The Study onTHE IMPACTS OF CORRUPTION ON THE SOCIAL AND ENVIRONMENTAL SUSTAINABILITY IN NEPAL Study Conducted by: Nepal Labour Foundation (NLF) Kathmandu, Nepal Submitted to CNV International - Fairfood International Netherlands January, 2011
ACKNOWLEDGEMENTThis report on the Impacts of Corruption on the Social and Environmental sustainability inNepal would not have been possible without the support and hard work of institutions and manyindividuals.Nepal Labour Foundation (NLF) would like to extend its sincere thanks to CNV Internationaaland Fairfood International for entrusting this research study to NLF. Likewise, NLF extends itsheartfelt thanks to Tea Estates and their workers (that were taken as sample) for providing theirvaluable time and participating in the process of study. NLF is thankful to all key informants andinstitutions that provided valuable information for this study.The entire research team deserves much appreciation for their dedication and hard work toaccomplish this study. NLF thanks Mr. Keshav Prasad Bhattarai for leading the research, Mr.Ram Narayan Kurmi and Ms. Leela Dahal for their excellent field work including supportprovided for data collection, tabulation and logistic during the field work.Khila Nath DahalPresident, NLFKathmandu, Nepal
AcknowledgementsI would like to express my heartfelt thanks to The National Federation of Christian TradeUnions in the Netherlands (CNV) and Fair food International for assigning Nepal LabourFoundation this study with financial and technical support.Similarly I would like to express my sincere thanks to all the facilities and persons (Annexure 2)who with all their best possible efforts had supported us in filling the questionnaires andproviding the information. Mr. Ram Narayan Kurmi and Ms. Leela Dahal, did the hard workshowing much zeal and enthusiasm by visiting so many districts and facilities in a given timeframe and collecting the data and other needed information.The enriched knowledge and experiences of Mr. Uddhav Paudel, Dr. Kusum Shakya and Mr.Rabindra Bhattarai, the NLF associated researchers has been a continuous source of courageand strength for me in conducting this study.Mr. Anchan Bhattarai, did the most tremendous task of tabulating the collected data, preparingcharts and analyzing and interpreting the information. Without his skill and labor it was notpossible to prepare this study within a desired time frame.Last but not least, I would like to express my larger part of thanks to Mr. Khila Nath Dahal, thePresident and Dr. Khem Raj Bhetuwal, General Secretary of Nepal Labour Foundation and itsexecutive body for assigning me this job. It has given me new insights and experiences indealing with such a critical study of national importance. Keshav Prasad Bhattarai Team Leader The Impacts of Corruption on the Social and Environmental Sustainability in Nepal
ContentsExecutive Summary1.1 Background of the Study1.2. Corruption in Nepal and Global Experiences1.3. Corruption and Environment Sustainability1.4. Agriculture, the World in 2050 and Environmental Sustainability1.5. High Value Agricultural Products and Export Situation2. Methodology of the Study2.1. Objectives of the Study2.2. Study design and Research Methodology2.3. Tools of Data Collection2.4. Research Sites and Data Analysis2.5. Limitation of Study3. Data Analysis3.01. Involvements in areas of agro products3.02. Level of Channel of Production Respondent had involved3.03. The attractive factors for selecting the business3.04. The most distractive factors in the business3.05. Corrupt Practices Respondent has faced3.06. People responsible in the corrupt practices3.07. Effects of corruption upon people3.08. Good governance and corruption
3.09. Provisions required holding the person involved in corruption3.10. Products mainly exported3.11. Corruption during Export3.12. People engaged in corrupt practice3.13. Mode of Transportation3.14. Use natural resources in any channel of agro products3.15. Measures taken to fulfill social or environmental commitment4.1 Findings of the Study and Recommendations4. 2.ConclusionReferencesAnnexes1. Questionnaires developed for the Cases of Corruption in agricultural export of Nepal2. Companies and facilities visited for data collection and questionnaires administration3. Persons involved in production, processing, and exporting tea, coffee, ginger and essentialoils, consulted by the researcher to fill the questionnaires and interviewed informally to verifydata.
Executive SummaryThis study investigates the impact of corruption on the social and environmental sustainability inNepal its nature and practices in Nepalese export trade and measures to control corruption so asto insure social and environmental sustainability.A country suffering a long course of political instability, violence and with weak institutionscannot escape from the curse of corruption. The experiences around the world have alsoconfirmed this. But how has it affected the social and environmental sustainability was ourconcern and this was the concern of present study.The questionnaires were developed as per the assignment of Fairfood International ResearchDepartment. The study was designed by the type of information needed, and availability ofresources.As per the subject of the inquiry, questionnaire and informal interviews were adopted as primarytools of data.The respondents covering almost all geographical regions and involved in various level ofbusiness of Tea, Coffee and Essentials Oil including Ginger, were randomly selected. To verifythe data collected through questionnaires with people involved in this sector and interviewedinformally.Despite of various limitations information collected from the respondents have been classifiedand analyzed by using simple statistical tools like mean, mode, bar diagram, pie chart forillustrating relationship between the variables.The results suggest a significant relationship between corruption, export fluctuations andenvironmental sustainability. It, therefore, paves way for further research by involving thegovernment, businessmen, academic institutions, trade unions as the stake holders. Nepaleseproducts should strictly follow the quality standards on each area of production, processing,packaging, labeling and quality testing in order to prove competitiveness in the global market.Export oriented special production zone can be developed with proper security, uninterruptedpower supply and enough financial services, supported by long-term policy and programmes forexport promotion.
Support of international community can be vital towards the formation of institutionalmechanism and strengthen civil society on their movement against corruption Parliament, themost important political actor can curb corruption by ensuring accountability and transparency inthe decisions of public bodies related with business. Parliamentary oversights through anti-corruption agencies and empowerment of civil society and media have a most critical role in thisregard to playA strong and independent judiciary accounts much in each and every national commitmentagainst corruption. Nothing can grow and be sustainable without strong public support. Thisstudy has indicated sufficiently that corruption is not only the result of weak law and ordersituation, but the product of values cherished by individual and society.
