Padma bridge and thoughts on self-reliance
Wednesday, 18 July 2012
Sheikh Rahman
Bangladesh should view the World Bank's cancellation of financing of the Padma Shetu (Padma Multi-Purpose Bridge) as a blessing in disguise. Building the bridge is the challenge for the nation resolute on using its own resources and lessening dependence on external agencies. Nationalist sentiments defy any outside power chipping away at its authority in determining its own destiny. Dependence on external sources is not something we can do away within a matter of days or even a few decades. It does not however mean that we should willingly surrender our self-respect for obtaining a loan from development financing institutions.
Funds offered by the World Bank or the International Development Agency (IDA) appear to bear low interest rates but actually, after adding all of the charges - costs and fees - the average rate of interest is as good as any commercial bank loans at about 13 per cent. Therefore, alternative sources of funding that may seem to be offered at higher interest rates may be considered given there is no additional fees and obligations. World Bank loans are given with certain conditions and commitments. Finance from development agencies come with conditions that require recruiting consultants from the advanced industrial economies and procurement of goods from manufacturers originating in these countries. It has been variously estimated that a big part of the donor funds flow back into the advanced industrial economies. At least, 75 per cent of the funds flow back to the donor countries in capital-intensive projects leaving a quarter for the debtor country's GDP (gross development product). Once the local administrative and counterpart organisations absorb a chunk of the borrowed capital mostly for the recruitment of consultants and procurement of goods very little is left over for any meaningful contribution towards the realisation of the programme's objectives. Donor funds are often compared with indirect subsidies and support for maintaining the competitive edge of these advanced economies. Soft loan is a myth - so get over it. It is just a cheap slogan to sell the services and offload excess capital sitting idle in the financial institutions of the capitalist societies.
Contribution of 'tiffin money' from school children may be seen as a great morale boost up for a nation struggling to maintain a positive balance of payments. It may be a long shot but even if this kind of nationwide resolve succeeds in rooting out corruption from our system, then the nation would have taken a step forward in achieving 'real' development goals. Therefore, in the nation's history this is a momentous occasion that should be marked as the starting line to embark upon achieving 'real' development goals. Bangladesh is poised for growth driven by the political will of the government and the consensus of the people.
Today's tiffin money can be the seed money for tomorrows engineers, financiers, and experts for constructing any bridge or mega-infrastructure or energy projects with Bangladesh's own resources - finance, manpower, expertise and technology.
Dependence on external funding sources and management of mega-projects drains the economy of vital resources. In addition, foreign experts take away the cream of the business opportunities and charge exorbitant consulting fees leaving low-skilled low-wage labour jobs for the local enterprises. Consequently, this leads to attrition of the best of talents from the debtor country. Scarce talents are siphoned off for finding creative ways to contribute to the profit making motivations of the multinationals. Therefore, the nation is deprived of the input from its professional cadre leading to a dearth of capacity to meet the challenges facing the nation. Only a handful of die-hard nationalists are left to protect the interest of the country. Incentives in the form of free foreign trips for conferences and symposiums, long- and short-term training sessions, and year-long study programmes abroad are offered through donor channels.
A sort of brain washing follows the lavish treatment of the government officials and key decision makers who are enticed to collaborate with the capitalists and bend the rules for the multi national companies allowing them to maximise their profits at the expense of people's well-being.
Given the inadequacy of resources, the construction of the Padma Shetu with Bangladesh's own financing may not be at present a viable option since this would take away valuable funds earmarked for economic development and poverty alleviation. However, the positive development from the recent fiasco with the development financing agency is the realisation of the urgency for establishing a more self-reliant economy. A sense of determination seems to have united the nation on the need to lessen dependence on external sources for managing its economy. This kind of dependence often implies conditionalties binding upon the debtor country to make it easier for multinationals to drain its wealth. Neighbouring nations of India and Malaysia have already reduced their dependence on the donor agencies and have done away with most of the practices resembling the residual elements of colonialism.
