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Ministry of Foreign Affairs of Denmark

Final

Programme Document

UNNATI - Inclusive Growth Programme in Nepal

UNNATI means “prosperity” or “progress” in Nepali language.

August 2013

File no: 104.Nepal.61.KTM

i

Map of Nepal and Eastern Development Region

UNNATI - Inclusive Growth Programme in Nepal Table of Content

ii

Table of Content

Map of Nepal and Eastern Development Region .......................................................................... i

Table of Content ....................................................................................................................... ii

List of Abbreviations ............................................................................................................... iv

Cover Page ............................................................................................................................... vi

Executive Summary ................................................................................................................ vii

1. Introduction ......................................................................................................................... 1

2. Justification .......................................................................................................................... 2

3. Summary of Design .............................................................................................................. 4

3.1 Strategies ..................................................................................................................................................................................... 4

3.2 Development Objective .......................................................................................................................................................... 6

3.3 Programme Design ................................................................................................................................................................... 7

3.4 Aid Modalities and Partners .................................................................................................................................................. 9

3.5 Exit Strategy ............................................................................................................................................................................ 11

4. Intermediate and Immediate Objectives ............................................................................. 12

4.1 Component 1: The Value Chain Component ................................................................................................................ 12

4.2. Component 2: The Infrastructure Component ............................................................................................................. 14

4.3. The Enabling Environment Component ........................................................................................................................ 15

5. Specific measures to address other issues ............................................................................ 17

6. Budget ................................................................................................................................. 20

7. Management and Organisation ........................................................................................... 21

8. Financial Management and Procurement ........................................................................... 25

8.1. Budgeting and Flow of Funds ........................................................................................................................................... 25

8.2. Accounting .............................................................................................................................................................................. 27

8.3. Procurement ............................................................................................................................................................................ 28

8.4. Auditing ................................................................................................................................................................................... 28

9. Results Measurement and Reporting at Programme Level ................................................. 29

9.1. Results Framework ............................................................................................................................................................... 29

9.2. Monitoring and Results Measurement ........................................................................................................................... 31

9.3 Inception Phase Requirements ........................................................................................................................................... 38

10. Key assumptions and risks ................................................................................................ 39

10.1 Assumptions .......................................................................................................................................................................... 39

10.2 Risks ........................................................................................................................................................................................ 39

11. Indicative Implementation Plan ........................................................................................ 41

Annex 1: LFA Matrix ............................................................................................................. 43

Annex 2: Mapping of Stakeholders ......................................................................................... 48

Annex 3: Mapping of Development Partners .......................................................................... 64


iii

Annex 4: TOR for Programme Steering Committee ............................................................... 76

Annex 5: TOR for Management and Coordination Committee .............................................. 78

Annex 6: Gender Rolling Plan ................................................................................................ 80

Annex 7: Environmental Screening Note ................................................................................ 87

Annex 8: Budget Support Assessment ..................................................................................... 93

Annex 9: Key Reference Documents ..................................................................................... 100

Annex 10: TOR for Programme Monitoring and Results Measurement Coordinator .......... 102

Annex 11: TOR for Training and Technical Assistance in the DCED Results Measurement

Standard ............................................................................................................................... 109

Annex 12: Data, Calculations and Assumptions for Programme Targets ............................. 112

Exchange Rates as per 3 June 2013

1.00 USD = 5.73 DKK;

1.00 EUR = 7.45 DKK;

1.00 DKK = 15.5 NPR

Component 1: The Value Chain Component

iv

List of Abbreviations

ABD Asian Development Bank

ADS Agriculture Development Strategy

BDS Business Development Services

AFM

A2F

Advocacy Fund Manager

Access to Finance

BMO Business Member Organisation

BFIs Banks and Financial Institutions

CA Commodity Association

CADP Commercial Agriculture Development Programme

CNI Confederation of Nepalese Industries

CTC

CSO

Cut, Twist, Curl

Civil Society Organisations

DADO District Agriculture Development Office

Danida Danish International Development Assistance

DAO District Agricultural Officer

DBP Danida Business Partnerships

DCCI District Chamber of Commerce and Industry

DDC District Development Committee

DDC Dairy Development Corporation

DFID Department for International Development

DKK Danish Kroner

DLS Department of Livestock Services

DoLIDAR Department of Local Infrastructure Development and Agricultural Roads

DoR Department of Roads

DTO District Technical Office

EDR Eastern Development Region

EoD

ERBF

Embassy of Denmark

Eastern Region Business Forum

EU European Union

EUR Euro

FAO Food and Agricultural Organisation of the UN

FNCCI Federation of Nepalese Chambers of Commerce and Industry

FOs Farmers’ Organizations

FY Financial Year

GDP Gross Domestic Product

GEPIN Earlier name of UNNATI (Growth and Employment Programme in

Nepal)

GESI Gender Equality and Social Inclusion

GIZ/GTZ German Development Assistance

GoN Government of Nepal

GSI Gender and Social Inclusion

HIMALI High Mountain Agriculture and Livelihood Improvement

HRBA Human Rights Based Approach

I/NGO International/Non-Government Organization

IFC International Finance Corporation, World Bank Group

ILO International Labour Organisation

INCLUDE

LFAs

Inclusive Development of the Economy Programme

Logical Frameworks

LO/FTF Danish Trade Unions

MC Management Contractor

MCC Management and Coordination Committee

MoCPA Ministry of Cooperatives and Poverty Alleviation

MDA Ministries, Departments and Agencies (public sector)


v

MEDEP Micro Enterprise Development Programme

MFIs/FIs Micro Finance Institutions/Financial Institutions

MLVAC Market Linkages and Value Addition Component (previous name of the

Value Chain Component)

MOAD Ministry of Agriculture Development

MoCS Ministry of Commerce and Supplies

MoF Ministry of Finance

MRM Monitoring and Results Measurement

MoFALD Ministry of Federal Affairs and Local Development

MSME Micro, Small and Medium Enterprises

MT Metric Tons

NBF Nepal Business Forum

NEAT

NIM

Nepal Economic, Agriculture and Trade Activity

National Implementation Modality

NLSS Nepal Living Standard Survey

NPC National Planning Commission

NPR Nepalese Rupees

NRREP National Rural and Renewable Energy Programme

NTDS Nepal Tea Development Corporation

NTIS Nepal Trade Integration Strategy

PACT Program for Agriculture Commercialisation and Trade

RRRSDP

PSC

Rural Reconstruction and Rehabilitation Sector Development Programme

Programme Steering Committee

SME Small and Medium Enterprises

SWAp Sector Wide Approach

TAS Technical Advisory Services, Ministry of Foreign Affairs

TEPC Trade and Export Promotion Center

TEPO Tea Extension Project Office

ToR Terms of Reference

TPSDP Trade and Private Sector Development Project

TYP Three Years Plan

UNCDF UN Capital Development Fund

UNDP United Nations Development Programme

UNNATI Means “prosperity” and is the Nepali name of the Inclusive Growth

Programme in Nepal supported by Denmark

USAID US Development Assistance

USD US Dollars

VC Value Chain

VDC Village Development Committee

WTO World Trade Organization

UNNATI - Inclusive Growth Programme in Nepal Cover Page

vi

Cover Page

Country: Nepal

Programme Title: UNNATI - Inclusive Growth Programme in Nepal

Start-End Date: 1 January 2014 – 31 December 2018 (5 years)

Support Budget: DKK 400 million

Development Objective: Promotion of sustainable inclusive growth to reduce

poverty and raise living standards.

