Note: This document may not always reflect the actual appropriations determined by Congress. Final budget allocations for USAID's programs are not determined until after passage of an appropriations bill and preparation of the Operating Year Budget (OYB).
NEPAL
FY 1997 FY 1998 FY 1999 Actual Estimate Request Development Assistance.............. $13,821,000 $15,700,000 $20,800,000 Child Survival and Disease.......... 4,779,000 10,000,000 5,460,000 P.L. 480 Title II........................... 273,000 683,000 ---
IntroductionNepal is one of the poorest countries in the world, with a per capita income of approximately $210 and with half of its 22.6 million citizens living in absolute poverty. A limited natural resource base, rapid population growth, environmental degradation, low levels of social development, and widespread poverty present formidable development challenges. Meeting these challenges is central to a number of U.S. national interests, including: promoting broad-based economic growth; securing a sustainable environment; stabilizing population growth and protecting human health; promoting democracy and respect for human rights, especially for women; and opening the market for hydropower investment.
Development Challenge
Nepal's population growth rate is high while health is poor. The population is growing at 2.3% annually while infant and maternal mortality rates remain among the world's highest. To reduce the fertility rate, USAID is helping to expand the availability of quality, voluntary family planning services. Modern contraceptive use has risen from 2.9% to 28.8% over the past 20 years while desired family size declined from 4 to 2.9 children per woman. The fertility rate dropped from 5.6 to 4.6 in just five years. USAID is also helping to reduce under five-year-old child mortality which dropped from 165 deaths per 1,000 live births in 1988 to an estimated 118 deaths per 1,000 live births in 1993. USAID is also increasing prevention and control of HIV/AIDS which is growing steadily among high-risk-behavior groups in Nepal.
Agriculture is the primary occupation for 80% of the economically-active population, but cultivated land constitutes only 18% of Nepal's land area, with little room to expand. To optimize income generation from this limited resource, USAID assistance is encouraging subsistence farmers to move into high-value cash crops. The program is showing phenomenal success with a high-value commodity increase to 200,000 metric tons (64% increase) and a sales increase of 30% ($20 million total) over the past year. In forestry, USAID's support to over 1,000 community forestry user groups improved management of nearly 84,000 hectares of forest. The value of biomass produced in such forests is now $3.3 million annually per year and is projected to reach $4.5 million per year by 2000.
Nepal's long-term development requires that the women's roles in the economy and society be recognized and strengthened. But low levels of literacy, restricted access to resources, and limited knowledge of legal rights obstruct women from fully contributing to the development process. Through a unique, integrated program USAID is strengthening women's skills by increasing their literacy, knowledge of their legal rights, and access to economic opportunity. In the past year alone, over 35,000 more women became literate, over 40,000 became aware of their legal rights, and another 20,000 had access to financial assistance for their businesses.
As home of the Himalayas and the headwaters of South Asia's major rivers, Nepal has the world's greatest hydropower potential. Yet only 1% of that potential is developed, and power shortages continue to constrain economic development. To reverse this, USAID is encouraging investment in hydropower by assisting the Government of Nepal (GON) to improve the enabling conditions for investment in environmentally sound hydropower development. U.S. investors have shown a high degree of interest in this sector, attracting the single largest U.S. investment in Nepal's history.
According to the World BankSee footnote 1, the external deficit of Nepal remains high at 10.3% of GDP in 1997 and is fully financed by external aid. USAID is not involved in debt relief in Nepal.
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 is the third-largest bilateral donor, accounting for about 5% of the total donor assistance..
FY 1999 Program
Priority investments in high-value agriculture and forestry, family planning and health services, women's empowerment and hydropower development are necessary for Nepal's attainment of sustainable growth and broad-based development. These investments will also address global issues by promoting democracy, protecting the environment, stabilizing population growth, and controlling HIV/AIDS.
With USAID's assistance, total fertility (the average lifetime births per woman) declined from 5.6 in 1990-91 to 4.6 in 1995-96, a move from a high to a moderate population growth rate. Eighty percent of this decline is from increased use of contraceptives--the focus of this objective. Complementary USAID assistance in maternal and child health has made substantial progress in reducing under-five mortality. Continued funding will: help Nepali families reach their desired size of 2.9 children; promote treatment of diarrheal diseases, acute respiratory infections, and vitamin A deficiency; and increase awareness and use of HIV and STI (sexually transmitted infection) prevention and control services.
