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World Bank, Poverty, Aid, NGOs, and Development Paradox in Nepal
by Bhuwan Thapaliya   
Rated "G" by the Author.
Last edited: Sunday, April 18, 2010
Posted: Sunday, April 18, 2010

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we turn over the pages of any development books related to Nepal and other developing nations of the region, we are continually confronted by the issues of "poverty," "poverty traps," "incidence of poverty," "poverty line" and what not. Many people in fact use these words as synonyms while most rely on the standards provided by the World Bank or the United Nation organizations.

If we turn over the pages of any development books related to Nepal and other developing nations of the region, we are continually confronted by the issues of "poverty," "poverty traps," "incidence of poverty," "poverty line" and what not. Many people in fact use these words as synonyms while most rely on the standards provided by the World Bank or the United Nations organizations.

For example, a World Bank poverty study that is often quoted provides the following statement: " Nepal is among the poorest and least developed countries in the world with almost one-third of its population living below the poverty line." But this statement in itself is a paradox because it hardly reflects the situation in Nepal .

In 2002, a report titled "How Not to Count the Poor" was published by two U.S. academics, Sanjay Reddy and Thomas Pogge. They contended that the World Bank figures on how many poor people there are in the world were "misleading and inaccurate," "neither meaningful nor reliable" and extrapolated "incorrectly from limited data" (1). Considering this, one can refute the World Bank's report on various grounds but one cannot ignore it totally, though the World Bank's effort to end poverty has always been mythical.

Furthermore, we are compelled to ask, what does poverty really mean? The history of the past decade or so makes it difficult to be optimistic that there will be swift resolution of the poverty problems in the developing world. Before moving further, there is a "mystery," experts say that we must explain: the number of people living in poverty is growing at a faster rate than the world's population.

Corporate investments and foreign aid and international loans to poor countries have increased dramatically throughout the world over the last half century, but so has poverty. Why? There are various relevant answers but the closest and the simplest answer may be this: paradoxically, the developing world now spends $13 on debt repayment for every $1 it receives in grants (2).

And moreover, throughout the Third World , real wages have declined, and national debts are rising. This makes the matter very complex for developing countries such as Nepal . Those Nepalese who are not affected by International Aid too are subjected to pay the national debt. This is very unfair. But they have no magic potion. Nepal is poor. And the poorer the country the more likely it is that debt repayments are being extracted directly from people that neither contracted the loans nor received any of the money (3).

Furthermore, rising debt means less export earnings -- which create further penury as it leaves the debtor country with lesser option to meet the demands of its population. Hence, a critical question is what action in the industrial countries may mean for the rest of the developing world.

Nearly a billion people entered the 21st century unable to read a book or sign their names (4). But the industrialized world, though they preach about the problems faced by the developing world, did nothing concrete at all to change the direction of the developing world.

But at the same time, it is unwise to blame the industrialized world alone for the problems faced by the developing world. For instance, less than 1 percent of what the world spent every year on weapons was needed to put every child into school by the year 2000 and yet it didn't happen (5). The developing nations' large percentage of the economy is eaten by war and internal strife, and this shows it is not often wise to blame the developed nations for their homemade cause.

Considering all the above facts, to be precise, what are the prospects, if any, for high economic growth as well as rapid poverty alleviation in developing countries such as Nepal ? Is poverty alleviation an impossible task, as it might appear to be, based on the result of past efforts?

The answer to these questions is no, in view of the remarkable results obtained by some of the poverty focused programs launched in the country.

At the moment, such successful cases appear to be few and localized. Nevertheless, given the quality and quantity of their results, it is becoming increasingly evident that Nepal does offer great opportunities for rapid economic growth and poverty reduction.

It has unlimited natural resources and potential; for example, quartz, water, timber, hydropower, scenic beauty, small deposits of lignite, copper, cobalt and iron ore. Moreover, Nepal has considerable scope for exploiting its potential in hydropower and tourism.

But Nepal , despite being a country rich in hydropower resources, has unfortunately been unable to utilize this asset to its advantage. Although with an estimated total viable potential of 44,000 megawatts, less than 500 megawatts are being generated. This resembles the pathetic state of the nation. The cake is right there in front of them, ready to be eaten, but they simply aren't eating it.

Nepal is yet to learn from Bhutan , Canada , Norway and Laos , which are now thriving because of electricity. But sadly, Nepal has been unable to tap its most ardent natural resources. Both its resources and its potential are underutilized -- probably because of its technological backwardness, its remoteness, its civil strife and its vulnerability to natural disaster. But for how long can Nepal remain like this?

Meanwhile, there is one sector in Nepal that has aided its development. Take for instance, the role of non - governmental organizations (NGOs) in alleviating poverty to some extent.

In recent years, though they are often accused of farming dollars to meet their own needs, a number of NGOs have been engaged in different aspects of social, economic and human development in Nepal . The impact of their involvement so far seems significant in terms both of coverage of the poor and contribution to poverty reduction.

In particular, the role of NGOs in the promotion of high-value agriculture production and micro-enterprise activities, and in the development of local skills and institutions within the framework of co-operatives to sustain these activities, has proved to be effective and sustainable.

On the contrary, the experience of NGOs in promoting rural income generation on the one hand, and the generally poor results obtained by government-run poverty alleviation programs in the past on the other hand, have raised a number of issues.

What went wrong in the most of the national poverty alleviation programs in the past, most observers are asking.

