Operation Reconstruction
After ten years of violent insurgency, Nepal ’s precious infrastructures have suffered a tremendous setback. Roads and bridges, telecom towers and hydro projects, buildings and offices have all borne the brunt of violence. Estimates put the total destruction of infrastructures at over $ 300 million. Around three hundred thousand people were displaced due to lack of security. As the country embarks upon the peace process, there is a need to focus the attention towards reconstructing these infrastructures. Many believe that the country would do well not only to reconstruct but to initiate the whole process of nation-building. Given the huge warmth Nepal enjoys among its international partners in the recent days following the successful fruition of people’s movement, it would not be too difficult to get them also involved in the reconstruction as their financial and technical inputs would be imperative to undertake this massive task
By SANJAYA DHAKAL
In course of decade-long insurgency Nepal ’s vital infrastructures have suffered huge damages. Suspension bridges in rural areas, hydro projects, telecom towers, government buildings and so on have been ravaged in the conflict.
Around 2000 of the 3913 VDC buildings have been fully or partially destroyed. Many small and micro power plants have been damaged while most of the rural parts remain without communication link.
More importantly, due to the prevailing environment of fear and terror, no new big ventures of development have been taken up in the last half a decade. Even the two big ventures – Melamchi drinking water project and Middle-Marsyangdi hydro project – have been facing obstructions and are still no close to completion.
In such a background, the current movement of the country towards peace process has generated a widespread excitement over the prospects of reconstruction. For the last five years the country has been wallowing in abysmally low rate of economic growth. In fiscal year 2001/02, the GDP growth rate was negative after a decade of average rate of 5.1 percent growth. In subsequent years, too, the growth rate hovered below 4 percent. This year the projection is that the nation would attain 2.7 percent growth. Compare this with the annual population growth rate of 2.3 percent – and it becomes clear how the country has remained stagnant, if not worsened economically.
All Round Reconstruction
In a meeting organized by the Asian Development Bank (ADB) in Hyderabad nearly a month ago, senior officials at the Ministry of Finance proposed donor investment totaling $ 1 billion for reconstruction in Nepal .
The White Paper on economy presented by Finance Minister Dr. Ram Sharan Mahat at the parliament two weeks ago also stated that in the immediate term, the government needs to invest on reconstruction and rehabilitation of conflict victims. Speaking in the parliament, Dr. Mahat laid emphasis on the reconstruction efforts with the help of donor support.
However, as Dr. Shankar Sharma, former vice chairman of the National Planning Commission (NPC) puts it, “The time is ripe for undertaking the nation-building or new construction exercise rather than limiting on reconstruction.”
Agrees Rajendra Khetan, a noted industrialist and vice chairman of Confederation of Nepalese Industries (CNI), “The government should not limit on repairing the damaged structures, which were established in the past. Now the authorities should try and develop need-based and multi-use infrastructures. For example, if they want to build hydropower project, they should also focus on related industries, link roads, tourism effect and so on.”
Dr. Sharma and like-minded economists believe that this time Nepal must go through economic revolution as well. “Often our country witnessed revolutions that brought about significant political changes but they were not followed by economic revolution. Now is the time our leaders must think about putting our country on a path towards modernity in every sense of the word,” said an economist.
Besides, there is a strong perspective that reconstruction or development of infrastructures should not merely focus on visible physical structures or the conventional items of economic importance. Reconstruction or nation-building does not merely include expansion of infrastructures. “It involves a whole range of socio-economic issues. For instance, we have to work hard to attain the global Millennium Development Goals on education, health, poverty and other sectors. If we can attain these targets, that would make the country stronger in terms of human development,” said Dr. Sharma.
The MDGs represent a clear-cut set of targets, which, if fulfilled, can mean a total transformation of standards of living. At present, of the seven goals and 18 targets, Nepal is ‘likely’ to achieve goals regarding halving extreme poverty (by 2015 from the base level of 1990); reduce child mortality by two-third; halt and reverse the incidence of tuberculosis; and halve the proportion of people without access to safe drinking water.
However, Nepal can only ‘potentially’ attain other goals such as halving the proportion of people who suffer from hunger; achieve gender equality in access for boys and girls to primary and secondary education by 2005 and to all levels of education no later than 2015; reduce maternal mortality ratio by three-quarters; halt and reverse the incidence of malaria and other major diseases; and reverse loss of environmental resources.
Furthermore, the country is ‘unlikely’ to achieve its targets of reaching Universal Primary Education (by ensuring that children everywhere, boys and girls alike, will be able to complete a full course of primary schooling); and halting and reversing the spread of HIV/AIDS.
The country needs around US$ 7.6 billion in the coming years to invest in the socio-economic sectors to attain the MDGs. As per an earlier study by Bal Gopal Baidya on the need assessment for the attainment of MDGs, there is a shortfall of budget by 35 percent in the area of hunger/poverty; 24 percent shortfall in education; 15 percent shortfall in health; and 13 percent each in drinking water and sanitation and rural infrastructure.
Role Of Private Sector
The private sector has a crucial role to play in the undertaking of nation-building and reconstruction.
“There could be the role for the private sector in areas like need identification, techno-financing, management and operation under BOT/BOOT,” said Khetan. He added that the private sector can ‘source’ the capacity if, indeed, there is an environment conducive for massive nation-building in the country.
