Remarks by USAID Administrator Rajiv Shah at the FNCCI Economic Summit

Wednesday, February 26, 2014

It is an honor to visit Nepal and have the opportunity to see firsthand the extraordinary progress of one of USAID’s closest development partners. Over the last few days, I’ve walked around the historic Patan neighborhood to see how communities are constructing safer buildings to withstand earthquakes. I’ve met local scientists who are harnessing satellite remote sensing data to help communities adapt to climate change—so that farmers can estimate crop yields and plan ahead. And I joined the Minister of Health to present an award to the team that developed chlorhexidine—a live-saving medical gel that was created right here in Nepal and has cut the risk of infant death by 23 percent.

It has not been hard to see why Nepal has been only one of just eight fragile states to have successfully halved extreme poverty ahead of the 2015 target for the Millennium Development Goal. It didn’t take two decades—or even ten years. In just seven years, between 2003 and 2011, the extreme poverty rate fell from 53 percent to 24.8 percent. Enabling a new generation of Nepalese children to grow up in dignity and security—knowing they’ll have a fair shot in their future.

This is extraordinary. After more than a decade of insurgency and post-conflict challenges, the political environment has stabilized, and a core focus on maternal and child health has cut maternal mortality in half over the last two decades.

This is—without a doubt—a unique and important moment for Nepal. Thanks to a history of progress and new advances in science and technology, Nepal stands within reach of ending extreme poverty and securing a foundation for long-term economic growth.

But this future is not inevitable.

Today, almost 8 million Nepalis get by on less than $1.25 a day. For them, every decision is a trade-off with potentially catastrophic consequences. Do you buy medicines for a sick parent, provide an evening meal for your children, or put a few pennies away towards a new roof or next year’s school fees? These questions are an everyday reality, especially for Nepal’s subsistence farmers, for whom extreme poverty is not just a statistic—but a drain on their basic human dignity.

We know we can end extreme poverty for these 8 million Nepalis.We can end it for 26,000 children who die every year before the age of five. And we can end it for the 41 percent of all children who are stunted.

But it will take partnership, innovation, and a strong commitment to policy reform. Indeed, it will take a new model of development.

If the old model of development was hiring a contractor to build a road, the new model of development is partnering with the engines of growth—from companies to local entrepreneurs—to build inclusive economies and vibrant civil societies.

In other words, we have to put the power of business and innovation into the hands of those who serve this mission…whether it is partnering with scientists to protect against earthquakes…or working with a local company to scale new solutions in nutrition to ensure every child thrives.

Here in Nepal, we’re working together to build high-impact partnerships to strengthen local capacity and build the thriving markets that will one day replace our assistance. Nowhere is this more important than in agricultural development, which we know is one of the surest routes out of poverty.

Since growth tied to gains in agricultural productivity is up to three times more effective at raising the incomes of the poor than growth from any other sector. This is absolutely true here in Nepal, where 75 percent of the population makes its livelihoods in agriculture.

That’s why we are working through President Obama’s global food security initiative Feed the Future to improve nutrition and incomes for one million Nepalis.

Armed with new research on high-yield, climate-resilient maize varieties from Nepali centers, we’ve trained over 200 community groups in the seed production—including field inspection and post harvest management.

Perhaps most exciting, several of these groups have even grown to become full-fledged private seed companies.

As a result, 50,000 rural families have generated an additional 1 million dollars in sales—as maize yields nationwide have improved by 36 percent. But raising incomes means little if families don’t have access to loans to grow their businesses or bank accounts to help save money for school fees. By partnering with local banks, we’ve helped expand mobile banking services—and give families the opportunity to pay loans, transfer money, or receive their salary right on their phone.

In the last year alone, banks served more than 19,000 new clients and disbursed over $2.3 million in rural loans to almost 8,000 borrowers—most of whom were women.

Today, Nepali private sector leaders estimate that mobile financial services will reach all 75 districts within five years—enormous progress in a country where 70 percent of Nepali families don’t have a bank account. We also partnered with a local company called Lomas Pharmaceuticals to accelerate progress in ending preventable child death.

Because—the truth is—that even as we’ve seen enormous progress in some areas, the mortality rate for newborn infants here in Nepal has not improved for several years.  

In 2005, we supported a randomized control trial that showed that we could cut neonatal deaths by 23 percent with the use of a 7.1 percent chlorhexidine solution that’s applied to the umbilical cord immediately after it’s cut.

Based on these findings, we are working with the Ministry of Health and Population to bring chlorhexidine to newborns to nearly all of Nepal’s districts over the next three years. 

Chlorhexidine is just one example of the power of science and innovation to solve seemingly intractable challenges in development.

We’re also harnessing cutting-edge technology to strengthen Nepal’s resilience to climate change and potentially devastating shocks—like earthquakes and droughts—that can set back hard-won development gains.

As many of you know, Nepal is the 14th most vulnerable country in the world to climate change.

Which means the slightest rise in temperature—or the briefest change in rainfall has the potential to affect millions of people, casting them back to the brink of poverty. In a partnership with local scientists and the United States National Aeronautics and Space Administration—called SERVIR—we are harnessing satellite data to help policymakers and local communities plan ahead.

Armed with remote sensing data, farmers can estimate the season’s crop yields and local leaders can take steps to avoid famine.

Scientists can identify which villages are most at risk for landslides or glacial floods.

And forest officials can monitor forests for fires in real-time.  

Today, over 250 forest officials from across Nepal currently receive fire alerts on their mobile phones—technology that is at the very cutting-edge of climate science.

But business and technology alone are not enough to end extreme poverty or accelerate economic growth.

Political leadership and policy reform are essential preconditions to driving investment where it will have the biggest impact on extreme poverty.

Nepal’s proactive approach to implementing pro-growth policies have been instrumental in the nation’s progress—but there is more to be done. Despite the nation’s well-known hydropower potential, for instance, the sector remains woefully under-developed.

Today, only 705 megawatts of electric generation capacity have been developed—a small fraction of Nepal’s potential.

The government had made great strides in enacting coherent policies to develop hydropower, but important reforms are still needed. Similar reform is needed in the nation’s seed policies to allow greater private sector participation in the development and marketing of seeds.

This includes simplifying seed registration procedures and compensation guidelines—policies that have been prepared with our support, but not yet implemented.

We know that policy reforms are not easy. Cracking down on corruption and nepotism is not easy. Cutting off the vested interests in state monopolies is not easy. Raising prices on fuel is not easy.

But these steps will help pave the way for sustainable economic growth—the very growth Nepal needs to lift millions from extreme poverty.

Six decades ago, Nepal and the United States first came together to build a new future for all Nepalis.

We lay Nepal’s first roads and installed its first telephone exchange.

And though our commitment remains just as strong today, we know that every nation must pursue its own path to prosperity. It will be the people of Nepal and their leadership that determine how fast and how far this beautiful and enterprising nation will travel. It will be Nepali dedication and talent that will unleash broader prosperity. And it will be Nepali skills that weave a stronger fabric that lifts all Nepalis out of extreme poverty.

We look forward to working closely with leaders in this room and across the country…not simply with our development investment alone, but by bringing together innovators and entrepreneurs from both of our nations to brighten the future of generations to come.

Thank you.


Kathmandu, Nepal
Issuing Country 

Last updated: March 10, 2014

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