Having been on the ground at Dubai’s International Humanitarian City for two full days this week, I witnessed first hand the global response to the tragedy that has decimated Nepal. A 7.8 magnitude quake, with thousands killed and injured has prompted an outpouring of global support.
By next Monday, the UN’s World Food Programme said it hopes to have flown ten emergency aid missions. That means potentially a thousand tonnes of emergency supplies using an air bridge established between the UAE and Nepal with a full mix of cargo planes.
It has not been an easy start. The first 747 jumbo jet, offered up by His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of UAE and Ruler of Dubai, was filled to the brim with temporary shelters, medical kits and mobile communications bases. It was stranded for the first day without landing clearance on the other side.
But it is impressive to see how this logistics hub springs to life. Its first real test was the 2004 tsunami a year after it set up operations. The IHC is not so much a city, but rather a sea of warehouses leveraging the experience Dubai has in the airline sector. Sandwiched in between the new Al Maktoum Dubai World Central airport and Jebel Ali Port and Free Zone, the facility is home to nine UN agencies and over 60 aid organisations.
But 48 hours into the relief efforts, it had become abundantly clear the biggest challenge is a severe lack of capacity in Nepal. Goran Zuber of the International Federation of the Red Cross and Red Crescent, in between conversations to meet the expectations of multiple donors, describes a “serious bottleneck” on the ground as agencies struggle to balance critical search-and-rescue operations with the need to deliver emergency supplies, such as temporary shelter for the over 9,000 people injured.
Tribhuvan International Airport was insufficient before the quake; today is it struggling to cope. Power and transport infrastructure has been severely damaged. An early estimate by IHS Global Insight has put damages at $5 billion, about 20 per cent of the country’s GDP. That number is expected to rise in the weeks ahead as global aid organisations work their way beyond Kathmandu.
“With housing construction standards in Nepal being extremely low due to the poverty of the general population the impact of the earthquake has been devastating,” noted Rajiv Biswas, Asia-Pacific Economist with IHS.
Mother Nature has struck a country that can least afford it. It is one of the poorest countries in the world. Per capita GDP is just over $800 and unemployment hovers around 40 per cent. The number one foreign exchange earner by far is the constant stream of global remittances, making up about a third of the economy.
It would not come as a surprise to see that the monstrous quake will have highly negative impact on the country’s tourism sector. Nepal welcomed over 800,000 people last year according to the World Travel and Tourism Council, but with the severe damage done to Unesco heritage sites, certainly those who were seeking out the still unspoilt but rough charm of Nepal will delay plans for the next few years as the South Asian country tries to rebuild.
Institutional capacity to absorb the financial aid that will be on offer may be in short supply as well. The Nepalese people have been the victims of a protracted battle over a new constitution.
It took a peace deal to settle a decade long insurgency by Maoists, which clearly held back foreign direct investment.
Already the Asian Development Bank has offered $200 million in financial assistance to support the initial phase of reconstruction. Using the example of Typhoon Haiyan in the Philippines two years ago, over $800 million has been funnelled in, fostering Phase One of recovery. On the flip side, Haiti, despite $3.5 billion of assistance, has not been able to capitalise on the global outpouring of support five years after being decimated by a massive earthquake.
Though it is difficult to comprehend a potential silver lining after such upheaval, the quake could be a defining moment for Nepal to engage with its large emerging market neighbours — China and India. Beijing only recently formed the $100 billion dollar Asian Infrastructure Investment Bank, despite public resistance from Washington.
This will become an ideal opportunity to have its 57 member-states to start deploying funds and hopefully trigger an infrastructure-led recovery in this tiny nation.
Nepal has to be able to prove it is not another Haiti in the making and show it can leverage the global assistance that has lined up on the runways of the UAE and the credit lines of financial institutions.
The writer is CNN’s Emerging Markets Editor.
