At a time when Nepal has been making efforts to accelerate development projects by making them inclusive and sustainable, the Asian Development Bank (ADB), Nepal's largest multilateral development partner, has come up with a new Country Partnership Strategy.  

The Asian Development Bank (ADB) has approved the strategy with Nepal that will anchor ADB assistance to the country over the next five years.  According to a press release, ADB will extend long-term public and private sector finance for capital investment in the areas of transport, energy, water, and other basic public services, such as education and skills development;  investments that will ensure poverty reduction, as well as inclusive and sustainable growth. This funding is expected to be just under $1.5 billion over the next five years. ADB expects to raise double this amount from other partners from both the private and public sectors. 

“The Government and ADB worked very closely together to define a strategic framework that will allow ADB and others to join up in funding the type of investments that can transform Nepal. The strategic work was done in close consultation with key public agencies and private enterprises, as well as with civil society and other development partners. What we now need is to convert this into projects that ensure value for money and deliver development effectiveness,” said Juan Miranda, Director General of ADB’s South Asia Department.

Nepal, which will hold constituent assembly elections next month following a period of political transition after the end of armed conflict in 2006, has a great potential to scale up hydropower development, tourism, and agriculture, and to benefit from its strategic location between the People’s Republic of China and India. However, impediments such as critical power shortages, poor connectivity and water supply, and weaknesses in its human capital base, investment, and governance are undermining that potential.

ADB’s five-year strategy will tackle these critical constraints through high priority energy sector investments to strengthen domestic energy security and promote exports through public-private partnerships. Integrating Nepal with the regional and world economy by expanding its airports and trans-boundary road networks and modernizing customs will also be a focus of ADB’s assistance.

Improving urban infrastructure such as water supply and sanitation in centers such as Kathmandu is another critical activity. ADB will also help with irrigation and watershed improvement to boost productivity and commercialization. Meanwhile, ADB’s education program will target schools, higher education, and vocational and technical skills training. 

The new strategy also places significant focus on governance, financial management, climate change, reforms for private sector investment and sustainability, institutional development and better project implementation performance but will have the flexibility to respond to emerging needs in the business environment during the political transition.

Asian Development Bank Country Partnership Strategy (CPS) for Nepal 2013-2017 will also tackle impediments to broad-based, employment-centric, inclusive growth, including (i) the infrastructure deficit, (ii) the low human capital base, and (iii) poor institutional capacity including governance.

In 2013–2016, programs will primarily focus on energy, transport, and urban sectors. Education and agriculture transformation will also be supported. Support will be increasingly selective and focused to deliver timely, sustainable, and quality results.  In energy, the goal will be achieving energy security at home with stronger institutions.  In transport, the CPS will support Nepal’s Country’s Strategic Road Network in rural and urban areas. Key airports will also be upgraded to boost tourism and industrial development.

Although it has been delayed for more than decades, ADB's CPS stresses that it will complete the MelamchiTunnel and connecting distribution systems by 2016. It will provide assistance to secondary and small towns to improve their urban environment. 

In education, ADB will support skills development and the school sector reform program.   In agriculture, ADB will support implementation of the Agriculture Development Strategy, with a focus on water management with value chain development. "Support in the above sectors will be enhanced with mainstreaming of good governance including public financial management, gender equality and social inclusion, and environmental sustainability including climate change and disaster risk management," said ADB in its press release. The CPS prioritizes institutional development of selected priority sector agencies with long-term partnerships to enhance portfolio performance.

The CPS will also support measures to boost private sector development by helping selected public-private partnership energy projects and improving the environment for private and foreign direct investment.