Nepalese raise concerns over new DPI loans amid previous project failures

Some experts have expressed apprehensions that the government of Nepal has contracted a new loan for the implementation of a digital public infrastructure (DPI) project without proper diagnoses of previous similar projects that witnessed some failures.

Last month, Nepalese authorities signed a loan agreement with the Asian Development Bank (ADB) amounting to $40 million, in addition to a $50 million loan which had been approved by the World Bank for the country in February.

Dubbed the Nepal Digital Transformation Project, the new initiative, to run for the next five years, is designed to strengthen the country’s essential DPI architecture in order to streamline access to government and private sector services for at least seven million citizens.

Before this new project, there were the Digital Nepal Acceleration (DNA) Project and the Digital Nepal Project (DNP) which ended, reportedly without effectively meeting the objectives for which they were designed.

The projects were said to have been plagued by structural inefficiencies which included government red tape, procurement challenges, and weak capacity for proper inter-agency coordination.

The collapse of the DNA project particularly exposed a pattern of administrative inertia where different ministries spent critical time blaming one another rather than executing the plan, according to The Kathmandu Times.

Political pressure from various provinces regarding infrastructure distribution further helped paralyse the project. As a result, the DNA project was cancelled 18 months after approval, with no progress registered and not a single rupee spent within that period.

Nepal’s Former Communication Minister, Rekha Sharma, is quoted by The Kathmandu Post as remarking that part of the failure of the project stemmed from fundamental disagreements with the funders over spending priorities, specifically regarding grants meant for the Nepal Telecommunications Authority for rural broadband expansion.

The Kathmandu Post echoes concerns about the new project, quoting digital economy expert Bibek Rana as asserting that such important projects must be based on “a strategic anchor.”

To Rana, the government must treat DPI projects as a broader economic reform endeavor, and not a routine IT project treated with levity. The official warns that proceeding without a strategic anchor risks the same fragmented and isolated results seen in the past, especially since donor agencies are currently financing nearly a dozen different digital programs across Nepal with unsatisfactory progress.

Some recent studies on Nepal’s DPI progress highlighted several drawbacks including interoperability issues.

Some of the officials quoted by The Post cite examples like Egypt, Georgia, Sri Lanka, and Malaysia where donor-funded projects of the same nature proved successful because these nations showed sufficient proof of skill, coordination, and implementation capacity.

In a bid to address these challenges which have bedevilled Nepal’s digital transformation projects, the country’s Finance Minister disclosed that corrective efforts are underway. He mentioned at the Kantipur Economic Summit that work is afoot to bring all IT-related aspects under one coordinating agency, which shall be placed under the authority of the Prime Minister’s Office to break down bureaucratic silos and enforce data interoperability.

As a result of the institutional transition, the implementation of the new project has been put on hold, amid calls from experts and other stakeholders to consolidate the legal and governance frameworks needed for effective implementation of the new project in order not to repeat past mistakes.

Meanwhile, there have also been calls for the government to better negotiate loan deals for such projects in the future, and to ensure that capable and technically sound teams represent Nepal in a way that government priorities can be given the necessary attention.

Article Topics

digital ID infrastructure  |  digital public infrastructure  |  government services  |  Nepal