DKK

million

Distribution

%

C1 The Value Chain Component

Intermediate Objective: Sustained improvement in competitiveness of selected

value chains.

105.0

26

C2 The Infrastructure Component

Intermediate Objective: Sustained improvement in rural infrastructure.

190.0

47

C3 The Enabling Environment Component

Intermediate Objective: Sustained improvement in the enabling environment.

35.0

9

Technical Assistance 35.0 9

M&E, Reviews, Audits, Formulation of new phase 18.3 5

Unallocated Funds 16.7 4

TOTAL BUDGET 400.0 100

________________________ ____________________________

Ministry of Finance Nepal Danish Ministry of Foreign Affairs

________________________ ____________________________

Place and date Place and date

UNNATI - Inclusive Growth Programme in Nepal Executive Summary

vii

Executive Summary

Context for UNNATI - Inclusive Growth

Programme in Nepal

Support to inclusive growth is of paramount importance

for the development of Nepal and is fully in line with

national policies and strategies. Nepal is among the

poorest and least developed countries in the world, with

almost one-quarter of its population living below the

poverty line. Agriculture is the mainstay of the

economy, providing a livelihood for three-fourths of the

population and accounting for about one-third of the

gross domestic product.

Nepal has undergone a transformation since its decade-

long Maoist conflict ended and a Comprehensive Peace

Accord was signed in 2006. Parliamentary and

Constituent Assembly elections were held in 2008 and

Nepal was declared a democratic republic. The

voluntary retirement and beginning of integration of

Maoist ex-combatants into the Nepal Army in 2012 was

another important milestone in the peace process, but

the progress has been slow. The Constituent Assembly

failed to promulgate a new constitution by May 2012.

At the point of time of formulating this programme,

new elections to the Assembly have been announced

and the drafting process will need to be reinitiated.

Addressing the root causes of the conflict, of which

most of them still exist in the form of poverty,

exclusion of disadvantaged groups and a culture of

impunity, is a precondition for sustaining peace and

development. Notwithstanding, Nepal is in a phase of

its history in which the government and its

development partners need to address the trans-

formation of Nepal into a Democratic Federal State and

achieve substantial peace dividends for its population.

Inclusive growth and job creation is a key government

priority. Due to the structural weaknesses of the

economy and lack of incentives to investment, there are

not sufficient gainful employment opportunities in

Nepal. Migration, in particular to India, is therefore

often chosen as a way out of poverty, despite its high

social cost. It is estimated that up to a total of five

million Nepalese work abroad and their remittances

account for up to 25 percent of gross domestic product.

The Nepalese development objectives and strategies as

stated in the government’s Three-Year Plan 2010/2011

– 2012/2013 (and also confirmed in the new Three-

Year Plan that is underway) form the basis for the

preparation of the Danish supported inclusive growth

programme. UNNATI is designed to contribute to these

objectives making it fully aligned with national

objectives and policies.

Danish strategies for Growth and Employment

The design of UNNATI is done in accordance with

Danish development policies and strategies and in

support of Nepalese objectives and strategies for

inclusive growth, employment creation and poverty

reduction. The Danish development assistance to

promote growth and employment is based on the

overall strategy for Denmark’s development

cooperation:”The Right to be a Better Life” and the

“Strategic framework for priority area – Growth and

Employment 2011-2015”. As stated in these strategies,

poverty cannot be fought and human rights fulfilled

without a solid economic foundation. Accordingly,

Denmark will emphasise the promotion of market-

based inclusive growth creation. Poverty can only be

defeated by robust and sustained inclusive growth,

reaching all levels of society and empowering the

individual to take charge of and improve her or his own

life.

As natural resources become scarcer and the planet ever

more fragile, new forms of sustainable growth are

required. Therefore, green growth is central to the

Danish strategy for development cooperation. It will be

an important aspect in the programme, how to promote

a greener growth pattern when supporting

commercialisation of agriculture and local

infrastructure

UNNATI - Inclusive Growth Programme in Nepal.

It is in this context that the Danish Government has

made an allocation of DKK 400 million (approximately

USD 70 million) for the Inclusive Growth Programme

in Nepal for a five-year period commencing January

2014. The key priority is to strengthen market-based

growth with a focus on reducing poverty and improving

living standards. This entails that the core of the

programme will focus on the agriculture sector given its

importance as a main contributor to the economy and to

employment. The strategic focus of the programme will

be on private sector development in compliance with

the government of Nepal and Danida’s strategies, and

the private sector will be a beneficiary and also a direct

implementing partner. The public sector is expected to

be a key partner and to play a critical role in setting and

implementing national objectives, policies and plans;

for providing the regulatory frameworks; for supporting

infrastructure development; and for creating an

enabling environment for the private sector to

contribute efficiently and effectively to inclusive

growth. Joint donor support is considered a priority.

The programme contributes to the national objectives

set by the Government of Nepal namely to transform

Nepal from the group of the least developed countries


viii

to the group of developing countries as a “Prosperous,

Peaceful and Just Nepal” within a two-decade period.

The development objective: Promotion of sustainable,

inclusive growth that reduces poverty and raises living

standards.

Agriculture is the backbone of the economy and

especially the rural economy. Agriculture is dominated

by smallholder farming, but with the potential for

commercialisation and development of agribusiness.

Supporting agriculture and other rural economic

activities in terms of creating market linkages and value

addition will have a significant impact on inclusive

growth poverty reduction and rising of living standards.