THE IMPACTS OF CORRUPTION ON THE SOCIAL AND ENVIRONMENTAL SUSTAINABILITY IN NEPAL Chapter One Introduction 1.1 Background of the StudyNepal mainly is a sustenance agricultural country. Over 75 percent of its population dependsupon agriculture. 77 percent of its total land area is covered with hills and mountains and the restis the plain. About 21 percent land area is under cultivation. The forest, shrub land, grassland andwater cover about 54 percent of land mass. According to the Economic Survey made by theGovernment of Nepal on the year 2009/10 the preliminary contribution of agriculture and forestsector is 33.0 percent of the GDP1. As a share of total agro-crops, food crops comprises about 46percent, cash crops 31 and the others comprise 23 percent.To feed the over growing populations and earn their living Nepali farmers have few alternativesthan to farm in hilly slopes and fragmented plots of land under difficult climatic conditions. Tomake the situation worse mass level migration from hills and mountains to valleys and plainshave spoilt the fertile land and worsened the situation further. This gradually has caused severefood shortage in Nepal. This has changed this country from food exporter to net food importer.This has put continuous pressure upon the forestland to a vulnerable situation. Within the lastthree decades, it is estimated that half of its forest of Nepal has been destroyed due mainly topolitical instability. This has laid tremendous pressures on the fragile ecosystems of themountains followed by mass deforestation leading to landslides and floods threatening the livesand occupation of millions of people living in both Nepal and India.Population pressure, land fragmentation, lack of irrigation and monsoon based farming, andinadequate financial and technical support are attributed to low but fluctuating yield in farming.Huge increase in population and mass unemployment have not only put unbearable pressureupon land, agriculture and forest but also created ethnic divisions among people leading to1 Economic Survey (2009/10), Ministry of Finance the Government of Nepal
political, social and economic instability. To feed its growing population, Nepal has to use all itsland resources and much less is available for high value crops.Nepal belongs to the Pale arctic and Indo-Malayan bio-geographical realms. It is located at theconvergence of the eastern and western Himalayas. As a result of both this location, and the greatand dramatic altitudinal and climatic variation found within its borders, Nepal is home to atremendous diversity of ecosystems, especially for a country of its size. While the exact numberof ecosystems varies from source to source, the government of Nepal has recognized 118ecosystems in Nepal, ranging from tropical monsoon forests to alpine pastures. (1)This could give Nepal an unmatchable export markets for diverse agro and forest based products.But it has been left unattended. Further, y Nepal has not been able to make smooth supply of itslimited products into international markets. Nepal’s land-locked location has hindered its exporttrade potential. All these factors are attributed for inability in the production of agro and forestbased products as a significant share of Nepal’s export trade.Absence of product specialization has limited export of agricultural production. Further,commercialization of agriculture in both India and China has left with very little options forNepalese products. To compensate this, Nepal at times has shown trends exporting crude naturalresources e.g. timber, stone, boulders and sand which ultimately have deteriorated theenvironment.1.2. Corruption in Nepal and Global Experiences According to the Corruption Perception Index published by Transparency International (TI) onOctober 26, 2010 Nepal is one of the highly corrupt countries, 146th among the 178th surveyed.The rate of corruption in Nepal has increased in comparison to that of previous year.While making its report public, the TI has stated the increase in corruption has been a directimpact of the unstable political situation in the nation. In its 2009 report, Nepal was ranked 143positions out of 178 countries and back in 2008 it was on 138 positions.TI also observes that political instability, lawlessness, nepotism and lack of accountability havemainly characterized this situation in Nepal. Unfortunately, corruption has not only dominatedgovernance at all levels, but also that an anti-corruption agenda has not become a political andsocial priority of Nepal. Corruption, as a great socio-political and economic evil of Nepalisociety, has been the major obstacles to justice, democracy and overall national development. In
a 2003 Global Poll, conducted by the World Bank covering 48 countries, corruption is ranked thefourth critical issue of development after economic growth, poverty reduction and education. (2)This is still relevant for NepalCorruption is said to be a major constraint to the enjoyment of human rights, reducediscrimination and subjugating the poor and marginalized groups. Their powerlessness to raisethe voice for their cause and inability to pay bribes for the enjoyment of their rights createsfurther inequalities and marginalization: a gross violation and betrayal of their human rights.According to an estimate of World Bank Institute (WBI), worldwide bribery totals at least onetrillion dollar per year. This amount is equivalent to approximately 3 percent of the gross worldproduct. This is just the volume of the bribes but not the impact, which ultimately goes to a muchhigher level.One of the pioneers of anti-corruption movement, James D. Wolfensohn, former president of theWorld Bank (1995-2005) observes that corruption diverts resources from the poor to the rich,increases the cost of running business, distorts public expenditures and deters foreign investors.(3) His immediate successor, Paul Wolfowitz, in a similar vein, mentions that corruption is adisease that threatens the hopes of the poor for a better future for themselves and their children (4)indubitably, corruption in Nepal, especially at the political level, has cruelly violated the ethosand mores of a democratic system. Buying votes as well as selling favors and opportunities hasbeen the standard political practices maintained studiously by almost all political parties. Thosewho gain access to political power also bag the most wealth, which resultantly, widens theexisting level of inequality to an intolerable level. This, in consequence, has producedfrustrations among the youths and the common people breeding severe instability and even morecorruption during such instability.The Commission for the Investigation of Abuse of Authority (CIAA) is an authority in Nepalwhich can take actions against all officials including the Prime Minister to ordinary publicservants. The CIAA acts to investigate the corruption and penalize the corrupt so as to promotegood governance, build morale of public servants and raise public confidence on the state. Nepalalso has an anti graft body called as National Vigilance Center several and owns several legalprovisions against corruption. As a signatory of the United Nations Convention againstCorruption (UNCAC), Nepal has recently enacted several acts to qualify with the legislative pre-
requisites of UNCAC. However, despite of these institutional arrangements, Nepal is at the topof the index of corrupt countries.One of the renowned political scientists of present time, Samuel P. Huntington mentions thatcorruption involved with politics in many societies has become the grand road to wealth-exchanging political action with immense economic wealth an exchange of political actions.The amount of wealth that politics help to amass could not be possible with business. (5) He hasalso explained that societies having high capacity for corruption also have high capacity forviolence. (6)And, violence, as we have experienced in our own context, is translated into terrorism in notime, this or that way.This, unquestionably, is fairly understood that both corruption and violence serve the samegoal; putting pressures upon the government and system to satisfy their demands in anillegitimate way. This further weakens the state, its institutions and energizes violence andterrorism in return. The most detestable thing we have come across these days is that politicshas lost its whole set of essence, ethos and mores. Politics has become a major industry orbusiness for people in power and again the wealth generated by power would bring more powerand correspondingly more wealth in a cyclic way. Understandably, investment in no industry orbusiness can give as much wealth in a short time than the investment in politics.Therefore it is political stability, good policy; a strong and committed leadership can bringexceptional achievement for any country. A society is judged by its treatment to the weakestand most vulnerable members. Corruption, violence and environmental destruction live andwork together.David Nussabaum, the Chief Executive of Transparency International (TI) has rightly remarkedthat the corruption has a long history but research and analysis about its cause and effects haserupted over recent years .(7).In human history here are innumerable examples of how corruption has played a critical role inmaking a state go weaker and weaker and crumble at last on social, political and environmentalgrounds. It has long played the organized societies from ancient China and India to modern dayEuropean and American governments. (8) In many parts of the world corruption has made itssuccessful journey unchallenged, caused development suffer worst, investment discouragedpiteously and poverty go unbounded. Paulo Mauro after the study he made in more than 100
