Business and development

KIRAN PANDAY

From the hills to the Tarai, 14 million Nepalis do not have proper toilet facilities. They have no choice but to defecate in open spaces every day. The needless deaths of 154 Nepalis in Jajarkot last year were due to their using contaminated water, which inflamed the cholera epidemic in the mid-western hills of Nepal.

Likewise, an estimated 600,000 Nepali women still suffer in silence from uterine prolapse, a preventable reproductive disease, which significantly diminishes their quality of life.

It's fair to wonder why this information is in this space. The answer is straightforward.

Since 1951, such social concerns and others have been addressed in piecemeal fashion by various government bodies, donor agencies, NGOs and community organisations. Though much progress has been made, these and other problems are still with us, sixty years later. The longer they stay with us, the more they slow down our collective ability to benefit from the productivity of a healthy population that can go to school, go to work and contribute to community development.

Helping address such problems need not be the exclusive province of government, NGOs and donor agencies. It's time for both big Nepali businesses and entrepreneurially minded individuals to start using some of their skills, resources and contacts to visibly rethink how they can speed up the process.

Big business: Most trekking trails are littered with instant noodle and snack food plastic wrappers. There is no reason why some of these foodstuff companies cannot, in cooperation with local communities, start a campaign for cleaner cities and villages by providing incentives to customers to return or dispose of used wrappers.

Such an attempt need not be on a grand nationwide scale from the word go. Interested companies could start small, see what works where, and gradually scale up efforts by roping in like-minded partners. This requires patience, persistence, an ability to deal with ambiguities and a range of people with diverse interests. But in these politically fractured times, such visible attempts to do good do pay off in that they strengthen Nepali companies' institutional abilities to get things done by engaging a wider group of internal and external stakeholders.

Some multinational soap companies are running a national media campaign about the importance of hand-washing. That is good, but not enough. They need to think beyond selling an extra cake of soap by actively engaging local civic institutions to make community cleanliness a matter of pride. True, it's not the job of a private company to push the issue of sanitation. But from a business standpoint, if such companies do not find effective ways to work with local health posts, politicians and women's groups, how do they expect customers to emotionally relate to their products as opposed to a competitor's?

Entrepreneurs: Most NGOs are started by socially minded entrepreneurs, who seek to solve a specific problem. Over time, they may receive funding that enables them to grow in terms of staff size and program range. Their growth correlates with a diffusion of their earlier idealism and a loss of measurable goals, which is often accompanied by "this is just a job" mentality.

Nepali entrepreneurs who want to work on social problems are likely to be more effective when they stick to a single concrete issue with clear goalpost - say, providing complete and sustainable access to toilets in a particular set of VDCs or eradicating uterine prolapse in specific development regions by a certain date. Such a focus may be the best way to eradicate the social problems that continue to hamstring Nepal's progress - rather than the usual NGO mode of nibbling away at lofty, vague goals.

1. Thurpunsich
This is a timely and relevant article.

However, the article focuses on "need-to-change-behavior" approach to solving a problem. And that is not good enough.

Businesses behave according to market behavior. Market behavior that produces negative externalities will not motivate businesses to behave in a socially responsible manner.

If you see instant noodle wrappers littering hiking trails, it's because there is no incentive for anyone to either littering or cleaning up.

One effective way to solve this problem is to hit the problem where it hurts the most--impose Pigouvian tax on instant noodles. A Pigouvian tax is a tax that controls market behavior that produces negative externalities (which, in this case is trail litter).

How do you achieve this? By making polluters pay. How? By imposing the Pigouvian tax at the production point. But how will this clean up the litter? It will, if you use the tax money to pay the villagers to pick up the wraps and pay them for each wrap picked.

That's how bottles and cans recycling work in many countries. This is how you make "private cost" cover the "social cost".

Corporate social responsibility is important, but without market incentives (e.g., Pigouvian tax) , it doesn't go far enough to cover social costs (e.g. noddle wrap litter).

Posted on: 19 MARCH 2010 | 9:08 PM NST

2. Arthur
On litter control, I agree with Thurpunisch #1. But it is better to understand this as "wrapper deposit" similar to container deposit rather than a Pigouvian tax on noodles. People will keep their wrappers, or they will be collected by others instead of remaining as litter, if they get a deposit back for each wrapper. That is only possible if the government requires that an additional deposit be charged for each wrapped item and the deposit is paid back on return of the wrapper to a collection point.

Businesses naturally oppose such measures since they do not add to bottom lines. It is pointless asking to businesses to impose them out of altruism. It can only be done by regulation.

On soap, what is the "value added" for society by expending resources on campaigns so that consumers will "emotionally relate" to one brand of soap instead of another? People emotionally relate to people, culture etc. "Business" striving to make them emotionally relate to brands of soap is purely parasitic.

An actual productive capitalist business could contribute to sanitation by simply organizing the most efficient production and distribution of soap, to meet peoples needs for it, focussed entirely on the bottom line. Articles like this reflect the absence of actual productive capitalist enterprises in Nepal.

Posted on: 20 MARCH 2010 | 1:00 PM NST

3. Suman
Thanks to Thurpunsich for sharing the term, "Pigouvian Tax" . I am much corncerned with the way immigrants from Bihar and other parts of India starts collecting used bottles, plastics, and other stuffs in Nepal due to lack of systematic recycling culture and policy. In many western countries (in Germany) the customers are imposed additional prices for the product that uses plastics or glass bottles, which are refunded later no matter in which stores they want to return. If we could also imposes such additional charges to the products and have the refund policy ....

Posted on: 22 MARCH 2010 | 8:40 AM NST

4. jange
"Most NGOs are started by socially minded entrepreneurs". Wherever did you get such a fanciful idea???

It would be interesting if Ashutosh went and lived in a village in Jjarkot for a month to experience for himself the psychology of a villager in remote Nepal. It need not be too difficult- let's say enough rice, corn, wheat etc. for a month plus an assistant to help him. I am assuming that Ashutosh will participate equally in all the tasks. Pus a couple of animals to look after. Maybe he will then understand what their priorities are and why things are the way they are.

Posted on: 24 MARCH 2010 | 8:11 AM NST