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Country Strategy and Program 2005-2009: Nepal
IV. ADB's Strategy
A. Summary of Key Development Challenges
68. The conflict has evolved into a serious political crisis, which
makes it imperative that root causes of the conflict are addressed.
ADB's results-based strategy is designed to assist the Government
to address some of the key development challenges facing the country.
69. Ensuring that the development process is more broad-based and
inclusive can help break the vicious cycle of exclusion and chronic
poverty. This could be addressed by mainstreaming the concerns of
poor women and of disadvantaged ethnic and caste groups in development
policies and programs; by fostering more balanced regional development;
and by promoting community and beneficiary participation in all
phases of project design and implementation.
70. Poverty reduction has been slow, primarily due to inadequate
and narrowly based economic growth, high population growth, and
regional imbalance in overall development. Nepal therefore needs
to attain stronger and more broad-based growth. Strengthening rural-urban
and regional connectivity, building market linkages, and improving
the quality of and access to basic social services are critical
to promote broad-based growth, enhance mobility, and improve productivity.
Fostering increased private sector investment by restoring peace
and stability and by improving the policy and regulatory environment
is key to achieving higher growth. Promoting public-private partnerships
in the development and management of infrastructure can be a major
instrument for greater connectivity and higher growth, especially
in the underserved parts of the country.
71. Notwithstanding Nepal’s significant progress in fostering social
development over the years, the quality and efficiency of basic
public services, such as education and water supply and sanitation,
remain poor. In education, key priorities are to improve access
to and quality of primary and secondary education, boost vocational
training (aimed primarily at creating employment), and foster a
suitable mix of public and private higher education. Expanding access
to potable drinking water, and improving sewerage and sanitation
facilities are the highest water supply and sanitation sector priorities.
72. Improving governance is a pressing issue for Nepal and has
significant implications for improving delivery of economic and
social services, and for effective aid utilization. Weak institutional
capacity; weak enforcement of laws and regulations designed to promote
private investment; corruption; and lack of vision, predictability,
transparency, and participation in government policy and strategy
erode investor confidence and impede private sector initiatives.
All sector operations should include measures aimed at improving
governance. In terms of core governance, key priorities include
curbing corruption, making the civil service more efficient and
effective, reforming public enterprises, promoting decentralization,
tapping local knowledge, promoting greater transparency and accountability
in public service delivery, and building capacity.
B. Country Strategy and Program Strategic Focus
73. Fostering an inclusive development process will be ADB’s strategic
approach over the next 5 years to contribute to the long-term goal
of poverty reduction in Nepal. A more inclusive development process
will assist the Government to promote greater balance in development
of different regions of the country; improve access of the poor
to basic services, opportunities for economic advancement, and participation
in the development process; and address the needs of disadvantaged
women, ethnic groups, and lower castes. Such a development process
will not only contribute to social and economic progress but also
to stability. ADB will support the following measures to foster
a more inclusive development and results-oriented process:
- Conflict assessment. All assistance will be
reviewed to (a) assess the degree to which it can be effectively
implemented in the conflict setting, and (b) examine options for
designing assistance to address the root causes of the conflict.
- Participatory processes. Community and beneficiary
participation will be substantially strengthened in all phases
of project design and implementation to ensure the involvement
and commitment of local communities.
- Mainstreaming inclusion. Opportunities to assist
poor women, disadvantaged ethnic and caste groups, and the rural
population will be examined in all assistance activities, with
an emphasis on steadily enhancing the benefits of ADB assistance
that accrue to those previously excluded from progress.
- Transparency and accountability. Decentralization,
public participation, and
measures to help reduce corruption will be assessed and supported
by ADB
assistance. Public audits and transparency at the local level
will be encouraged.
