Staking a claim

  • A failure to consult local people can slow down projects and result in economic losses
- Ghanshyam Ojha
Staking a claim

Sep 8, 2014-

Managing stakeholders is always instrumental for the success of any project, but it is especially crucial in developing countries like Nepal, where law and order is either weak or unfair in implementation. The authorities’ failure to enforce law and order dents the confidence of investors and negatively impacts project implementation. Studies state that at least 50 percent of the success of any project hinges on the management of relevant stakeholders.

Stakeholder management is a modern phenomenon and it marks the changing patterns of dealing with stakeholders. Traditionally, stakeholders were a small group of influential people, particularly those in the central leadership. But the traditional definition of stakeholders has apparently changed with the empowerment of local citizens.

The International Finance Corporation (IFC) defines stakeholders as persons or groups who are directly or indirectly affected by a project as well as those who may have an interest in the project and/or those who have ability to influence its outcome, either positively or negatively. The IFC recognises local communities, national or local government authorities, politicians, religious leaders and civil society organisations as stakeholders.

Reasons for delay

The failure to manage stakeholders has caused serious economic damage to Nepal. For example, the construction of 75 kilometer 220KV Khimti-Dhalkebar transmission line suffered for seven years due to a lack of timely consultation with locals. Reportedly, locals in Sindhuli were not properly communicated the potential benefits of the project and they did not take ownership of it. Local resistance delayed the $10 million project for at least six years, which has caused great economic losses. Locals have now finally agreed to provide land to erect six towers, and the project will be instrumental in evacuating power generated by the 456MW Upper Tamakoshi hydropower project. This change was only possible through rounds of consultative meetings with locals and underscores the fact that local ownership is paramount for any project.

A conservative approach takes the people’s support for granted. Such an approach prioritises a top-down methodology and largely ignores stakeholders at the bottom. Nevertheless, it runs the risk of triggering local-level resistance against the project. On the other hand, many investors and project planners still heavily rely on upper echelons, be it political parties or Civil Society Organisations (CSOs). But Nepali society has made significant strides in redefining priorities and stakes. Local people have become more aggressive and firm about claiming their stake. They increasingly question the effectiveness of projects and organisations which base themselves within district and regional headquarters. Nowadays, locals want to be partners to any development activity. Therefore, projects need to review their traditional approach of targeting a selective group of politically powerful people, who live in the centre, for project implementation. A local citizen’s ownership must be guaranteed for the success of any project.

With the introduction of Local Self Governance Act 1999, the government seems to have prioritised local participation for development activities. Furthermore, the formation of local-level entities, including Citizen Awareness Centres (CAC) and Ward Citizen Forums (WCF) through the Local Government and Community Development Project (LGCDP) underscores the importance of local people’s participation in development works. The CAC and WCF have been set up for pragmatic decentralisation and to ensure inclusiveness.

Identification and analysis of stakeholders should be integrated within project planning itself. Based on analysis, project planners should be wise enough to develop methods to communicate with various sections of stakeholders. Local stakeholders, who are directly or indirectly affected by the project, need to be on board the project since its inception. Local stakeholders’ participation can accelerate the delivery system and make the project more transparent and accountable.

Detracting investors

Unfortunately, many projects in Nepal still follow the conservative approach of tackling stakeholders and hence, have failed to achieve desired success. The growing number of political parties and their affiliates has posed additional challenges in managing stakeholders. Furthermore, political highhandedness and an excessive degree of political impunity has resulted in the politicisation of development works. Such an environment detracts potential investors from investing in Nepal as they see huge risks of failure due to the politicisation of stakeholders.  

Many political parties still use their affiliate groups to fulfill ideological interests. Furthermore, some parties mobilise local groups to ‘blackmail’ particular companies/projects for financial gain. Such patterns have complicated the stakeholder management process. At a time when many international investors are excited to visit Nepal and explore investment opportunities, political parties, who are still dominant stakeholders, need to facilitate the stakeholder management process for projects. Parties can act as a thick cushion between local people and projects, and they can facilitate dialogue to resolve local-level resistance. On the other hand, locals should also analyse the potential implication of projects before maintaining firm positions on many ‘unreasonable’ demands. A single unreasonable demand can kill the entire project and in the end, it is the locals who lose the most. Locals need to properly analyse the potential negative impact on their financial gain due to delays in acquiring land for a project. Locals tend to set unreasonable rates for the price of their land when a project tries to acquire it, and this may ultimately kill the entire project.

Ojha heads external affairs for the Investment Board, Nepal

Published: 09-09-2014 09:04

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