A system that is guided by stupidity, there is little room for logic, reasoning and rationality

He obtained his Ph.D. from prestigious Birmingham University, United Kingdom in the year 1993 on Performance of Public Enterprises. Prior to that he secured his MBA degree from Leeds University, UK in 1987. At the moment he is the Executive Director at the Industrial Relations Forum, IRF, a project in collaboration with Friedrich Naumann Foundation, Germany and FNCCI. Dr. Narayan Manandhar has served for several institutions in various capacities. To name a few, Dr. Manandhar worked as Advisor at the National Planning Commission for the Mid Term Review of the Eight Five Year Plan and the preparation of the conceptual framework on the Ninth Plan Document (from December 1995-1997); Training and Research officer at the Nepal Administrative Staff College from 1985 till 1995; Assistant Research officer at the National Population Commission from 1981-1982; Assistant Lecturer and Lecturer in Financial management, Management accountancy, Project planning, Statistics and Public Enterprise Management for MBA level students at the Shanker Dev Campus, T.U.

Dr. Manandhar has also served on special assignments at the Ministry of Finance; National Democratic Institute, Nepal Electricity Authority; New Era, NPC; CEDPA; Nepal-USA Chamber of Commerce and Industry; Nepal Red Cross Society; FNCCI/Employers' Council; ILO and so many others.

He is very friendly. Undoubtedly he is very modest and highly qualified. His friends say that Dr. Manandhar is very sensitive towards the preservation of Nepal's national interests. This scholar has more than 300 articles in English and Nepali to his credit. Similarly, Dr. Manandhar has penned few books as well and those include; Industrial relations in Nepal; Public Enterprise and Privatization and Scripts in Management ( in press).

Apart from these, Dr. Manandhar has scores of research studies to his credit which range from "Population and Employment in Eastern development Region in Nepal" to "Issues on Public Enterprise Management in Nepal" and from "Privatization in Nepal: Lessons and Experience" to Women in Management.

Dr. Manandhar has also contributed articles to Business Age magazine; Himalaya Times, Kathmandu Post; Economist Intelligence Unit and he has assured that he would contribute to the Telegraph as well.

This Saturday, Dr. Manandhar will celebrate his happy birthday. We wish you Dr. Manandhar all the best. Last week, we approached this versatile scholar for an exclusive interview to which he could not readily accepted. Below the results: Chief editor.

TGQ1: Dr Manandhar, as an expert in the governance and management how would you assess the current situation of Nepal in both of these respects? What are the causes of mis-governance and why many of the nation's resources have gone wasted? Who do you primarily blame for this?

Dr.Manandhar: Sometime back I have read a satirical comment on the absence of relationship between knowledge (information) and power in Nepal. It goes like this: Those who are in power have no knowledge and those who have knowledge are not in power. I think this is exactly the situation what is happening in this country. During ten years of democratic dispensation we assumed that the electoral process would filter out bad apples and give us good ones. But it has not happened or is not happening, at least, for the moment. I do not know, may be we have had to wait for some more years to go. May be we still had to do a lot in developing the basic foundations of democracy. May be a politician is in position to answer this question. And for a nation ten years is definitely not a short period of time. I also do not think it is justifiable to blame the present system for all the wrong doings. We have inherited a large part of malaise from the old panchayat days. Just to keep the polity alive, during panchayat days the administration was pampered to the maximum limit. In fact, the panchayat system was synonymous with administration. In new multi-party dispensation we thought the polity will now runs the administration. At the out set it does gives an impression that the polity is in control of the administration. The way CDOs are transferred, the way bureaucrats are moved from one position to the other. It gives an impression that the politicians are running the show. I think this is a misleading picture. The politicians are still at the mercy of bureaucrats. Because of the lack of knowledge and more over the lack of experience on their part has made them vulnerable to the decisions of the bureaucrats. Let me give you my own experience with the monopolistic tendencies of the bureaucrats. And let somebody do not take it as an irrelevant personal issue. A high-level public sector management-training institute, located at Jawalakhel, tampered my contract paper and filed a case against me for not fulfilling contractual obligations. I have had a contract to work in the institute after the completion of my overseas study course. When I pointed out that the paper itself was forged, the said institute not only feigned the contract paper it also went to the extent of deceiving the court to have the verdict in its favor. Now, please, somebody tell me, how could an institute staffed by thugs and charlatans preach good governance and management in this country? To add insult to the injury, the British Government heavily supports the said institute. How can you have good governance with bad advisors? I have even raised the issue with the then British ambassador, he assured me of investigation but I am still waiting for the justice to be done. People may discount this as a rare case, a personal case. No, this is not. This has to do with our system. The case illustrates how corruption has been institutionalized in our society. Just to assassinate the character of an individual, how a whole institution can be mobilized and, moreover, how national resources are floundered. Therefore, unless there is total revamping in the bureaucratic system, I do not think there will be a perceptible change in the society. In a system that is guided by stupidity, there is little room for logic, reasoning and rationality.