74. The strategies and choice of sectors of the CSP are based on (i) extensive consultations with all stakeholders-private sector, academia, excluded groups, civil society, local community representatives, women activists, experts, and political parties in all five development regions; (ii) the analysis of Nepal's development constraints and poverty conditions; (iii) the Government's strategic priorities as set out in the Tenth Plan; (iv) ADB's experience and sector-specific strengths; (v) opportunities to harmonize ADB's assistance with that of other development partners; and (vi) the constraints to and opportunities for improving development results and effectiveness. ADB's strategy will rest on three pillars: broad-based economic growth, inclusive social development, and good governance. Sector interventions have been chosen on the basis of their potential: (i) to help address the underlying causes of chronic poverty and conflict; (ii) to be effectively implemented in a challenging development context; and (iii) to contribute to the delivery of meaningful development results. The conceptual linkages between the goals, the three strategic pillars, and the priority sectors of the CSP are shown in the Figure and are described below.
1. Broad-Based Economic Growth
75. Providing access to economic opportunities, with a special focus on the needs of the poor and excluded in rural areas (particularly in the Midwestern and Farwestern regions) will be the approach to foster broad-based growth over the CSP period. Connecting the poor and excluded to employment and market opportunities as well as promoting their integration with the national and global economy will be crucial in this regard. ADB will assist the Government to link the poor and excluded to emerging economic growth poles. To this end, ADB will assist in developing the transport and communications network to support a more dynamic, national market economy, while fostering strong links between national, regional, and international markets. ADB will assist the rural poor by (i) strengthening farm-to-market linkages in underserved regions of Nepal thereby improving agriculture productivity; (ii) supporting prudentially sound, market-oriented rural financial intermediation to support both agriculture and off-farm investment, including the development of a functional land market; (iii) restructuring the energy sector to create a foundation for private investment and to promote rural electrification; (iv) improving access to rural communications and information facilities; (v) encouraging private investment, including small and medium enterprises; and (vi) developing one or more transport corridors traversing the northern and southern parts of the country. The last point addresses the weakest link in regional connectivity in Nepal.
2. Inclusive Social Development
76. ADB will strongly support inclusive social development, particularly human resource development that aims to (i) empower the poor and excluded through social mobilization and awareness and (ii) promote the skills needed for remunerative employment and for raising productivity. Key priorities will be to improve vocational training and the quality of secondary education. ADB will also incorporate social protection components into its rural assistance to help bolster off-season rural employment, provide incentives to poor and disadvantaged families to keep their children in school, and protect minimum consumption requirements of those ultra-poor who cannot work. ADB will continue to invest in better health conditions by supporting the Government's efforts to provide potable water supply and basic sewerage and sanitation facilities in rural areas. With rapid urbanization, the deficiency of urban and environmental infrastructure and services poses a serious threat to the health of the urban population in many urban and peri-urban areas. Investments will be made to meet the urgent need for safe water supply and sanitation services in a financially sustainable manner in these areas.
3. Good Governance
77. Good governance is central to Nepal’s development and resolution of the conflict.
Decades of poor governance have contributed to the conflict. Further, the lack of representative
government at all tiers for last 2 years has been a major constraint to expeditious structural
reform. Greater selectivity, recognition that longer time frames may be required to achieve
reform, more up-front investment in awareness and consensus building, and greater attention to
local service delivery are ways in which conflict-related risks to progress in governance will be
mitigated.
78. ADB assistance will aim to make governance more inclusive and results-oriented. The CSP will focus on: (i) encouraging participation of women, and disadvantaged and excluded groups both in the development process and in government; (ii) supporting the Government's decentralization initiatives, including fiscal decentralization, by strengthening the planning and implementation capacity of local institutions; (iii) improving devolved service delivery at grassroots level by encouraging involvement of the local community, private sector, and NGOs; (vi) pursuing institutional strengthening and deregulation to minimize opportunities for corruption; and (v) supporting civil service reforms to enhance the accountability, transparency, and results orientation of public service delivery. Building effective and responsive institutions remains central to forging a more inclusive society and promoting development. A combination of affirmative actions, community and beneficiary participation, and anticorruption initiatives will help make institutions more representative and accountable. Support for devolution and decentralization will help institutions tap local knowledge and empower communities. Fostering partnerships between government, the private sector, and NGOs will help build more robust service-delivery systems and reinforce accountability. Strengthening institutional capacity to deliver results, by supporting merit-based personnel management, improved monitoring and evaluation, and better project planning and implementation will enhance the competence and
credibility of public sector institutions.
