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FY 1997 Development Assistance: $22,500,000
Introduction
The U. S. Government bilateral assistance program to Nepal supports the broader United States interest of maintaining Nepal's independence and stability as a buffer between two major powers, China and India. Small, landlocked and impoverished, the Himalayan Kingdom of Nepal was first opened to the outside world in 1951. Never colonized, seven centuries of authoritarian rule ended only in 1990 with the establishment of a constitutional monarchy and multi-party democracy. Central planning is giving way to market-led development, and a more dynamic monetized economy is emerging as government policies are liberalized. Nepal has a strong record of support for positions favored by the United States in international fora, including participation in international peacekeeping operations. Bilateral assistance is provided in the interest of sustainable development and longer-term stability.
The Development Challenge
With an annual per capita income level of $210, Nepal is one of the world's poorest countries: half of Nepal's 20.4 million citizens live in absolute poverty; 65% of all children under 36 months show evidence of stunting as a result of chronic malnutrition; average life expectancy is estimated to be only 54 years; infant and maternal mortality rates remain among the highest in the world; and only 40% of the population is literate. Rapid population growth of 2.5% annually exacerbates a difficult development environment and further complicates the delivery of services for the improvement of human welfare. The population increased by 65% to 20.4 million over the past 20 years, and it is expected to double within the next 30 years.
The poor are predominately rural subsistence farmers, and agriculture is the primary occupation for 81% of the economically active population. Cultivated land constitutes only 18% of the total land area of Nepal, and subsistence farming reached peak productivity levels years ago as high population density resulted in over-exploitation of the natural resource base and erosion of soil fertility. As opportunities to bring additional land into cultivation are limited, the Government of Nepal (GON) is giving priority, with good results and promise, to crop intensification, diversification and commercialization. The strategic vision, based upon documented USAID project results in the mid-west development region of Nepal, is to achieve and sustain an annual agricultural growth rate of about 5%. Coupled with efforts to reduce the population growth rate to 2% or below, this means that per capita agricultural output will rise to a more robust 3% or better as compared with recent past rates of 0.5% annually. Over a 20 year period, rural poverty thus could be reduced to 30% of present levels.
GON strategy to reduce population growth recognizes that there is a large unmet demand for family planning services, and a great number of gaps in service delivery. USAID is helping to expand the availability, access to and use of quality family planning and reproductive health services. Reducing maternal and under five-year-old child mortality rates are complementary efforts. Due in part to USAID's efforts, results have been significant: the use of contraceptives has risen from 3% to 24% over the past 20 years, desired family size has declined from five children per family to 3.2, the infant mortality rate declined from 150 in 1986 to 102 per 1,000 live births in 1991, and the average life expectancy of a woman has risen from 49 years a decade ago to 53 currently. As a further complement to these social initiatives, and recognizing the threat of a rapid spread of the HIV/AIDS epidemic in Nepal and throughout South Asia, USAID is employing proven methods to increase prevention and control practices by high-risk groups.
Increasing sales of high value agricultural and forestry products in a sustainable manner, and reducing fertility and improving maternal and child health are essential factors in building the momentum necessary for sustainable development. The inclusion of women in all aspects of the social, economic and political development of Nepal is similarly critical. Religious and ethnic conventions have traditionally disregarded the role of women in the economic well-being of the family, community and nation and repressed or denied their role in decision-making. Opportunities to alleviate this constraint improved with the advent of democracy, and have been further reinforced over the past year with publicity surrounding the Beijing conference, and the visit by First Lady Hillary Rodham Clinton. USAID efforts in this area are focused on increasing women's literacy rates, improving legislation which ensures the provision and enforcement of basic rights, and enhancing participation in economic activity through micro-credit programs.
Donor assistance has contributed directly and substantially to Nepal's development over the past 40 years. A base of physical and human capital necessary for nation-building has been established, and respectable improvements in human welfare have been achieved. The country, however, has been overly dependent on donors, and future investment must come increasingly from private sources. Borrowing is possible too, as current external debt is almost all concessional and the debt servicing requirement is low. Prospects for investment and the further strengthening of the macro-economic policy environment were enhanced over the past year with the fall of the United Marxist-
Leninist Government and the coming to power, through constitutional means, of a coalition government committed to free market principles. USAID and other donors are assisting the new government with tax reform, privatization of parastatals and streamlining of business licensing procedures. USAID, however, is reducing its bilateral assistance in this area in favor of tightly focused efforts in high-growth agriculture, smaller family size, and greater participation by women.
