After a long tenuous political transition, Nepal enjoys some significant advantages:
- A long and robust tradition in community-led development contributed to development progress even during the height of the conflict.
- A “demographic window of opportunity” bolstered by a young population—the median age is under 22 years old
- An agile private sector strategically located between the world’s two fastest growing economies, India and China
The World Bank Group (WBG) in Nepal
The WBG strategy provide assistance under a longer-term partnership strategy that is flexible enough to accommodate a fragile and evolving country environment.
The strategy supports the Government of Nepal’s overarching goal to improve the living standards of all Nepalis and to reach middle-income status by 2022. It is organized around two ‘pillars’ that emerged during consultations with the Government, development partners and key stakeholders including civil society, the private sector, rural community groups and the media. The strategy aligns with the government’s development priorities, particularly in the energy sector.
- Pillar 1: Boosting economic growth and competitiveness; expanding hydroelectric power generation; enhancing transport connectivity; and improving the business environment.
- Pillar 2: Increasing inclusive growth and opportunities for shared prosperity; enhancing productivity in the agriculture sector; providing equal access to health care, skills development and social protection.
The World Bank currently supports 18 projects in Nepal with $1.3 billion in commitments from IDA. The International Finance Corporation (IFC) has a committed portfolio of $40 million in Nepal. Over a four year period (2014-18) Nepal may also benefit from a $ 200-300 million yearly allocation linked to good portfolio performance, economic management and improvements in governance. These funds could finance three to four new operations per year.
Pending the availability of viable investments and improvements to the business climate, IFC has planned a hydropower program ranging from $300-800 million over the strategy period.
Additionally, IFC can potentially commit U$ 20-40 million per year for investments in financial institutions, manufacturing, agribusiness and services sectors.
The Bank’s knowledge program is fully aligned with the priorities set out in the strategy. It builds on the recent policy notes sent to the government and focuses on the three “I” investment, infrastructure and inclusion needed for Nepal to reach higher growth levels.
Building on this work, the WBG is carrying out a Country Economic Memorandum to analyze in more detail Nepal’s key drivers of growth with a potential focus on exports, migration/ remittances, hydropower and public investments.
IDA and IFC will continue advising the government on the Investment Board and Public Private Partnerships (PPPs) for infrastructure development and help craft matching strategies to support the development of feasibility studies and contract documents to take these potential projects to the market.
Finally, the WBG will respond to ad-hoc requests from the government and, based on the progress drafting the new constitution, will likely conduct research on federalism and the process of decentralization.
Regional and Global Programs
In addition to national investment projects, the World Bank Group is actively supporting Nepal’s participation in regional and multilateral global initiatives. The Regional Wildlife Program, Strengthening Regional Cooperation for Wildlife Protection in Asia aims to help governments build capacity, institutions and incentives to collaborate in tackling illegal wildlife trade and other conservation threats to habitats in border areas.
The Nepal-India Electricity Transmission and Trade Project facilitates power trade between the two countries through imports into Nepal, and eventually, export of surplus power to India. At the global level, Nepal is the only country in the world that was selected to participate in two Climate Investment Fund (CIF) Pilot Programs – the Scaling up Renewable Energy Program (SREP) and the Pilot Program for Climate Resilience (PPCR).
Last Updated: Jun 19, 2015