The Government of Nepal has signed a project with the World Bank (WB) to strengthen rural market links to support the post-COVID-19 recovery. Two agreements were also signed with the Asian Development Bank (ADB), one to improve flood prevention and preparedness capacity and the other to enhance airport capacity, again both in an attempt to strengthen rural market links to support the post-COVID-19 recovery.
The project signed with the World Bank on December 21 aims to facilitate productive partnerships between rural producer organizations and private sector buyers to both add value and to create jobs. It also aims to foster sustainable inclusion into, and the development of, higher-value domestic and foreign value chains. The following day, December 22, the loan and grant agreements with a value of US$200 million were signed with the Asian Development Bank (ADB).
The Rural Enterprise and Economic Development Project (REED), valued at US$80 million, was signed by Sishir Kumar Dhungana, Finance Secretary of the Government of Nepal, and Faris Hadad-Zervos, the World Bank Country Director for Maldives, Nepal and Sri Lanka. This project aims to bolster Nepal’s agriculture sector by strengthening rural market links and promoting entrepreneurship while creating jobs to support post-COVID-19 recovery.
Emphasizing that the World Bank Group’s support is crucial, Finance Secretary Dhungana said, “The project will enhance the access of rural enterprises and small-holder producers to markets and institutional buyers.” He added that promoting agribusiness competitiveness with sustainable market links will be critical to boost Nepal’s post-COVID recovery.
Underlining that the project brings a unique opportunity to transform Nepal’s agriculture sector, World Bank Country Director Zervos said, “It will stimulate economic recovery from the pandemic’s fallout by bolstering rural enterprises and creating local jobs and opportunities.” By fostering meaningful collaboration among various actors, the project can promote Nepali agriculture products globally by encouraging the development of many niche sectors such as coffee, tea, fruit, and medicinal products, among others, he added.
- The REED project focuses on five economic corridors covering Provinces 1, 2, Bagmati, Gandaki, Lumbini, and Sudurpashchim that offer opportunities for successful linkage activities of rural entrepreneurs to be supported by the project.
- Aiming to build capacity in the agriculture sector and strengthen the entrepreneurship ecosystem, the project will work with provincial and local governments, intermediary organizations, and small and medium enterprises.
- It will finance investments in municipal agriculture centers and value chain infrastructures to ensure the availability of inputs for farming as recovery actions from COVID-19. The project is expected to use labor-intensive cash for work mechanism in short-term public works.
- The project supports the Government of Nepal’s Agriculture Development Strategy 2015–2035 that aims to create a sustainable, competitive, inclusive, and resilient agricultural sector that drives economic growth with private sector participation.
At the same time, the Government of Nepal and the Asian Development Bank (ADB) signed a US$150 million concessional loan agreement to finance the South Asia Sub regional Cooperation (SASEC) Airport Capacity Enhancement Project and a US$40 million concessional loan and US$10 million grant for the implementation of the Priority River Basins Flood Risk Management Project.
Shreekrishna Nepal, Joint Secretary at the Ministry of Finance of Nepal, and Rudi Louis Hendrikus van Dael, Officer-in-Charge of the Nepal Resident Mission, ADB signed the agreements on behalf of the Government of Nepal the ADB respectively.
Meanwhile, thanking the ADB for its continued support to Nepal’s infrastructure development which has been crucial for the socio-economic development of the country, joint secretary Shreekrishna Nepal said, “The implementation of these programs will significantly contribute to the national economy by increasing the existing capacity of Nepal’s airspace and flood protection infrastructure.”
Reflecting on the necessity of this concessional loan, ADB officer-in-Charge Rudi further added, “Both projects can contribute to delivering important results to the people of Nepal.” The flood risk management project will improve disaster resilience and make lives safe, whereas the airport project will contribute to improving connectivity, leading to economic growth, once the pandemic has stabilized, he added.
- According to the agreement, ADB will provide a concessional loan valued at US$150 million for the Airport Capacity Enhancement Project.
- This project aims to enhance airport capacity by constructing a parallel taxiway extension, hanger apron, enabling the next phase work design of the Tribhuwan International Airport (TIA) and the construction of the second terminal building at Gautam Buddha Airport (GBA).
- ADB will also provide a concessional loan valued at US$40 million and a US$10 million grant for the Priority River Basins Flood Risk Management Project.
- The project is expected to contribute towards the improvement of the flood protection infrastructure and enhance the flood forecasting and response system. It will also improve flood prevention and preparedness capacity.