Addressing market linkages and value addition also

offers opportunities to address other constraints to

private sector development in Nepal such as

introduction of new technologies and innovations,

access to financial services and improving quality

systems and standards. Successful agriculture and rural

development also hinges on connectivity to markets

and access to economic and social services as well as to

marketing infrastructure. These types of interventions

should be complemented with streamlining and

advancing the policy and strategic environment for

inclusive growth in order to address identified

constraints. The programme has been designed to

address these issues at micro-, meso- and macro-level

through three mutually reinforcing components. The

programme will take its point of departure in seven hill

districts in the Eastern Development Region, but many

interventions will be regional and national-based.

The Value Chain Component

Intermediate objective: Sustained improvement in

competitiveness of selected value chains. The rationale

for the component is that agriculture is the most

significant economic sector in Nepal and the market

linkages are weak, which contribute to poor access to

markets, high transaction costs and low value addition

to farm produce. Even though the importance of

agriculture to the rural economy is widely recognised,

the growth rates have remained at around four percent

during the past years. Agro-based micro, small and

medium sized enterprises play a crucial role in

backward linkages with smallholder business-oriented

farmers thereby linking them with input supplies and

with the market. Hence, linking the more business

oriented farmers and their organisations to micro and

small agro-based business enterprises with respect to

input provisioning, contract farming, marketing,

processing and packaging of agricultural produce will

facilitate the process of commercialising smallholder

farming and the establishment of effective business

systems linking the farmers to consumers.

Rural financial services are inadequate, which

contribute to low investments in agricultural production

and in agro-based micro and small enterprises.

Therefore, a financial services programme will be set

up to improve access to and use of a range of financial

services by households and MSMEs.

This component is considered the core component with

the two other components being supporting components

addressing critical constraints identified under this

component.

The Infrastructure Component

Intermediate objective: Sustained improvement of rural

infrastructure.

The rationale for the component is that Nepal’s road

network remains less developed than that of other

countries in the region and the general rural

infrastructure is inadequate and underdeveloped in

terms of market places, storage facilities and

productivity enhancement facilities. At the district and

village level, the quality of the road network is poorer.

The unreliability of the transport network affects the

timely movement of people and goods and delivery of

services. Post-harvest losses are high due to lack of

appropriate road network and of marketing and storages

facilities. The main justifications for external support

under the component are low capacity, particularly at

district level, leading to weaknesses in planning, lack of

local, targeted investment, lack of attention to

maintenance and lack of a specific and consistent focus

on local economic growth. These are the main

underlying causes of poor and missing infrastructure in

the selected value chains.

The Enabling Environment Component

Intermediate objective: Sustained improvement in the

enabling environment.

The rationale for this component is that inclusive

growth figures prominently on the Government’s

agenda. Private business together with government and

the cooperative sector are considered the engine of

inclusive growth and employment. The component is

designed to address macro- and meso- level policy

challenges pertaining to the inclusive growth. These

include: i) a need for improvement of the business

environment, including a better investment climate and

private sector-led growth; ii) absence of a

comprehensive policy and strategy for development of

the private sector; iii) insufficient infrastructure,

inadequate labour skills and continuous labour unrest,

restrictive labour relations and political instability; iv) a

public-private dialogue based on presumptions rather

than accurate knowledge; By addressing policy

challenges related to the pattern and pace of economic


ix

growth and the link between inclusive growth and

poverty reduction, the component contributes to

achievement of the Government’s desire to provide

even opportunities for all groups of society regardless

of their gender, ethnicity or religion.

Partners

The programme will work with public and private

partners in Nepal such as national and local

government; commodity, producers and business

associations; micro, small and medium enterprises; and

with financial institutions. The programme will have

five lead implementing partners i.e. Nepal Business

Forum, UNCDF with support from Nepal Rastra Bank,

DDCs/DTOs/DoLIDAR, a Management Contractor and

an Advocacy Fund Manager.

Indicative Budget

The total budget frame for the Nepal Inclusive Growth

Programme is DKK 400 million for the five-year

programme period. An indicative budget is presented in

the table below.

Indicative Budget

Allocations

DKK

(million)

Distribution

(%)

1. The Value Chain

Component

105.0 26

2. The Infrastructure

Component

190.0 47

3. The Enabling Environment

Component

35.0 9

Technical Assistance 35.0 9

M&E, Reviews and Research 18.3 5

Unallocated Funds 16.7 4

Total Programme Budget 400 100

Key Assumptions and Risks

The main assumption is that government will continue

to see the private sector as the engine of economic and

inclusive growth and sustainable employment creation.

The major risks for effective implementation and

ensuring long term impact of UNNATI- Inclusive

Growth Programme in Nepal include the fragile

political situation; hesitation on part of the private

sector to invest due to unpredictability of private sector

policies, strategies and regulations; to a high level of

corruption; unavailability of elected local governments

at the district and the village level; poor labour

relations; and acute shortage of labour force due to

foreign and urban migration.


Programme Document Programme Document

1

1. Introduction

The Danish Government has in the National Budget for 2012 approved an allocation of DKK

400 million for an inclusive growth programme in Nepal. The budget allocation is expected

to strengthen market-based growth with a focus on employment and improved living

conditions. It is, furthermore, expected to include support to the agriculture sector, which

creates employment for around 80 percent of the population. The strategic focus of the

programme will be on private sector development in compliance with Danida’s strategy for

support to growth and employment, and the private sector will be a beneficiary and also a

direct cooperation partner. The public sector is expected to play a key role in terms of

defining national objectives, policies and plans; for providing the regulatory frameworks; for

supporting infrastructure development; and for creating an enabling environment for the

private sector to contribute efficiently and effectively to inclusive growth and employment

creation. Joint donor support is considered a priority. The programme will be effective from

January 2014 and will cover a period of five years.

The programme preparation commenced in September 2011 with an identification study.

Subsequently the Danish Embassy presented a Programme Concept Note to the Danida

Programme Committee in May 2012. The feasibility studies of the proposed programme took

place in Nepal in June 2012 and the detailed formulation of a Draft Programme Document

and three Component Descriptions was done in August 2012. The programme was appraised

in December 2012. The appraisal mission recommended that district profiles and assessment

of value chain opportunities and constraints in the programme districts should be prepared

and included in the programme documentation before the programme should be presented to

the Danida Board and to the Danish Minister for Development Cooperation before approval.

As a consequence of the findings of the studies, it was decided to change the name (and

development objective) of the programme from “Growth and Employment Programme in

Nepal (GEPIN)” to “UNNATI – Inclusive Growth Programme in Nepal”. The reason for this

is that perspectives for creating jobs are less significant in the programme than the

perspectives for increasing inclusive growth and thereby reducing poverty and raise living

standards significantly in targeted districts and all along the selected value chains.

The government agreement is expected to be signed in the autumn 2013. The preparation

process has been done in compliance with the Danida Guidelines for Programme

Management1.

