Infrastructure development

Swedish ambassador Johan Nordenfelt has expressed his country’s "willingness" to invest in infrastructure development of this country. No doubt, this gives a strong indication that Sweden is prepared to help in this country’s infrastructure development. The ambassador said this while addressing Nepali journalists at the Reporter’s Club the other day. The ambassador was in the capital in order to sign the first bilateral agreement between Nepal and Swedish International Development Cooperation Agency (SIDA). SIDA has provided 12.5 million US dollars for the Melamchi water supply project. Earlier, Sweden contributed over 36 million US dollars to land and geographical information systems. The construction of Melamchi water supply project, that should have already been underway, is estimated to cost over 464 million US dollars. And SIDA’s assistance will be utilised for the construction of a tunnel. Nordic countries, besides Asian Development Bank, Japan Bank for International Development and OPEC Development Fund, have funded this long overdue Melamchi project. The Nordic countries have also provided assistance for Nepal in areas such as health, sanitation and poverty alleviation.

The ambassador must have realized the lack of basic infrastructure in this poverty-stricken country. Despite foreign assistance, the country has been reeling under abject poverty for the last decade as a result of poor policy and ineffective implementation of laws. Successive governments have neither identified areas while dealing with poverty, nor have they outlined specific and effective strategy to attack it. As a result, the rate of poverty which stood at 40 percent a decade ago, has increased to 52 percent. Besides poverty, half of the children in remote areas have no access to education, safe drinking water and primary health care. And half of the areas of this country are inaccessible by road. Thousands of rural poor die from preventable diseases every year. Any allocation of budget for the development of rural areas has been misdirected. Unfortunately, the donor agencies and foreign envoys have realized the fact that the government has yet to gear up seriously for sustainable development. Such foreign donor agencies have not only provided assistance, but have also built basic infrastructure for the development. Yet the practice of favouritism, nepotism and cronyism continues to rule the roost of the development of this country. The abject poverty of this country cannot be eradicated until this country develops proper infrastructure. Now the government must strengthen bilateral relations with those Nordic countries, which are keen to invest in development projects.

Consortium financing

By Bishwambhar Neupane

After the restoration of multi-party democracy in the early 1990s, His Majesty the Government Nepal (HMG/N) adopted economic liberalisation policy. This opened the door for the private sector to participate in various industrial and infrastructure building projects. Given the fact, it was apparent that the funds required for such projects is really high and thus only one or two financial institutions (FIs) are not able to meet such high requirements. To meet the increasing demand of industrial loan requirement and to meet the large quantum of loan, various FIs have to meet in a common forum of investment known as Consortium Financing.

The history of consortium financing in Nepal started a decade ago. The Nepal Industrial and Development Corporation (NIDC) initiated the move by financing Jyoti Spinning Mills in consortium. After the introduction of liberal economy and Privatization of State Owned Enterprises, the concept and the pace of consortium financing started to pick up. Since then the FIs started to participate in consortium financing on their own style and judgement.

Neither the Nepal Rastra Bank (NRB) nor FIs have operational guidelines to consortium financing. The role, function and the responsibility of the Lead Bank, Agent Bank or the Participating Banks are still not clear. The experts claim that in a true sense, we are simply onto Loan Syndication and not Consortium Financing. In the absence of common policy guidelines, FIs are facing new problems and challenges in consortium financing.

In order to finance a huge industry, a capital-intensive project or an infrastructure project, a single FI is constrained by the policy imposed by NRB. NRB has prescribed a ceiling of credit (fund based and non-fund based) for a single borrower or to the companies within the same group. Apart from Single borrower Limit, the main and the most crucial idea of consortium financing, all over the world, is that it endures FIs in diversifying the risk and sharing the investment opportunities. It is an apparent fact that the FIs have the responsibilities for mobilising financial resources for the economic and social development as well as for the sake of their own sustainability. They need to employ accumulated resources for the returns on the one hand and protect the assets of the depositors on the other. Lacking effective regulations, non-performing assets are mounting and the capital is eroding.

Whatever its weaknesses, consortium finance is helping FIs in its limited capacity to diversify even the inherent risks of a project. Besides, it is also providing an investment opportunity to FIs in an economic condition where both the industrial as well as trading activities are eroding.

