Introduction

The United States Agency for International Development (USAID) has been a significant force in Nepal’s development for over six decades. Since its inception in 1961, USAID has played a crucial role in Nepal’s progress across various sectors, including economic growth, governance, health, education, infrastructure, and disaster resilience. Its long-term engagement is evident in the tangible improvements witnessed across the nation, contributing significantly to Nepal’s journey towards stability and self-reliance. This article examines the multifaceted impact of USAID’s involvement in Nepal and its continuing influence on the nation’s future trajectory.

USAID’s Multifaceted Role in Nepal’s Development

USAID’s engagement in Nepal encompasses a broad spectrum of development initiatives designed to improve livelihoods, stimulate economic growth, strengthen democratic governance, and enhance resilience against natural disasters.³ The agency provides financial assistance, technical expertise, and policy support, all of which have been instrumental in Nepal’s socio-economic advancement.

1. Fostering Economic Growth and Trade Development

USAID has been a key driver of Nepal’s economic development, focusing on agricultural productivity, micro-enterprise growth, and trade expansion.⁴ Programs like Feed the Future have bolstered food security by introducing modern farming techniques, promoting high-yield crops, and facilitating market access for farmers. These interventions have not only increased agricultural output but also improved livelihoods in rural communities.

Furthermore, USAID has worked to strengthen Nepal’s trade capacity by supporting small and medium-sized enterprises (SMEs) and improving access to finance.⁶ By creating economic opportunities, the agency has contributed to poverty reduction and facilitated Nepal’s integration into regional and global markets.

2. Advancing Health Sector Improvements

One of USAID’s most notable long-term impacts in Nepal has been in the health sector. USAID-supported programs have improved maternal and child health, expanded immunization coverage, and enhanced reproductive health services. The agency has also been critical in combating infectious diseases such as tuberculosis, malaria, and HIV/AIDS.

Nepal’s remarkable progress in reducing child and maternal mortality rates can be attributed, in part, to USAID’s investments in healthcare infrastructure, training of healthcare professionals, and improved access to essential medicines. These efforts have had a lasting positive effect on the health and well-being of countless Nepalese citizens.

3. Challenges and Evolving Dynamics

While USAID’s contributions to Nepal’s development are undeniable, its engagement has also faced challenges and criticisms. Concerns have been raised regarding aid dependency and the need for self-sustaining solutions. The effectiveness of certain projects and the bureaucratic complexities associated with aid distribution have also been subjects of discussion. Furthermore, geopolitical factors and evolving U.S. foreign policy priorities can influence the continuity and scope of USAID programs. Promoting local ownership and strengthening collaboration with Nepalese institutions are crucial for ensuring the long-term sustainability of USAID’s initiatives.

The USAID Fund Freeze, Trump Administration, and Elon Musk’s Impact

As U.S. President Donald Trump’s administration has paused USAID funding for three months, a significant impact has already been seen in Nepal.

Nepal is already facing the shockwave as USAID has put all projects on hold and started terminating contracts. On February 16, Elon Musk-led United States Government Department of Government Efficiency (DOGE) announced the termination of $20M for “fiscal federalism” in Nepal and $19M for “biodiversity conservation” in Nepal.

Trump’s order to freeze resources for foreign aid programs for 90 days has paralyzed all USAID-funded operations and activities of government projects and NGOs in Nepal. Musk, heading his drive to shrink the federal government, is overseeing foreign projects and scrutiny in USAID, which is increasingly seen as a devastating problem for Nepal. A major revamp has already been seen that will shrink the workforce and align spending with Trump’s priorities.

The recent freeze on USAID aid is already having a significant impact on Nepal, halting vital projects, disrupting essential financial support, and casting a shadow over the future of key development initiatives.

The suspension has forced USAID and its partners to put numerous ongoing programs on hold, leaving both government-led efforts and over 300 NGOs in a state of uncertainty. Additionally, the cancellation of pre-scheduled visits from U.S. officials has further complicated diplomatic relations and slowed critical developmental engagements.

The impact is particularly severe in sectors directly dependent on USAID’s funding, including health, agriculture, environment, and education. The USAID Health Direct Financing Project, signed in April 2023 with a budget of $25 million, was designed to improve healthcare services by providing financial support to Nepal’s federal Ministry of Health and Population, the Ministry of Social Development in Karnali Province, and three local governments in the same region. Now, with funding frozen, essential healthcare improvements are in jeopardy.

Similarly, the USAID Agricultural Direct Financing Project, a $21 million initiative launched in September last year, was aimed at enhancing food security by helping 69,000 households adopt modern agricultural technologies. This government-to-government agreement was expected to transform farming practices across 53,000 hectares of land, but with the aid freeze, its future remains uncertain.

A funding freeze is reportedly disrupting tuberculosis (TB) care globally. Over the last two weeks, vital USAID-supported TB diagnostic and treatment centers in countries with high TB rates have been forced to shut down due to “stop-work” orders. This has left TB patients without access to essential medications and timely diagnoses. Even medications that have already been procured are not being distributed, as USAID-funded staff in numerous countries are no longer receiving their salaries.

It has been accused for several discreet programs internationally such as :

-$446,700 to promote the expansion of atheism in Nepal through the State Department.

-$1 million to boost French-speaking LGBTQ groups in West and Central Africa through the State Department.

-$14 million in cash vouchers for migrants at the southern border through the State Department.

-$20,600 for a drag show in Ecuador through the State Department.

However, on February 13th, a federal judge in Washington, D.C., ruled that the funding freeze must end. Judge Amir H. Ali determined that the Executive Order was likely to cause “irreparable harm” to aid organizations, who are facing severe financial difficulties and, in some cases, complete shutdown.

The Future of USAID in Nepal

Looking forward, USAID’s role in Nepal is likely to evolve in response to emerging challenges and opportunities. As Nepal progresses towards middle-income status, the focus of development assistance may shift from direct aid to capacity-building, technical partnerships, and private sector engagement.

USAID’s future engagement is expected to prioritize sustainable development, climate change adaptation, digital transformation, and private sector development. Strengthening Nepal’s resilience against external shocks, such as pandemics and economic downturns, will also remain a key area of focus.

Conclusion

USAID has made a profound and lasting contribution to Nepal’s development journey. From economic growth and governance reforms to health improvements and disaster resilience, its support has been instrumental in shaping a more stable and prosperous Nepal. While challenges persist, the continued partnership between USAID and Nepal holds immense potential for driving sustainable progress and empowering Nepalese communities for generations to come.