The Danish Embassy has throughout the programme identification and formulation

maintained a close dialogue with stakeholders from the Government of Nepal, the private

sector and civil society as well as with key development partners in Nepal. The Embassy has

organised the following formal stakeholder workshops with participation of key stakeholders:

o Workshop to present and discuss Identification Report jointly with TAS2 on 25

January 2012;

o Workshop to discuss issues relating to infrastructure development on 13 September

2012;

o Workshop to present and discuss the three draft Component Descriptions 25

September 2012.

o Workshop to discuss district profiles and value chain studies on 1 May 2013.

1 http://amg.um.dk/en/menu/TechnicalGuidelines/ProgrammeManagement/ProgrammeManagement.htm

2 Technical Advisory Services, Ministry of Foreign Affairs, Copenhagen



2

All missions have met with Ministry of Finance, International Economic Cooperation

Coordination Division, as part of their briefings and Ministry of Finance has organised

debriefing for the missions with key government stakeholders. The preparation of the

programme has, in addition to widely consultations in Kathmandu, included consultations

with key stakeholders in the programme districts in the Eastern Development Region as well

as a number of districts in Western Nepal.

The programme documentation comprises the main Programme Document as well as a

component description for each of the three components as stand-alone documents.

2. Justification

Nepal has undergone a political transformation since its decade-long Maoist conflict ended

and the Comprehensive Peace Accord was signed in 2006. Parliamentary and Constituent

Assembly elections were held in 2008 and Nepal was declared a democratic republic. The

voluntary retirement and beginning of integration of Maoist ex-combatants into the Nepal

Army in 2012 was another important milestone in the peace process, but the progress has

been slow. The Constituent Assembly failed to promulgate a new constitution by May 2012.

New elections for the assembly have been announced and the drafting process will need to be

reinitiated. Addressing the root causes of the conflict, of which most of them still exist in the

form of poverty, exclusion of disadvantaged groups and a culture of impunity, is a

precondition for sustaining peace and development.

Economic performance will be strongly influenced by political developments. It is widely

believed that important decisions will continue to be held hostage to the unstable political

situation, with negative implications for stability and economic development. The situation is

unlikely to improve substantially in the near future. People’s expectations have been raised

and Nepal’s leaders face the challenge of meeting them and agreeing on a political settlement

that will help to achieve sustainable peace.

The economic growth rate of country that averaged 3.5 percent over a decade has registered

growth of 4.6% in the last fiscal year (FY 2011/12). The inflation rate has stabilised at

around 8%, and the fiscal deficit is contained below 4% of the gross domestic product

(GDP)3. Poverty has decreased in Nepal over the years in both relative and absolute terms.

With respect to the national poverty line 25 percent of the population was characterised as

poor in the National Living Standard Survey (NLSS) 2010/2011, which is a decrease of more

than 20% points over the period of 15 years. Nepal progress on the Millennium Development

Goals has been remarkable in the areas of poverty reduction, education, gender equality and

health.

Even with the decrease in poverty line, Nepal is among the poorest and least developed

countries in the world. A special issue is the apparent dichotomy in terms of labour

availability. On the one hand Nepal suffers from widespread un- and underemployment with

300,000 to 400,000 young people entering the labour market each year. On the other hand,

outmigration of labour (both skilled and unskilled) leads to a shortage of labour in certain

geographical areas and economic sectors including the tea and dairy sectors in the target

districts of the programme. Migration, especially to India, is often chosen as a way out of

poverty, despite its high social cost. Agriculture is the mainstay of the economy, providing a

livelihood for three-fourths of the population and accounting for about one-third of GDP.

Industrial activity mainly involves the processing of agricultural products, including pulses,

tea, milk, sugarcane, tobacco, and grain.

3 Nepal Rastra Bank 2011/2012



3

Poverty and exclusion have been cited as the main reasons of conflict in Nepal and inclusive

growth and employment are thus at the core of ensuring lasting peace. It is clear that poverty

continues to affect social groups to differing degrees. Poverty is higher in rural areas than

urban areas; it affects Dalits more than other groups, and households headed by an illiterate

person have a greater likelihood of being poor than those headed by persons who completed

secondary school. A recent report on gender disparities concluded that Nepal is one of the

least equal countries in the world – ranking 115th out of 1344. Women’s exclusion is

particularly marked in regions – such as the Mid- and Far-Western Hills – and among some

ethnic groups.

The isolated and disadvantaged nature of rural economy in Nepal is generally characterised

by subsistence agriculture, poor infrastructure, traditional farming practices, shortage of

skilled and unskilled labour force. Efforts have been made in the past by the government and

the development partners to overcome some of these challenges. As a result, in many cases

the small producers have been empowered in terms of applying modern farming practices

and enhancing production and productivity. These interventions have perpetuated a supply-

driven mentality among the producers and, in many cases, marginalized their relationships

with other private firms with whom they should be partnered. Cooperatives are continually

formed for collective marketing of agricultural production but with few connections to

buyers or end markets. Thus, the vertical linkages and horizontal linkages in the agro-

enterprise sector are either underdeveloped or weak in Nepal and probably this is the single

most critical constraint. Finance is an important support service for any business and is

frequently the most pressing constraint expressed by agro-enterprises in Nepal. The existing

lending terms, credit volume, available credit lines do not always meet their needs. The

perpetually precarious trade relationship with India, Nepal’s largest trading partner,

compounded by the lack of facilities, particularly in the agribusiness and food sectors, to

better understand and conform to sanitary and phytosanitary requirements and other industry

standards required for market access outside of Nepal.

Even though the importance of agriculture to the rural economy is widely recognised, the

growth rates have remained at around 4 percent during the past years. A large proportion of

the rural population depends more and more on non-farm income. Remittance and foreign

employment are factors that are increasingly important to the national economy as well as

individual households. Remittance contribution to GDP5 was in 2010/11 USD 4.0 billion

corresponding to 25 percent. Around two million people are registered as working overseas6

in mainly India, the Gulf and Malaysia and the annual outflow of workers is 250,000. The

total number of overseas workers may be as high as five million including unregistered

workers. At household level, remittance helps to reduce poverty, improve standard of living

and attain higher educational levels. At macro level, remittance could be used for

entrepreneurship and productive investments, which in turn increases job opportunities and

income of the people. However, around 79 percent is spent on consumption and only around

10 percent on investments according to the NLSS 2010/11. Remittance makes a significant

contribution to the economy, however the long-term impact and sustainability is

questionable. These issues have to be addressed in systemic manner stimulating that a higher

proportion of remittance is being invested and as such creating growth and sustainable

4 The Global Gender Report, World Economic Forum 2010 5 MoLTM, IOM 2010, Foreign Employment, Remittance and its Contribution to the Economy of Nepal

6 NIDS, NCCR, 2010, Nepal Migration Year book



4

employment in rural as well as in urban areas and thereby reducing the dependency on

migration and incomes from remittance.

