say:"[P]rojects which do not contribute directly to conflict mitigation and conflict resolution have to be discontinued", and that SDC would reprioritise its project portfolio towards projects that "work in and on the conflict and which directly address social exclusion, inequities and inequalities, in other words the root causes of the conflict."

This is a case of a donor pressing the panic button too quickly, thereby painting Nepal's difficult situation as a hopeless crisis. There are two possible reasons:

First, SDC's decision showed how narrow-minded certain aid agencies can be about the inherent value in strengthening Nepali small businesses-the likes of, say, coffee-growers' collectives in Gulmi, marketing agents for Jumla apples in Nepalganj or a struggling FM radio station in Butwal that broadcasts community-friendly messages-so that they continue to play a much-needed civic role in their communities to, well, mitigate conflict by bringing people together, enhancing their social capital and keeping them plugged into information networks. Small businesses, after all, exist neither in a vacuum nor in a capitalist's paradise.

Second, it also showed that some aid agencies may well be ideologically prone to seeing business of any kind only in starkly outdated exploitative terms and not in their value-creating avatar, existing in Nepali communities. Sure, distributing blankets to the poorest of the poor with photo-ops may be good. It certainly makes development workers feel warm and fuzzy. But if 50 years of development aid has taught us anything, it is that finding ways for the poor to link up with local markets could have a better return on foreign taxpayers' money. This enables the underprivileged to sell their goods and services to make money for themselves, perhaps to eventually buy their own blankets.