Post-Earthquake Rebuilding Effort Stumbles As Government Fails to Account for Money

KATHMANDU, NEPAL — More than $4 billion was pledged to Nepal by international donors after a major earthquake in April 2015 killed nearly 9,000 people and devastated large swaths of the country.

But as of this month, the government has spent just less than $700 million on reconstruction, according to information provided by senior government officials to Global Press Journal.

Of that money, more than $400 million came directly from the Nepalese government’s own coffers, says Bhishma Kumar Bhusal, a senior spokesman for the National Reconstruction Authority. The remaining amount of roughly $253 million was given to the government from donors, including foreign governments, major international aid agencies, corporations, individuals and others.

It’s a mere fraction of the money that was pledged and a pittance compared to the nearly $8 billion that the government estimates it needs to rebuild.

So what happened to the rest of the pledges?

Part of the answer is easy: Some of that money never materialized, government officials say.

Of the total $4.1 billion pledged by international donors, Bhusal says $3.42 billion has been committed, meaning that the donor signed a formal agreement regarding the money.

GPJ’s efforts to track the money that has come in reveal an uncoordinated government response that is rife with inconsistencies.

Bhusal and other government officials say most of the $253 million they’ve taken in from foreign governments, international aid agencies, private donations and other transactions has been spent.

But data collected on the Earthquake Response Transparency Portal, a website maintained by a consortium of transparency agencies in Nepal, shows roughly $1.5 billion in cash pledges and disbursements made directly to the Nepalese government. That number doesn’t include in-kind donations, loans and other types of assistance. The portal is widely considered to be an accurate accounting of post-earthquake reconstruction funds, particularly since the Nepalese government’s own data sets of the same information, which were previously available online, are no longer easily accessible.

Bhusal says the $253 million accounts for the money that has come through the budget for the National Reconstruction Authority, which was created eight months after the earthquake as an independent agency. The rest of the money goes elsewhere in the government and other channels, he says.

But Kewal Prasad Bhandari, a joint secretary with the Ministry of Finance, says that all the reconstruction money goes to Bhusal’s agency.

“The Ministry of Finance will not take a single penny,” Bhandari says.

Bhusal’s office has in recent weeks given GPJ documents noting the amount of reconstruction funding received by various government departments and agencies, but later withdrew them, saying that the documents weren’t accurate.

In at least one case, Bhusal provided GPJ with reconstruction spending details that showed contradictory figures and amounts that didn’t add up.

He says some discrepancies in the government’s accounting are due to contingencies that came with the donations. In some cases, donors only reimburse money, which throws off the record books, he says, because money spent is connected to money yet to come in.

“So many figures are difficult to segregate, and coming up with the exact figure of support is difficult,” he says.

While the Nepalese government has spent less than $700 million on rebuilding, agencies working outside the government purview have spent many millions more.

Baikuntha Aryal, a joint secretary with the Ministry of Finance, says that much of the $3.42 billion committed has been spent directly by the agencies that promised it.

In one example, the American Red Cross pledged $1 million just days after the quake. The Earthquake Response Transparency Portal shows that the American Red Cross has committed, pledged or disbursed about $1.3 million in cash and in-kind funds, all of which was pledged to that agency by other donors, including the U.S. government, the coffee company Starbucks and other entities.

In reality, the American Red Cross has spent or committed to spend just under $44 million on reconstruction efforts in Nepal, says Jenelle Eli, a spokeswoman for the agency. None of that money was given directly to the Nepalese government, she says.

The U.S. Agency for International Development supports countries affected by natural disasters by giving money not to foreign governments but directly to partner agencies that implement programs, deputy spokesman Tom Babington said in an email to GPJ.

In all, the U.S. government committed, pledged or disbursed about $238 million in post-earthquake aid, according to transparency-portal data.

That aid is impossible to track, says Bhusal of the National Reconstruction Authority. The American Red Cross, the U.S. government or any other donor might pledge a certain amount of money, but if the donor spends that money on projects it identifies itself, the Nepalese government won’t know exactly how much is spent, unless the donor reports the funding to the government.

“In almost all the cases, they don’t provide the amount,” he says.

That’s not unusual, particularly in the wake of natural disasters in countries where the government doesn’t have the wherewithal to manage a rebuilding effort, says Bob Ottenhoff, the president and CEO of the Center for Disaster Philanthropy, which analyzes post-disaster giving.

“[Nepal] was a very poor country with a weak government with poor infrastructure and transportation, and it was struggling even before the earthquake to provide basic services,” Ottenhoff says. “Then you put on top of that the fact that you have very vulnerable communities who don’t have the resources to bounce back themselves, either, without support.”

Based on the Nepalese government’s track record so far – less than 1 percent of the families who qualify for grants to rebuild private homes have received them (watch a video describing that problem here) – there’s little hope among government watchdogs that reconstruction efforts as a whole will be successful.

“There is no proper mechanism” for spending donor money, says Shree Hari Aryal, president of Transparency International Nepal.

The government’s oft-changing top leadership bench – there have been four prime ministers since the quake (read more on that here) – have led to frequent changes in spending priorities and an eagerness to move forward with general redevelopment over reconstruction. Yet, the Nepalese government intends to close the National Reconstruction Authority in three years, which would mark five years since the date it opened.

Such a deadline is unusual, Ottenhoff says, noting that most post-disaster recovery efforts take many years. He notes that projects are ongoing today to rebuild from the 2005 disaster of Hurricane Katrina, a major storm that devastated New Orleans and nearby areas in the southeastern United States.

When the National Reconstruction Authority is closed, Bhusal and others say, the government will no longer give money to rebuilding efforts. It’s not clear where any remaining money will go once that happens.

Shilu Manandhar, GPJ, translated some interviews from Nepali.