Make the chicken: In a large pot or Dutch oven, melt the butter over medium heat. Add the chopped onion and cook until softened, about 5 minutes. Add the garlic and cook for 1 minute. Add the chicken and cook until browned on all sides, about 5-7 minutes. Add the thyme, salt, pepper, and paprika. Pour in the chicken broth and water, and bring to a boil. Reduce the heat to low and simmer for 10-15 minutes, or until the chicken is cooked through.
Make the dumplings: In a large bowl, whisk together the flour, salt, and baking powder. Cut in the shortening or lard until the mixture resembles coarse crumbs. Gradually add the warm water, stirring with a fork until the dough comes together. Turn the dough out onto a floured surface and knead for 2-3 minutes, until smooth and elastic.
Roll out the dumplings: Roll out the dumpling dough to a thickness of about 1/4 inch. Cut into strips or squares, about 1 inch wide and 2-3 inches long.
Add the dumplings to the pot: Bring the chicken broth to a boil, then add the dumplings to the pot. Cook for 10-15 minutes, or until the dumplings are cooked through and have risen to the surface.
Serve: Serve the chicken and dumplings hot, garnished with chopped fresh herbs if desired.