Continued support to agriculture and forestry will support continuation of the exceptional growth in high-value products with expected annual growth between 20% to 25%, and will foster environmentally sound practices to ensure the growth is sustainable. In the energy sector, improved investment policies and procedures as well as a better local capacity for environmental impact assessments is expected to attract at least $35 million more in hydropower investment in the next year.
Providing Nepali women with literacy, knowledge of their legal rights, and microenterprise assistance serves to both strengthen democracy and the economy in Nepal. Over the FY 1998-2000 period, USAID expects that 100,000 more women will learn/obtain basic literacy skills, knowledge of their legal rights, and the tools to create or expand and sustain a microenterprise. This should benefit hundreds of thousands more where these women live and work.
NEPAL
FY 1999 PROGRAM SUMMARY
(in thousands of dollars)
USAID Strategies and Special
ObjectivesEconomic
Growth &
Agriculture
Population &
Health
Environment
DemocracyHuman
Capacity
Development
Humanitarian
Assistance
TOTALS
S.O 1. Increased Sustainable Production and Sales of Forest and High-Value Agricultural Products.
- DA
2,600
---
1,500
---
---
---
4,100
S.O. 2. Reduced Fertility and Improved Maternal and Child Health
- DA
-CSD
---
---
12,000
5,460
---
---
---
---
---
---
---
---
12,000
5,460S.O. 3. Increased Women's Empowerment
-DA
2,000
---
---
1,000
---
---
3,000
Sp.O. 4 Increased Private Sector Participation and Investment in Environmentally and Socially Sound Hydropower
-DA
200
---
1,500
---
---
---
1,700
Totals
- DA
-CSD
4,800
---
12,000
5,460
3,000
---
1,000
---
---
---
---
---
20,800
5,460
USAID Mission Director, Dr. Frederick E. Machmer, Jr.
ACTIVITY DATA SHEET
PROGRAM: NEPAL
TITLE AND NUMBER: High-Value Agriculture and Forestry, 367-SO01
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1999; $4,100,000 DA
INITIAL OBLIGATION: FY 1992; ESTIMATED COMPLETION DATE: FY 2002
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 sustainable management of the productive resource base, and increasing adoption of improved technologies for high-value agriculture.
USAID Role and Achievements to Date: USAID's focus is on development and implementation of sustainable, farm-level forest and high-value crop production and marketing strategies. These activities are resulting in: (a) expanded market participation by farmers, traders, and agroentrepreneurs; and (b) sustainable management of the productive resource base in midwestern Nepal. USAID's support is creating 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 over $20 million in 1997; production of vegetable seeds and apples in midwestern Nepal now account for over 10% of national production levels; and the legal framework for transferring Nepal's national forests to community-based user groups has been established. This has resulted in the turnover of nearly 84,000 hectares of forest land 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 significant income increases (approximately 25%), benefitting over 50,000 members of farm households. USAID will build on these achievements to help Nepal attain sustainable economic growth.
Description: 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 agrobased 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 mid-western Nepal.
USAID is providing 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 market-oriented high-growth agriculture. Increasing access to improved technologies and augmenting the competitiveness of community-based and small enterprises have fueled growth in production and sales. Greater community and private control of local forests 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, agroentrepreneurs and other market intermediaries to provide market information and access.
Host Country and Other Donors: Donors are 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. 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 GON to implement the 20-year plan. The high-growth agriculture models being employed by the British Department for International Development in eastern Nepal, and by German Technical Aid (GTZ) and the Swiss Development Cooperation in central Nepal are based on USAID's experience in midwestern 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 1.2 million people (210,000 farm households) in the Mid-Western Development Region will directly benefit from increased production and marketing of forest and high- value agricultural products. Many additional people throughout Nepal will benefit from the introduction of improved varieties, increased trade, off-farm employment opportunities, and increased access to high-quality/lower-cost agricultural products. Women make up 35% of the participants in the high- value agriculture program, and have traditionally been involved in production, processing and marketing of fruits and vegetables. USAID also will improve the nutritional status of women and preschool children in midwestern Nepal. 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:
Ministries of Agriculture, and Forest and Soil Conservation
Winrock International Institute for Agricultural Development
Chemonics International
Canadian Center for International Studies and Cooperation
World Wildlife Fund
Cooperative for American Relief Everywhere
Development Alternatives, Inc.