TGQ2: Now, let me ask you about the role of foreign aid in Nepal, Recently, Norwegian foreign minister admitted that "criticism that donors take back big aid chunk could have reason." If this is the case how does foreign aid can help Nepal?

Dr.Manandhar: I am not aware of the Norwegian foreign minister's statement. I have also very little ideas on the dynamics of foreign aid. But one thing we must be sure about is that "beggars are not the choosers". Since we are not the choosers it also must not mean that we should every time be the losers. We have failed to minimize the losses from foreign aid. Rather than making "demands" on what we want and what we do not want, we are driven more by the supply of foreign aid. Therefore, when we dance to the tune of the donors, it is natural that the large chunk of foreign aid be diverted back.

As far as I could comprehend, foreign aid is a temporary measure, ultimately the economy must thrive on its own. During last forty years of experience with foreign aid in Nepal, I think we have had enough of it. In fact, in the past, we have been pampered by foreign largesse. The situation is very much different. We may have the inflow of foreign private capital, but not the foreign aid. So there will be natural belt tightening process. If we still continue to depend on foreign aid, that will be our biggest mistake. Why I am so much skeptical on foreign aid is that the aid flows in the developing countries are not coming out of the feeling of guilty conscience on the part of developed nations. They have their own vested interests. I am very much moved by a sentence written in The Economist's special issue of the survey of 20th Century, dated September 11, 1999. The line reads as follows: "The dirty truth is that people in the West worry more about the poor becoming rich and competing with them than about the poor staying poor." They fear that the economic growth in the poor countries might mean a dirtier world. If this is true, we need to analyze foreign aid in a different perspective. May be, we even need to question the human side of humanitarian aids.

TGQ3: You are one of few Nepalese who have objectively studied the payoff of privatization efforts in Nepal of the loss incurred in doing privatization. Critics of privatization claim that Nepali state is too weak to sustain reckless privatization efforts as the share of public sector output in GDP is only 5 percent and that go give the state only "law and order" role and emasculate its social responsibility is tantamount to enter into anti-state strategy. Please tell us your experience with privatization and its consequences to Nepali state?

