The International Development Committee has now concluded this inquiry and drawn the final conclusion that Nepal has huge economic potential, but progress is held back by poor governance and corruption.
The Committee commends DFID for providing technical support for the Investment Board of Nepal (IBN) when no other donors were willing to do so. Nepal is planning to construct two major hydro-electric schemes which will help address the country’s chronic power shortages. If traditional political problems are overcome and these schemes are successful, the Nepalese economy could be transformed and DFID could begin to develop an exit strategy.
Sir Malcolm Bruce MP, Chair of the Committee stated
"Nepal suffers from poor governance, and corruption is endemic in Nepal. The Committee does not see the use of local NGOs in place of the state as a panacea: in corrupt societies NGOs can also be corrupt. If Nepal is to become less corrupt, improvements in governance and a change of culture have to be made to state institutions. DFID should continue to work through state institutions, but ensure funding is linked to improvements in performance. DFID’s large budget in Nepal can only be justified if there are such improvements, and should be reduced if effective action to combat corruption is not perused vigorously by the Government of Nepal."