Foreign aid to Nepal has grown by leaps and bounds in the last 50 years. Today, it also includes military hardware and software to combat the Maoist insurgency. But despite donor input in money and advice, and the restoration of multiparty democracy, foreign aid has been unable to alter the course of events, and now finds itself in the spotlight.

The research work, Aid Under Stress authored by independent Nepali and Finnish scholars of Inter-Disciplinary Analysts group in Kathmandu and the Institute of Development Studies, University of Helsinki, takes two examples of Finnish aid in two phases of the Rural Water Supply and Sanitation Project (RWSSP) and the abortive Bara Forestry Management Plan to find out what went wrong.

The 1996 Bara forestry plan was conceived as "a pilot project to examine the viability of private commercial management" of tarai forests in a joint venture between a Finnish multinational and Nepali business houses, and was inspired by the donor's conviction that "only such a Finnish model could create the necessary discipline in forest exploitation".

But the proposal met with overwhelming opposition from all quarters: the forest-related national and international civil society, local users and forest officials. A Finnida consultant later concluded that the plan did not "adequately address the concern of the local community as stakeholders". It aborted the four-year effort that led to the withdrawal of Finnish aid to forestry altogether.

The RWSSP aimed at "full coverage of Lumbini Zone" at the end of Third Phase by mid-2003, providing water to 500,000 people through 68 gravity schemes and 27 shallow tubewells and sanitation to about 18,000 at the end of Phase Two. It is, however, a familiar story: expatriate domination through special outfits such as Project Support Units (PSU), the donor choosing the Ministry of Local Development (MLD) as partner for Phase II in place of the Department of Water Supply and Sewerage on grounds of "corruption", donor ability to extract endorsement from the chronically aid-dependent government despite DWSS and MLD reservations over the bloated 'technical assistance' cost (46 percent of total Finnish aid for Phase II), etc.

The researchers studied only one gravity scheme and one tubewell to assess project impact and, based on "user involvement", declaring it to be "a major success story". Since the report noted "low caste" people being deprived in one study site, it should have examined the project performance for such basic issues as equity, universal coverage in an area of 2.5 million people and post-construction institutional arrangements for sustainability, including its tardy record in sanitation. The report mentioned national NGOs doing a more frugal job in such projects, but failed to go into why Finnida did not opt for them.

The report has characterised development cooperation as an "encounter between two grand cultures, the transparent and rationalistic Western and the hierarchical, traditionalist and corrupt one represented by the Nepalis". But the statement, besides being misleading, also smacks of ethnic arrogance to the extent that it comes from the Finnish author. Corruption itself grew in Nepal in direct proportion to the growth in foreign aid, even as the donor officials generally behaved like ostriches. The two projects with all their limitations certainly cannot be seen as the product of a rational faculty. While transparency makes people responsive, the RWSSP Phase II design with its contested "technical assistance" costs was far from being so.

In contrast, due to exclusive devolution of authority to the stakeholders, the basic elements of good governance namely, participation, transparency and accountability, have been assured in Nepal's community forestry. The approach achieved a robust comeback of Nepal's forest wealth in less than a decade and a half. It is rationalism at work through and through. Contrary to the claim in the book of it being of Finnish origin, user management of forests itself was legally provided in February 1988 as a result of World Bank using it as a conditionality for Structural Adjustment Loan on the advice of a Nepali professional.

Foreign aid in Nepal suffers from defective structure. It is executed mostly by donors, most of whom lack familiarity with Nepal's extensive development experience. And it is exposed to misuse by corrupt politicians to buy votes in elections. No donor honestly advocates empowerment of stakeholders at the grassroots. So, if the country goes rapidly downhill despite foreign aid, it is only to be expected.

Bihari Krishna Shrestha is an anthropologist who once served in the National Planning Commission.

Aid Under Stress
Water, Forests and Finnish support in Nepal
Edited by: Sudhindra Sharma, Juhani Koponen, Dipak Gyawali, Ajaya Dixit
Himal Books