The 2009 World Bank Investment Climate Assessment (ICA) found that Nepal’s private

sector is starting to reap some dividend from the cessation of armed conflict in terms of

employment generation, rebounding tourism, increased tax collection, as well as less

complex business regulations and procedures to obtain permits. However, Nepal’s private

sector continues to suffer from the consequences of a decade of armed conflict and civil

unrest. Poor infrastructure, particularly for transportation and energy, inadequate labour skills

and continuous labour unrest, as well as inefficient and unstable credit markets, exacerbates

the damage that continued political instability has had on the investment climate. In terms of

ease of doing business, Nepal ranked 107 out of 183 countries in 2012. In 2011, Nepal’s

ranking was 110. Most of the improvement is contributed by making property registration

easy, by enacting measures to protect investors and by improving enforcement of contracts.

Nepal is ranked 125 in the Global Competitiveness Index (GCI) out of 142 countries in

2011/12 by the World Economic Forum. The year before Nepal was ranked 130. According

to the report, Nepal is least competitive among South Asian countries. In the five years to

2009, net Foreign Direct Investment (FDI) in Nepal averaged only 0.1 percent of GDP as

compared to an average of 1.9 percent for low-income developing countries. In summary, in

spite of recent improvements, Nepal still has a rather long way to go before the environment

is conducive for development of private business and private sector employment creation.

The major risks for effective implementation and ensuring long-term impact of UNNATI

include fragile and unstable political situation. Numerous contentious political issues remain

unresolved, and factionalism is entrenched. Issues relating to the basic contours of the state—

notably, the drafting of a permanent constitution—have not been settled, and, despite

apparent signs of co-operation between parties in early 2012, it is widely believed that

important decisions will continue to be held hostage to political disagreements, with negative

implications for economic development. The situation is unlikely to improve substantially in

the near future. Similarly, the country is facing low level of private sector investments due to

short term and ad hoc government policies on private sector development and to a high level

of corruption; unavailability of elected local governments at the district and the village level;

lack of adequate measures to reach the poor and excluded groups; and acute shortage of

labour force due to foreign and urban migration.

3. Summary of Design

3.1 Strategies

The design of the UNNATI – Inclusive Growth Programme in Nepal is done in accordance

with both Nepalese and Danish development policies and strategies for inclusive growth,

employment creation and poverty reduction.

The Danish development assistance to promote growth and employment is based on the

overall strategy for Denmark’s development cooperation: “The Right to a Better Life”7. As

stated in that strategy, poverty cannot be fought and human rights fulfilled without a solid

economic foundation. Fighting poverty requires years of solid economic growth. As natural

resources become scarcer and the planet ever more fragile, new forms of sustainable growth

are required. Therefore, inclusive and green growth is central to the Danish strategy for

development cooperation.

7 http://um.dk/en/~/media/UM/English-

site/Documents/Danida/Goals/Strategy/13287_DANIDA_strategiformidling_UK_web%20NY.ashx



5

Human rights based approach is an integral part of any activities under Danish development

cooperation and is based on four fundamental principles: i) non-discrimination; ii)

transparency; iii) accountability; and iv) participation. Human rights are a means and end of

development cooperation. If we help the poor people to fight for their rights then we also

fight the main causes of poverty. Human rights and democracy are fundamental values and

goals and an important priority area in Danish development policy. Denmark will support

processes and institutions, which promote human rights and work for equal access for all.

The strategic focus of the UNNATI programme will be on private sector development in

compliance with Danida’s strategy of green growth and human rights based approaches. The

programme will contribute with the challenging task of fighting poverty and a progressive

realisation of social and economic rights in the form of employment and improved living

conditions through a strategic focus on market based and inclusive growth. The human rights

principles of non-discrimination, transparency, accountability and participation are

mainstreamed into the activities in the programme. Especially the principle of non-

discrimination is important, as Nepalese society is still challenged by its overwhelming

diversity8 and a legacy of unequal access to political, social and economic opportunities. Also

promoting transparency, accountability and participation in practice will be key issues in the

support provided at district levels with e.g. decisions-making processes on infrastructure and

support to development of the selected value chains in the districts. This is especially

important, as there have not been local elections in the last 15 years at district, municipal and

the village level. Furthermore, the programme will work to ensure and promote that the

private partners respect human rights and assume responsibility for their impact on human

rights, in accordance with the UN Global Compact Principles. There will also be a focus on

how to promote a greener growth pattern when supporting commercialisation of agricultural

sector and connected infrastructure investments in the targeted districts in Eastern

Development Region (EDR).

The Danish development assistance to promote growth and employment is defined in the

“Strategic framework for priority area – Growth and Employment 2011-2015”. As stated in

that strategy, welfare is not created by the mere redistribution of existing resources.

Accordingly, Denmark will emphasise the promotion of market-based inclusive growth in

developing countries. Poverty can only be defeated by robust and sustained inclusive growth,

reaching all levels of society and empowering the individual to take charge of and improve

her or his own life. International development cooperation has, according to the Danish

strategy, sometimes been too thinly spread, with too little attention paid to private sector as

the key driver of economic development. Inclusive growth is emphasised in the strategy as it

allows people to contribute to and benefit from economic growth. Rapid pace of growth is

unquestionably necessary for substantial poverty reduction, but for this growth to be

sustainable in the long run, it should be broad-based across sectors and inclusive of the large

part of the country’s labour force – where inclusiveness refers to equal opportunities in terms

of access to markets, resources and unbiased regulatory environment for business and

individuals.

The Peace and Development Strategy prepared by the donor group in Nepal in 2010 with

joint donor-government efforts acknowledges economic growth as a factor to establish long-

term peace in Nepal. Therefore, recommended actions for recovery in short term as well as

actions for medium to long-term peace building is directed towards inclusive growth. As

agriculture is the mainstay of the economy, UNNATI will have strong links and relationships

to the agriculture sector. Not just in terms of agriculture production, but also in terms of

8 Nepal includes 102 different ethnic groups and castes; 47 languages spoken on a daily basis, Central Bureau of Statistics

(CBS)



6

supporting backward linkages – extension services, input supplies, quality assurance – and

forward linkages - value addition, marketing, branding. Access to financial services for

farmers and Micro, Small and Medium Sized Enterprises (MSME) will be addressed by

supporting financial institutions – banks, Micro-Finance Institutions (MFI) – to expand their

outreach and develop products and services targeting this market segment. Rural connectivity

and growth will be addressed by increased rural roads access, reducing post-harvest losses

and improve productivity through small-scale market infrastructure. At meso and macro level

the programme will address constraints for inclusive growth through evidenced-based

advocacy and support to advancing enabling business environment in general and specifically

addressing issues identified at micro-level by the programme. These interventions will

contribute to improved real growth rates; reduced vertical and horizontal inequalities;

improved productive employment and incomes; and improved performance of the agriculture

sector in the targeted intervention areas. This will have a lasting contribution on reducing the

gap between the rich and the poor and, thus, also contribute to peace and stability and to

minimizing the possible causes of conflicts in future.