Other Donors
Donor assistance accounts for nearly 60% of the GON's investment budget. Approximately $400 million is provided annually by donors with the greatest contributions coming from Japan, the World Bank, and the Asian Development Bank. The United States provided about 5% of all donor assistance to Nepal.
FY 1997 Program
Priority investments in high-growth agriculture, family planning and health services, and the empowerment of women are strategic to Nepal's attainment of sustainable growth, broad-based development and longer-term stability. At the same time, these investments address global interests of respect for human rights, environmental protection, stabilization of population growth and control of the HIV/AIDS virus.
Development assistance is requested for the continued implementation of a focused, results-oriented program built upon the successes of past investment and current opportunities. Almost half of the FY 1997 funds requested will be applied to the Agency goal of stabilizing world population growth and protecting human health. The balance of funds will be distributed between the Agency goals of broad-based economic growth and building democracy, with a somewhat higher portion allocated to the economic growth objective. Over the next three years, the Mission plans to reduce its focus on Agency goals from its current level of four to three or two. The number of U.S. direct hire staff will be reduced from its current level of 13 to 10 U.S. direct hire in 1997.
Agency Goal: Stabilizing World Population Growth and Protecting Human Health
Rapid population growth is a fundamental constraint to sustainable development in Nepal, and parental concerns about child survival are a deciding factor influencing demand for family planning services. A USAID objective in Nepal is to reduce fertility and improve maternal and child health.
The delivery of contraceptive services is increasing in both the public and private sectors, and the number of new acceptors of temporary contraceptive methods nearly doubled over the past year. Improved standards for contraceptive services have been promulgated and service providers are being trained accordingly. Broadcast media is being employed innovatively to inform health workers and the public of family planning concepts and methods.
Vitamin A capsule distribution to children is being institutionalized in selected districts, with over 14,000 community volunteers providing life saving capsules to 1.8 million children. This results in a 30% reduction in the risk of child mortality among children receiving capsules. USAID also is supporting efforts to combat diarrheal diseases and acute respiratory infections, the two major causes of death for young children. After a highly publicized launching of a public program for the distribution of home birthing kits by First Lady Hillary Rodham Clinton, 175,000 kits were distributed within the past year. As many as 16% of all home births in Nepal during this period were consequently made safer with minimal supplies.
The change of government and consequent reassignment or transfer of Ministry of Health staff from the districts and central offices were the major constraints faced in increasing the availability of family planning and maternal and child health services in the public sector. However, the very active and enthusiastic participation of both international andindigenous nongovernmental organizations, private practitioners and commercial retail outlets in extending services to the community is resulting in a positive public-private sector partnership in fulfilling demand for family planning and maternal and child health services.
Funding for continued growth of the family planning program in Nepal is essential for the increased contraceptive prevalence necessary to help couples achieve their desired target of three children per family. Continued funding is also required for increased utilization of three key child health interventions that will contribute substantially to protecting the survival of children: 1) increased use of family planning services; 2) increased quality of family planning services; and 3) increased use of selected maternal and child health services.
Agency Goal: Encouraging Broad-based Economic Growth
Agriculture offers the best prospects for broad-based growth and development in Nepal. Sustainable growth and development requires rational use of the natural resource base. A USAID objective in Nepal is to achieve a sustainable increase in sales of high-value agricultural and forest products.
In 1995, Nepal's agricultural gross domestic product (GDP) grew 4.6%, and USAID achieved 107% of quantified targets for production and sales of forest and high-value agricultural products. During 1995, 57,400 metric tons of high-value cash commodities were produced, and commercial sales totaled $8.1 million in the Mid-Western Development Region where USAID has been promoting production of high-value crops. Vegetable seeds and apples from USAID-assisted areas accounted for 50% of total national production and sales of these commodities.
In a joint venture with the Asian Development Bank, USAID's assistance with the turnover of government-operated irrigation systems (covering 15,000 hectares) to private user associations resulted in a doubling of incomes for 12,000 farm households. In another activity, USAID's support to 600 community forestry user groups improved management and productivity of 75,000 hectares of forest land. With forests under private management, the value of biomass produced from community forests is increasing by $8 million annually. In technology development, 20 new food and cash crop varieties and management techniques were released and adopted in the past year by over 130,000 farmers on 82,000 hectares of land.
