MONEY»
Social sector: donors’ first love
KATHMANDU, SEP 07 -
With Nepal having come out of a decade-long conflict and striving for the status of an inclusive state with a new constitution, the social sector has emerged the most preferred area amongst donors.
The third progress report on Millennium Development Goals (MDGs), that was unveiled on Tuesday, said that the share of foreign aid in the social sector has doubled since 2001-02, reaching nearly 68 percent in 2008-09. The social sector basically denotes the health and education segments in which the country makes the biggest investment compared to others.
The report states a gradual increment of foreign aid in the social sector from 2001-02, the time when the Maoist conflict was peaking. The escalation of the conflict, on one hand, made an environment for infrastructure development unviable, but on the other hand it forced the donors to step up their support to humanitarian needs and social sector. The donors began to readjust activities and develop new strategies, with an increasing number of international donors choosing conflict-sensitive approaches.
The other reason for decline in infrastructure assistance is Nepal's commitment to MDGs in 2000, where almost all indicators are social except the economic part relating to poverty reduction.
Donors say government inability to speed up infrastructure sector during the conflict also forced them to enter the social sector. "The government could not invest in the infrastructure sector due to conflict in the past where the donors could have supported the government," said Robert Piper, United Nation Development Programme (UNDP)'s resident representative. Piper said that another reason why donors went for the social sector was to achieve quick results on their investments. Donors' concentration on social sectors, according to government officials, saw their assistance in infrastructure going down from 2002. "Donors' aid to infrastructure sector decreased during 2002-2004 which was the height of domestic conflict and there was no environment to work in the infrastructure sector," said Finance Secretary Rameshwor Khanal.
The decade-long conflict has taught the government and the donors to be more inclusive when it comes to development and assistance. With the country moving towards a federal republic and inclusiveness, there was need to up the investment in social sector also. "Social sector became the government's priority and the donors also honour it by upping their assistance to the sector," said Biswombher Pyakurel, an economist. And, that is what the MDG progress report has illustrated.
As per the MDG report, donors have continued increasing their share of aid to the social sector while aid is shrinking in other areas including agriculture, infrastructure and trade and industry. Social sector has now emerged as the biggest area of donors' aid with 67.94 percent share. "The aid however, went to health and education sector at the cost of infrastructure," said Khanal.
Of late, there has been growing concern over donors' increasing interest in the social sector and dwindling interest in the infrastructure sector. The MDG progress report says, "The share of foreign aid for the infrastructure sector has declined over the period and such neglect of infrastructure may create risks of lopsided social sector development and unsustainability in the long term. Economists and government officials say without infrastructure development, the gain made in the social sector cannot be sustained. "Unless there is heavy investment in infrastructure, employment generation and trade expansion can't happen in the country." said Pyakurel. After Jana-Andolan 2, multilateral donors, ADB and the World Bank have upped their assistance to the infrastructure sector. The ADB has recently started urban drinking water project and the World Bank is also going for a project to improve the physical facility in growing towns. But, the focus of bilateral donors from Europe, according to government officials, remains the social sector. "Donors' aid in agriculture and forestry has increased only a little bit after 2009," said Khanal.
Sectoral distribution of foreign aid
01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09
Agriculture, forestry & irrigation 22.84pc 13.71pc 12.85pc 10.97pc 10.87pc 14.39pc 13.17pc 6.30pc
Transport, electricity & communication 41.06 pc 48.94pc 40.03pc 41.68pc 32.13pc 25.76pc 22.90pc 17.32pc
Trade and Industry 2.56pc 2.53pc 0.78pc 0.52pc 0.48pc 0.46pc 0.27pc 0.44pc
Social Sector 32.57pc 33.50pc 46.16pc 45.43pc 50.64pc 58.71pc 62.09pc 67.94pc
Others 0.96 1.33pc 0.19pc 1.40pc 5.88pc 0.67pc 1.57pc 8.00pc
Posted on: 2010-09-08 08:57
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