Rebuilding Nepal

On April 25, 2015, a 7.6-magnitude earthquake struck Nepal, which was followed by 465 aftershocks and another 7.3-magnitude earthquake in just 17 days. [1] Around 9,000 people died and 22,000 injured. More than 600,000 houses and public infrastructures were destroyed.

With Nepal considered as the 33rd most fragile state in the world [3], the earthquake worsened the ongoing vulnerabilities and inequalities faced by the country. According to UNDP’s Multidimensional Poverty Index (MPI) estimation in 2016, more than half or 56.4% of the population are vulnerable to or already living in poverty. Half of Nepal’s population is subjected to dismal healthcare, education and standard of living. [4] In terms of housing, the percentage of citizens struggling to afford a home increased from 4% in 2006 to 25% in 2014. [5]

Efforts to provide immediate relief to the victims of the earthquake served to be inadequate. Monsoon rains and the travel blockade between Nepal and India have also delayed relief operations. By December 2015, a reconstruction plan was formed. With this, the Government of Nepal estimated a total reconstruction cost of USD 9 billion.

The Earthquake Housing Reconstruction Project (EHRP) was initiated by the Government of Nepal, the World Bank, the United Nations Development Program (UNDP), and the European Union (EU), with the National Reconstruction Authority (NRA) as the governing body to facilitate reconstruction, deployment of engineers, and disbursement of grants. [7]

Worsening debt distress 

Although significant progress has been achieved, housing recovery remains slow, leaving families seeking shelter in substandard housing. While the final tranche has already been disbursed, the overall grant provided for the reconstruction is inadequate, leading families to take out loans from local banks or borrow money from informal lenders. Usual cost of rebuilding their houses is twice the amount provided by the EHRP. Therefore, these communities are subjected to high-interest loans, incurring debt. Affected villages are populated with half-finished houses, due to the lack of funding. [13]

Nepal is also subjected to worsening debt distress, with its dependence on foreign aid and loans to fund its development programs. Before the earthquake in 2015, Nepal allocated an annual debt payment of USD 215 million, to pay off its outstanding USD 3.8 billion foreign debt. This debt came from donor countries and international finance institutions (IFIs) such as the International Monetary Fund (IMF), World Bank (WB), and the Asian Development Bank (ADB). 

After the earthquake devastated Nepal, civil society has urged these IFIs and donor countries to provide debt relief to the country, so that it can redirect its debt payments to recovery. However, the IMF-WB has claimed that the country is in ‘good fiscal shape’, therefore not qualifying for debt relief. Instead, the WB granted a credit or loan of USD 500 million, which will only contribute to the debt burden the Nepalese carry. [14]

Instead of disbursing national funds to address the needs of its people, these are used to pay off debts. As exemplified in the aftermath of the Gorka earthquake, aside from a one-time disbursement of NPR 15,000 or USD 125 and 100 kg of rice to affected citizens, the government has not given other forms of assistance. [15] Poverty has already been rampant prior to the disaster, with a poverty prevalence rate of 23.8% in 2014. [16] After the earthquake, more than 900,000 citizens were pushed below the poverty line. 

Ironically, when tracing the dependence on aid of the country, it can be seen that the IMF-WB has contributed heavily to its decline in economic growth. In 1985, the IMF-WB pursued a structural adjustment program (SAP) that led to the removal of government subsidies for the agricultural sector, the backbone of Nepal’s economy. This led to a decline in agricultural productivity and stunted the growth of export industries of the country. [17]

The decline in economic growth urged the country to heavily rely on aid and loans, incapacitating the government to provide immediate assistance and pursue long-term development. The IMF-WB must be held accountable for the negative impacts it has brought to the country’s economy, and for the ripple effects these have caused to the Nepalese peoples’ development. 

Political instability

With decades of internal and external political party conflicts that have led to long-standing political instability, Nepal has lacked effective democratic institutions in addressing the needs of its peoples. It has also proven its ineffectiveness in responding urgently to national disasters, such as the Gorkha earthquake in 2015. 