79. Private Sector Development. ADB will assist
the Government to promote private sector investment by fostering
a more conducive policy and enabling environment, with special attention
to enhancing enforcement of policies aimed at catalyzing private
initiative. This will be combined with measures aimed at improving
the performance of key segments of the financial sector (agricultural
credit and rural financial services) and at improving government
capacity to support and oversee the private provision of public
services. ADB will also pay special attention to promoting public-private
partnerships and to improving the policy and institutional regime
for encouraging foreign direct investment. A combination of deregulation
and the improvement of investment-approval procedures for foreign
investors will help enhance the private sector investment environment
and better integrate the national economy with the global economy.
80. Gender and Excluded Groups. ADB will help
the Government address gender, ethnic, and caste discrimination
by (i) encouraging inclusive public policies; (ii) mainstreaming
antidiscrimination measures in ADB-supported rural development,
education, and civil service reform initiatives; (iii) building
institutional capacity to foster inclusion and promote gender equality;
and (iv) providing targeted interventions to empower poor women.
Mainstreaming will aim at building better linkages between the Ministry
of Women, Children, and Social Welfare and core line agencies so
as to (i) enhance gender responsiveness, (ii) ensure that women
and excluded ethnic and caste groups benefit from ADB-assisted projects,
and (iii) ensure that projects include components for empowering
excluded groups and monitoring changes in their status.
81. Environment. Fostering economic growth that
is environment-friendly and ecologically sustainable will be an
important priority to ADB. ADB will assist the Government to improve
social and environmental policies and procedures, especially when
these relate to large public sector projects. ADB will also provide
assistance to address urban and peri-urban environment issues. Community-based
management systems will be encouraged as a means of protecting the
environment and safeguarding fragile natural resources.
82. Regional Cooperation. Building on the progress
of SASEC, ADB will aim to assist Nepal in realizing its growth and
poverty reduction goals by deepening the process of regional cooperation
between Nepal, Bangladesh, Bhutan, People’s Republic of China, and
India. ADB will support the restoration of Nepal as a traditional
trade corridor by supporting the establishment of better transport
and border-trade connections with neighboring countries and will
promote cooperation in trade and investment facilitation, energy,
tourism, and communications. ADB will also provide assistance to
build capacity and support the activities of the SAARC Secretariat.
The recently held 12th SAARC Summit, at which the historic Islamabad
Declaration was adopted, has opened a new vista of opportunities
for regional cooperation in South Asia. Assistance for Nepal’s participation
in the Bay of Bengal Initiative for Multi-Sectoral Technical and
Economic Cooperation and the Kunming initiatives will also be considered.
As security conditions permit, ADB will also assist in reviving
the traditional trade and transport corridor that would connect
the People’s Republic of China and India through Nepal.
83. Improving Implementation. Development results
can only be delivered if agreed interventions are implemented in
a timely, effective, and sustainable manner. Nepal's project implementation
record is weak and has been exacerbated by the security situation.
Specific initiatives will be launched to address generic implementation
issues and improve the quality of ADB assistance, and include: (i)
focusing on fewer sectors; (ii) fostering greater commitment by
assisting projects that are government led and, increasingly, government
designed; (iii) encouraging harmonization to reinforce the alignment
of ADB assistance with government programs and those of other development
partners; (iv) ensuring that effective implementation arrangements
are in place when public policies are reformed; (v) involving a
wider spectrum of institutions in service delivery to improve quality
and responsiveness to users; and (vi) simplifying project design
to focus on a manageable set of objectives. In addition, to respond
to the special implementation challenges posed by the conflict,
ADB assistance will (i) adopt flexible implementation modalities,
(ii) promote greater community participation in project design as
well as implementation, (iii) ensure transparency and accountability
in flow of funds and implementation mechanisms, (iv) better target
the poor and disadvantaged, and (v) mainstream social inclusion.
