"Conflict Has Had Severe Impact At Micro Level"

Prof. Dr. Bishwambher Pyakuryal

President of Nepal Economic Association (NEA) and professor at the Central Department of Economics at the Tribhuwan University, Dr. Bishwambher Pyakuryal is a well-known economist. A lucid interpreter of national economy and a prolific writer, Dr. Pyakuryal has been involved in various researches, particularly in the field of measuring the socio-economic costs of conflict. Recently, he has come out – along with his colleague Rabi Sainju – with a book " Nepal's Conflict: A Micro Impact Analysis on Economy." The book is based on research conducted in four districts – Banke, Rupandehi, Kaski and Sunsari. He spoke with Sanjaya Dhakal of Nepalnews highlighting the findings of his research book.

What actually were the implications of conflict at micro level?

We have studied the implications broadly on three areas: service delivery, local economic growth and marginal livelihoods. In service delivery sector, the study has focused on personal/industrial security, education, basic health, clean water, sanitation, electricity supply etc. In these sectors, we have found severe interruptions. Take for instance the case of drinking water – although there were 5000 water points in 22 hilly districts, hardly 21 percent were found functioning. This had a spillover impact on overall human development. On local economic growth, unfortunately there were no information about structure of local economy to find out how they function. There were no data on number of jobs created etc. It was found that due to closure and transport obstruction, the economic cost of production had gone high. Likewise, on marginal livelihood, it was found that people's livelihood and livelihood system were disrupted due to violence and looting of properties. Due to deaths and displacement, the social support networks were destabilised and human capital lost.

What was the extent of impact of conflict at micro level?

The impact was quite severe. From education to health and from livelihood to industries, they were all affected.

Which sector, did you find, was worst affected by the conflict?

In health sector, the earmarked resources could not be spent. Education was disrupted. The Small and Medium Enterprises (SMEs) were found to have borne the brunt of the conflict.

Can you elaborate the impact on SMEs?

As per the findings, the major problem SMEs suffered from was the constant closure due to bandhs and strikes. They could not transport raw materials or finished goods due to obstructions. This raised their cost of production and hampered their growth. Although very few of them faced any direct threat from rebels, the problem of (forced) donations was rampant. Sadly, they complain they did not get any support from the government side – not only during conflict but also after ceasefire. On an average, SMEs were forced to shut down for 50 days a year. In some cases, they were shut down for 180 days even. The impact on SMEs is an issue of serious concern given their overwhelming contribution to nation's GDP, exports, employment and earnings. Over two-third of our export products are made by SMEs.

In your book, you have cautioned that Nepal could go back to conflict if the post-conflict situation is not handled carefully. Can you clarify?

In our research we found that in the last 30 years, 50 percent of the countries – which faced conflict like that faced by Nepal – have gone back to conflict in the first five years since they supposedly restored peace. There is no guarantee that Nepal cannot go back to conflict, especially because of visible incapability of the state to properly manage demands for inclusion raised by various ethnic, regional and disadvantaged groups. Therefore, Nepal needs to move ahead very carefully to sustain the peace.

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