WB to focus on fewer dev sectors for greater impact

  • Country partnership strategy for nepal
- MUKUL HUMAGAIN, Kathmandu
WB to focus on fewer dev sectors for greater impact

May 30, 2014-

The World Bank has narrowed its focus to fewer sectors for enhanced effect under its new Country Partnership Strategy (CPS) for the next four years. The global lender will concentrate on areas where it has a comparative advantage and can direct its resources for greater development impact.  

The latest CPS that was discussed by the WB Board on Thursday has identified energy and transport as the two main priority areas. This is the first time since 2007 that the bank has prepared a four-year, full-fledged CPS for Nepal. It is making a shift from short-term post-conflict assistance towards establishing the foundations for increased, inclusive and sustainable growth with the revamped strategy.

The last full-fledged assistance strategy for Nepal was CAS 2004-07. It was followed by three Interim Strategy Notes (ISNs) from 2007-13. The bank

adopted the strategy of assisting Nepal through the ISN against a backdrop of a fragile political environment following Jana Andolan 2.

The WB is already the lead donor in energy and road transport, and its assistance to these sectors will further increase under the new policy. At the same time, it will play a supplementary role in local development, agriculture and drinking water where the Asian Development Bank (ADB) is the lead donor. The WB has planned to reduce its financing obligations in sectors where there is a strong presence of development partners such as education and health.  

Supporting the Nepal government’s goal to reach middle-income status by 2022, the strategy has been organised around two “pillars”. Under Pillar 1, the bank will support increasing economic growth and competitiveness, and will focus on expanding hydroelectric power generation, enhancing transport connectivity and improving the business environment. Under Pillar 2, the bank will provide support to increasing inclusive growth and opportunities for shared prosperity, aiming to enhance the productivity of agriculture and equalize access to health care, skills development and social protection.  

“Nepal will need rapid and sustained growth to continue reducing extreme poverty and increase the incomes of the bottom 40 percent,” said Johannes Zutt, the World Bank Country Director for Nepal.  “This will require the country to boost investment and narrow a massive infrastructure gap, which is the single most important constraint to growth. Nepal will also need to make growth more inclusive and to provide opportunities for all Nepalis to participate in its development.”

In the next four years, Nepal can potentially get World Bank assistance of about $ 200-300 million a year from International Development Assistance (IDA).. In the last three years, the bank’s average annual assistance to Nepal was $ 210 million. Good portfolio performance and economic management and improvements in governance will help Nepal to get up to $ 300 million per year from the global lender.

The bank’s private sector arm International Finance Corporation (IFC) could also provide assistance to the hydropower sector to the tune of $ 300-800 million over the next four years depending on the availability of viable investments and improvements in the business climate.

Additionally, IFC could potentially commit $ 20-40 million per year for investments in financial institutions, manufacturing, agribusiness and the services sector. “IFC is ramping up both investment volumes and advisory support in the country across infrastructure, with a focus on hydropower development, agribusiness, access to finance and the trade and tourism sectors. IFC is also issuing a local currency bond to stimulate investments in Nepal,” said Serge Devieux, IFC Regional Director for South Asia.

In the energy sector, the CPS will focus on increasing Nepal’s energy supply.

It will assist the country to develop a corporate development plan for the Nepal Electricity Authority (NEA) for restructuring its operations and reducing its financial losses besides creating a power trading strategy to ensure that electricity generated in Nepal can be evacuated to a regional power grid.

In the transport sector, the bank will support transport connectivity with a focus on rural transport and connectivity to India besides improving access to markets for the poor and facilitating national and regional integration.

The bank has hinted that it could support building the Kathmandu-Tarai Fast Track Project in partnership with other development partners.

In line with the new CPS, the WB will stop financing basic education but it will provide support to secondary and higher education. The bank is currently supporting all levels of education—primary, secondary, tertiary and vocational training—through three distinct projects. It will focus on skills development in both the formal and informal sectors to enhance the productivity of migrant workers.

What’s in the CPS

 -A full-fledged CPS for Nepal after 2007

 -To expand engagement in energy

and connectivity

 -To reduce financing in education and health

 -To support the government’s goal to reach

middle-income status by 2022

 -Nepal can potentially get WB assistance

of about $200-300 million annually in

the next four years

 -IFC could also provide assistance to the hydropower sector to the tune of $300-800 million in next four years

 -To assist the country to develop a corporate development plan for the Nepal Electricity Authority (NEA) and a power trading strategy

 -WB Could support building the Kathmandu-Tarai Fast Track Project in partnership with other development partners

Published: 31-05-2014 09:26

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