3.2 Development Objective

In formulating the development objective of UNNATI, point of departure has been taken in

the objectives and strategies stated in the government’s Three-Year Plan 2010/11 – 2012/139.

The national objective in this Plan is to transform Nepal from the group of the least

developed countries to the group of developing countries as “Prosperous, Peaceful and Just

Nepal” within a two-decade period. UNNATI will contribute to this long term objective.

The development objective of UNNATI - Inclusive Growth Programme in Nepal:

Promotion of sustainable inclusive growth that reduces poverty and raises living standards.

The objectives and strategies of the Three-Year Plan take full recognition of the role of the

private sector as the engine of economic growth, employment creation and poverty reduction.

It emphasizes the will to increase the involvement of the private sector as a development

partner of the government in the areas of investment, production, distribution, social

development and employment generation. The policies10

of National Planning Commission

(NPC) as outlined in the Three-Year Plan focus on adopting a market economy in general

and the policy of welfare oriented economic development through government, cooperatives

and the private sector. UNNATI is expected to strengthen market based growth with a focus

on advancement of inclusive growth in order for Nepalese people to improve their living

conditions and realise their rights. The Programme takes its point of departure in 7 districts in

the Eastern Region. However, as value chain development by nature goes beyond borders,

the programme will address issues at all levels from micro- meso- and national – and even

international issues as needs be.

9 The current TYP comes to an end in 2013. However, EoD has been informed that the Government of Nepal will maintain

the emphasis on the importance of private sector development in the new development plan currently under preparation 10

www.npc.gov.np/en/policies

http://www.npc.gov.np/en/policies



7

3.3 Programme Design

The Danish strategic framework for the priority area – Growth and Employment 2011-201511

includes a number of thematic areas that may be included in Danish supported growth and

employment programmes. A thematic analysis was conducted during the programme

identification and the areas identified for support have subsequently been refined by the

programme feasibility studies as well as in additional value chain studies and socio economic

studies in the 7 districts.

Agriculture is the backbone of the economy and especially the rural economy. Supporting

agriculture and other rural economic activities in terms of creating market linkages and value

addition is expected to have a significant impact on inclusive growth, and on poverty

reduction and on raising living standards. Addressing market linkages and value addition also

offers opportunities to address other constraints to private sector development in Nepal such

as introduction of new technologies and innovations, access to financial services and

improving quality systems and standards. Successful agricultural development also hinges on

connectivity to markets and access to economic and social services as well as to marketing

infrastructure. These lower level types of interventions should be complemented with

streamlining and advancing the policy and strategic environment for inclusive growth in

order to address identified constraints – enhancing evidence-based public-private dialogue

mechanisms, monitoring and analysis of relevant policies with a focus on private sector

development and employment and especially employment creation for the youth. The

programme has been designed to address these issues at micro-, meso- and macro-level

through three mutually reinforcing components as illustrated in the figure below and the

Logical Framework Analysis (LFA) Matrix is presented in Annex 1.

Inclusive growth development is a new field for Danish development assistance to Nepal.

New partnerships have to be developed; an understanding of the dynamics of new sectors

established; and experience gained working with new challenges and opportunities in a very

complex and fragile environment. Against this background the programme has been designed

with a clear strategic focus on a few important value chains and taking its point of departure

in a limited geographical area, namely 7 districts in EDR.

Selection of value chain: Initially the programme will directly support the advancement of

three value chains – dairy, orthodox tea and ginger – in seven districts in EDR. During

11

http://amg.um.dk/en/menu/PoliciesAndStrategies/GrowthAndEmployment/



8

implementation one or two more value chains may be added. The selection of value chains

was based on a number of selection criteria with a clear geographic focus during the

programme feasibility study and confirmed during the detailed formulation. A long-list of 14

potential value chains were examined against a number of criteria including the importance

given to the value chain in the draft Agricultural Development Strategy, the Nepal Trade

Integration Strategy, the TYP as well as criteria of specific relevance for UNNATI

addressing growth potentials and criteria related to gender, social inclusion, and

climate/environmental impact.

Identification of geographic coverage: The EDR is not the poorest region of Nepal,

however, it has a comparative advantage in the development of commercial agriculture

despite of poor infrastructure such as roads and access to electricity. Agro- entrepreneurial

skills and a good base for commercial agricultural development exist in EDR with several

agro processing and agro-business units in the Terai and fruits, vegetables, tea (orthodox),

and spices in the hills. The most dynamic farmer groups and commercial agro enterprises are

to be found along the two south-north road corridors leading to Dhankuta and Ilam in the

region. The EDR’s proximity to huge markets (India and Bangladesh) for agriculture

products provides an important opportunity to commercial agriculture. The conditions of the

EDR are relatively more favourable for commercialisation of agriculture than in other

regions. The success in the EDR might stimulate replication in other regions. Value chain

development including support to commodity and producers’ associations, MSMEs and

financial sector institutions will not be limited to EDR. Also interventions at regional and

national level will be supported. In addition to selected value chain activities (marketing,

branding, etc.), national level activities will focus on advancing the private sector

development through strengthening evidence-based public-private dialogue mechanism and

improving the enabling business environment.

Support to selected value chains will aim at improving the efficiency and effectiveness of the

selected value chains in order to strengthen competitiveness of Nepalese products and

services and thereby increase their contribution to the economy. This calls for a strong

engagement of the private sector with the government providing the enabling environment to

ensure an equitable, inclusive and sustainable growth. The support will be implemented in

partnership with farmers and their organisations, private companies serving the agricultural

sector, e.g. input suppliers, equipment suppliers etc. agribusiness and financial institutions as

well as government institutions responsible for agriculture, cooperatives, local governments,

trade and quality standards. This support will constitute the core of the programme.

