Nepali Times
"Kathmandu is an island in an ocean of poverty."

The World Bank's Vice President for South Asia, Meiko Nishimizu was in Nepal this week. After a field visit to Dhading, she spoke to Nepali Times and talked extensively about Nepal's progress in the past two years, financial sector reforms and the empowerment of Nepali women. .

Nepali Times:What changes do you see in the past two years?
Nishimizu: I see Nepal much more integrated with the rest of the world even compared to two years ago. The benefits of that are obvious in Kathmandu, the better living standard is somewhat tangible. That is what integration of economies brings about-people call it globalisation which has become a bad word. It is what economic integration can do to people's living standards, to help reduce poverty faster if policies are right..

And in the villages you visited?
There it is a confirmation of what I learnt last time, the difficult lives that poor people lead in this country, especially women. And how different their life is from yours in Kathmandu. The gap between Kathmandu and the rest of the country is getting wider. Kathmandu is an island in an ocean of poverty. And Dhading is a district just next door to Kathmandu. It gave me a sense of urgency about how important good development polices are to narrow that gap.

The last time you were here you told us you were angry with the poverty you saw?

How has the Bank helped the government to address it?
People tend to think World Bank has a lot of money and clout to help Nepal. This is a misconception. The money the Bank can provide is a drop in a huge bucket. The bucket is Nepal's own domestic resources, including the taxes people pay. What we do is really, a part of the government's development program and hopefully good policy. In terms of policies, in this trip I have a sense of encouragement.

In the past two years there hasn't been any major Bank lending . has that got to do with policies not being right?
You have to remember that we have financed many projects in the past. The money is being disbursed, millions of dollars, for education, clean drinking water for people to manage forests on their own.

But no new lending?
That is not true. We have recently completed negotiations for a new project in telecommunication. There is a group of people with foresight here in Nepal who have been hard at work in creating a modern telecommunication sector, with modern regulation that enhances not control, but private-government partnership for bringing information technology. We feel that development cannot be brought about by money only, but through information, timely information. That is the future and these people anticipated it and are starting to create a regulatory regime to prepare Nepal for the future, so we decided to finance it.

Did you have a special purpose for this visit?
Since the last time I was here, there is a new government. Same party but a new prime minister and cabinet. So my main purpose was to come and meet the prime minister and key leaders in his cabinet who are working on some very important reforms. I needed to meet them face to face to have a better understanding of the quality of policies they mean to introduce in this country.

What was your impression?
I found the people I met to be very candid so I don't have to worry about what I say. The vision of this prime minister is Nepal without poverty. He has a very strong focus on the silent majority, the people who are marginalised from society, including women. Having listened to him, I believe that the focus and the vision is a genuine one, not rhetoric. As for the process of social transformation, part of which is higher income, he believes very strongly that the process has to be participatory. It has to be one nation, not Kathmandu vs the rest, or the rich vs the poor. He talks about empowerment, but the way he describes it, I feel he understands it deep down based on his grassroots experience. I feel he understands that the future of Nepal lies with the women. He wants to give the invisible women a voice. He really is focussing on the empowerment of women and dalits.

What about economic reforms?
There is something that Nepal really ought to be proud of: what was announced in the last budget and is being implemented. That is the Medium Term Framework. The value of financial discipline that process can bring to development expenditure is enormous. There are very few developing countries in the world that have implemented something like this. Everybody talks about it, but to actually have the guts to say we'll do it and do it, is different. I commend the government and this is something that Nepal as a nation ought to be proud of. The people need to make sure this implementation goes well so that the whole country benefits from this medium term framework as you go forward.
On financial sector reforms there has been a hiatus from time to time, but I am leaving with a sense of hope and encouragement that things will really start to move. Since the budget there has been a small group of people in Nepal who have been doing a lot of technical work preparing, but it is not an easy reform and it is not just about the two sick banks the newspapers write about. It is much more than that. It's about the entire banking system, how to help the central bank to regulate the banking system much better so that good money is made, as opposed to bad money.
In Nepal there seems to be the impression that this is a World Bank idea. It is far from the truth. I feel insulted when I read that, and reformers in this country would be doubly insulted by such a remark. It is really, really homegrown. The reforms are challenging and there is no way it can even start if it is only the World Bank saying so. It has to come from within, with conviction, with determination and with political will. The prime minister understands the issue is convinced that this reform is about his vision.
From the point of view of a common, hardworking but poor Nepali citizen what would happen if, god-forbid, a banking crisis happens. I get hit several times, first I lose my saving deposit, then the government will have to spend millions of dollars to stop the crisis from tax money. Who pays tax, it is I. I get hit again. I lose my savings and my tax goes into this to rescue all the rich, powerful, corrupt people who have ruined some of these banks who were once premier institutions, by being defaulters.
What are they doing, they are essentially stealing my money. I get hit twice, and again. Because all taxes are going to stop in this crisis, what happens to development expenditure? The school I was hoping would come up next year a mile down the road isn't going to be built. So the hope that I can finally educate my girls and boys is out of the window again. So, I get hit the third time. Then because the problem could be severe, the economy will go into a recession and I will probably lose my job. I get hit for the fourth. A bad policy hits the poor first and most.
What really comforted me is that the prime minister understands this and that is why he is committed. It is very rare for me to speak to a leader of a country who understands such important linkages, without me explaining it, and with a voice of

What would be your wish list for things to happen in Nepal?
(Laughs) Let me think. Obviously because banking reform is a very important reform that will change the course of this country when this work is finished. After it is done, given everything remains the same, you can hope for the growth rate to go up to 4 percentage faster. I hope that the commitment of the leadership will be translated quickly into constant, consistent action. I have no illusions, it is not going to be easy.
Another is related to the women I saw in Dhading and other marginalised people, the so called "untouchable" people, that I also met. Men in government and civil society will have to try to think from the point of view of women.

Last wish?
(Laughs) How about peace. The underlying cause of the Maoist movement had a lot to do with the destitution in remote areas, so not just dialogue with Maoists, which is continuing, but using the whole might of the government through development, I hope that every citizen of this country can get to a point where they can take peace and security for granted. That they don't have to worry about it constantly.

How did the Nepalis you meet come across?
Nepalis are extremely patient people, they have tremendous resilience and inner strength. I could sense that again in Dhading. I would like the people in positions of power, with wealth, with influence in the public and private sectors to understand how important that inner strength is, of the entire people of Nepal. The people who are better off, when they think of the poor and the under-classes, have to think of them as human beings with enormous wisdom. A good democracy that really helps raise everyone's living standard can really happen when more and more Nepali people value the differences, and we all bring different perspectives to democracy. Learn to value the enormous diversity of this country as an asset, not as a division.

(11 JAN 2013 - 17 JAN 2013)