The risk of relapse is global. The whole world is on the same boat and that boat is floating in rocky waters.
Faris Hadad Zervov is the Country Director of World Bank for Nepal, Maldives and Sri Lanka. Prior to this, he served as the World Bank Country Manager for Nepal and Malaysia as well as the Head of the Global Knowledge and Research Hub in Kuala Lumpur.
Hadad Zervos joined the World Bank straight out of Graduate School in 1996 with the Private Sector Development Department. In his near three decades with the World Bank, he has served as the Manager of the Technical Cooperation Program with the Gulf Cooperation Countries from 2000 to 2003, Head of Mission for Iraq from 2003 to 2005, Operations Manager for the West Bank and Gaza 2005 to 2008, Acting Director for Fragile States in the Operations Department from 2010 to 2011 and Country Manager for Bolivia from 2012 to 2015. In addition, Hadad Zervos took leave of absence from the World Bank in 2008 to serve as the Deputy Head of the Quartet Office for the Middle East Peace Process based in Jerusalem.
In an interview with Avant Shrestha of B360 Faris Hadad Zervos talks about his role as the Country Director of World Bank for Nepal and the World Bank’s priorities for Nepal in the new COVID 19 world. Excerpts:
What is your role as the Country Director of the World Bank for Nepal, Maldives and Sri Lanka?
It’s a monumental opportunity and a fantastic one for me but also a huge responsibility. And basically, the role of a Country Director for Maldives, Nepal and Sri Lanka, together account for a portfolio of $5.5 billion across the three countries with projects in key sectors such as infrastructure, human development, urban development, finance and government. In all these three countries my work is guided through what we call ‘Country Partnership Framework’ which is aligned with the work program and with the strategies and vision of each government across these three countries.
Now, my top three priorities, to answer your question, is to provide leadership to the teams and the manager across the teams to ensure that number one, all the programs in the three countries contribute meaningfully to sustainable growth to job, to poverty reduction and to inclusion. The second one is to work very closely with the government as a trusted partner but also as a development partner to make sure that we leverage support and results through the three countries’ programs. And thirdly, it is very important also to lead very diverse and effective teams across these countries to make sure they deliver to the people of Maldives, Nepal and Sri Lanka and that they also take advantage of regional opportunities.
We do not only focus in Nepal for instance or Maldives or Sri Lanka but we focus on the whole South Asian region. And to keep our eye on the prize of what can be done regionally for the benefit of the people.
For Nepal, which are the areas World Bank is primarily focusing on for the future of sustainable development goals?
If you look across the three countries in this specific configuration; they are all very important. They are extremely and equally important in different ways. However, Nepal actually happens to be the largest in terms of the programs of the World Bank. The World Bank portfolio in Nepal currently consists of about 25 projects amounting to $3 billion in key sectors in terms of infrastructure, human development, finance, governance and also in earthquake-damage reconstruction.
A big part of our commitments under our coessential financing window, which is called IDA and our trust fund, is actually focusing quite a bit on policy reforms in the area of fiscal federalism, the financial sector and the energy sector. So, our investment projects are basically ‘bricks and motors’, but we also invest quite a bit on policies and policy actions.
In 2018, the World Bank in consultation with the government developed a five year strategy which is called our ‘Country Partnership Framework’ (CPF). The goal and the strategy of the CPF continues to be valid even now in the post-COVID 19 world. This is to support what I would call new Nepal, which is the transition to a new federal system that can deliver sustainable growth and poverty reduction, inclusive of development and shared prosperity.
The way we operate is we align our priority and our strategy with the government and support the implementation of the projects within the government and public institutions. The intuitions of Nepal are responsible to carry out the projects themselves, while we support and finance. But the bottom line is that we are governed by two things: the eradication of extreme poverty and ensuring shared prosperity. Now this is what we’ve been doing through our portfolio, moving forward in the new fiscal year.
Has the pandemic disrupted the World Bank’s plan for Nepal?
The three things I am focused on are: first to respond to the needs of economic recovery, from economic disruption due to COVID 19 and to support the government’s program to provide relief, recovery and resilience. The second priority focused on this year is to restructure our existing portfolio. We have a big portfolio and to restructure it to focus on changing projects to reflect the new realities of COVID 19. Things obviously continue to be relevant and things are no longer a priority, there are new priorities, so we have to clean up our portfolio to make sure that it matches. We have to adapt to the new reality. And third, despite my first and second priorities, is to keep our eye on the prize. It is no secret that the world will change after COVID 19 and hopefully, it will change for the better. Even if tomorrow the pandemic mysteriously disappears, we realise that things have to be different.