The rural infrastructure interventions aim at improving rural infrastructure that supports

value chain development. This will address poor and unreliable rural infrastructure that leads

to poor and seasonally interrupted access to markets, and public and private services, high

transaction costs, low competitiveness and low productivity of the rural economy. The

support will be implemented through local government structures responsible for agricultural

roads and infrastructure. It is designed to complement value chain development and is also

considered to be a precondition for value chain development. Support to infrastructure

development will represent almost fifty percent of the total programme budget.

Support to improving enabling environment aims at strengthening the policy framework and

dialogue mechanism for advancement of inclusive growth in order for Nepalese people to

improve their living conditions and realise their rights. The support is designed to

complement the two other programme components including value chain specific policy and

regulatory issues, rights issues, labour relations and human rights issues, local and regional

economic development priorities, and organisational capacity of the relevant business, labour

market and commodity associations; and monitoring of local economic development. Key



9

partners will be business associations, labour market organisations and commodity

organisations at district, regional and national level. These organisations will engage in a

public, private dialogue with local and central government institutions enhancing an enabling

environment for private sector development. Special emphasis will be put on rights issues

and corporate social responsibility.

The programme will be implemented in close coordination with other Danish programmes

including the Danida Business Finance12

and Partnership programmes. It will benefit from

synergies with the National Rural and Renewable Energy Programme (NRREP) in terms of

access to renewable energy technologies – biogas, hydropower, solar energy - for rural

households and MSMEs; with the Human Rights and Good Governance Advisory Unit

(HUGOU13

); and with the Local Government and Community Development Programme

(LGCDP), which is also working with capacity development of DDCs, VDCs and local

communities. LO/FTF Council of Denmark is actively engaged in support to the labour

market in Nepal through its regional programme in Asia. LO/FTF has been engaged in the

formation of the Joint Trade Union Cooperative Centre, which is expected to serve as an

umbrella organisation for trade unions in Nepal. Trade unions may apply to the challenge

funds under the sub-component 3.2 for improved advocacy for rights and good corporate

governance.

A clear theory of change is guiding that each component, sub-component, output and activity

is defined so they will logically contribute to achieving the objectives of the programme. See

more elaboration on this in Chapter 9.

3.4 Aid Modalities and Partners

Growth initiatives are cutting across numerous sectors including agriculture, trade and

commerce, industries, infrastructure, energy, labour relations, skills development and

environment. As such multiple actors from the private and public sector will directly or

indirectly be engaged in the activities supported by the programme. UNNATI will reach

beneficiaries by working with agricultural service and product suppliers as well as with key

national, regional and district business organisations such as Nepal Business Forum (NBF),

Federation of Nepalese Chambers of Commerce and Industries (FNCCI) and District

Chambers of Commerce and Industries (DCCI); with producers’ and commodity

associations; banks and micro-finance institutions (MFIs). The programme will also

collaborate with government ministries, departments and agencies (MDAs) like: Ministry of

Finance (MoF); Ministry of Agriculture Development (MoAD); Ministry of Cooperatives

and Poverty Alleviation (MoCPA); Ministry of Commerce and Supplies (MoCS); Ministry of

Federal Affairs and Local Development (MoFALD); Department of Local Infrastructure

Development and Agricultural Roads (DoLIDAR); District and Village Development

Committees (DDC/VDC) etc. An overview of key government ministries and agencies is

presented in Annex 2. As value chain component is the core of the programme, Ministry of

Agriculture Development has been designated as Lead Agency of the programme. MoAD

will lead the overall coordination with other MDAs as well as other programmes related to

value chain development.

The flow of funds will take into consideration that the programme will have a mix of public

and private partners. An assessment of the possibilities for providing budget support has been

undertaken. The assessment concluded that budget support should not be applied during the

12

A representative from Danida’s Business Finance Programme, Ministry of Foreign Affairs, participated in the formulation

mission in August 2012 13

HUGOU is likely to be replaced by a Joint Facility for Governance, which is currently being formulated.



10

initial period of the programme due to the nature of the programme which involves private

sector actors and the possible fiduciary risks. The mid-term review will consider if future

funding for public sector infrastructure support can be channelled through Ministry of

Finance as sector budget support. Funds and services will be channelled to private sector

partners and beneficiaries through a number of aid modalities including service providers,

matching grants, challenge funds, credit lines, loan guarantee schemes etc. Funds for public

sector initiatives like infrastructure development will ultimately14

be channelled through

district development funds and at national level funding will be made available to Nepal

Business Forum, BMOs labour market organisations and the Nepal Rastra Bank.

Several development partners are actively engaged in programme activities relating to

inclusive growth and value chain development, others have completed programmes and new

entrants are expected. An overview of the programmes of the development partners is

included in Annex 3. The Ministry of Finance is responsible for donor coordination and

harmonisation. A recent donor initiative has seen the establishment of a forum for private

sector development and economic growth coordination. The EoD will take active part in this

forum in order to enhance synergy and coordination with on-going and planned programmes

and build on the lessons learned by completed programmes. In this connection, it should

specifically be mentioned that the programme has agreed to coordinate closely with the EU’s

Trade Facilitation and Capacity Building project, which includes support to the tea sector. It

has been agreed that EU will focus on regulatory and quality issues relating to tea – the

public sector responsibilities – whereas UNNATI will focus on supporting private sector

development issues relating to tea. Similarly, agreement has been reached with the Ministry

of Commerce and Supplies on how UNNATI can offer follow-up support to the initiative by

FAO/WTO in development of the ginger sector in EDR. The programme will also build on

lessons learned from other programmes including the ADB supported Commercial

Agriculture Development Programme and the DFID supported Rural Access Programme –

just to mention a few.

As mentioned earlier, inclusive growth programmes are a new area of support for Denmark

in Nepal. Hence, it is important to learn from other development partners and to establish

close collaboration as mentioned above. A number of opportunities have been identified for

the programme to buy into programmes being implemented by other development partners

and thereby take full advantage of their experience and to reduce transaction costs. UNNATI

will work with the Nepal Business Forum and the Eastern Regional Business Forum for

policy dialogue in support of private sector development (see C3)15

with support from IFC;

as well as UNCDF’s programme with Nepal Rastra Bank in support of access to MSME

finance (see C1). The programme implementation framework is illustrated in the figure

below.

UNNATI – Inclusive Growth Programme in Nepal

Component The Value Chain Component The Infrastructure Component The Enabling

Environment Component

Sub -

Component

Access to

Finance

Commercialisati

on of Value

Chains

Rural Roads

and Bridges

Market

Infrastructure

Private –

Public

Dialogue

Advocacy

for Rights

and CSR

14

While experience is being gained with public financial systems the programme will maintain separate accounts at district

level to be managed jointly with relevant local government staff 15

C1 – Component Description for Component 1: The Value Chain Component

C2 – Component Description for Component 2: The Rural Infrastructure Component.

