“Nepal needs to be competitive for FDI to graduate from LDC”

  9 min 41 sec to read
“Nepal needs to be competitive for FDI to graduate from LDC”

Peter Malnak
Mission Director

The United States Agency for International Development (USAID)has been active in Nepal for over six decades in areas including economic growth, food security, health, education, development works, climate change and peace and security. Working together with the Nepal government and other organisations, the US government agency has been continuously engaged in developing human and institutional capacityat the local level. Peter Malnak is the Mission Director of USAID Nepal and has been in the post since September 2015. The US official has worked in various conflict marred countries. Prior to his appointment in Nepal, he served as Mission Director for Rwanda from 2012. He also held the position of Middle East Affairs Office Director in Washington DC during the 2011 Arab Spring where he was engaged in inter-agency coordination for twelve affected countries. Previously, he had worked in countries like South Sudan, Jordan, Egypt and the West Bank. In an interview with Nikeeta Gautam of New Business Age, Malnak talked about USAID’s activities in supporting the local economy of the 2015 earthquake affected areas, its role in strengthening business literacy in Nepal and how the country can upgrade from its Least Develop Country (LDC) status. Excerpts: 

How is USAID engaged in post-quake reconstruction and the rehabilitation process supporting the local economy of the affected areas?
When you look at the statistics, the general focus is on damaged infrastructures regarding the post-quake reconstruction.  However, many people have missed the fact that there is a whole economy behind the damaged local infrastructures. So, USAID has been working for the renovation of small scale infrastructures like water systems in the affected areas. 

Meanwhile, we are also active in a nutrition programme which we are conducting especially for women during their pre-birth periods and mother and child for the post-natal period. USAID is focused on making sure that the right policies are adopted. Also, we have observed that the communities see the programmes are more focused and targeted on the needs of their economic growth. 

What can be done to effectively execute the government’s reconstruction plans?
The government of Nepal has done a good job by establishing the new entity National Reconstruction Authority to look after the post-quake reconstruction efforts and develop the institutional capacity for reconstruction.  Donors have been helping the government of Nepal to take the right decisions. One of those primary decisions was to have an owner-driven reconstruction programme in place for building residential homes which allows the homeowners to control the pace of reconstruction.  An NGO driven or government driven approach could complicate things and cannot always work well for the communities. So this approach is the right way allowing the communities to work within a certain framework.  

There are also some areas where efforts have not been up to the mark. Communicating with the citizens, for instance, is one of the complicated responsibilities in a nation which is going through a recovery phase. To make the projects successful, they can take various communication alternatives like using SMS text messages to the affected population, making public service announcements on radio and television along with supporting additional local social mobilisers.  We all need to do a better job in the communication part for a speedy reconstruction process. 

The level of business literacy is low in Nepal. What is USAID doing to raise the level of business literacy here?
We have a strong focus on business literacy programmes with a targeted investment to promote literacy among marginalised adults, women and youths. We help people working with us who know how to manage small businesses and make the targeted groups understand that we are with them so that they don’t make any wrong choices. We work in communities to provide business skills which they need to incrementally improve their ways to invest money in agriculture or home-based enterprises. 

You have worked in different conflict affected countries. How has your experience been like in Nepal which was also affected by a decade long insurgency and is still politically unstable?
In the past seven months of my tenure, I have seen tremendous development in Nepal. Having worked in a country like Rwanda which is extremely front lining on the development issues, I found that there is a greater level of sense and vision in Nepal and a lot more reform supporting legislation which is very important to help institutionalise the types of resources and legal and regulatory foundations that the country needs to expand. I have seen a lot of optimism for the country for its future direction. Though conflict affected for a long period, and still suffering from the political instability, people here are highly engaged in economic activities and are quite resilient.  They work together to make their life better in terms of education, health, investments in small businesses and reducing poverty. The communities are very active to make decisions which are right for them and not to wait for someone else to give them instructions. I also see that the government here understands the global practices and wants to adopt them. 