The interesting thing is that we have a choice and an opportunity to make sure that we can be better. We can actually be better off as a result of this pandemic despite the tragic losses. That is if we do things differently and we focus on resilience, and we focus on making sure that in an unfortunate case that this happens again, we can build back better and we can build greener institutions. One thing that we have seen in Kathmandu is that due to the result of this lockdown the air is cleaner which shows that it is possible to do that with concerted action. We have learned that we can clean our environment. Unfortunately, this was forced upon us, but why do we need to have a pandemic forced upon for us to build and become green and I think these are the really interesting things.
And one thing we have learned as a result of the pandemic is that local service unit in local VDCs and provinces can actually deliver and they have been delivering. This is fantastic news. So let’s turn this crisis into an opportunity and continue to focus on federalism, continue to focus on the importance of the private sector. We have to really make sure that the private sector survives and continues to thrive after COVID 19. And the last one which is the most important and our biggest investment is our human capital: children, education and health. So, federalism, jobs and private sector, environment resilience and human capital those are the four things.
The government of Nepal and World Bank signed $29 million financing agreement for Nepal’s COVID 19 response, where is that money being used?
Our program is quite big. As I said, it’s about 25 projects for about $3 billion. That covers a number of areas. Human capital is a big part of it. In addition, we have been engaged in the healthcare sector and the education sector and the social protection sector for many years. Those are preexisting projects and the projects that we are now going to restructure and we are currently restructuring to adapt to the new needs of COVID 19.
The $29 million has a very specific purpose. And basically the $29 million financing was specifically for the COVID 19 response; the immediate response. I have to say and forgive me for saying this, I am really proud of how the World Bank actually did this project for COVID 19. The moment COVID 19 appeared in our world, it was within weeks that we actually prepared this project, signed it with a government and got it dispersed. I think this is a record for the World Bank and in terms of the speed by which we were able to deliver on this.
The COVID 19 emergency response project; this $29 million project has a very clear purpose. It’s to help Nepal prevent, detect and respond to the pandemic and to strengthen its public health preparedness. This is the main goal. Plus, it takes into account the huge efforts that the government itself had taken to respond to the immediate health crisis. And also, it takes into account the huge social toll and the economic toll it took on the lives of people.
The $29 million is permitted by the Ministry of Health and Population and focuses specifically on scaling up the infrastructure and lowering the time that it takes to do a PCR test and do contact tracing. This is the deliverable number one. It also focused on strengthening the capacity of surveillance and the response of key institutions like the National Public Health laboratory epidemiology in this disease control division, and the Health Emergency Operations Center. The other motive is to increase isolation and treatment capacity in public hospitals. Plus to really reach out and try to support the vulnerable groups. In this way the $29 million is focused specifically on COVID 19 response.
One of the key issues that needs to be tackled for any vision to be realised is to have proper tools to do that. And the proper tools are strong counterparts in some functional capacity in order to work with development partners and implement projects efficiently.
There are lots of projects World Bank is involved in Nepal? Could you elaborate on some of the major projects that are happening?
It’s 25 projects with $3 billion in investments in a number of areas, inclusive of as I mentioned, infrastructure, human development, finance, governance. And earthquake causing reconstruction infrastructure.
We focus on a number of areas and across different types of infrastructure. For instance, we focus on water and sanitation, we focus on energy and energy sector, and we focus on roads, among others.
If you look at our program, it has actually increased quite a bit over time. Around last year we had about 24 projects with about $2.3 billion. And we’re now expanding to about $3 billion in projects. So, the World Bank support is aligned with the government’s priorities. And these include how we are moving forward with response to COVID 19 and specifically with a focus on economic recovery.
Additionally, it’s very important for us to focus on the private sector. There’s also the International Finance Corporation (IFC) which is a part of the World Bank Group, which I don’t cover, but it is part of our group of families. The IFC actually focuses on the private sector, and we place great value in the importance of a private sector that survives COVID 19 and thrives afterwards.
Just to give you an example of two important projects we’ve been doing, this was in the press recently, we formally signed with the Minister of Finance for a project on strategic roads and connectivity. The project in question alone in terms of World Bank’s financing is about $450 million (The overall projects is around $800 million).This is by far the largest investment from the World Bank for Nepal. I mean, this is an extremely important project which goes beyond transport sector, even in a COVID 19 world because its job and its goal is to reduce the time and cost of moving goods via key border crossing points and corridors. This is very important for Nepal, given that it’s landlocked, and given that it’s trading goods account for 40% of GDP.
COVID 19 has shown us that the importance of having urgent supplies and critical supplies across and the efficiency of moving things across border points is very important. Not only for the relief effort, but even after that in terms of economic recovery, and making sure that the exports and the imports coming out of Nepal are efficiently. This in the long term is going to be very critical to help with the recovery.