Dr.Manandhar: What we must understand is that the privatization as a global phenomenon has arrived not with a hope for private sector efficiency gains rather with a despair from public sector inefficiency losses. This is the fundamental flaw of privatization. And this does not mean I am against privatization. In fact, my academic background makes me very much suited for privatization. Privatization is like democracy. Some one having a deep faith in private property rights, individual freedom, workings of the market, economic efficiency, competition, rewards and sanctions based on performance cannot, theoretically, go against privatization. We have hardly tried to debate privatization in an ideological framework. Second, our privatization drive is purely built on ownership dimension. Apart from ownership there are two other elements that go with privatization, namely, building of competition and clearing principal-agency relationships. We have focused on ownership dimension hoping to achieve operational efficiency of the sick and loss making public enterprises. Unfortunately, much acclaimed operational efficiency has not achieved. This we did even at the cost of distributional justice. Third, our privatization policy goals are not clear. Let cite here some illustrations. Having allowed a leather factory to not to produce shoes and to concentrate only on leather processing and the textile mill planning to diversify into hospital business; why cannot we allow the brick factory to sale its land? Having sold a large brick and tile factory like Harisiddhi Bricks and Tile Factory, why cannot we sell much smaller company like Bhaktapur Bricks? Similar question may be asked with Biratnagar Jute Mills. Why does not government takeover the privatized but closed units like Raw Hide and Agriculture Tools even after their closure for so long? You cannot conduct privatization on the basis of "goods once sold are not refundable basis". Our bungled privatization drive only indicates that the government is solely driven by off loading the sick industries from the public to the private sector. What the policy makers have failed to incorporate within the privatization drive is that the privatization, in no way, lessen the government's responsibility. Its role may change but privatization increases government's responsibility in the economy. Unfortunately, our privatization drive has come as a mechanism to lessen the role and responsibility of the government in the economy. Definitely, the big government is bad, it does not necessarily mean we have to strive for smaller government. The question here is not even big or small government. The moot question is the delivery of better government. The irresponsibility towards privatization is being reflected by the lack of privatization monitoring mechanisms and post privatization corrective actions.

TGQ4: How do you evaluate the performance of private sector in Nepal? Many claim that Nepal's dominant private sector is less and less accountable to the nation and people as they are oriented more to profit and less to public welfare. How can this class be made accountable to public welfare?

Dr.Manandhar: Obviously, the private sector is driven by market forces, meaning, demand, supply, prices and profits. If not tamed properly, the market forces could be cruel, particularly, to those who have no access to information and who have little income and asset to participate in the market. This is where we need the role of the government. The government must act as an umpire to monitor and regulate the game being played in the market place. We must not blame Nepali private sector, simply because they are driven by profit motive. Without profit there cannot be business and the concept of business is not that of philanthropy. The government should not be concerned with the amount of profit but with the method and process of earning that profit.

The private sector is slowly coming up in Nepal. But it has a long long way to go. It is still within the domain of family business. And family business invariably limits its size and scope of operation. Professional management and transparency in operation are another aspects that need to go into the private sector. The private sector has been behaving in an irresponsible manner, particularly, due to the lack of mutual trust and confidence between the government and the private sector. Assurance of property rights to the private sector and reduction in the discretionary behavior of government officials may help to build good relationships between the two. I think the way government behaves have far reaching consequence on the performance and behavior of the private sector.

TGQ5: How media can help improve the existing anomaly in governance and development process? Corruption at the higher echelons in the Nepali political sector is rampant. The donors have warned the government yet things have not changed much. A donor driven country as it is, what you think would happen if the donors retaliate and stop funding to this country further. Also tell us how Nepal should lessen her over dependency in foreign aid? Is this possible? Your comments please.

Dr.Manandhar: After poverty and unemployment, corruption would probably be the major issue in the development of Nepal. Donors are very much concerned with the corruption because corruption is no more taken as "a grease" into the squeaky wheel of bureaucratic decisions. If not checked, corruption may endanger democracy and free market system itself. In future, donors may even use curbing corruption as the conditionality of aid in developing countries. They have already said so indirectly by referring to "good governance factor".

I do not expect the donors to abruptly stop giving aid to Nepal. They also have their own interest and agenda in pouring aid into Nepal. However, as a general policy, in future, I see considerably reduction in the quantum of aid inflow to Nepal. This process has already happened. Whether by design or default Nepal has to reduce its dependency on aid. How it is going to reduce aid dependency is a million-dollar question. To be very frank I do not have an answer to this question. In a system where the success of every finance minister is being judged by the amount of aid he or she is able to bring into the country, it is very difficult to look for a model that is averse to foreign aid.

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