countries concluded that if a given country is to improve its corruption score by 2.38 points on a10 point scale, its per capita gross domestic product (GDP) growth would raise by more than halfa percentage point. (9). Similarly, The Global Organization of Parliamentarians againstCorruption (GOPAC) has identified corruption as the greatest threat to the democratic ideal ofself government.1.3. Corruption and Environment SustainabilityA society sustains if it has the ability and capacity not only to meet the requirements of presentgeneration but more to the requirements of future generation. When we mean development andprogress it is also the wise and sustainable use of its natural assets available.Corruption does not only distort development priorities, leads to conflict, violence and chaos. Itundermines social fabric binding people in unity and cooperation for centuries also spoiling theenvironment and its sustainability.Our natural assets comprise of both renewable and non renewal as land, forest, oil, minerals, air,water etc. How nations and people use these natural assets defines not only the sustainability ofhuman civilization it also generates conflict, violence and even war among them.Greed for accumulating more money and grab political power through it and further using thesame power to accumulate more wealth has caused the depletion of invaluable natural resourcesworldwide. Developing Countries dependent mainly on natural resources, are suffering mainlyfrom this vicious cycle.Obviously, rampant corruption weakens state and social institutions that are responsible protectnature and environment. The entire protective shields available for the preservation of naturalresources are weakened by corruption. Nepal’s forest resources as well as rare wild life havebeen the target of corrupt practices among people in power and authority for long. Cruelexploitation of stone, boulders, concrete and sand and its export to India, is one but sufficientexample that has been causing Siwalik (Chure) range of mountain crumbling and bringing havocin the plains with floods and landslides. If it continues this way the fertile plain land not only inNepal but the Gangatic plains of India and Bangladesh will be deserted. The millions of livesliving there will suffer the worst.Nepal’s bio-diversity has fallen into troubled waters due to rampant human encroachment andthe global warming induced climate change. There is serious concern because the measures totackle the damages are nowhere visible. However, Nepal itself can do very little to fight against
corruption due to its weak institutional capacity. Climate change can bring devastating effects inthe whole Himalayan plains of Nepal, India and even Bangladesh, if things are left unattended.In this respect, all the countries within the same river system should join hands with Nepal totackle the catastrophe. Even a minor change in the temperature is bound to lead not only to thedecimation of many species of flora and fauna but millions of population living in this region.Nepal has shown and this research has also proved that when a state is weak, it cannot provideprotective shield to environment and people. Only very few people with power and authoritycommand over the state property and natural assets. People may be denied for their propertyrights. Insecure property rights also iampact on natural and environmental assets. Life in water isthreatened and trees are cut prematurely. Natural balance will be affected and climate changewould bring harsher and harsher calamities leading to more environmental disaster. Thus, itreduces investment in human made capital; but it encourages encroachment on forest and publicland (10).Thus protecting the environmental assets and improve governance is one of the biggest challengeof humanity in the 21st century. In the last 60 years, we have made tremendous achievement inobtaining knowledge, wealth, health and human happiness. But, what we have failed in all theseyears is protecting our environment, prolonging the life of earth and sustaining the happiness wehave achieved. Desertification has advanced to an unimaginable level affecting 250 million andthreatening about a billion people living in 110 countries and this figure could double by 2050.(11). If deforestation continues at the present pace, rainforests will have been eliminated from thesurface of the earth by 2050. (12) If all developing countries follow the same ecological footmarks of developed countries humanity will need nine more planets to the size of the earth tomeet the needs of the natural resources of the world population. (13). Environmental problemslike climate change would cause large dislocations in ecosystems fundamental to humansocieties and economies e.g. complete loss of world’s major rain forest, glaciers in the Andes andHimalayas and rapid acidification of oceans leading disruption of whole marine ecosystem. Thiscould extinct more than 50 percent of sea lives. Besides a mere one meter increase in sea levelby the end of this century will threaten the lives of more than 60 million people and 200 billionin assets in developing countries alone. About 400 million more people could risk hunger andabout 2 billion people may no longer have enough water to meet their basic needs (14)
No doubt, Climate change has become the most formidable environmental threat of our timeand this according to World Bank President Robert B. Zoellick ‘is one of the most complexchallenges of our century. No country is immune. No country alone can take on theinterconnected challenges posed by climate change, including controversial political decisions,daunting technological changes and far reaching global consequences.’(15). Again, according toZoellick as the planet warms, rainfall patterns shift and extreme events such as droughts, floodsand forest fires become more frequent. Millions of densely populated coastal areas and islandswill lose their homes as the sea level rise. Poor people in Africa, Asia and elsewhere faceprospects of tragic crop failures; reduced agricultural productivity and increased hungermalnutrition and disease. (16)Certainly, corruption contributes to the weak enforcement and implementation of environmentalregulations and the violators laws are left untouched for their crimes against the environmentand harms they inflicted to the people. Corruption makes a country handicapped in using itsnatural resources for the larger interest of people and hampers growth and development.1.4. Agriculture, the World in 2050 and Environmental SustainabilityOne third of the land used for cultivation and animal grazing was almost deserted by the end oflast century. During that time only 25 percent of the surface was suitable for rainwater – reliantagriculture and 35 percent of the productive land in Asia had become desert. In Latin America 73percent of dry lands in agricultural use suffer from a kind of desertification.(17) According to theestimate of World Bank - by 2050 the world population could be 9 billion (i.e., about 50 percentmore than today). Similarly, the world income would increase about fourfold (135 trillionDollar) by present ratio. The share of low and middle income country in the world income willbe 40 percent to that of 20 percent now. Average per capita income in developing countrieswould be US$ 6,300 and more than 65 percent of the population by that time will live in urbanareas. With rising income and population growth the demand for food could double. (18)To supply food for the increased population by 2050, we need more and high quality foods. But,sustained agriculture growth cannot be achieved by increasing the land area under cultivation.Further expansion of agricultural land would cost highly to the environment and bio-diversity.Therefore, environment friendly, high yielding and sustainable crops farming is the only validbut responsible answer available to us.
