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In Nepal, IDA is Supporting Local Governments to Drive Development

Women from Lamahi Dang take rest in a public park.

Women from Lamahi, Dang, in Nepal's Lumbini Province take rest in a public park restored by the Lamahi Municiplality with support from Nepal Urban Goverance and Infrastructure Project (NUGIP). 


World Bank

Far from the bustling streets of Kathmandu, Nepal’s federal capital, a quiet revolution is transforming secondary cities across the country. 

The transformation is led by the local governments, as they take charge of their development agendas under the federal structure of the country introduced in 2017.

The World Bank Group’s International Development Association (IDA) is supporting this transformation by helping the local governments improve their institutional capacities, and service delivery and manage their infrastructure effectively. 

This is being done through the $150 million Nepal Urban Governance and Infrastructure Project (NUGIP) financed by IDA and implemented by the government of Nepal in 33 municipalities across Nepal’s seven provinces. 

NUGIP puts the participating local governments at the forefront of project implementation with an allocation of about 95 percent of the project budget to the local governments.

NUGIP at Work: Stories and Voices from the Municipalities

In Pokhara, NUGIP’s Urban Development Grant is transforming the city’s strategic roads into well-planned, people-friendly urban streets.

The upgradation of the Talchowk-Begnas Road – a critical stretch connecting Pokhara main city to the beautiful Begnas lake and the Rupa Rural Municipality – is set to boost tourism, trade and local business.

Like other NUGIP road sub-projects, this stretch employs innovative solutions to enhance climate and disaster resilience, featuring efficient drainage systems, erosion control measures, and robust embankments.

Extensive local consultations have led to the inclusion of dedicated cycle lanes, and wider footpaths, promoting eco-friendly transport. Universal design elements in sidewalks and crossings further enhance comfort and accessibility for all users.

"The upgraded road will be more than just convenience" exclaims Shakuntala Sunari Magar, a school teacher from Talchowk. "It will ensure safer journey for our students to school and back home."

Strengthening municipal capacities 

While implementing various components of the NUGIP project, participating municipalities are learning to handle bigger projects by learning and adapting.  

We are embodying the spirit of ‘learning by doing’ to manage the project effectively, from planning and design to implementation. We learnt from our challenges while hiring design and supervision consultants, managing procurement, and overseeing contracts, which is invaluable for our future projects.
Dhana Raj Acharya
Mayor, Pokhara Metropolitan City

This learning for municipalities involves meticulous planning and execution, particularly in conducting environmental and social (E&S) impact assessments; developing and implementing E&S management plans; occupational health and safety; and establishing grievance redress mechanisms to ensure that the development projects are sustainable and inclusive.

This newfound expertise is empowering the local governments, enhancing their capability to drive their development. 

The autonomy in the implementation of Nepal Urban Governance and Infrastructure Project has allowed us to tailor the developments to our city’s unique needs.
Ram Krishna Khand
Mayor, Tilottama Municipality

Besides infrastructure development, NUGIP assists the participating municipalities in strengthening their institutional and fiscal capacities for effective governance, and improved service delivery. The project is providing training and hands-on assistance across key thematic areas, while supporting the development of tailored Institutional Strengthening Plans to address their key challenges.

In Itahari Sub-Metropolitan City, NUGIP is supporting the municipal officials and local representatives to build their capacity and develop projects to integrate Nature based Solutions into physical development plan. This strategic move aims to mitigate flood risks and enhance climate resilient urban development.  

Supporting people through public works and citizen engagement 

Labor Intensive Public Works (LIPW) under NUGIP are continuing to benefit people at the participating municipalities. More than 50,000 people, with nearly 50% female participation, benefitted from cash-for-work schemes for development of small community-based projects. These included road and drainage rehabilitation, water and sanitation works, health and education infrastructure, environment protection, and rehabilitation of public spaces.

Women and men work in public construction site in Phalewas, Nepal
Khima Kumari Chhetry (left) works in a road improvement program supported by NUGIP Project.

Khima Kumari Chhetri, 28, from Phalewas Municipality, is one such beneficiary. Khima used her earnings from the LIPW road improvement program to purchase household necessities and invest in her children’s education. Now proud of her contribution to community development, Khima is already part of the next phase, hoping to use the money to start a small business. 

Through the Labor Intensive Public Work component of NUGIP, our municipality is able to enhance small scale infrastructure works in most of the marginalized community areas. This modality of community-based infrastructure upgradation works should continue as the additional income will provide more opportunities to households to support their livelihood.
Shova Kumari Chettry
Deputy Mayor, Phalewas Municipality

Likewise, In Dolakha, NUGIP helped connect 50 Dalit households, a traditionally marginalized community of Majhgau in Bhimeshwor Municipality, with the main road via a 3-foot wide stepped trail, facilitating road access and transportation of agricultural produce.

For the first time, the community members were fully engaged in this process, from project selection to committee formation and labor contribution, leading to an income that allowed for better living conditions, and investment in small businesses. 

As part of NUGIP, our ward is using citizen engagement tools for participatory budgeting to ensure that the voices of all members, especially women and marginalized groups, are heard and considered in decision-making processes.
Prabhat Acharya
Ward Chairperson, Ward No 17, Itahari Sub-Metropolitan City

These stories and voices are a testament to the positive impact of NUGIP’s efforts towards strethening capacity of the local governments to improve their service deilivery, uplift small-scale infrastructure, provide employment, and improve living conditions for yet unreached local communities.

The results achieved by NUGIP and its partner municipalities towards enhanced urban livability and economic prosperity demonstrate the steady progress of the implementation of federalism in Nepal.

This can be further strengthened by boosting the fiscal and institutional capacities of the participating municipalities, and enhancing intergovernmental cooperation and collaboration among the three tiers of the government. 


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