Nepal has been receiving foreign aid since last six decades but the money of the tax payers from the development partners and donors have failed to make any visible impact due to lack of its transparency that has made it ineffective.
Though, aid makes real difference in saving lives, putting kids of development countries into school, and reducing poverty but the current status of non-transparency has made it difficult for the receivers exactly to know how much money is being spent, where and on what. Even the Finance Ministry does not have complete details of where have all the money been going, undermining aid’s potential and its effectiveness.
In such a case, transparency will ensure citizens in both the donor and recipient countries to know whether the aid money has been making any impact or not.Large sum of development aid often go missing on their journey from the pockets of the first world tax payers to the schools and hospitals of the third world.
The donors are also often handicapped due to the lack of effective feedback from the receivers.
On one hand, the receiving countries like Nepal fails to maintain transparency, and on the other, the donors themselves have also not been serious in maintaining transparency leading to more suspicion on the effectiveness, according to the International Aid Transparency Initiative's (IATI) pilot Aid Transparency Index 2011 that revealed none of the 58 donor agencies surveyed ranked ‘good’ meaning most transparent.
"Only nine agencies achieved a score of over 60 per cent, earning theclassification ‘fair’, according to the IATI report that has listed World Bank-IDA fairest among the nine fair agencies. Some nine agencies have been featured in moderate category, 25 are featured in poor category and 15 donors are featured in the very poor aid transparency category in the index on the basis of availability of specific information items at organisational, country, and activity level for 58 donor organisations, including bilateral and multilateral donors, International Financial Institutions, and private foundations.
"While no organisation made it into the top group (above 80 per cent), the World Bank received an overall score of 78 per cent — more than double the average score of 34 per cent — ranking the most transparent donor agency," it added.
The report reflects the popular perception of the effectiveness of aid forcing the donors to make faster progress in publishing timely, comprehensive or comparable information about the development assistance they give.
The aid transparency would fundamentally strengthen their ability tocoordinate efforts and reduce overlap, waste and inefficiency helping them accountable to their taxpaying citizens. Taxpayers in developed countries facing the effects of dramatic austerity measures have started questioning the rationale for giving money to other developing nations and they are more inclined to demand strong fiduciary systems and evidence of impact.
Due to increasing accountability drive, the Asian Development Bank (ADB) has recently offered to provide a clearer picture on how much development aid is provided and received around the world by joining AidFlows, in partnership with the World Bank and Organisation for Economic Co-operation and Development (OECD).
AidFlows is a one-of-a-kind website that provides an aggregate view of data on official development aid, including funding from donors, from OECD countries and from multilateral development banks. Its goal is to increase transparency by providing the public with a tool for easy access to information like which countries and which sectors receive how much of global aid, and who the main contributors are at the institutional level. The site also allows users to compare aid flow information between individual countries.
In line with global campaign for open government data Nepal also needs to make aid data accessible to the public. It will also serve the interest of the donors, which are forcing government to be transparent to become transparent themselves too.
Nepal has vowed to be more transparent and started working on Aid Monitoring Platform (AMP) — in coordination of UNDP — that is expected help make the aid information transparent.Finance Ministry has expected Rs 110 billion foreign aid commitment within the current fiscal year, but without institutionalisation of foreign aid management, it would lack effectiveness as usual. The country in transition not only lacks aid absorption capacity, but also has no proper mechanism to monitor the on budget aid flow, let alone the off budget aid.
Nepal has been receiving increasing aid commitments in recent years; however, the government’s lack of capacity to spend has made it ineffective.
According to the figures of the Finance Ministry, there has been a huge gap in aid commitment and disbursement due to lack of absorptive capacity. Nepal had received aid commitment of Rs 106.10 billion — including grant and loan — in the last fiscal year. But according to the central bank, the country has received only Rs 26.21 billion foreign grants on cash basis, which was a mere 3.9 per cent increment compared to a fiscal year ago.
Similarly, the country had received Rs 96.60 billion commitment — including loan and grants from bilateral and multilateral agencies — in the fiscal year 2009-10, but it had received only one fourth of the commitment that stood at Rs 25.23 billion grant only, according to the central bank data.