As argued above, we do not have any policy guidelines that govern and control the activities of consortium financing. In the absence of any guidelines, the FIs are facing many problems. The role of Lead Bank, Agent Bank and Participating Banks are not clear. Other issues like charges, fees and expenses to be distributed among consortium partners are not guided by the existing procedure.

Consortium financing, thus, requires some common guidelines in respect of policy and operational process to avoid anomalies and bring uniformity and consistency. The most effective way of consortium financing is to prepare a detailed Facility Agreement incorporating all the norms of consortium financing as required, in consultation with the entrepreneurs as well as with the consensus of consortium partners. It not only facilitates the execution of consortium loans but also helps regulate all those involved in financing.

The objective and scope of consortium partners varies according to the nature of FIs. And on top of that, in the absence of standards stated in the policy, the consortium partners cannot agree on a uniform practice. Moreover, the area of priority and financing procedures and scope also varies from one FI to another. The Reserve Bank of India, for example, has issued instructions for consortium financing on June 1987: Maximum number of Banks to participate, borrower limit, appraisal of proposal by Lead Bank, admission of new member bank, single window approach in disbursement, documentation and repayment, fees and charges norms of consortium and so on.

In order to avoid anomalies among the consortium partners and to facilitate the project, the role and the area of responsibility of Lead Bank, Agent Bank and Participating Banks has to be clear. And if possible, consortium partners should be of having similar interests or objectives, for example

* Commercial Banks in consortium with Commercial Banks only.

* Development Banks in consortium with Development Banks only.

* Finance Companies in consortium with Finance Companies only.

Even after a decade, the FIs are facing lots of challenges in consortium financing. Besides the challenges faced by the FIs in terms of absence of clear policy matters, most of the projects financed in consortium are not doing well. To be precise, they are not even servicing the interest. On the one hand we lack common guidelines in respect of policy and operational process, whereas on the other, the projects financed in consortium are not doing well. Therefore, it is high time NRB came up with a suitable procedural guidelines to develop consortium financing and to build up confidence among the financing institutions so as to encourage them to finance projects in consortium for the overall economic progress.

Exit gracefully

By Laxmi Sharma

Kaun Banega Crorepati (KBC) programme of Star Plus has really elevated Amitav Bachhan’s image. He has captured more popularity now than when he was an actor. No doubt, he was a superb actor , but not all people had the opportunity to know him well and could not posses that high opinion about him. But now, his admirers are everywhere; he is simply at the helm of the one of the most popular TV shows. From grandpas to grandsons, he commands admiration. The way he speaks- oh! marvellous - he mesmerizes the audience. His knowledge and versatility has struck the audience. KBC would not have succeeded without Bachhan. His vast knowledge in almost every subject and his interpersonal skills are simply superb!

Whereas our Madan Krishna’s presence on NTV’s Nagad Panch Lakh (NPL) has done just the opposite. No need to mention that Madan Krishna is a good comedian. Yes, he has made all Nepalese laugh. As an actor, he is versatile too, but this NPL has downgraded him. Because
audience has been comparing him with Bachhan, the superstar of Bollyhoood.

Madan Krishna would not have been downgraded if he were not compared with Bachhan. But, here, his battle is with the actor of the millennium. So, Madan Krishna pales in front of Big B. Krishna's decision to join this programme cannot in any way be called wise. He was far better off in his previous roles. To conduct the NPL show, we need a man of wits and charisma, and not an actor. Acting has very little to do in this programme. As the case may be, Madan Krishna lacks general knowledge, forget in-depth knowledge in various subjects. That is why we struggle to hear him properly. He is not articulate because he is a shallow man and not fit to host the show. Of all the people, why him?

While watching NPL, the audience is reminded of a school-level quiz contest. Madan Krishna is simply not the right choice as the host of the programme of NPL. His slow and conscious conversations easily bore not only the audience but also the contestants. Madan should have learnt a lesson from the failure of Manisha and Anupam Kher in Sawal Dash Karod Ka. Both these actors could not compete with Bachhan. It is quite obvious that Madan Krishna would be made to exit the scene. But when?