USAID's involvement in developing legislation to provide communities with the legal right to manage their productive resources has had a substantial impact on increased agricultural productivity. Communities now have a clear stake in the sustainable management of the productive resource base because they can legally benefit directly from increased productivity. USAID's rural economic development program capitalizes on implementing the new legislation. USAID experience suggests that expansion of high value forest and cash crop production holds considerable promise for empowering women, because an increasing proportion of community-based economic and natural resource associations are comprised of women.
USAID proposes to continue working with the Government of Nepal (GON) to accelerate agricultural growth, including identifying private sector investment opportunities for rural hydropower development. USAID is encouraging the GON to further liberalize economic policies, privatize state-owned enterprises, and develop efficient educational and agricultural research institutions to provide the human resources and technology which are essential for achieving a sustainable increase in the agricultural growth rate.
Agency Goal: Building Democracy
Nepal represents a remarkable model and success story for democracy in South Asia. The improved participation of women in political and economic affairs will further strengthen democratic practices and better confront the challenges of poverty in Nepal. A strategic objective of USAID in Nepal is the empowerment of women. The focus of investment is on literacy, legal rights, and improved access to credit for economic undertakings.
Over the past year, the number of literate women increased by 30%. USAID assistance is directly accountable for almost half of this achievement. At the same time, USAID strengthened national capacity for the intensive delivery of non-formal literacy training and continued significant accomplishments in line with quantified targets. Increased knowledge will lead to wider participation of women in political and economic activities and to better informed decision-making in the family on matters such as the schooling of children, fertility rates and the use of resources. In one of the world's poorest countries, literacy contributes to the success of every development initiative.
USAID activities supported another 1,300 women in their efforts to seek legal redress, most frequently against unwilling polygamy. Precedent setting court cases are a means to establish a legal foundation for the protection of basic rights and an end to discriminatory statutes. Ownership and inheritance of property, credit eligibility, and marriage and divorce rights are all legal rights issues affecting Nepali women.
Small loans through Grameen-style banks supported by USAID are providing the means for rural women to initiate economic activity not previously available to them. In 1995, loan issuance exceeded targets by 300%.
| Encouraging Economic Growth | Stabilizing Population Growth | Protecting the Environment |
Building Democracy |
Providing Humanitar- ian Assist. |
Total |
|
|
USAID Strategic Objectives |
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1. Sustainable Increase in Sales of High-Value Agriculture and Forestry Products. Development Asst |
$2,000
|
|
$3,000
|
$5,000
|
||
|
2. Reduced Fertility and Improved Maternal-Child Health. Development Asst |
|
$15,000
|
$15,000
|
|||
|
3. Empowerment of Women. Development Asst |
$1,500 |
|
$1,000 |
$2,500 |
||
|
Total Development Asst |
$3,500 |
$15,000
|
$3,000
|
$1,000 |
|
$22,500
|
PROGRAM: NEPAL
TITLE AND NUMBER: Reduce Fertility and Improve Maternal and Child Health, 367-SO02
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1997: $15,000,000 DA
INITIAL OBLIGATION: FY 1996; ESTIMATED COMPLETION DATE: FY 2002
Purpose: To reduce currently high levels of fertility and maternal and childhood mortality by expanding the availability, access to and use of quality family planning and reproductive health services, and key child survival and maternal health services.
Background: Nepal is faced with major problems in the health sector that impact especially on women and children. Although significant advances have been made in some areas, the nation still faces high population growth rates, high maternal and child death rates, weak health institutions, a difficult geographical setting, and many social barriers to improved health practices.
USAID Role and Achievements to Date: USAID's support to the public and private sectors includes improving the quality as well as availability of family planning services, and selected community-based child survival and maternal health interventions. The total fertility rate has dropped from 5.6 children per woman in 1990 to an estimated 5.2 children in 1995. Contraceptive prevalence has increased from 24% in 1991 to an estimated 28% in 1995, and under-five mortality has decreased from 165 per 1,000 in 1990 to an estimated 108 per 1,000 in 1995.