Why is the success rate so different between programs run by the government and by NGOs? Is it the scale or the focus of activities that caused this difference? What are the missing links, if any, in those programs? All these questions are worth pondering.

Although the NGOs' success cases are yet localized and perhaps too few to make a national-level impact, they do bring to light ways for pursuing the goal of poverty alleviation.

"There is also growing recognition that for such programs to succeed governments and international organizations needs the active support of non-governmental and community based organizations already working at the grass root level. Increasingly, that recognition is reflected in the share of international aid directed to the poor in developing countries through NGOs" (6).

The poor results by the government's various poverty alleviation programs have raised doubts as to the appropriateness of the design and seriousness in implementation. A careful review suggests that these programs have left out some important links. The planning commission needs to show more transparency in its plan and it must build its own Nepalese poverty alleviation model if it is really to alleviate the penury of the Nepalese clan.

The constraint however is this: in almost all of our governmental plans and programs, for example, there appears to be no clear linkages between the goal and the design, between design and implementation, between the lessons learned from previous programs and those applied to new programs, and between the knowledge and the practice of the implementing agency.

Meanwhile, one greater accusation against the developmental failure in Nepal is given to non-accountability.

Non-accountability has become a general phenomenon in every social, economic and political sphere in Nepal . Who should be held accountable for the success or failure of programs: the politicians? The civil servants? The donors? Or even the beneficiaries themselves? Who should be answerable to the beneficiaries, who are the ultimate bearers of the consequences? All these questions are debatable but must be answered if Nepal is to push ahead.

The government and international organizations have proclaimed their commitment to reduce poverty and to give developmental tasks a very high priority for the rest of the decade. While recognizing that increased economic growth will contribute to poverty reduction, they must keep in mind, before implementing their policies, that they cannot eliminate poverty without programs of direct action targeted at the poor themselves.

For example, practical experience as initiated by Grameen Bank, a micro lender in Bangladesh , suggests that programs that focus directly on income generation can generate the enthusiasm and participation of the poor, and help create an effective demand for the other aspects more rapidly. The progress in the latter aspects may not automatically be forthcoming; but future programs in these areas are likely to be less costly and more sustainable at the local level, experts are saying.

Nonetheless, economists argue by stating that poverty is not -- and should not be -- measured only in terms of the income levels. According to them, poverty encompasses a broad range of social, economic, human, political, environmental and other aspects affecting quality of life. To be fair, their understanding is accurate.

But let this be understood by all policymakers: the poor are often illiterate, and they are deprived of access to safe drinking water, health and sanitation services and many other facilities. Logically, poverty alleviation should mean improvements to all these aspects.

However, is it reasonable for a program to aim at addressing all of them? If not, which ones should be given priority consideration? This is the most important question for Nepal to answer if it is to alleviate poverty and raise the standard of living of its people.

But most indicators suggest that poverty alleviation is a tough job in Nepal because approximately 40 percent of the population lives below the poverty line of $12 per person per month and about four-fifths of the working population live in rural areas and depend on subsistence farming for their livelihoods (7).

The progress of development in Nepal will no doubt depend on the proper utilization of its resources -- both land and human resources -- but its progress also depends on concerted action by the global community, including industrial countries and external finance agencies. Their joint task is to foster a global economic climate that promotes the exchange of goods, knowledge and capital all over the world. And it is their duty to do so because 20 percent of the population in the developed nations consumes 86 percent of the world's goods (8).

Nonetheless, in the midst of the global disparity, developing nations such as Nepal can develop but need a concrete economic road map to move ahead. It cannot afford to stroll on the boulevard of uncertainty, for time is running out.

Much of Nepal remains crippled by poverty, disease and underdevelopment. Perhaps Nepal is destined to be underdeveloped because corruption, nepotism, favoritism, chaos, political uncertainty and lawlessness have taken center stage and there are no signs of them easing off in the near future because of the complexity of Nepalese politics.

Hence, success depends upon getting many things right in Nepal ; for instance, economic, moral, social and legal transformation, to name a few.



1. Sanjay G. Reddy and Thomas W. Pogge. 2005.

"How Not to Count the Poor" ( Colombia University ) Version3 6.2.3. 29 October

2. Global Development Finance, World Bank, 1999.

3. Debt - The facts, Issue 312 - May 1999, New Internationalist

4. The State of the World's Children, 1999, UNICEF

5. State of the World, Issue 287 - Feb 1997, New Internationalist

6. Asian Development Bank, Cooperation with NGOs in Agriculture

and Rural Development, vol. 2, Asian Development Bank, Manila .

7. Rural Poverty in Nepal : 7th March 2007, IFAD.

8. 1998 Human Development Report, United Nations Development Program.


Bhuwan Thapaliya is a Nepal-based economist, author, analyst, poet and journalist. He serves as an Associate Editor of The Global Politician (

Web Site: The Global Politician

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Reviewed by Regis Auffray
Thank you for sharing this informative, apt, timely, and eye-opening article, Bhuwan. Love and peace to you,

Reviewed by M.Bennett Hooper (Mikii)
Dear Bhuwan to be saddened by man's inhumanity, greed and corruption is not enough, however, speaking for myself i feel extremely helpless whenever the issue of addressing these ills comes to the forefront. The courage of you and a few others to educate us is priceless and in my moments of discomfort I'm ashamed when thinking of the less fortunates of the world. All I'm able to offer is my prayers and the sharing of this information with the youth who may be able to make a difference. May you conitnue to be a catalyst for change in Nepal and the world. Mikii
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