These measures will improve portfolio performance and development
results. Major investment in sustained capacity building of public
institutions on the one hand and simplification of design and implementation
procedures on the other are critical to achieving better development
results.
C. Results Orientation
84. This document represents ADB's first pilot results-based CSP. It is results-based because it (i) identifies the "results" sought by the Government to which ADB will contribute; (ii) identifies what "outcomes" are expected during the implementation of this CSP; (iii) provides a mechanism and indicators for monitoring progress made toward achieving those outcomes; and (iv) provides a basis for evaluating the success of this CSP, thereby providing a basis for adjusting future plans to improve results. This document, therefore, describes the main ways in which ADB will assist the Government in achieving its national goals and objectives; it does not, however, establish the "share" or quantitative measure of ADB's contribution to national goals and objectives.
85. Focusing on the delivery of development results is particularly relevant to Nepal at this
time to help build broad-based support and trust in the Government, and to contribute to
reviving the peace process. Making strategic processes more results oriented involves learning
from past experience; scaling up proven poverty-reducing interventions; ensuring that, once
committed, external assistance is implemented effectively; and judging progress not by the
expressed interest, but by the delivery of results on the ground. Over time, the results-based
CSP will help build a stronger and more robust development partnership by establishing a
results framework for priority setting, for monitoring progress, and for assessing the consistency
and coherence of ADB-supported interventions.
86. A results framework has been prepared to serve as a management tool for focusing
ADB assistance on the delivery of development results (see Matrix). The results framework
provides a conceptual link between the Government’s long-term development goals, its
medium-term development agenda, the development context, intermediate results, and the risks
and assumptions underlining the provision of external assistance.
87. ADB's contribution to the achievement of intermediate outcomes in the next 4–5 years
will also depend on its ongoing projects and programs. Improving the implementation of ongoing
operations, therefore, will be important to boosting ADB's contribution to the achievement of
development results. The Government and ADB routinely restructure and refocus ongoing
operations, based on the findings of careful project monitoring and supervision, in an effort to
improve the delivery of development results.
88. The results framework (the Matrix) has a number of salient features. First, it clearly
identifies which of the long-term development goals and medium-term development agenda of
the Government are aligned with ADB’s overarching goal and strategic focus. This alignment is
important because, while both the Government and ADB are fully committed to the achievement
of the Millennium Development Goals, ADB’s assistance will have to remain focused on those
areas in which ADB can make a meaningful contribution and in which it can harmonize
assistance provided by other development partners. Second, the results framework identifies
key constraints that are barriers to the achievement of the identified goals and objectives.
Addressing these constraints and removing these barriers are the combined undertaking of the
Government and all of its development partners, including ADB. Third, the results framework
describes the focus of ADB assistance. This is not a matter of the number of sectors or projects
assisted by ADB, but the credibility and relevance of ADB's support to a wider effort aimed at
achieving national development objectives. Therefore, in the results framework, ADB (along with
other development partners) commits to contribute to the achievement of intermediate
outcomes that are needed to address the development constraints facing Nepal. Fourth, the
results framework reproduces a set of realistic intermediate indicators that are intended to show whether progress has been made toward achieving these intermediate outcomes. Fifth, the
results framework clarifies those key assumptions used and risks identified during strategy
formulation that could affect the outcomes.
89. The results framework is designed to be an operational management tool. It may need to
be periodically updated to ensure its continued relevance; to identify and guide the operations to
enhance development impact; and to monitor and evaluate progress in implementing the
strategy and program for necessary adjustments in order to improve results.
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