This means we need an agricultural revolution and a new sustainable agro trade policy thatcould ensure our life and safety in the new millennium. Better policy and programs to answer theproblems of land and water degradation, deforestation and air pollution. Nutrient management,integrated pest management, conservation and policies and institutions that can promote betterpractice adapting climate change. (19) But, this cannot be attained without better and responsiblemarkets for agricultural products. Better trade practices between and among states is anothercrucial matter on this regard.1.5. High Value Agricultural Products and Export SituationThe primitive nature of agro based economy has led widespread unemployment and low yield.So growing fruits, cash crops and industrial crops have been popular these days. But Nepal doesnot have any product specialization. One year Nepal finds a good market for its one kind ofagricultural products but the next year, the market of that particular product is flooded withproducts from India and China. Small Nepali farmers and agro businessman are to suffer heavylosses at the hands of successful and powerful agro- business houses of its immediateneighbors- India and China.So there is little consistency on agricultural products for the purpose of exports. To compensatethis Nepal at times have shown trends exporting natural resources e.g. timber, stone, bouldersand sand which ultimately have deteriorated the environment.Food markets in Nepal are rapidly changing with urbanization and growing number of middleclass population. They are demanding more high value agricultural products. Newer marketopportunities are being open for agro traders. Market liberalization in many countries has alsomotivated the producer, processors, retailers and exporters of agricultural traders in Nepal. Sincethe last two decades, Nepal has begun to produce some high value agricultural crops inremarkable volume. During this period the area of land used for growing high value crops e.g.vegetables, fruits, spices, and other industrial cash crops has increased three fold. More than onethird of cultivable land area (1061379 Hectare) is covered with such crops. This has helped toimprove the living standards of thousands of farmers.According to the primary estimate of Trade and Export Promotion Center, a government bodyrelated with export promotion in Nepal, in the fiscal year of 2009/2010 the total Nepali export
was only 14 percent whereas the import was 86 percent. The export when compared with theprevious year has decreased by 11.1 percent and the import was increased by6 29.1 percent.Total amount of import was Rs.367.61 billion while the export was only Rs.60.95 billion rupees.The proportion import and export in the year was 1:6.2 while in previous year it was 1:4.2.During the year 2009/2010 Nepal exported tea with equivalent to Rs.1.20 billion, ginger Rs.460million, coffee Rs.24.30 million and essential oil Rs.35.9 million.Nepal’s trade imbalances have been widely increasing year after years. Trade deficit of Nepal inthe year 2009/2010 has increased by 41.5 percent (Rs.314.66 billion). It has made it clear thatNepal has to expend its valuable foreign reserve to import the daily needs. In the mean time,export based industries are facing trouble due not only to interrupted power supply and labourunrest but the more by corruption. As a result employment opportunities are narrowed down. IfNepal fails to increase its internal production as well as its quality, its political instability andinternal conflict will deteriorate the situation further.The table given below shows the position of given crops production and export in the year2008/2009 and 2009/2010Commo Area under production KG Values in NRs.000 Main Districts Main countries fordities Cultivation of production Export (in Hectare 2008/2009 2009/2010 2008/2009 2009/2010 Tea 16718 9,195,5179 85,48,534 1,24,0864 1,195,318 Jhapa, Illam USA, UK, Kg. Panchthar, France, Canada, Terathum, Japan, Dhankuta etc. Netherlands, India, China, Korea etc Coffe 1531 88,100 kg. Palpa, Gulmi, India, Japan, e 79,2900 Syangja, Korea, USA, Kavre etc. Canada. Germany etc. Ginge 15836 26,723,603 30,415,678 403,408 456,014 Illam, India, USA r Palpa,Morang, Nawalparasi and almost all districts Essen 27,501 16,108 54,928 35,905 Kathmandu, USA, Canada, tial Bara, Parsa, China, Japan,
Oils Dolakha, UK, Germany, Sindhupalcho Sweden etc. wk etc.Source: Statistical Information on Nepalese Agriculture, Ministry of Agriculture andCooperatives- Government of Nepal, December 2009, www.tepc.gov.np and AEC/ FNCCI Nepal,2009.Following this introductory chapter, methodology of the study is described in the secondchapter. The third chapter has a detailed data analysis. Findings of the study are given in thefourth chapter along with recommendation and conclusion.
Chapter two 2. Methodology of the Study2.1. Objectives of the Study The Objectives of the present study is to investigate: 1. The nature and practices of corruption in Nepalese export trade. 2. The impacts of corruption on social and environmental sustainability. 3. The needed measures to control corruption and ensure sustainability.2.2. Study design and Research MethodologyIn order to gather the background information for the study and assess the real situation dozensof relevant literature were thoroughly reviewed. The questionnaires were developed to gatherinformation. Research team visited 16 facilities/companies and interviewed 32 persons engagedin the relevant trade practices (Annexure2). Among the facilities, 20 respondents were selectedrandomly to cover the whole cycle of production, processing and exporting.This study adopts both quantitative and qualitative methods for analyzing and interpretation ofthe data collected. Questionnaire and interviews along with observation of enumerators are theprimary source of information.2.3. Methods of Data CollectionIn this study primary information are respondents. The questionnaires were developed, discussedand pre-tested before finalizing for data collection. The twenty respondents were randomlyselected, covering almost all geographical regions and involved in various level of business ofTea, Coffee, Essentials Oil and Ginger. They comprise of exporter, trader, producer andprocessor. They were the key elements of this study and are the sources of data as well.Some people who were involved in this sector were interviewed informally to verify the datacollected through questionnaires. The complete list of companies, organizations and personsfrom whom data was collected is given in annexure.
