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Countries and Regions Country Partnership Strategies Document
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Country Strategy and Program 2005-2009: Nepal
Executive SummaryNepal is facing unprecedented development challenges. Notwithstanding some important gains in economic and social conditions over the past decade, the pace of overall poverty reduction in the country has been slow. Nepal remains one of the poorest countries in the world with a per capita gross domestic product of around $270 and a poverty incidence of 38%. Poverty reduction has become more daunting due to the escalating armed insurgency that began in 1996. The conflict has adversely impacted on rural livelihoods, led to loss of life, caused out-migration, destroyed local government and the security infrastructure in certain parts, and restricted movement of people and goods. The conflict, combined with political instability—due to the suspension of Parliament and fractious relations among the mainstream political parties—presents a complex development setting. However, the current crisis also presents Nepal with an opportunity to address fundamental problems that have long hindered development and contributed to poverty and social exclusion. The conflict has exposed deep-seated geographic, economic, social, gender, and ethnic inequalities within Nepalese society. There is a need to break the vicious cycle of social exclusion, chronic poverty, and low growth that fuels social and political tensions by making the development process more broad-based and inclusive. Addressing these inequalities and attaining high economic growth are vital to improving living conditions and to achieving a lasting solution to the conflict. The Government recognizes the gravity of the conflict and its underlying causes. The Tenth Plan (FY2003-FY2007), which is also the Government's poverty reduction strategy, highlights the need to address chronic poverty and social exclusion. The Tenth Plan is built on four pillars: (i) broad-based and higher economic growth, (ii) social development, (iii) targeted programs for excluded groups, and (iv) good governance. Implementation of the Tenth Plan presents a major challenge to the Government as it is predicated on the peaceful resolution of the conflict and on political stability. The Asian Development Bank (ADB) and Nepal's other development partners have an important role to play to support the Government in implementing the Tenth Plan under the present conditions-escalation of the conflict and continuing political instability. This is ADB’s first pilot results-based country strategy and program (CSP). It identifies the “results” or “impact” sought by the Government, to which ADB will contribute, and identifies what “outcomes” are expected to be achieved during the implementation of this CSP. Preparation of this results-based CSP involved wide consultations with government officials at all levels, civil society, beneficiary communities, and Nepal’s development partners. Based on in-depth consultations, the CSP builds on a rigorous analysis of the poverty situation in the country, ADB’s operational experience in Nepal, and a comprehensive assessment of conflict and the evolving political context. The relevance of the lessons learned from ADB’s past experiences for the proposed CSP was assessed in the current development context to assure adequate measures for strengthening the development impact of the proposed assistance program. ADB’s strategic approach in Nepal over the next 5 years will be to foster a broad-based and inclusive social and economic development process so as to achieve a steady decline in poverty. ADB’s support for a more inclusive development process will assist the Government in promoting greater balance in the development of different regions of the country; in improving access of the poor to basic services, their opportunities for economic advancement, and their participation in the development process; and in addressing the needs of disadvantaged women, ethnic groups, and castes. Making the development process more inclusive will contribute to stronger growth and poverty reduction. By creating opportunities for more people to contribute to, and benefit from, economic growth and development, ADB’s assistance will help ease social tensions and create the foundation for sustainable poverty reduction. ADB’s strategy for development assistance to Nepal—based on the development challenges and opportunities and the Government’s strategic priorities set out in the Tenth Plan—will focus on:
As crosscutting initiatives, the CSP will also focus on:
Delivering development assistance effectively in a conflict setting is a major challenge. Lessons learned from past ADB experience include the need to (i) keep ADB operations simple and implementable, (ii) promote local service delivery and active participation of key stakeholders to ensure that projects are demand-driven and sustainable, and (iii) work steadily to enhance public policy and institutional performance resulting in a more enabling environment for private initiatives. To this end, (i) ADB's future assistance will be more sharply focused and results oriented, (ii) more sector-wide and programmatic approaches will be used, and (iii) participation of a wider spectrum of stakeholders and institutions in the design and implementation of all projects will be encouraged. In addition, ADB's assistance will be increasingly harmonized with the Government's policies and procedures as well as with the assistance of other development partners. To respond to the special implementation challenges posed by the conflict, ADB assistance proposes more flexible modalities; greater community participation; more transparency of ADB operations; and a sharper focus on poverty reduction, regional equity, and the mainstreaming of social inclusion in ADB operations. This approach will address the underlying causes of the conflict and persistent poverty.
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