ADB approves new strategy‚ pledges $1.5 billion for five years

Asian Development Bank (ADB) has approved a new Country Partnership Strategy with Nepal that will anchor the multilateral development partner assistance to the country over the next five years, focusing mainly on energy and infrastructure.

ADB will extend long-term public and private sector finance for capital investment in the areas of transport, energy, water, and other basic public services like education and skills development; investments that will ensure poverty reduction, as well as inclusive and sustainable growth, it said.

The funding is expected to be just under $1.5 billion over the next five years. It expects to raise double this amount from other partners from both the private and public sectors, if the country increases its spending capacity.

ADB’s five-year strategy will tackle these critical constraints through high priority energy sector investments to strengthen domestic energy security and promote exports through public-private partnerships. Integrating Nepal with the regional and world economy by expanding its airports and trans-boundary road networks and modernising customs will also be a focus of ADB’s assistance.

Improving urban infrastructure like water supply and sanitation in centres such as Kathmandu is another critical activity. ADB will also help with irrigation and watershed improvement to boost productivity and commercialisation. Meanwhile, ADB’s education programme will target schools, higher education, and vocational and technical skills training.

The new strategy also places significant focus on governance, financial management, climate change, reforms for private sector investment and sustainability, institutional development and better project implementation performance but will have the flexibility to respond to emerging needs in the business environment during the political transition.
“The government and ADB worked very closely together to define a strategic framework that will allow ADB and others to join up in funding the type of investments that can transform Nepal," said director general of ADB’s South Asia Department Juan Miranda.

The strategic work was done in close consultation with key public agencies and private enterprises, as well as with civil society and other development partners, he said, adding that the ADB and government now need to convert it into projects that ensure value for money and deliver development effectiveness.
Nepal, which will hold Constituent Assembly (CA) elections next month following a period of political transition after the end of armed conflict in 2006, has great potential to scale up hydropower development, tourism, and agriculture, and to benefit from its strategic location between the People’s Republic of China and India.
However, impediments like critical power shortages, poor connectivity and water supply, and weaknesses in its human capital base, investment, and governance are undermining that potential.
“However, the periodic strategy will tackle these critical constraints through high priority energy sector investments to strengthen domestic energy security and promote exports through public-private partnerships,” the ADB added.

The previous country partnership strategy (2010-2012) had focused on inclusive economic growth, inclusive social development, governance and capacity building, and climate change adaptation and environmental sustainability.