2.4. Research Sites and Data AnalysisKapilvastu, Syangja, Arghakhanchi and Palpa districts from western Nepal were selected forCoffee and ginger. Salyan from mid –western region was selected for ginger. Dhankuta,Morang, Ilam and Jhapa districts were found for tea (Eastern Development Region) and finallyKathmandu was selected for essential oil from Central Development region. In this way thisresearch has covered four from the five development region and 10 out of 75 districts of thecountry. These sites were selected because of trade related concentration of production andprocession activities. The companies and individual for administering questionnaires andinformal interviews were selected randomly for the availability and accessibility of data neededfor.All the data and information gathered through questionnaire and interview were checked andedited for internal consistency. The information is classified and simple statistical tools likemean, mode, bar diagram, pie chart were used for illustrating relationship between the variables.2.5. Limitation of StudyThe study has several limitations which are given as follows:The respondents were hesitant to talk on issues like corruption. They did not want to share theirexact trade volume and transaction.Many people who are engaged in production of coffee, ginger and essential oils produce it assupplementary crops on their lands. Middlemen and traders collect those products fromindividual farmers and bring them to mainly local markets. Absence of institutional set up toproduce, price and export and organized efforts are some other limitations of the study.
Chapter Three 3. Data AnalysisChart no. 3.01.Involvements in areas of agro productsTotal Number of Respondents:-20 8 7 6 5 4 Ginger 3 2 Essential Oils 1 Cofee 0 TeaOut of 20 respondents a 40% (08) respondent belongs to tea production, 25% (05) respondentsbelong to essentials oil where as only 20% (04) and 15% (03) respondents belong to coffee andginger respectively. Majority of the respondents belongs to tea because tea production is famousin the Nepal and respondents were easily available, whereas in the case of the coffee productionis just a new starts in very few districts.
Chart no.3.02Level of Channel of Production Respondent had involved Levels of Channel of Production Production Processing Domestic Trade Export Trade OthersOut of 20 respondents, majority of the respondents (28%) were involved in both the domestictrade and export trade, whereas (24%) respondents were involved in processing and only (20%)respondents were involved in production.
Chart no. 3.03.The attractive factors for selecting the profession 7 6 5 High Yielding and Profitable Personal Experience 4 Smooth marketability Others 3 2 1 0When the respondents were asked on the attractive factors to choose the profession, majority(35%) of the respondents told that their personal experience encouraged them to choose thisprofession, Smooth marketability was the next attractive factors for them with 25% of therespondents. Some of the respondents 20% told high yield and profitability encouraged them,where as some 20% told other causes like as easy bank loan, job opportunity, suitableenvironment and experts advisory.
Chart no. 3.04.The most distractive factors in the business Absence of Technical Support and Bank Loan Low Yielding and unfavorable climate Absence Marketability Corruption Others (specify)When the respondents were asked about the most distractive factors seven among the twentyrespondents 35% told that absence of the technical support and lack of loan from banks is themost distractive factors they had faced. Twenty percent of respondents told that low yielding andunfavorable climate and absence of marketability were the distractive factors for them. Equalnumber of respondents said that it was absence of marketability. But the second most distractivefactor for all the respondents (25 %) was indeed corruption.Table no:-3.05Corrupt Practices Respondent has faced(In percentage)Corrupt Practices Production Processing Trade ExportExtortion 30 50 24 17
Favoritism 9 15 28 25Carteling 30 05 17 17Coercive/ 17 15 12 25forcefulObstructionEmbezzlement 5 00 6 00Others 9 15 12 16Most of the respondents involved in the production level told that extortion and trade cartel arethe most corrupt practices they faced during their business, followed by the coercive/forcefulobstruction. Favoritism and illegal local tax, various forms of donation and lottery in the name ofthe various religious/ cultural practices and lottery are included in the others.In the case of the processing fifty percent of respondents faced extortion then followed by thefavoritism, coercive and cartel, whereas no one faced the embezzlement problems, where asvarious kinds of local tax, donation were mentioned by the respondents.Majority of the Respondents involved in the local trade faced either favoritism or extortion. Thenother respondents told that cartel, coercion and embezzlement were the problems they facedduring their business. The respondents came under others categories were faced with problemslike, local tax, transport problems and etc.Likewise equal number of respondents 25% involved in export trade told that favoritism andcoercive activities were the corrupt practices they faced during their business. Similarly, equalnumbers of respondents 17% respondents told that extortion and cartel were the bad practicesthey faced during their business. None of the respondents faced embezzlement during thebusiness The respondents from other category told that, problems in custom and border areas anddonation were the main problems they faced during their business.
Chart no: - 3.06.People responsible in the corrupt practices 8 7 Government Officials 6 5 Member of Political Parties and 4 their affiliates 3 2 Trade Unionist 1 0 Middle Man All Others (specify)Data showed that all (government officials, members of political parties, trade unionist andmiddle man) actively found engaged in the corrupt practices. This mean that corruption in Nepalhas institutionalized and majority of the respondents (8) told this. Some underground rebelsgroups included in the others.
Chart no.3.07Effects of Corruption Low Salary/Income or Profit Poverty/ Deprivation 6 Discrimination in gender and other 5 Aspects Restrictions on the Access of 4 individual and Community to Natural Resources 3 Environmental Degradation 2 All 1 Others (specify) 0Most of the respondents answered that most of the problems with their job was the corruptpractices. As a result of this they are forced to suffer from poverty, low salary or profit, genderbased discrimination, and restrictions on access to natural resources. Environmental degradationis the common problems experienced and faced by the respondents. Personal humiliation, lack ofthe political support to raise voice against such practice, inferiority complex are mention in theothers category.
