Wednesday, April 8, 2015

Post-war Reconstruction in Nepal

Nepal saw a number of reconstruction projects commencing after the end of its internecine strife in 2006. Such reconstruction activities can be categorized on the basis of the actors leading them: government, international agencies and the private sector. Government/nongovernment organizations and donor agencies in Nepal now operate a number of collaborative reconstruction projects. Most importantly, the Government of Nepal established the Ministry of Peace and Reconstruction in 1 April 2007. Among other mandates, the ministry is now working on the reconstruction of physical infrastructures damaged during the war. The government has also created Nepal Peace Trust Fund (NPTF), a multimillion dollar reconstruction program operated from the basket fund contributed by major donor agencies (Peace Fund Secretariat, 2007). Besides, the Asian Development Bank focuses on rural reconstruction whereas the World Bank does so in upgrading rural roads and is contributing to the Poverty Alleviation Fund (PAF) so as to address the root causes of the war − poverty, inequality, and lack of services.
Kathmandu under Construction: The New Building of Nepal Telecom Indicates
the Flourishing Telecom Industry in Nepal. Photo: Safal Ghimire/April 2014
Another influential and active actor in post2006 physical reconstruction in Nepal is the private sector. Activities of the private sector affect the economic, social, cultural and political spheres. This sector in Nepal has the potential to assist in post-war recovery by generating economic opportunities and equitably distributing profit (Ghimire and Upreti, 2014). Some multinational private companies have begun investing in mega projects in postwar Nepal. For instance, some Chinese (Three Gorges for instance) and Indian (GMR for instance) companies are licensed to mega projects on hydropower. At times, they have been politically contested because of the geopolitical interests of China and India in Nepal and the nexus between Nepali political actors with the investors from these countries. As hydro resource has been a boon for Nepal, considerable number of private investors is now involved in this sector.

Not only the collective impulse of statebuilding, but also their own commercial interests drive the private sector actors in post-war reconstruction projects (Ghimire and Upreti, 2012). Many companies have invested in mining and extracting, especially sand, gravel and stone extraction. The other sectors that are attracting investment in postconflict period are chain stores and super markets with multimillion rupees reinvestment for expansion, nontimber forest products (NPTF) and herbal processing plants, commodity market (online sale of gold, silver and gems), and banking and finance. The most important among all, Nepal witnessed huge scale of investment in real estate by private companies in the aftermath of the war. This included buying and selling of urban lands, construction of attractive residential colonies and highrise apartments in city areas (UNHABITAT, 2010). Against this background, it is imperative to look at the boom in construction of highrise apartments and residential colonies immediately after the conclusion of the war and at how investment by private sector in this business affected postconflict economy of Nepal.

Thanks to the increasing remittance, easy credit by banks and of course rural to urban migration during conflict, economic activities in Nepal grew rapidly after the peace agreement in 2006. Even though the corporate sector faced critical challenges after some months, the freedom after the war was like that of unbolting of a floodgate. The influx of migration during the war had already overpopulated the capital city Kathmandu. With increased urbanization and dense population, real estate business flourished overnight as soon as the insurgency stopped disturbing economy (Shrestha, 2010). This business skyrocketed in the first several years after 2006 until the Nepal Rastra Bank, the state bank of Nepal, intervened in the financial market. This shortspanned boom generated multimillion investment in housing and land properties, made few businesspeople billionaire overnight and spread uneven impact in the national economy, a process termed as 'real estate bubble' or 'housing bubble' in Economics literature. This is evidenced by the 59 housing and highrise building projects in the three districts (Kathmandu, Bhaktapur, Lalitpur) inside Kathmandu valley. They cover the area worth 3024783.13 square feet of land, which is around one fourth of the area of Bhaktapur district alone (COLARP, 2012). Hence, there is an academic opportunity to explore the relations between post-war reconstruction (often called as ‘post-conflict reconstruction’, which I disagree upon) and post-war recovery in Nepal from the perspectives of investment, divestment, state priorities and actual need of the conflict-affected people in Nepal.

Follow-up post: Private Sector and Post-war Recovery: The Case of Housing Bubble in Nepal

References

COLARP. (2012). Land Grabbing and Multinational Companies: A Study of Kathmandu Valley. Kathmandu: Consortium for Land Research and Policy Dialogue.
Ghimire, Safal & Upreti BR. 2014. Peace by Corporate Means: How Mature Is the Private Sector for Peacebuilding in Nepal? Journal of Peacebuilding & Development, 9(2), 90–96. doi:10.1080/15423166.2014.947894.
Ghimire, Safal and Upreti, Bishnu Raj. 2012. Corporate Engagement for Conflict Transformation: Conceptualising the Business-Peace Interface. Journal of Conflict Transformation and Security 2(1): 77-100.
Peace Fund Secretariat (2007). Nepal Peace Trust Fund Projects’ Progress ReportI. Kathmandu: Ministry of Peace and Reconstruction.
Shrestha, B. K. (2010). Housing provision in the Kathmandu Valley: Public agency and private sector initiation. Urbani Izziv, 21(2), 8595. DOI: 10.5379/urbaniizziven 20102102002
UNHABITAT. (2010). Nepal Urban Housing Sector Profile. Nairobi: UNHABITAT.

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