MANILA, PHILIPPINES (12 December 2017) — The Asian Development Bank’s (ADB) Board of Directors has approved a $100 million loan to improve rural roads to promote more extensive agriculture and agribusiness development in five states of Nepal.
“Many areas of Nepal are not reaching their high potential in agriculture because of earth roads that cannot be used after rains, high transport costs, and slow movement of goods,” said Lee Ming Tai, ADB Senior Rural Development Specialist. “Improving rural road connectivity to the core road network is key to ensuring that the benefits of economic growth are felt in rural areas. This is in line with the goal of the government’s Agriculture Development Strategy signed in 2015 of encouraging commercial agriculture, increasing productivity, creating new rural jobs, and reducing poverty,” he added.
Up to 70% of Nepal’s working population is employed in agriculture, contributing 35% of the country’s gross domestic product. But Nepal’s agriculture generally suffers from low productivity since movement of goods between farms and markets is slow and expensive. Not only do most rural roads offer only seasonal access there are often missing links that could connect them with the core network.
Almost 40% of rural households live at least 2 hours away from the nearest paved roads, while only 17% of the rural population in Nepal have access to all-weather roads. The average rural household is 3.5 hours away from the nearest bus stop and more than 2 hours away from the nearest market center.
The project will improve 388 kilometers of rural roads to all-weather standards and maintain them for three years, bringing better access to 7.5 million people in 16 districts in 5 states that are heavily dependent on agriculture. Building on ADB’s previous experience with rural road programs, the project will also provide training on safeguards, road safety, road asset management, contract management, and road design.
The project will generate an estimated 3.8 million person-days of employment during the construction and maintenance periods. Apart from the economic and social benefits that will be generated for women from easier movement, at least a third of the project’s orientation, planning, and public and social auditing will be carried out by women.
Accompanying the loan is a technical assistance grant of $1 million to restructure the Department of Local Infrastructure Development and Agricultural Roads into a state-of-the-art rural road agency. This will help develop new business procedures, train officials, and devise a new management structure, among other activities.
The total cost of the project is $135.72 million, of which the government will provide $35.72 million. The project is due for completion in January 2023.
ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, ADB is celebrating 50 years of development partnership in the region. It is owned by 67 members—48 from the region. In 2016, ADB assistance totaled $31.7 billion, including $14 billion in cofinancing.