Beyond graduationPeople want the country to 'actually' graduate from LDC status, not just on paper.
Bhoj Raj Poudel
All roadmaps, plans and preparations are subject to change and need to be updated. The whole idea of Nepal becoming a prosperous country by being an export hub in the region is just a notion of perceived happiness borrowed from the future. As we have been preparing to graduate from the least developed country (LDC) status to developing country status, it is time to re-think how much homework we need to do to walk on the path of prosperity beyond graduation.
Nepal needs to invest an amount more than double its GDP in different sectors to be competitive in the global market even beyond graduation. The government alone can’t funnel the money needed to lay the foundation for all sectors to be ready for the shock of graduation from LDC status. And on top of that, LDC graduation is not the end of the story. Graduation has positive and negative impacts on the country’s economy. A detailed assessment of both the positive and negative effects should inform all players in the economy.
There is a tendency to feed information only to the government at the federal level in terms of the impact of graduation and what will happen to different sectors. This should also change. Both the public and private sectors should be equally well informed about the effects of graduation. More importantly, provincial and local governments should have adequate information and knowledge about the impact of LDC graduation, and what would be the likely scenario in terms of the inflow of official development assistance and other support from bilateral and multilateral agencies.
Different agencies, including the National Planning Commission (NPC), have been undertaking studies to understand the nuances of graduating from LDC status by 2026. But that level of understanding and findings from different studies and dialogues should be shared widely at the provincial and local levels among all stakeholders, including the political leadership and civil society. All the players in the economy should accept that there will be a shift in the nature of support to Nepal in the post-graduation days. There may not be continuity of preference regarding an international market for export and other accesses. Hence, the private sector should start preparing to remain as competitive as it can in the global market once the cushion of preferential policies goes away.
Preparing for post-grad
The World Trade Organisation (WTO) states that there won’t be a significant change in the outlook for official development assistance beyond graduation as the donors and multilaterals appear committed to supporting it in the post-graduation period. Primarily because more prominent international organisations do not use the LDC category to design strategies for official development assistance, this leads to the conclusion that the LDC category has fewer implications than in official statements and commitments. However, there must be a roadmap to walk on the path of prosperity in the post-graduation days.
With that being the process, the WTO suggests that graduating countries renew engagement with multilateral economic institutions and mechanisms, considering all the systemic and global issues and improving the existing arrangements concerning trade, finance, tax, immigration, agriculture and the environment. For all those to be on the right track, preparations should start early so that all the details are taken care of and no individual citizen or small firm will have to go through the repercussion of the country’s graduation. Another equally important aspect of graduation is a capacity needs assessment of the country in the post-graduation days. It should focus on financing requirements, new types of support from the international development community, public finances, transfer of technology and know-how, direct foreign aid, disaster risks and required infrastructure to ensure better and simplified donor support. The challenge in our case is that the preparation is inadequate in terms of even doing a capacity needs assessment, let alone how to fulfil these needs and what kind of strategy there should be.
Nepal’s case for graduation is not unique. Many countries have completed the process in the past from which we can draw lessons. As we have just three years remaining to reach the point of graduation, we must work on each of the areas mentioned above with a clear strategy. More importantly, the homework should also include identifying our niche areas that could help Nepal become a prosperous developing country which eventually enters the path of becoming a mid-income country by tapping into some growth trajectories. But the real exercise should be done in identifying these growth trajectories. So far, Nepal has been wrapped up in the narrative of exploiting areas such as tourism and agriculture to become a prosperous nation. Now is the time to re-assess that narrative if Nepal can become a prosperous country through tourism and agriculture alone.
Nepal has a collective habit of shifting the goalposts to envision the country’s economic development date. On each occasion of setting up a new goalpost at different times, the government receives support from one development partner or another. Hence, it is also vital that all development partners work on the same canvas to help Nepal prepare for graduation from LDC status. In the absence of a coherent approach, it is going to be another exercise that Nepal will do but yield little fruit.
People want the country to "actually" graduate from LDC status, not just on paper. One may ask what that actual graduation is. The answer is simple: A Nepali should be able to traverse a 200-kilometre road in standard time, and not get stuck for hours and days, all the while fearing for one’s life. If you don’t get that, look closely at the country’s connectivity infrastructures. Everything is linked to that, from the movement of people to saving lives in a time of emergency to the function of the economy.