Status of the elderly

By Prem Lal Chitrakar

The existing and increasing population of aged people is becoming one of the problems that Nepal has been facing in recent years. Due to these increasing aged people, various countries have also started building Old Aged Homes to promote the well being of aged people. But efforts made so far in this country are not adequate as well as lack support from local institutions.

The status of aged people, according to recently taken census 2001, is still not available. However, the 1991 census states that more that 4.7 percent of the total population of Nepal belong to the age group between 60 to 74 years.

The aged people above 75 years have been 184 thousand and it has reached 234 thousand people this year. This group of people and their number would be 310 thousand people by the year 2011.

Under these situations, it is difficult to estimate that how many people in this category have been taken care by their own family members. How many of them have been aspiring to live in old aged homes built so far ? What types of old aged homes are to be built in accommodating them and how to develop an old aged home without adequate resources in rehabilitating these elderly people ? These have been some of the problems that resource poor Nepal has been facing in recent years.

Aging has, in fact, been a cyclical process. All the people of the world - be they rich or poor and learned or uneducated - have to pass through this cyclical process in their lives, irrespective of their present state of strength or merit or weakness.

It is indeed a human nature that aged people everywhere in the world, have also been aspiring to live in a suitable or congenial environment where they are taken care of, well nourished, and have adequate, latitude in their development or to undertake in some creative exercises even in their old age.

Of the 234 thousand elderly people (aged more than 75 years) which Nepal is having at present, how many of them have been well taken care of by their own family members ? How many of them have been sheltering in old aged homes ? How many of them have been leading a hopeless life and how many have been aspiring to engage in some creative works for the benefit of this country or society or to the Nepalese people ? The statistics on these areas have awfully been limited owing to the lack of studies undertaken by the concerned agencies in this country. But all aged people have not been well taken care of by the members of the family because of the variety of reasons.

Several old aged homes have been developed in Nepal in recent years to rehabilitate the elderly people for their welfare, their development and promotion.

The following have been some of old aged homes operating, developed and developing in Nepal. They include Pasupati Briddhaashram at Pasupati, Swastha Sewa Tatha Shanti Ashram at Shankhamul, Bhuddha Briddhaashram in Banepa, Bishanti Mandir in Dhankuta, Deughat Briddaashram in Deughat, Nishahaya Shewa Shadan in New Baneswar, Dhamma Bash Briddhaashram in Khushibu, Tapasthali Briddaashram in Chapali, Briddha Mahila Niwash in Pokhara, Janaki Briddhaashram in Janakpur, Shanti Ashram in Khokana, Matatirtha Briddhaashram in Matatirtha, Joti Briddha Mahila Ashram in Thankot, Nepal Bhasha Misha Puchha Ashram in Swayambhu, Ananda Ashram Cooperative in Kathmandu and an Elderly Citizens’ Home in Godawari to name a few.

Of the above mentioned old aged homes developed in this country, almost 50 percent of them have not been operating. Those old aged homes operating are not free from management problems.

Recently, however, the government has adopted a new comprehensive policy on senior citizens with an objective of tapping their skills, knowledge and experience in different areas and ensuring their social and economic development so that they can live a life with dignity and honour in society. The new policy on senior citizens adopted by the government is similar to the United Nations principles on aging adopted by UN in 1992. But how it is going to be implemented remains clearly understated.

Nepal not only failed to participate in the First-World Assembly held in Vienna in 1982, but has also failed to implement the Vienna International Plan of Action on Aging, discussed and adopted in Vienna in 1982.

Under this situation, Nepal should focus on five specific issues as new strategy options in promoting as well as in tapping the skills, knowledge and experiences of the senior citizens of this country. They are:

1. Undertake a quick bench mark study on older persons living in all the agro-ecological regions to prepare a report on senior citizens.

2. Develop a new programme to promote the welfare of elder persons in line with both Vienna International Plan of Action and new policy on Senior Citizens for presentation in Madrid durning World Assembly on aging .

3. Develop a new mechanism in providing financial support to local old aged homes built by local institutions.

4. Participate in by any means the Second World Assembly on aging which is going to be held in Spain in April,
2002 and

5. Try to receive the Trust Fund generated by the UN in implementing the Vienna International Plan of Action on aging.