Table no:-3.08Good governance and corruption Conditions of Laws Yes No Not Sufficient Sufficient law against 00 06 14 Corruption Strong Legal and 00 08 12 Constitutional mechanism Implementation of 03 12 05 Anti Corruption law in Local level Organization to 01 11 08 support the victims Others (specify) 00 00 00Overwhelming majority of the respondents this or that way believed that present legal systemsare not competent to control corruption and institutional support mechanism to protect thevictims are not sufficient.Table no:-3.09Provisions required to hold the person involved in corruption Provisions Percentages Strong Constitutional Mechanism 15 Strong Legal Mechanism 13 Strong Political Commitment 08 Strong Civil Commitment 05 Interfering by the donor agencies 03 Capacity building of the organizations 08 working against corruption Transparent procedure 08 Making Strong network of the victims 13 Banning corrupt organizations in 03 international trade Promoting fair practices Strengthening the Role for international 03 Trade bodies and Trade Unions All 13 Others (Specify) 08
When researcher asked, what can be done to hold people engaged in corruption accountable?majority of the respondents argued to amend the present legal system (28% respondents arguedfor the strong constitutional and legal provision), and followed by the strong network of thevictims and some respondents argued all options given in the question are essential to check thecorruption, and the respond from other category told that all rights should given to companies tocheck the corruption, but they are not clear what short of right they want.Chart no.3.10Products mainly exported 10 9 India 8 7 China 6 5 South Asian Countries other than 4 India 3 Asian Countries (excluding South 2 Asian Countries) 1 European Countries 0 Others (if any)Majority of the respondents export their products to India since it is the nearest neighboringcountry. Another large numbers of the respondents export their products in European Countries,like Germany, Austria, United Kingdom, Belgium and others. Whereas some others respondentsexport their products to other Asian countries (except South Asia) were Japan, South Korea andGulf Countries. Bangladesh was another South Asian Country except India, where Nepali traderexports their products. USA is included in others. Most of the respondents were not interested toanswer their amount of business and profit.
Chart no.3.11Corruption during Export 12 10 8 Yes No 6 Little or more is to be given anyway 4 2 0Majority of the respondent 15 out of 20 ( included both yes and little or more is to be given anyway) agreed that they have been paying bribes in the time of the exporting their goods, only fiverespondent told that they were not forced to pay bribes.
Chart no.3.12People engaged in corrupt practice 7 6 5 4 Police or Border Security Force 3 Custom Officers 2 Foreign trade syndicates 1 All 0Another aspect of the corruption is shown by the chart (3.12) Respondent told that all (police andborder security force, custom Officers, foreign trade syndicates) were actively participated incorrupt practices.
Chart no.3.13Mode of Transportation Road 10 Sea 8 Air Rail 6 All 4 2 0Most of the respondents who export their products to India used road, those who export Europeuse Sea and those who export others Asian, North American and South Asian Countries use Air.
Chart no.3.14Use natural resources in any channel of agro products River water Ground water Forest products Solar energy Bio/natural gas Nothing All OthersMajority of the respondents used forest products (35%), and then ground water (19%), riverwater (15%) and bio gas (12%), none of the respondents used solar energy. The respondentsfrom others used water, form Lake as well as collect rain water.Table no.3.15Measures taken to fulfill social or environmental commitmentSocial Commitment Respondents in percentagesSupporting to open and run Schools, libraries 19and Health facility to local peopleHave opened and run schools, libraries and 05Health and sanitation facility as well assubsidized supply of foods and otherconsumer goods for the labor engaged in yourcompanyProviding drinking water facility and supports 16
to local development infrastructures e.g. roads,bridges, communication facilities communityhouses etc.Recharging ground water 16Waste water treatment plant 02Solid Waste Disposal System 19Reforestation in public land or Community 12forestOthers (Specify) 00Nothing 11Majority of the respondent were involved in the social welfare like as building schools, drinkingwater facilities, health post, roads, library and others which shows that they are committedtowards their social responsibility. Like this, respondents are found serious towards theenvironmental protection (16%) respondents involved in recharge of ground water, (12%)respondents were involved in reforestation, (2%) respondents had water treatment plant and(19%) has solid waste treatment plant and they made organic fertilizer by solid waste, whichshow that (49%) respondents directly involved in the environmental protection, only fewrespondents (12%) were not serious about their social responsibility, they did nothing.
Chapter Four 4.1. Findings of the Study And RecommendationsThe results of this research do suggest a significant relationship between corruption andenvironmental sustainability, care needs to be taken while interpretation.The analyses presented in this paper provide some clues on the relationship between corruptionand environmental sustainability; more qualitative analysis could generate insights that wouldhelp with the interpretation of the national studiesCorruption thrives when government and political parties are weak and inefficient to representpeople with their interests, confidence and enthusiasm. This study has also shown thatcorruption has both national and international dimension. It has strong connection with eachother. Therefore, both the national and international community has a tremendous job to do inthis regard. They may effectively build pressures and encourage any country to ratifyinternational treatise against corruption. The table 3.11 and 3.12 has forced us to make thisconclusion. Nepali export traders have not only to pay bribes to the Nepali officials but also toforeign officials and trade syndicates.Nepal needs intensive researches on goods for exports. The government, businessmen, academicinstitutions, trade unions and all other stake holders with their own initiations are to be engagedin researches with bigger as well as smaller and effective research units. More efforts on policyand program level are to be given to provide Nepali products wider international markets. Globalstandards are to be met and continuously maintained strictly as well on areas of production,processing, packaging, labeling and quality testing.Similarly, special production zones for export trade are to be developed and export orientedindustrial and business sector are to be provided with special security and other befittingmeasures. Up to now only tea sector is found with such zone. Attractive benefits are to beprovided with infrastructural support including uninterrupted power supply, communication andtransport network including short term and long term policy and program support.
Nepal alone cannot do this. International community also must feel an urgent need to providefinancial and technical support to a developing country like Nepal in building strong political andconstitutional bodies to make a fight against corruption and ensure smooth passage to theirproducts. They may also support civil societies working against corruption. Parliament, the mostimportant political actor can curb corruption by ensuring accountability and transparency.Parliamentary oversights through anti-corruption agencies and empowerment of civil society andmedia have a most critical role in this regard to play. Media in Nepal have shown great efforts inbringing corruption cases into public, but they are not supported by legal institutions. So soon themedia zeal and commitment against corruption dies or come under the influence of corruptpeople.A strong and independent judiciary accounts much in each and every national commitmentagainst corruption.Nothing can grow and be sustainable without strong public support. So, in the case of combatingcorruption, this study has also indicated that it is the public who must come to lead the nation.With confidence and strong civic actions, they can raise their voice and build effective advocacyin favor of zero tolerance to corruption at the political level.Corruption is not only the result of weak law and order situation, but also the result of valuescherished by individual and society. All the respondents involved accepted this as normal androutine. And this is the most terrible thing. This makes the whole society fall into shatters. Soreforming strengthening good values system and reforming the opposite one through strongadvocacy and campaigning is a basics for fighting corruption.People and companies engaged in trades related with tea, coffee, ginger and essential oils areheavily dependent upon natural resources. For example 35 percent of the respondent used forestresources (table 3.14) but only 12 percent involvement in reforestation makes it clear that weneed much to do in ensuring environmental sustainability. Policy intervention is most needed forsafer waste water and solid waste disposal system to control the contamination of both groundand river water resource. If strong policy and technical support could be made available to usesolar energy at the processing level, it would help both to protect the forest resources. A countrysuffering from power cut almost every time of the year and up to 11 – 18 hours a day in the offseason makes future of all our industry and trade with a bleak.