The writer is Senior Adviser of Enertech International, Inc. USA.
sheikh.rahman2010@gmail.com
Bangladesh should view the World Bank's cancellation of financing of the Padma Shetu (Padma Multi-Purpose Bridge) as a blessing in disguise. Building the bridge is the challenge for the nation resolute on using its own resources and lessening dependence on external agencies. Nationalist sentiments defy any outside power chipping away at its authority in determining its own destiny. Dependence on external sources is not something we can do away within a matter of days or even a few decades. It does not however mean that we should willingly surrender our self-respect for obtaining a loan from development financing institutions.
Funds offered by the World Bank or the International Development Agency (IDA) appear to bear low interest rates but actually, after adding all of the charges - costs and fees - the average rate of interest is as good as any commercial bank loans at about 13 per cent. Therefore, alternative sources of funding that may seem to be offered at higher interest rates may be considered given there is no additional fees and obligations. World Bank loans are given with certain conditions and commitments. Finance from development agencies come with conditions that require recruiting consultants from the advanced industrial economies and procurement of goods from manufacturers originating in these countries. It has been variously estimated that a big part of the donor funds flow back into the advanced industrial economies. At least, 75 per cent of the funds flow back to the donor countries in capital-intensive projects leaving a quarter for the debtor country's GDP (gross development product). Once the local administrative and counterpart organisations absorb a chunk of the borrowed capital mostly for the recruitment of consultants and procurement of goods very little is left over for any meaningful contribution towards the realisation of the programme's objectives. Donor funds are often compared with indirect subsidies and support for maintaining the competitive edge of these advanced economies. Soft loan is a myth - so get over it. It is just a cheap slogan to sell the services and offload excess capital sitting idle in the financial institutions of the capitalist societies.
Contribution of 'tiffin money' from school children may be seen as a great morale boost up for a nation struggling to maintain a positive balance of payments. It may be a long shot but even if this kind of nationwide resolve succeeds in rooting out corruption from our system, then the nation would have taken a step forward in achieving 'real' development goals. Therefore, in the nation's history this is a momentous occasion that should be marked as the starting line to embark upon achieving 'real' development goals. Bangladesh is poised for growth driven by the political will of the government and the consensus of the people.
Today's tiffin money can be the seed money for tomorrows engineers, financiers, and experts for constructing any bridge or mega-infrastructure or energy projects with Bangladesh's own resources - finance, manpower, expertise and technology.
Dependence on external funding sources and management of mega-projects drains the economy of vital resources. In addition, foreign experts take away the cream of the business opportunities and charge exorbitant consulting fees leaving low-skilled low-wage labour jobs for the local enterprises. Consequently, this leads to attrition of the best of talents from the debtor country. Scarce talents are siphoned off for finding creative ways to contribute to the profit making motivations of the multinationals. Therefore, the nation is deprived of the input from its professional cadre leading to a dearth of capacity to meet the challenges facing the nation. Only a handful of die-hard nationalists are left to protect the interest of the country. Incentives in the form of free foreign trips for conferences and symposiums, long- and short-term training sessions, and year-long study programmes abroad are offered through donor channels.
A sort of brain washing follows the lavish treatment of the government officials and key decision makers who are enticed to collaborate with the capitalists and bend the rules for the multi national companies allowing them to maximise their profits at the expense of people's well-being.
Given the inadequacy of resources, the construction of the Padma Shetu with Bangladesh's own financing may not be at present a viable option since this would take away valuable funds earmarked for economic development and poverty alleviation. However, the positive development from the recent fiasco with the development financing agency is the realisation of the urgency for establishing a more self-reliant economy. A sense of determination seems to have united the nation on the need to lessen dependence on external sources for managing its economy. This kind of dependence often implies conditionalties binding upon the debtor country to make it easier for multinationals to drain its wealth. Neighbouring nations of India and Malaysia have already reduced their dependence on the donor agencies and have done away with most of the practices resembling the residual elements of colonialism.
The writer is Senior Adviser of Enertech International, Inc. USA.
sheikh.rahman2010@gmail.com