Foreign aid-funded projects deserve special importance

The government prepares a large Annual Development Program (ADP) every year to ensure socioeconomic development, but then reduces its size in the middle of the fiscal year. Again at the end of the year, the expenditure on development remains even below the downgraded ADP allocation. 

On the other hand, the non-developmental and operational expenditure of many ministries and divisions of the government exceeds the allocation of the original budget declared at the beginning of the fiscal year.

Failure in the spending of the ADP allocation is creating inconsistencies in the implementation of the entire budget. This undermines the aspirational goal of developing adequate physical and social infrastructure to meet the challenges after graduating from the LDCs and reaching the status of an upper-middle-income country. And obviously, the main reason behind all this is a failure in project implementation. 

The authorities have an obligation to assess everything properly prior to the preparation and approval of any project. The feasibility, outcomes and cost benefits of the project have to be studied beforehand. We believe that it is done. But now questions remain as to how sincerely this is done. 

After approval of a project, the inception of implementation takes a long time due to delays in several preliminary preparations, including recruitment of human resources, land acquisition and some others. By carrying out all preliminary preparations during the project design and planning phase, the implementation can be completed on time.

A longer preparation phase delays overall implementation for the maximum projects under the ADP, which creates a higher cost for salaries and other compensations to the officials as they would have to remain engaged with the project for a longer period of time.

At the same time, the cost of the project is also increasing due to a hike in the price of construction materials and equipment.

As we know, the cost of any project or program is estimated by considering the projection of inflation in the following few years. But the cost of many projects sometimes increases several times due to carrying on for additional five to 10 years.

The experience of our human resources is increasing with time. Then why is the efficiency and excellence in project implementation not increasing? Are the policymakers taking enough initiative in this regard?

Slow project implementation issues are historically evident in Bangladesh and the reasons behind it have also been identified previously. Several reasons are highlighted by the Implementation, Monitoring and Evaluation Division (IMED) of the planning ministry every year. Delays in the recruitment of PDs and other manpower, delays in the entire procurement process including preparation of tender documents and delays in land acquisition have been cited for decades. Along with this, some new reasons are also emerging.

Why is the implementation situation not improving even after identifying these factors? This means that the reasons and people responsible for the delay are not identified and held accountable and no disciplinary action is taken. Instead of penalising contractors who fail to work on time violating commitments, project costs are increasing in Bangladesh. This tradition creates a message for the other contractors that not delivering projects on time is rewarded instead of being penalised here. If failures in some projects were punished, others could learn a good lesson. 

Accountability, transparency and good governance play an important role in this field. If those responsible for a project felt that any delay in implementation could create any risk regarding their jobs or business, they would have taken the initiative to accelerate the implementation work.

Delays in project delivery also prevent people from reaping the benefits for a longer time. If the project is implemented for a long time, use of the project also decreases due to socio-economic changes during this period.

For example, the government has several initiatives to develop infrastructure to reduce traffic congestion in the capital Dhaka by reducing the number of private vehicles. Most such initiatives are at the implementation stage for a decade. 

However, many people are forced to buy private cars as the work is not completed on time. 

Due to the slow pace of infrastructure development by the government, expenditure in various sectors at the individual, family and societal levels is increasing. 

In the absence of well-structured exit policies, the maximum benefit of the money spent by the government in the development sector is not ensured. Proper initiatives should be taken in advance on how the resources and infrastructure created through a project will be used or managed after the implementation. 

In many cases, it is seen that hospital buildings are constructed through a project, but doctors are not being appointed. Sometimes relevant machinery or equipment is not  installed. Even if there is equipment, people are not appointed to operate it. A sound exit plan should also be developed during project formulation.

The economy of Bangladesh along with other countries around the world is facing a fund crunch due to the recessionary impact caused by the war between Ukraine and Russia and prior to that recovering from the adverse impact of Covid-19. 

The government increased prices of gas, fuel, electricity and some other goods and services due to huge subsidy pressure. Even the government failed to expand programmes regarding cash and food support for the poor to help them to fight inflation. 

The government has to be more cost-effective in spending money on development activities like other sectors. Priorities must be set before   releasing any funds further.

In a developing country like Bangladesh, there is a need for development projects in various sectors including infrastructure. That does not mean that all projects must be implemented simultaneously. In this case, the phase-by-phase project implementation steps should be taken considering priority.

Implementation should be stopped for the projects that have just been approved or have only 5-10% of work progress. Initiatives should be taken to accelerate the implementation of projects that are awaiting completion or more than 90 per cent of work has been completed.

We have several carryover projects that have been going on for several years. All these projects would not have been left out if they were very important. Small-scale carryover projects should be excluded from ADP. 

And the implementation of the big carryover projects must be completed because leaving such projects will be a waste of money already spent.

Many projects that have already been approved or are in the implementation stage have also incurred additional expenses in various sub-components. I feel that reviewing the allocation of such projects will save the government a huge amount of money. 

Due to the sluggish progress in development activities, the pressure on the government fund is also increasing. A significant release of  more than $50 billion in the foreign aid pipeline would have eased some of the pressure on our foreign exchange reserves. 

The development partners withdrew the proposed foreign aid due to a critical juncture of implementation. As a result, the government is forced to complete these projects with its own funding.

Special importance should be given to the implementation of more than 300 projects with foreign aid. 

Analysing data shows that the operating expenditure of the government is rising sharply compared to a slower increase in development expenses. It is disappointing that even though mega projects have been taken up one after the other, the development expenditure has not increased in line with the operating expenditure. 

Allocation for the infrastructure, especially for some mega projects, has been prioritised for over a decade, which has some justifications also. Allocation for developing the social sector is still very low. The lower investment in the education and health sector undermines balanced development. 

It has been claimed by the private sector for a long time that investment here remained low due to weakness in the infrastructure. But only weakness in the infrastructure would fail to attract investment in the absence of skilled manpower. 

Weaknesses in our health and education sectors are hampering human resource development.

Many graduates from our universities remained unemployed or underemployed while the private sector hired skilled manpower from abroad. A large amount of foreign currency is flowing due to shortage of skilled manpower.

A huge allocation should be made for human capital development in the next five years to eliminate this mismatch in the demand and supply of manpower.

Dr Fahmida Khatun is the executive director of the Centre for Policy Dialogue (CPD)