“Our private sector is quite capable of management as well as financing. The government first needs to create the atmosphere,” added Dr. Sharma. In fact, apart from private sector even the civil society has shown interest in playing its part in the reconstruction of the nation. Senior journalist and active civil society leader Kanak Mani Dixit recently informed that a major conference called “Peace, Reconstruction, Development: National Conference” would be held in early July by involving academicians, politicians, civil society representatives and development workers to discuss the issue of peace and reconstruction.
As such, given the right atmosphere, the government, the private sector and the donor community can come together for a fruitful partnership to develop the conflict-ravaged country and fulfill the dreams of millions of poor people. Whether the current set of leadership can do so only time will tell.
“This Is The Time For Nation-Building”
-- DR. SHANKAR SHARMA
DR. SHANKAR SHARMA is the former vice chairman of National Planning Commission (NPC). A noted development economist and planner, Dr. Sharma spoke to SANJAYA DHAKAL on issues pertaining to the reconstruction. Excerpts:
How much did the country lose in terms of destroyed infrastructures?
It is around $ 300 million. Basically, telecom towers, hydro power stations, airport tower equipment, bridges and government office buildings sustained heavy damages due to violence. Some of them have already been repaired but many, particularly the government buildings (around 600 to 700 of VDC buildings alone) and suspension bridges, could not be repaired.
How serious had been the damages?
Compared to other war-torn nations in the world, we have been lucky. Even though thousands of people have been displaced, no one is living in refugee camps here. Many of them might have either gone to live with their relatives or left for India or other countries for work. And they can be rehabilitated. Likewise, destruction to infrastructure is still manageable.
What are your views regarding the debate about the need for national reconstruction?
I believe that the country should embark on the path towards New Construction rather than limit itself on Reconstruction. While reconstruction is, indeed, necessary, our vision should be nation-building itself.
How, do you think, we should go about nation-building then?
Actually, there are two parts to it. The first is the immediate term plan, which would involve rehabilitation of displaced persons, repairing of government buildings and suspension bridges and providing various kinds of relief to the people. In the longer or medium term, we need a vision. We can base our priorities on the existing Poverty Reduction Strategy Paper (PRSP) and Tenth Plan. We have included all relevant issues and concept of inclusion in these papers. Therefore, we can give continuity to these plans and upgrade them as well. Even our donor partners have also asked us for setting priority first. These plans can clarify our priorities based on which they can support.
What should be the procedure of initiating the nation-building exercise?
There can be two different approaches we need to adopt. First is the program approach. We can proceed with our efforts to meet the targets in health, education and drinking water sector through this approach. At the country-level, in education sector 17 donors have put their support in a basket fund. And our target is to achieve the Millennium Development Goals (MDGs). Likewise, in health also World Bank and DfID have provided pool funding. In health as well as drinking water sector, we could just attain the MDGs. That would be a great beginning. Then after the targets can be upgraded as well. The second is the project approach, which can be adopted for the development and reconstruction of big infrastructures like road, electricity and so on. These big projects are equally necessary if the country is to achieve high economic growth.
What are our specific needs in sectors like road and electricity development?
There are still 13 districts in the country with no road link. We have studied and identified that we need to construct 700 km length of roads to link them all. Likewise, we have identified that we need to upgrade around 1200 km of road in various places across the country. The average cost of constructing a road is Rs 10 million per kilometer and the average cost for upgrading them is Rs 7 million per kilometer. In the area of electricity, final studies have already been done regarding the generation of 750 MW of power through different projects. And it is estimated that they would cost Rs 80 billlion.
What are the other areas of importance?
There are some sectors where we need to work in the short-term for the benefit in the long-term. The displaced people should be rehabilitated and provided with jobs. It has been our experience that taking resources to rural area would result in all-round benefits. While constructing feeder roads, we should remember the road density target – in Terai let no one need to walk more than 2 hours to reach a motorable road and in hills, let no one need to walk more than 4 hours for the same. It would be beneficial to work with the communities in micro hydro, alternative energy, rural roads and other areas.
How can we raise the resources to carry out these efforts?
The government first must be on the driving seat. Once the government sets its priority, donors would also come. At present, we allocate around $32 million donor support in our annual budget. If this amount can be doubled, then resource would be adequate.
How can we mobilize donor support then?
We should activate the Nepal Development Forum (NDF). We should prepare our plans as quickly as possible. This is a golden opportunity as there is a lot of positive feeling towards Nepal . This feeling must be cashed. Besides, we also need to show that the government is capable of utilizing these resources.
What would be the role of private sector?
Basically, private sector would begin to play their role once the government sets its priorities and begins allocating on development of infrastructures.
How would these efforts help in the economic growth?
All these efforts would definitely help in increasing GDP growth. In fact, 5 percent growth can be immediately achieved once there are no transport restrictions and peaceful atmosphere persists. And we can easily reach 6 to 7 percent of growth by taking private sector into confidence. In order to move beyond 7 percent growth, we need to address a whole lot of issues for private sector like doing away with red tapism, simplifying tax administration and controlling corruption, among others. We must also start taking advantage of growth in India and China and move towards bridge economy.
What should we ask from India , then?
Apart from economic package, we must seek concessions in trade and investment. We need to ask them to eliminate non tariff barriers and hassles in customs. We also need to tell the Indian government to encourage their industries to set up bases in Nepal and tell them what incentives they can give to ensure that it happens.