Major Results Indicators: Baseline 1999 Target End of SO Target Production of forest and high-value agricultural commodities (metric tons) 21,428 (1993) 110,000 170,000 (2002) Annual sales of forest and high-value agricultural commodities ($ 000) 3,200 (1993) 25,100 32,000 (2002)
ACTIVITY DATA SHEET
PROGRAM: NEPAL
TITLE AND NUMBER: Reduced Fertility and Improved Maternal and Child Health, 367-SO02
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1999: $12,000,000 DA; $5,460,000 CSD
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, voluntary family planning and reproductive health services, and key child survival and maternal health services.
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 (FP) services, and selected community-based maternal health and child survival interventions. The total fertility rate has dropped from 5.6 children per woman in 1990-91 to an estimated 4.6 children in 1995-96. Modern contraceptive prevalence has increased from 24.1% in 1991 to an estimated 28.8% in 1996, and under-five child mortality has decreased from 165 deaths per 1,000 live births in 1988 to an estimated 118 deaths per 1,000 live births in 1993.
Description: 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 focuses on three activity areas: increasing the quality and the use of family planning services, increasing the use of selected maternal and child health (MCH) services, and increasing the use of HIV and STI (sexually transmitted infection) prevention and control practices. Assistance is delivered to cooperating agencies through an integrated program of USAID bilateral and centrally funded field support. Technical assistance and local cost funding are provided to the Ministry of Health to strengthen policies and procedures to improve the delivery of selected high-impact child survival interventions, as well as to support an integrated logistics management system, family planning and reproductive health training programs, and the FP/MCH service delivery system. Assistance is also focused on increasing awareness and use of FP/MCH, HIV/AIDS and STI services through effective communications and counseling. USAID supports a private, nonprofit Nepali company that markets contraceptives and health products, accounting for 45% of the distribution of oral contraceptives and condoms in Nepal. USAID provides 75% of the contraceptives to Nepal for distribution by the GON, private commercial outlets, and NGOS. A network of U.S. and Nepali NGOs provides community-based health and family planning services in 26 of Nepal's 75 districts. Female community health workers and community members participating in health education and adult post-literacy classes provide information and community-level services for diarrheal diseases, acute respiratory infections, vitamin A deficiency, child spacing, safe birthing practices and HIV/AIDS. This forms the basis for long-term sustainability of changed health behaviors and practices.
Host Country and Other Donors: USAID is the lead donor for family planning service delivery and is the only donor supporting private sector family planning services. It is also a major contributor to selected maternal and child health programs (vitamin A, diarrheal disease control, and acute respiratory infections). In addition, USAID is the chief donor supporting the private sector to deliver interventions to combat HIV/AIDS and other sexually transmitted infections. The United Nations Children's Fund (UNICEF) assists with the national immunization program, control of diarrheal diseases, acute respiratory infections, vitamin A capsule supply, water and sanitation, nutrition, and basic education programs. The United Nations Population Fund (UNFPA) provides the balance of the contraceptive supplies, promotes population awareness, and supports family planning and safe motherhood
programs. The World Bank supports construction and renovation of health facilities and warehouses. Host country contributions include procurement of some essential drugs and vaccines, payment of staff salaries and maintenance of facilities. USAID works closely with these donors and the host country in implementing its program.
Beneficiaries: Children under five years of age and women of child-bearing age in Nepal represent 35% of Nepal's population (about 7.9 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:
Ministries of Health, and Population and Environment
World Education International
John Snow, Inc.