As mentioned above, political instability, lawlessness, nepotism and lack of accountability havebeen identified as the overall situation of Nepal. Corruption has dominated governance at alllevels, It has weakened our national will power in such a way that an anti-corruption agenda hasfailed to exist as a political and social priority of Nepal. So this has even corrupted the justice,democracy and overall national economy.4.2. ConclusionAs anywhere in world, Nepal has also shown that higher levels of corruption lead to lower levelof investment, and growth. It lowers productivity in all sectors whereas agriculture ormanufacturing causes low spending in education health and infrastructure development. (20) Thisalso produces a more unequal distribution of income, tax evasion at a larger scale underminespoverty reduction programs and eats up the political legitimacy of whole system, brings politicaldisaster, strengthens the morale of terrorist organizations and ensures the collapse of whole set ofsocio-political and economic system. This obviously will bring havoc in environment because allthe actors cruelly exploit the natural resources available in the country to fund their life andactivities. Political instability is the gravest cause for corruption which further steers for moreinstability and loot on natural resources. Even at the level of top government official, the ForestMinistry Secretary Yubaraj Bhusal, has recently claimed that only in the last seven years Nepalhas cleared 100,000 hectors of forest area due to such political loot. (21)When trade fails, it is not only the traders responsible for this. The main is policy and politics forgood governance. Making strong demands for good policies and selecting responsible andcredible people is the answer to corruption. When people go to polls probably the most importantmeasure they themselves can do to change the situation is to vote the right person with a clearconscience.Nothing will be impossible and a country is sure to win its bright future if it has right people withright policies to govern. Nepal can never be an exception. What we need are leaders at all levelsof society and governance -transparent and accountable in their conduct of public affairs.Yes a nation needs good policies. With good leaders and good policies, we need a good team tobe in control, to run our nation curb corruption and protect environment and as mentioned above,only electorates and opinion builders can do it much better.
References(1) ARD/ USAID, Tropical Forestry and Bio Diversity (FAA 118 &119) Assessment Report, Nepal, 2006.(2) Keshav Prasad Bhattarai, The Himalayan times (July 12, 2010)(3) James D. Wolfensohn, Voice For The World’s Poor- Selected Speeches and Writing, The World Bank,2005, page 45,50-51.(4) In the preface of Rick Stapenhurst, Niall Johnston and Ricardo Pellizo (edited) The Role ofParliament in Curbing Corruption, the World Bank, 2006.(5) Samuel P. Huntington: Political Order in Changing Societies, Adarsh Books, 2009, page-66.(6) ibid page - 63.(7) (Quoted in J. Edgardo Campos and Sanjay Pradhan edited: The Many Faces of Corruption –Tracking Vulnerabilities at the Sector Level, The World Bank, 2007, page 1.)(8) ibid.(9) Rick Stapenhurst, Niall Johnston and Ricardo Pellizo (edited) The Role of Parliament in CurbingCorruption, The World Bank, 2006, page 14.(10) World Development Report 2003, page 42.(11).Federico Mayor in collaboration with Jerôme Bindé , The World Ahead : Our future in the Making,Zed Books and UNESCO Publishing House,2001, Page 178.(12). Mayor and Bindé ibid page 154.(13). Human Development Report 2007/2008 Fighting Climate Change: Human Solidarity in a DividedWorld, page 3(14) World Development Report 2010 – Development and Climate Change, The World Bank, Page 4.(15) World Development Report 2010 page xiii(16) Zoellick ibid(17) Federico Mayor in collaboration with Jerôme Bindé , The World Ahead : Our future in the Making,Zed Books and UNESCO Publishing House,2001, Page 179.(18) Responsible Growth for the New Millennium - Integrating Society, Ecology, and the Economy, TheWorld Bank, 2004, page 1-2)(19) Responsible Growth for the New Millennium - Integrating Society, Ecology, and the Economy, TheWorld Bank, 2004, page 9.(20) Bjørn Lomborg (edited) Solutions to the World’s Biggest Problems – Costs and Benefits, CambridgeUniversity Press, 2007, page 232.(21). Nagarik Daily, December 30, 2010
AnnexesAnnexure 11. Questionnaires developed for the Cases of Corruption in agricultural export inNepalQuestions for the person related with particular area of agro- products Answer Pattern Supporting Remarks ( Give a Tick in box ) Tea1. Name of the agro- productsyou are engaged in - Coffee Essential Oils Ginger Answer Pattern Supporting Remarks ( Give a Tick in box ) Production2. What level or Channel of Levelproduction are you involved at? Processing Level Domestic Trade
Export Trade Answer Pattern Supporting Remarks ( Give a Tick in box ) High Yielding3. What are the most attractive and Profitablefactors you have been facing within this particular chain? Favorable to geography and Climate Suites to your interest Easy to farm ,harvest, store Smooth Marketability Other (please specify) Answer Pattern Supporting Remarks ( Give a Tick in box ) Absence of4. What are the most technicaldistractive factors you know-how andhave been facing with support forIn this particular chain? production, Processing, storing, bank loan/etc.