Description: USAID focuses on four activity areas: increasing the use of family planning (FP) services; increasing the quality of family planning services; increasing the use of selected maternal and child health (MCH) services; and increasing the use of HIV/AIDS prevention and control practices. Assistance is delivered through an integrated program of USAID bilateral and centrally funded field support to cooperating agencies. Technical assistance and local cost funding are provided to the Ministry of Health to strengthen an integrated logistics management system, family planning and reproductive health training programs, the FP/MCH service delivery system, and the awareness and use of FP/MCH and HIV/AIDS services through effective communications and counseling. USAID supports a private, non-profit company that markets contraceptives and health products, accounting for 45% of the distribution of pills and condoms in Nepal. A network of U.S. and local nongovernmental organizations (NGOs) provides community-based health and family planning services in 25 of Nepal's 75 districts. Female community health workers and community members participating in health education and adult literacy classes provide information and services on control of diarrheal diseases, acute respiratory infections, vitamin A deficiency, child spacing, safe birthing practices and HIV/AIDS at the community level, forming the basis for long-term sustainability of changed health behaviors and practices. USAID provides 60% of the contraceptives to Nepal for both the public and private sectors (public, NGO and commercial retail sales).
Host Country and Other Donors: The United Nations Children's Fund (UNICEF) assists with the national immunization program, control of diarrheal diseases, acute respiratory infections, vitamin A capsules, water and sanitation, nutrition and basic education programs. The United Nations Population Fund (UNFPA) provides the balance of the contraceptive supplies, supports population awareness, and the family planning and safe motherhood programs. The World Bank supports infrastructure construction and renovation of facilities and warehouses for the health sector. Host country contributions include procurement of some essential drugs and vaccines, payment of staff salaries and maintenance of facilities.
Beneficiaries: Children under five years of age and women of child-bearing age in Nepal represent 35% of Nepal's population (about 7.2 million people). USAID-supported MCH programs reach over half of these customers. USAID's support to the family planning program potentially reaches the entire population of women (15-49 years of age) and men of reproductive age.
Principal Contractors, Grantees, or Agencies: USAID implements activities through the Ministry of Health, USAID Global Bureau Cooperating Agencies, a U.S. firm, private non-profit companies, and U.S. and local NGOs.
Major Results Indicators:
Child mortality per 1,000
Purpose: To increase the sustainable production and sales of forest and high-value agricultural products. This will be accomplished by expanding market participation by farmers, traders and entrepreneurs, promoting sustainablemanagement of the productive resource base, and increasing adoption of improved technologies for high-value agriculture.
Background: Accelerating agricultural growth is a key component of USAID's strategy for addressing the needs of the 80% of Nepal's population employed in agriculture and agro-based industry. Commercializing agriculture and improving management of the productive resource base are key elements of USAID's highly successful high-growth agriculture model which has been established in the Mid-Western Development Region (MWDR) of Nepal. USAID is now expanding this high-growth model into new geographic regions and further supporting the development of a policy environment which promotes the commercialization of agriculture.
USAID Role and Achievements to Date: The focus of USAID's support is to create market linkages for new technology inputs to improve production, and to develop markets for forest and high-value agricultural products in Nepal and the South Asia region. At the national level, USAID supports development and adoption of export-oriented trade policies and implementation of natural resource legislation which expands community and private management of forest and water resources. As a result, sales of forest and high-value agricultural products have increased from an estimated $3 million in 1993 to $8.1 million in 1995; production of vegetable seeds and apples in the MWDR now account for over 50% of national production levels; and the legal framework for transferring up to 60% of Nepal's national forests to community-based user groups has now been established, and forests are now being transferred to community management. In cooperation with the Asian Development Bank, USAID is assisting with the turn-over of government-operated irrigation systems (covering 15,000 hectares) to private user associations. This has already resulted in a doubling of incomes for 12,000 farm households. USAID will build on these achievements to help Nepal achieve sustainable economic growth.
Description: USAID provides funds to NGOs and private firms to develop community level capacity to produce, process and market forest and high-value agricultural commodities. USAID also works with national level organizations, including the Agro-Enterprise Center of the Federation of Nepalese Chambers of Commerce and Industry and government ministries, to create an improved economic and business environment for export-oriented high-growth agriculture. Increasing access to improved technologies and increasing the competitiveness of community-based and small enterprises have fueled growth in production and sales. Greater community and private control of local natural resources is enhancing the quality and productivity of the resource base. Sustainability is further enhanced by strengthening government capacity to provide extension services in support of commercial agriculture, and by linking producers and community groups with private traders, agro-entrepreneurs and other market intermediaries to provide market information and access.
