On 28th September, the World Bank approved the US$150 million ‘Nepal Urban Governance and Infrastructure Project’ to support post-COVID-19 economic recovery in Nepal. The project, which aligns with the National Urban Development Strategy (NUDS, 2017), will strengthen service delivery and the institutional capacities of municipalities in the strategic urban clusters of Provinces 1, 2, and 5 as well as the Gandaki Province.
The selected municipalities are considered vital to Nepal’s economic development as they are centers of commercial and administrative activities.
Stating that the project is in harmony with the overall support provided by the government and development partners towards the effective implementation of federalism in Nepal, Faris Hadad-Zervos, World Bank Country Director for Nepal said:
“Our support will help build capacity of key municipalities, enhance local accountability and accelerate COVID-19 recovery by short-term employment for vulnerable groups as well as service delivery”.
He added, “In the context of rapid urbanization, federalism, and COVID-19, providing support to strengthen institutions for effective local service delivery in Nepal’s secondary cities, and extending targeted support to vulnerable groups affected by the impact of the pandemic is critical.”
By creating the country’s first dedicated Urban Sector Grant, the project plans to finance strategic infrastructure in the targeted cities according to the priorities of the municipalities. The project also aims to support capacity building for the municipalities to improve urban management that focuses on citizen engagement and enables them to better plan, manage and execute service delivery and urban management activities.
Highlighting that the project is a critical milestone as it is the first World Bank project in Nepal to directly support federalism, Jonas Ingemann Parby, the Project Task Team Leader and Senior Urban Specialist of the World Bank, said:
“The project includes best practices in climate resilience, gender equality, social inclusion, and citizen engagement which the federal, provincial, and local governments can take on.”
The project is expected to build the capacity of municipalities in relation to the functions that they perform and are held to accountable for. It will finance small scale, labor-intensive public work to create temporary jobs for at least 20,000 people across the country, including women and vulnerable groups. The project also includes a contingency emergency response component to reallocate project funds to support emergency response and recovery.
Although the pace of urbanization over the last few decades in Nepal has become faster, it remains one of the least urbanized countries in Asia. The census of 2011 revealed that only 17.1% of Nepal’s population resided in 58 designated urban areas. However, with the addition of 159 municipalities in 2015, 40% of Nepal’s population now resides in 217 designated urban areas.
NUDS envisions that, by 2031, the annual investment will reach at least US$82 per capita from the present US$41 in 217 municipalities for urban infrastructure development and increased access to piped water and sewerage in all urban core areas. It also aims to achieve electrification for all urban areas with 80% of households with alternative sources, road density of 7.5km/sq.km and 80% paved roads in existing municipalities, 50% of new residential housing through land readjustment, 100% solid waste collection, and highspeed internet availability in all large and medium towns. One of the milestones of the strategy is a 70% contribution to GDP from urban areas.
View current funding opportunities for urban development projects in Nepal on the DevelopmentAid platform.