Family Health International
Save the Children
The Asia Foundation
Adventist Development and Relief Agency
Cooperative for American Relief Everywhere
The Futures Group
Johns Hopkins University
Center for Development and Population Activities
Association for Voluntary Surgical Contraception
Management Sciences for Health
Center for Disease Control
Major Results Indicators: Baseline End of SO Target Total Fertility Rate 4.6 (1995-96) 4.0 (2002) Under-five Mortality Rate per 1,000 Live BirthsSee footnote 2 165 (1988) 85 (2002)
ACTIVITY DATA SHEET
PROGRAM: NEPAL
TITLE AND NUMBER: Increased Women's Empowerment 367-SO03 STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1999 $3,000,000 DA
INITIAL OBLIGATION: FY 1995; ESTIMATED COMPLETION DATE: FY 2000
Purpose: To enable women to improve their own well-being and that of their family and community by facilitating their access to literacy, income generating opportunities, and legal rights.
USAID Role and Achievements to Date: USAID is recognized as a lead donor agency addressing women's issues in Nepal. USAID interventions--literacy, legal rights, and economic participation--are inextricably linked to the empowerment of Nepali women and their strengthened participation in the overall economy.
Through USAID programs, 35,000 women became literate, 40,000 women learned of their legal rights, and 20,000 women participated in savings and credit programs in 1997 alone. These women are empowered by their successful participation in these programs: they are better able to direct the allocation of household expenditures toward investment or consumption which improves their own well-being and that of their families and communities.
Description: Nepal needs the full participation 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 much of the population in Nepal. While women are considered vital and productive workers, their access to information and to productive resources has remained severely limited. In terms of labor participation, women are predominantly confined to agriculture, account for the majority of unpaid family workers, number predominantly among the underemployed and are heavily concentrated in low paying jobs. Attitudinal biases and belief patterns in Nepal affect women's capacity to participate in decisions about daily activities. They have limited ownership of property rights, little access to and control over social or economic resources, and restricted mobility. As Nepal 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 Nepal's ability to participate in the increasingly complex global economy and to redress the overwhelming poverty enveloping the country.
Increasing women's empowerment is a key component of USAID's strategy to stimulate national economic growth and reduce rural poverty. USAID defines women's empowerment as "women making choices which improve their well-being and that of their families and communities." Through a unique approach, USAID is focusing on three areas to empower women: increasing adult female literacy rates; improving the legal awareness of women; and strengthening women's economic participation. Literacy is an agent for awareness and change. Women's literacy groups are 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 works 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 can better confront the challenges of poverty in Nepal. Empowered women will support poverty reduction efforts, achieve significant productivity gains, and have a positive influence on their children's health and education. Their improved status is pivotal to political and economic change and the ability of Nepal to participate in the increasingly complex global economy.
Host Country and Other Donors: USAID has become the recognized leader in supporting empowerment of Nepali women. UNICEF believes that to help children, women must be empowered. Their programs target women for health, water, education, and advocacy. The Asian Development Bank has a
comprehensive program in microcredit for women through Nepali NGOs. USAID is the lead donor in adult female literacy and for legal rights as a post-literacy activity.
Beneficiaries: The direct beneficiaries are primarily adult women of Nepal aged 15-44. Under the second stage of this objective (FY 1998-2000) 100,000 Nepali women will become literate, understand their legal rights and how to advocate for them, and learn to effectively operate microenterprises. Hundreds of thousands of family and community members will indirectly benefit from economic and social gains of the empowered women.
Principal Contractors, Grantees, or Agencies:
Ministry of Women and Social Welfare
Save the Children
Canadian Center for International Studies and Cooperation
The Asia Foundation
Private Agencies Collaborating Together
Major Results Indicators: Baseline 1999 Target End of SO Target Women who are literate (000) 123 (1991) 550 550 Women who know their basic legal rights 325 (1994) 149,000 194,000 Women with active loans (000) 7 (1996) 48 81 (2000)
ACTIVITY DATA SHEET
PROGRAM: NEPAL
TITLE AND NUMBER: Increased Private Sector Participation and Investment in Environmentally and Socially Sound Hydropower , 367-SO04
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1999 $1,700,000 DA
INITIAL OBLIGATION: FY 1998; ESTIMATED COMPLETION DATE: FY 2000
Purpose: To increase private sector participation and investment in environmentally and socially sound hydropower.