Another project that we recently approved is actually in the energy sector and focuses not on a specific infrastructure, but the overall policies. This project is focused very much on a lot of the good moves that government of Nepal is doing on policy reforms and regulatory reforms to really unlock the potential of Nepal’s energy sector. We support measures to improve the financial viability of any established regulatory sort of framework that is autonomous, independent and accountable, and to also, move towards greater integration with the regional electricity market. That’s a very exciting thing that’s happening in South Asia now with new regulations, new policies to allow for regional trade of electricity. So we are very much supporting that and that’s the type of work that the World Bank does.
Economists say Nepal may relapse to low-income status as incomes and jobs evaporate due to the pandemic. Your thoughts.
The risk of relapse is global. The whole world is on the same boat and that boat is floating in rocky waters. What you said is true, and it applies to Nepal, but it also applies to every country around the world. The risk depends on how the pandemic unfolds. And unfortunately, despite the global efforts, we still don’t know how this will unfold. So clearly, uncertainty risk exists. Now, we have to acknowledge that the government has taken some immediate relief measures and is currently really doing some good work and trying to do more analysis to identify policies and measures to mitigate the shocks to the economy.
As for the livelihoods, we are working with the government through the youth employment transformation initiatives to create jobs for migrants who are trying to move forward, which is a critical issue for the government of Nepal. This is something that we feel is important and we have been discussing and are using this time to restructure their strategy and turn it into a massive opportunity.
It is a challenging time for everyone but how do you foresee this challenge convert into opportunity?
Again it’s a bit of a cliché, but there’s this old adage, ‘risk can be turned into opportunity if taken advantage of; if not, risk turns into a threat’. So, you want to make sure risk becomes an opportunity.
The advice is really to follow the structure and the strategy over the short term, medium term, long term around four key pillars. The four key pillars for the short term is do everything possible to save lives during the pandemic. The real focus is to be clear on the decision of the lockdown, social distancing and social tracing which would help saving lives.
The second pillar is something we have to put in place as soon as possible such as social measures, which includes social protection support and job programs to name a few. These programs make sure that the people particularly those who fall in a vulnerable group are covered, for example, children and migrant workers. We have to make sure that and plan on how do we get children to school while keeping them safe at the same time. And this is not an easy task. So maybe digital solutions are important and practical. Plus Nepal also has a huge returning migrant population which is extremely vulnerable and we have to focus on finding employment opportunity for them.
The third pillar is that we have to support the private sector and support the local firms. This is going to be critical in order for the economic recovery to take place. These pillars don’t come necessarily after each other. They can all of them start at the same time. It is not possible to say we’re going to focus on priority one and two and then get to others later, because then when this pandemic is behind us, and hopefully it will be behind us soon, we have to support the private sector now because if there is no private sector left, the recovery is not happening.
And the fourth pillar is to use this opportunity to ‘keep our eye on the prize’. And that’s focusing on macroeconomic sustainability, making sure we build back greener, use this opportunity to scale up digitisation and the digital economy and make sure that federalism, and the fact that we have seen that local service delivery mechanisms can work, take advantage of this and turn this around to make it a strength for Nepal.
What are the major challenges the World Bank face in terms of achieving goals?
I would say it’s not an issue of the World Bank’s vision. Our vision is basically aligned to what the government’s vision so we are here to bring in our resources or experience or knowledge and financial resources to help the government and the people’s vision.
One of the key issues that needs to be tackled for any vision to be realised is to have proper tools to do that. And the proper tools are strong counterparts in some functional capacity in order to work with development partners and implement projects efficiently. For example, there are constant turnover of staff across industries. There has to be stronger accountability and counterparts for a more permanent basis. We have a great opportunity with the rollout of federalism. The rollout of federalism creates a little bit of a blank slate or an opportunity for the public institutional network of Nepal to reset itself. I think federalism and creating this new VDCs and provinces is an opportunity to build back institutions in a more permanent basis and to allow for better execution of capital expenditures and public expenditure. I think that’s one of the key issues but at the same time this is an opportunity we face.
The other issue is what constitutes and who are the key players in recovery and who are the key players in development to move forward. Development is something that requires many actors like the public sector and the role of economic policy, etc who are very important in steering the ship in some direction. But basically, I believe the private sector has to be the one who is going to roll the ship.
However, during this time we have to create opportunity and sustain jobs not only through big companies but through small and medium enterprises as well. We have to support young entrepreneurs, young intelligent Nepalis who have an idea, and who need the proper ecosystem. There has to be an appropriate environment that allows those who have an idea and have a mode of producing that idea to flourish in very transparent, very competitive and to compete on equal ground with others. And when we talk about private sector, let’s stop focusing on the people who are already established. They have the businesses and they are very important, but we should also focus on young Nepalis, inside Nepal and outside, who have great ideas. Fair competition requires access to finance, access to know how, access to export markets so s/he can deliver his or her dream and, in the process, create jobs and help Nepal.