KATHMANDU, July 13, 2011 – The World Bank and the Government of Nepal today signed a grant agreement of US$ 75 million in additional financing for the Poverty Alleviation Fund (PAF).
The agreement was signed by Lal Shanker Ghimire, Joint Secretary and Chief of the Foreign Aid Coordination Division, Ministry of Finance and Andras Horvai, World Bank Acting Country Manager for Nepal.
“The Poverty Alleviation Fund has helped improve living conditions, livelihoods and empowerment among the rural poor, particularly those who are disadvantaged due to gender, caste, ethnicity or physical isolation,” said Ellen Goldstein, the World Bank Country Director for Nepal and Bangladesh. “2.65 million Nepalis, or close to a tenth of the population, are directly benefiting from the program”.
Initiated by the Government of Nepal in 2004, PAF now works in Nepal’s 40 poorest districts, directly supporting over 14,500 Community Organizations (COs) and benefitting nearly 530,000 households, of whom 57 percent are from the disadvantaged Dalit and Janajati communities.
Average incomes for households in areas supported by PAF have increased over 80 percent in real terms, adjusted for inflation. More than 15,600 households now have road access for the first time; 25,300 households have new irrigations systems and water supply; bridges and sanitation have been provided for more than 32,000 households. More than 6,800 households have benefitted from alternative sources of energy, with significant preference for micro hydro plants and solar systems, and extension to electricity lines.
383 investments in new and rehabilitated irrigations systems are expected to be finalized by next year, which will benefit close to 4,400 additional households. Nearly 3,800 community organizations are investing in vegetable farming, thereby increasing availability and quality of food in these communities and providing a valuable source of income.
An independent impact evaluation shows that the overall welfare of PAF assisted households has improved by 13-49 percent depending on how recently they have been assisted by PAF. Communities that have been assisted longer have a higher welfare gain. For example, the incidence of food insecurity for PAF assisted households has declined by 7 percent on average and 18 percent for households who have been assisted by the program for a longer period of time. This impact is stronger for Dalit and Janajati households. By contrast, food insecurity for comparable households increased by 4 percent during this period. As a result of PAF, school enrolment rates among children aged 6-15 years increased by 11 percent on average and by 12-15 percent for households from older PAF assisted communities. The program has also helped increase access to services such as agriculture centers, community forest groups and farmer groups, and is positively supporting women’s empowerment.
“The additional financing for PAF will continue to strengthen this impact in more communities and more districts,” said Goldstein. “The program will focus more support on improving food security in response to drought and price fluctuations, particularly for the most food insecure households who are most vulnerable to the spiraling cost of food.”
The assistance package comprises US$ 65 million in grant from the International Development Association (IDA) and US$ 10 million in grant co-financing from the Global Food Price Response Program multi-donor trust fund.