USAID Role and Achievements to Date: The USAID-funded Nepal Hydropower Strategy and Options assessment, completed in 1992, was the first major review of potential for private hydropower development, and led to a new GON commitment to attract private U.S. and other international investment. Since then USAID has been providing small amounts of technical assistance to the GON to improve its capacity for negotiating private sector hydropower development agreements. USAID has been successful in increasing Nepal's institutional capacity to attract private investments in small and medium scale hydropower projects. Nepal has developed and begun to implement environmental, engineering and competitive contracting guidelines, and has undertaken a series of initial regulatory reforms required for private power development. Tremendous strides have been made during the last two years towards development of the policy and regulatory infrastructure needed for private development of Nepal's hydropower capabilities.
USAID has played a critical role in leveraging several hundred million dollars of private and other donor investments in hydropower development. This includes the 36 MW, $98 million Bhote Koshi Project; the 60 MW, $138 million Khimti Khola Project; and the 144 MW, $250 million Kaligandaki A Project. The majority of the equity investment for the $98 million Bhote Koshi Project is being provided by Americans, which makes this project the single largest American investment in Nepal.
In December 1997, recognizing that continued assistance was needed in this sector, USAID signed a three-year $4.3 million Hydropower Special Objective Agreement with the GON.
Description: Nepal currently has a shortage of electricity to meet even its relatively low peak demand of 303 megawatts (MW). Nepal has no indigenous supplies of fossil fuels, but does have significant hydrologic resources. Nepal has roughly 83,000 MW of hydropower potential, half of which is economically feasible for development. At present less than 1% of these resources are being used. Nepal's demand for power is outstripping supply by 25 MW or 10% per year, and the domestic energy demand is expected to rise to 610 MW by 2005. India and China provide natural markets for Nepal's excess hydropower potential and are both experiencing critical energy shortages.
To help Nepal tap this tremendous potential, USAID is helping the GON to focus on two aspects of hydropower development investment: (a) improving the policies and procedures for hydropower investment and thereby improving the enabling environment for potential investors, and (b) strengthening local capabilities to ensure that investments are environmentally and socially sound. USAID will provide assistance to the GON's Electricity Development Center (EDC) to do such things as: improve the "one window" facility for investment, monitor investor compliance with social and environmental mitigation requirements, use instruments for open competition, do cost-benefit analyses, and privatize hydropower. To bolster environmental and social soundness of hydropower investment, USAID will strengthen local capability to conduct social and environmental impact assessments, which will improve both the quality and quantity of such assessments in Nepal. The program will also encourage more public hearings in the investment process, thereby improving transparency and assuring that needs of local residents are heard and addressed.
Host Country and 0ther Donors: USAlD has participated actively and substantively in discussions with the World Bank and the GON regarding conceptualization and design of the World Bank's new Power Development Fund (PDF) which will be established in 1998. USAID consultants drafted the implementation guidelines for the PDF, the model Request for Qualifications and other PDF design documents. The PDF will provide $175 million to support hydropower development in Nepal. Of this total, $100 million will be used to leverage private investments at an expected ratio of 3:1. If used successfully, this initial $100 million fund can be increased annually. The remaining $75 million will be used to improve Nepal's power transmission and distribution system. The Asian Development Bank also provides financing for hydropower projects. The UNDP and GTZ implement projects to promote development of micro and medium scale hydropower projects. NORAD (Norwegian Aid) is another donor involved in the sector.
Beneficiaries: The principal beneficiaries will be the thousands of Nepalis who will receive dependable, clean electricity that can be used for productive purposes and to improve their well-being. The GON will benefit from improved capacity to attract private investment, and investors will benefit from an improved, more transparent investment climate.
Principal Contractors, Grantees, or Agencies:
Ministry of Water Resources (Electricity Development Center). A competitive bidding process is underway which will determine the principal contractor.
Major Results Indicators: Baseline 1999 Target End of SO Target Private Sector Companies progressing toward hydropower investment 8 (1997) 14 18 (by improving the GON's processing/ negotiating capabilities) Private financial commitments for 238 (1997) 325 400 (2000) environmentally and socially sound hydropower investment ($millions)
Footnote: 1 World Bank Report: Nepal 1997 Economic Update: The Challenge of Accelerating Economic Growth (November 11, 1997).
Footnote: 2 Sources: 1991 Demographic and Health Survey and Preliminary Report; 1996 Nepal Family Health Survey, September, 1996. There is no target for 1999 because the Demographic Health Surveys are only done every five years.
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