Host Country and Other Donors: A consortium of donors, including USAID, participated in developing Nepal's principal agricultural planning document, the Agriculture Perspective Plan, and is now coordinating with the Government of Nepal (GON) to implement the 20-year plan. The high-growth agriculture model being employed by the Overseas Development Administration (British) in eastern Nepal, and by German Technical aid and the Swiss Development Cooperation in central Nepal is based on USAID's experience in western Nepal. USAID's efforts to strengthen the GON's capacity to conduct agricultural research and provide extension services complements similar efforts by the World Bank and the Asian Development Bank. The two banks also fund large infrastructure programs in irrigation and rural roads.
Beneficiaries: Approximately two million people (350,000 farm households) directly benefit from increased production and marketing of forest and high-value agricultural products. Many additional people will benefit from increased trade and off-farm employment opportunities. Women make up 35% of the participants in the high-value agriculture program, who traditionally are involved in production but increasingly are participating in marketing and processing activities. USAID also will improve the nutritional status of women and pre-school children in the MWDR. This is part of a new initiative to link nutrition with increased production and consumption of high-value, micronutrient-rich foods.
Principal Contractors, Grantees or Agencies: USAID implements activities through two U.S. firms, a Nepali private firm, the private Agro-Enterprise Center of the Nepal Chambers of Commerce, and U.S. and local NGOs.
Major Results Indicators:
Annual sales of forest and high-value
agricultural commodities ($ million) 3.2 (1993) 40 (2002)
PROGRAM: NEPAL
TITLE AND NUMBER: Strengthening the Participation of Women in the Economy, 367-SO03
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1997: $2,500,000DA
INITIAL OBLIGATION: FY 1996; ESTIMATED COMPLETION DATE: FY 2002
Purpose: To enable women to improve their own and their family's economic and social life circumstances by facilitating their access to literacy, income generation and legal rights.
Background: Nepal needs the full contribution of women in its struggle to confront the challenges of poverty. Women constitute more than half the population, and are the primary providers of subsistence for most of the population in Nepal. Yet, as the country continues the struggle to develop, women continue to be marginalized in terms of literacy, legal rights, economic opportunities and general control over their lives. Women's status is a marker of the ability ofNepal to participate in the increasingly complex global economy and to redress the overwhelming poverty enveloping the country. Women are pivotal to economic change. They are also the key to the balance between economic development and sustaining the socio-cultural integrity and diversity of Nepal.
USAID Role and Achievements to Date: USAID has supported a number of activities targeted at women since sponsoring a landmark research effort on their status in 1983. USAID's support has included programs in literacy, legal rights and economic participation. In 1994-95, the USAID literacy program achieved a 30% increase in the number of literate women in Nepal. As for legal rights, women are greatly disadvantaged by current laws. USAID supports a grant to revise six laws which the Supreme Court has found unconstitutionally biased against women with regard to property ownership and inheritance. The passage of new laws will have a far-reaching impact on granting full legal equality to women in Nepal.
Description: USAID will continue a focus in three areas to empower women: increasing adult female literacy rates; improving the legal status of women; and strengthening women's economic participation. Literacy is an agent for awareness and change. It is central to the process of empowering women. Women's literacy groups will be entry points for income-generating activities that also facilitate more effective participation in markets. Since women's legal status also impacts on their ability to contribute to and benefit from economic opportunities, USAID will work with the same women's groups to improve their knowledge about the law, legal processes and the judiciary. As these women gain confidence and take an active role in decision-making, families will better confront the challenges of poverty in Nepal. Empowered women will support poverty reduction efforts, achieve significant productivity gains and provide large societal benefits. Their improved status is pivotal to economic change and the ability of Nepal to participate in the increasingly complex global economy.
Host Country and Other Donors: The United Nations Children's Fund (UNICEF) is the major donor supporting women in Nepal. UNICEF believes that to help children, women must be empowered. Their programs target women for health, water, education and advocacy. The Asian Development Bank started a pilot program in microcredit to women through NGOs. USAID has been the lead donor in adult female literacy. Other donors support large basic education projects. The GON and donors recognize the necessity for close collaboration. Formal coordination occurs through a USAID-chaired donor group in which the Government of Nepal (GON) participates. Appropriate coordination mechanisms are still being worked out with the new Ministry of Women and Social Affairs.
Beneficiaries: The adult women of Nepal.
Principal Contractors, Grantees, or Agencies: USAID implements activities through a combination of U.S. and Nepali NGOs.
Major Results Indicators:
Women educated in their legal rights (millions) 0.5 (1995) 2.35 (2002)
Number of small enterprise loans to women (millions) 0.1 (1995) 0.5 (2002)