Low Yielding & unfavorable climate Absence Marketability Corruption5. What kind of Corrupt practices you are facing with and at which level? (Answer Pattern ( Give a Tick in related box ) Production Processing Marketing/ Supporting Remarks ExportingBribery □ □ □Extortion □ □ □Favouritism □ □ □Carteling □ □ □Coercive/ □ □ □forcefulObstructionEmbezzlement □ □ □6. Who is mainly responsible for such corrupt practices? (Give a Tick ) Supporting RemarksGovernment Officials □ □Member of Political Parties and their affiliatesTrade Unionists □Middleman □Companies buying products from the farmer □
Big farmers and traders □Others (Please specify) □7. How has it affected you? Give a Tick Supporting RemarksLow Salaries/ Income or Profit □Poverty and Deprivation □Discriminations in Gender or other aspects □ Violation of Land Rights of the individual or local □Community Restrictions on the Access of individual and Community □to Natural ResourcesEnvironmental Degradation □a) Contamination of Water Resources □b) Air Pollution □c) Destruction of Forest and wild Life □d) Others (Please Specify)8. Please answer the following regarding the existing conditions on good governance and corruption ( Give tickin the proper box) Yes No Not adequate1. Do we have stronger legal bodiesagainst corruption?2. Do we have stronger laws againstcorruption?3.If the laws against corruption isimplemented at the local level?4.If are civic bodies to protect victims ofcorruption?5.Others ( please specify)
9 .What can be done to hold Supporting RemarksPeople engaged in corruption accountable? Give a Tick1.Making constitutional provision against □corruption more stronger2.Making new laws (more strict against □corruption) □3.Strong political determination andcommitment □4.Strengthening the capacity of anticorruption agencies5.Forming new unions among peopleengaged in production, processing and trade □channel6. Strengthening the capacity of traders, □trade unions and other civic bodies againstcorrupt practices.7. Intervention from Donor Agencies. □8.Making strong Networks of the Victims □9.Making Procedure Transparent □10.Banning corrupt organizations in □international trade Promoting fair practices11. Others10. Where is your products mainly exported to? How much profit did you earn from your trade in the yearsmentioned? Profit Earned from export in the YearsCountries / Regions Answer 2007/2008 2008/2009 2009/2010 Pattern
(Give a Tick)India □China □South Asian Countries other □than IndiaAsian Countries (excluding □South Asian Countries)Overseas Countries (Please □specify the country orcountries)Others if any □If you have any comments/ remarks please give it here:11. (a)Are You forced to pay bribe or similar type of money to foreign officials or trade syndicates or networks (please give a tick in the boxYes, I have to pay No I do not Any how I have to pay little or more □ □ □11,(b)Whom do you have to pay such bribePolice and border Security Force Custom Officials People/ institutions engaged in foreign trade □ □ □(c) Could you please provide some example?(d). which mode of transportation do you use when you export your goods? By Road By Air By Sea By Train Comments □ □ □ □
12. What natural resources do you use in any channel of agro products you are engaged in? Give a Tick in the Supporting Remarks boxForest Products □River water □Ground water □Solar energy □Bio Gas/ Natural GasNone of them □All of them □13. What measures you have taken for the promotion of your social or environmental commitment andresponsibility? Give a Tick in the Supporting Remarks boxSupporting to open and run Schools, □libraries and Health facility to local peopleHave opened and run schools, libraries and □Health and sanitation facility as well assubsidized supply of foods and otherconsumer goods for the labor engaged inyour companyProviding drinking water facility and □supports to local developmentinfrastructures e.g. roads, bridges,communication facilities community housesetc.Reforestation in public land or Community □forestRecharging ground water □Waste water treatment plant □Solid Waste Disposal System □Others, please specify □
14. Could you help us to have a look on Eco Audit situation in the production, processing and exporting processof your farm or company? How much you saved? How much you managed?Number of Amount Energy Green liters of Tons of Toxic RemarksTrees Water house waters solid chemi gases waste calsIf You have something more to say please write here:17. If you have any comment you would like to make:22.214.171.124. Please use additional paper if you need to elaborate your answer and comments 1. Name - . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . (optional) 2. Age - . . . . . . . . . . . . . . . 3. Company -. .. . . . . . . . . .. . . . . 4. Position - . . . . . . . . . . . . . . . . . 5. Job Description - . . . . . . . . . . . . . . . . . 6. Experience: 7. Motivation that keeps you in this job/ profession:19. If you want to say more about you, your job, your company and your observation on this areaof study you are welcome.With Thanks
Annexure 2Companies and facilities visited for data collection and questionnaires administration1. Annapurna Organic Agro Industry, Sandhi Kharka Arghan Khanchi.2. District Cooperative Associations, Tamghas 4, Gulmi.3. Giri Bandhu Tea Estate Pvt. Ltd. Birtamod, Jhapa.4. Ginger Research Program, Ghanawang, Salayan.5. Gorkha Tea Estate Pvt. Ltd. Phikkal, Illam.6. Gurnas Tea Estate, Dhankuta 1, Dhankuta.7. Herbs Production and Processing Co. Ltd. Kathmandu Metropolitan city 35, Kathmandu.8. Highland Coffee Promotion Co.Ltd. Ichangunarayan , Kathmandu9. Himalayan Bio Trade Co. Ltd. Dhapasi, Kathmandu.10. Himalayan Sangrila Tea Pvt.Ltd. Sankhejung 7 - Nepal Tar, Illam11. Himalayan Tea Processing Pvt.Ltd. Sankhejung 3 , Illam12. Kuwapani Tea Plantation, Hile, Dhankuta.13. Nepal Small Tea Producer Pvt. Ltd. Phikkal Illam,14. Ginger Production Cooperatives Association, Limited, Tansen 4, Palpa15. Siddha Kalika Coffee Production Association, Madan Pokhara ,Palpa.16. Shiva parbati Community Consumer Group,Banganga, Kapilbastu.17. Sankhejung Hill Range Tea State, Sankhejung, Illam.Annexure 3.Persons involved in production, processing, and exporting tea, coffee, ginger and essentialoils, which were consulted by the researcher to fill the questionnaires and interviewedinformally to verify data.1. Mr.Amar Bahadur Rai, Sankhejung 3, Illam.2. Mr.Bashanta Raj Chitrakar, Jadibuti, Kathmandu.3. Mr.Bir Bahadur Basnet,Sankhejung Illam.4. Mr.Bhesh Raj Timilsina, Tansen 4, Palpa.5. Mr.Dadhi Ram Acharya, Sandhikharka 6, Arghankhachi.6. Mr.Dilip Rai,Phikkal 5,Illam.7. Mr. Gopi Dhungana, Panchkhel, Kabhre.8. Mr.Hom Sitaula, Sankhejung 7 - Nepal Tar, Illam9. Mr.Janardan Gauttam, Dhanawang Salyan10. Ms. Kalpana Tamang,Garamani Jhapa.11. Mr.Khagaswar Gauttam, Tamghas, Gulmi12. Mr.Khilendra Gurung, Dhapasi, Kathmandu.13. Krishna Dahal, Hile, Dhankuta