The prime minister need not chair the Investment Board Nepal (IBN) any more. The board was established through a 2011 Act, with the goal of pushing large-scale infrastructures so as to lay a strong foundation for the country’s economic takeoff. Almost a decade down the road, this government entity has turned into yet another waste of taxpayer money and under-utilizer of foreign aid. Having failed to efficiently manage political, technical, economic, and aesthetic aspects of mega projects, it doesn’t have one project completed in the past decade. For one, the PM-chaired board has not given its senior management clear guidance to make maximum use of available resources.
The Rwanda Development Board (RBD), a government institution with a mandate to accelerate Rwanda’s economic development by enabling the private sector, was established just two years before the IBN. Today, the RDB provides trusted market intelligence, practical advice, and business tools to help Rwandan companies expand into global markets. It also attracts foreign investment in 12 different sectors such as manufacturing, agro-processing, real estate, ICT, financial services, mining, infrastructure, energy, tourism, health, and education.
In the case of Nepal, the IBN is slowly turning into no more than a government office with some consultants on donor payroll. The RBD, on the other hand, is chaired by a venture capitalist with cabinet ministers as members, along with other representatives from both public and private sectors. One could argue that Rwanda is an authoritarian state that hands out high-end jobs like CEOs to ruling elites. But this is no different in the case of the IBN. All its three CEOs so far have been appointed based on their loyalty to this or that PM rather than on their core competences.
Notably, the Public-Private Partnership and Investment Act, (PPPIA) 2019 had replaced the Investment Board Act (IBA), 2010 with the support of the Asian Development Bank (ADB). The new Act envisioned two separate units within the IBN—PPP Unit and Investment Unit—for greater efficiency in investment approval and in processing projects built under PPP mechanism. The Act also aims to make PPP more operational (and the IBN secretariat has a bigger role to play in this regard). But more than a year since the Act’s promulgation, not much has been done to honor its letter and spirit.
The expenditure to run the board has become a sunk cost for the economy as it has failed to yield any desirable fruits. It hasn’t been able to develop the capacity of domestic private sector nor to attract foreign investors. The IBN does not even have a basic mechanism of collecting, processing, and analyzing data, which is vital to get a clear picture of domestic and international markets. Most of its work is routine bureaucratic stuff that predictably fails to excite potential investors. The same can be said of the couple of investment summits Nepal has hosted.
Against this backdrop, time has come to reengineer the board to make it professional enough to push private sector to perform better. If a board chaired by the country’s prime minister fails to deliver for so long, it should either be dissolved or restructured. Or it will continue to consume state resources without having anything to show for it. The country will suffer mightily during the Covid-19 crisis if we retain such an expensive institution that delivers almost nothing to the economy. Pre-Covid-19 projections of the need for investment won’t make any sense in the coming days.
Foreign investment is something that nearly all countries are angling for. To be competitive enough to attract international private investment, we must at least have a decent investment institution equipped with basic institutional and human resources.
There are two ways to do this: i) By restructuring the board and recruiting senior management based on core competence, and ii) By strictly implementing PPPIA to make PPP more operational so that the domestic private sector can contribute more on project development.