The instability and political shift took the government and the opposing parties more than eight months to appoint the head of the NRA. [18] In fact, they have changed the chief executive three times in over a year. The Government of Nepal wanted current elected officials to head the NRA, whereas the opposing parties preferred technocrats. This debate, added with the lack of transparency and budget allocation, contributed to donors’ hesitancy to continue their pledges.

On top of that, the elected officials in the 2017 elections acted merely as moderators of the EHRP at the local government level. With the lack of close monitoring and assistance, it took months to address grievances on inefficient relief distribution, and the lack of information dissemination and coordination among sectors in decision-making.

Lack of assistance and people-centered approach 

Aside from the inadequate financing for the reconstruction, requirements for the grant also served as hindrance for citizens to receive the much-needed aid. One of the reasons why citizens failed to rebuild their homes is land title dispute. The lack of land title ownership by some households, even though their families have been living in the place for generations, have made them ineligible for the reconstruction grant. 

Aside from financing, the World Bank has significant influence over the EHRP as it provides advisory and technical support to the government of Nepal for its implementation of the project. The bank assisted the NRA specifically in matters regarding financial management and application of safeguards. However, the primary responsibility in ensuring compliance with the safeguards falls on the beneficiary households, the bank just provides a mobile team to provide support if needed. 

The lack of on-ground technical assistance for affected communities, both from the NRA and the World Bank, has led to the households being denied the reconstruction grant. There were families who started rebuilding their houses before the NRA released their technical guidelines. Once rules have been set, the homes were found non-compliant in terms of material and design. Prior to the earthquake, there were no effective mechanisms to guide  the people in building their houses and monitoring their progress. Without efficient and comprehensive plans, reconstruction remains to be unsustainable.

Despite the World Bank claiming that there is an available Grievance Redress Service (GRS), affected households were not able to air out their concerns. It was noted that the villages who are undergoing reconstruction have numerous and widespread discontent with the project implementation. In addition, due to the top-down approach of the NRA, the project implementation units in the central level and district level failed to integrate the views at the ground level of the affected communities, in creating planning and designing the development project. 

Lack of coordination and training

A year after the earthquake, as of September 2016, the NRA has lagged behind the budget plan. Despite the World Bank’s assistance in the project’s financial management, only NPR 21 billion or USD 174,498 have been allocated for reconstruction, out of the NPR 91 billion or USD 756,159 committed solely for the years 2015 and 2016. The agency reasoned that the delay was caused by thorough damage survey and planning.

Engineers have also reported having a hard time providing service to the residents for the reconstruction. They are not equipped with resources, ample training, nor even an office. More than 1,500 engineers and architects have been employed, but their tasks are not well-defined.[19]

As for public knowledge and participation, the government’s lack of disaster preparedness skills training barred citizens from playing an active role in the recovery process. Prior to the disaster, a program for earthquake resistant house construction and an earthquake drill was held, but most people were not aware of the training or were merely observers. Public awareness remained poor even after the earthquake.

The EHRP, despite being a crucial project for the recovery of affected villages, have largely overlooked the context and concerns of these households. According to Yam Nath Giri, Monitoring and Evaluation Specialist from Lalitpur, the NRA should have first addressed the grievances of households before the release of reconstruction guidelines, which they failed to do. 

Putting all the burden and responsibilities to the affected households without sufficient financing and assistance have led to debt distress and ineligibility to the grants. The NRA, with the World Bank, must ensure that ample training is given to their technical staff, in order to increase assistance for affected households. The project should also promote coordination of the various development actors and relay information to the communities. Grievance and redress mechanisms of the World Bank and NRA should be made available and well-known to the communities. Furthermore, subsidized loans should also be made accessible to all sectors. 

Most importantly, instead of providing additional credits or loans to Nepal, IFIs and donor countries must cancel the debts that further impoverish the country. The IMF-WB, in particular, with its role in negatively impacting the economy and development of the country, must administer the necessary measures to provide debt relief for Nepal. Removing the debt burden on the peoples of Nepal is a critical step in providing long-term development and recovery for all.