What is USAID doing to increase the engagement of the private sector in community development?
USAID provides assistance in a multi-dimensional approach to the Nepali private sector. 70 percent of the work here is centered in the agricultural sector which accounts for about 36 percent of the country’s GDP.  We are focused on issues related to improving agricultural policies which include everything from seeds and fertilisers to making the market more competitive.  This helps the agricultural sector attract more investment. 

Nepal needs big infrastructures for its economic development.  However, USAID is not seen engaged in the development of large infrastructures here. What are the core areas of work for USAID in Nepal?
We don’t have large infrastructure projects here. Multilateral development banks including the World Bank, Asian Development Bank and other donors, for instance, provide their assistance for large scale infrastructures. We mainly work on the softer sides to ensure that the infrastructure projects are well executed and maintained. As both sides of the coin are important for the overall economic achievement, we still have a long way to go. We fund smaller level infrastructure programmes like water systems that are targeted to reduce waterborne diseases. We have also started targeting small scale infrastructures in the six earthquake affected districts in Nepal.

We work in the hydropower sector to develop the human and institutional capacity to bring more investments in large hydropower projects in Nepal. We make sure to produce the workforce which is both educated and healthy. We also work at the policy level to support the Investment Board Nepal and also with various ministries that have different types of legal and regulatory frameworks for investment. We help through one-term consultants providing a global experience so that Nepali decision makers can adopt appropriate policies. 

How do you make sure that USAID funding is well utilised?
US government financial assistance to Nepal was USD 130 million dollars and in 2016 it is USD 116 million. So, that level of assistance has to be very well thought out, targeted and we have to work to our competitive advantage. Our competitive advantage is based on global evidence and global data that we bring to Nepal to rapidly improve human capacity, institutional functioning and focus on areas that will catalyse investment and infrastructure development.

Our focus is to develop the human and institutional capacity in order to make the country economically strong. We work increasing farmers’ incomes, food security,and nutrition while also supporting the government at the policy level to address various issues in agriculture and the overall macroeconomic sector for a better business environment in Nepal.

What are the major achievements of USAID regarding its projects here?
Our aim has always been to help the government and the citizens to own their development and understand how to make the right decisions for the country. We provide expert advice so that people take the right decision. This is the most important thing because we want to make sure that we impact the people of Nepal in their community so that they can reduce poverty and improve the life standard of Nepal. 

Health is one of the core areas for USAID. We have supported the Ministry of Health to improve maternal child health with the major focus on nutrition. The reason is that chronic malnutrition is very widespread in some parts of Nepal and as a result approximately 40 percent of children under the age of five are suffering at present. In many cases worldwide, chronic malnutrition can reduce the overall national wealth and GDP by 10 percent. So, we are talking about very significant investment where we invest a certain amount and years later you get a much better payback. So, by organising different innovative health related programmes, we have been gaining achievements in the health sector. 

USAID also helps to identify the market actors who have potential to support the farmers. For instance, under the 'Kissan' agricultural programme, we are investing in different levels of agricultural input providers so that they can provide training to farmers and adopt new technologies faster. I have observed that there is a very strong adaption rate here in newer agricultural technologies which we don’t usually see in other similar countries. The farm productivity has increased 300-500 percent compared to last year. In this way farmers are earning better and have access to the basic needs. They are also more resilient to shocks in case there is any downturn in agricultural production. The training is also helping them to understand whether there is greater value to add when they focus on producing tomato paste rather than just growing tomatoes. 

Nepal plans to graduate from an LDC to a developing country by 2022. Nevertheless, things have not gone in the right direction due to the prolonged political instability and last year's disastrous earthquake. How do you think Nepal can achieve this?
Nepal needs USD 10 billion a year in terms of FDI in order to graduate from the LDC status. In order to elevate the status, Nepal needs to be competitive in attracting FDIs. That can be everything from having a greater level of ICT infrastructure to developing high value jobs to promoting exports.  Nepal has performed commendably in improving human development across multiple other areas. So, it is up to the Nepali citizens and government to shift to the higher position by 2022. 

paru lama

yes,nepal also needs to competitive and develope. i also want to support and help neplease citizens and i will do one day and best of luck peter malnak sir...

Ben Dagani

Insightful, Thank you very much.