C3 – Component Description for Component 3: The Enabling Environment Component



11

Implementer UNCDF with

support from

NRB

Management

Contractor

DDCs/DTOs with support

from Management Contractor

NBF Advocacy

fund

Manager

Partners Banks/ MFIs Private and Public Sector Partners and

Stakeholders

ERBF,

Business

Association,

GoN

agencies

BDOs,

CAs,

NGOs

Target Groups Farmers, Entrepreneurs, Women, Youth, Marginalised Groups

The programme will make use of a management contractor for implementing sub-component

1.1. The implementing partner for Component 2 will be DDCs/DTOs/DoLIDAR with

technical assistance from a management contractor. Hence, the management contractor will

support the district-based interventions of the programme, while the other partners mainly

focus on meso- and macro-level interventions. This is the preferred option due to the nature

and complexity of the programme (see also Section 7 Management and Organisation).

Technical assistance – long-term as well as short-term – will be provided under the

arrangements with the responsible development partners and the management contractor. It is

foreseen that the management contractor will establish offices in the Eastern Development

Region covering the seven targeted districts with its main office in Dhankuta, a cluster office

in Ilam and outreach offices in the remaining districts. Furthermore, a liaison office will be

established in DoLIDAR, Kathmandu. Terms of reference for the management contractor are

included as Annex 10 in the Component Description for the Value Chain Component.

An Advocacy Fund Manager will be recruited to be implementing partner of sub-component

3.2, the Advocacy Fund for Responsible Business. Due to the nature of an advocacy fund it is

important that the Fund Manager is independent to prevent conflicts of interests.

3.5 Exit Strategy

UNNATI will work with a broad spectrum of public and private organisations. Sustainability

of support provided under the programme will focus on building capacity and sustainability

in the partner organisations – farmers’ organisations, producers’ and commodity associations,

MSMEs, Business Development Services (BDS) providers, banks, MFIs, village-based user

groups, business associations as well as in partner government institutions. The strategy will

be to support activities and initiatives that are strongly anchored and owned by the respective

organisations – the programme support will be conditional of being additional or innovative

and should not be stand-alone interventions. In other words the support should be demand-

driven, and the programme should as appropriate stimulate demand. This overall approach to

support provided under the programme should ensure that all interventions supported are

initiated with a clear exit strategy in place and focussing on capacity building and

sustainability from the outset. In other words: private sector initiatives should only be

supported if it is justified that the initiatives are likely to be continued on a commercial basis

after the support will come to an end (or financed through member fees and other realistic

sources). Support to the MDAs should only be provided if it is likely that the interventions

can be followed up (a legislation will be enforced and a road will be maintained) through

public funding (or other realistic sources).



12

UNNATI is designed for a five-year period. It is representing the launch of a new

intervention in Nepal with a significant investment from the Danish as well as the Nepalese

side. The five year period will be used to establish the programme management and

implementation structures and to establish working relationships with a broad spectrum of

partners and to gain practical experience with the approaches and methodologies developed

in the component descriptions. Hence, the lessons learned from the first five years of

operations should be documented and serve as the basis for considering a possible new phase

of the programme after 2018. This option should be examined by the joint mid-term review

of the programme tentatively scheduled to take place in 2016.

4. Intermediate and Immediate Objectives

UNNATI Programme contains three components each with its own intermediate objective.

Each component comprises two sub-components each with their own immediate objective.

Under each sub-component a number of outputs and associated activities are defined. The

three components and their sub-components are briefly described in the following sections

and are further elaborated in detailed component descriptions that are three stand-alone

documents.

4.1 Component 1: The Value Chain Component

The rationale for the component is that agriculture is the most significant economic sector in

Nepal and the market linkages are weak, which contributes to poor access to markets, high

transaction costs and low value addition to farm produce. Agro-based MSMEs play a crucial

role in backward linkages with smallholder business-oriented farmers thereby linking them

with input supplies and with the market. Hence, linking the more business oriented farmers

and their organisations to micro and small agro-based businesses enterprises with respect to

input provisioning, contract farming, marketing, processing and packaging of agricultural

produce will facilitate the process of commercialising smallholder farming. It will enhance

the establishment of effective business systems linking the farmers and their organisations to

buyers and consumers. By developing the agricultural sector and its linkages with

agribusiness and the market, will not only consolidate its important role in the economy but

will further develop it by diversification and expansion and thereby offer sustainable

employment opportunities in the rural areas as well as along the processing and marketing

systems in rural and urban areas. Rural financial services are inadequate, which contributes to

low investments in agricultural production and in agro-based micro and small enterprises. To

promote the availability of appropriate rural financial services, financial services will be

supported by the programme for financing – working capital as well as assets financing - for

the MSME and agro-based enterprises and supported as appropriate with technical assistance

and training. This component is considered the core component of UNNATI with the two

other components being supporting components addressing critical constraints identified

under this component.

The intermediate objective of the component is: Sustained improvement in competitiveness of

selected value chains.

The component comprises two sub-components with the following immediate objectives and

main outputs:

Sub-component 1.1: Commercialisation of Value Chains. The immediate objective is

improved commercialisation of selected value chains. As an opening portfolio, three value

chains will be supported with the following main outputs:

Value Chain 1: Orthodox tea



13

o Output 1.1.1.1: Farmers increase yields and quality of green tea through

establishment of tea sapling nurseries, training of farmers on better cultivation

practices and through the establishment of local soil-testing facilities

o Output 1.1.1.2: Farmers get higher prices through increased supply of organic inputs

and through support for organic certification.

o Output 1.1.1.3: Processers get better quality tea through support to establishment of

collection centres.

o Output 1.1.1.4: Processors improve quality of tea going to the market through

increased number of qualified local tea technicians, increased use of better technology

and improved supply of equipment maintenance

o Output 1.1.1.5: Orthodox tea exporters increase exports through direct marketing

support, promotion of Nepali Orthodox Tea, improved, locally produced packaging

and support to establishment of a tea warehouse

Value Chain 2: Ginger

o Output 1.1.2.1: Farmers increase yields through improved input supply of seeds,

compost, bio-fertilizers as well as through applied research in disease control;

o Output 1.1.2.2: Farmers get higher prices for ginger through establishment and

utilization of storage pits;

o Output 1.1.2.3: Quality of ginger to market improves as a result of establishment and

operation of collection centres and better packaging for ginger transport;

o Output 1.1.2.4: Processers increase value added from ginger through the

establishment of private ginger processing businesses that develop new products and

uses new technology;

o Output 1.1.2.5: Traders get higher prices as a result of establishment and operation of

a ginger warehouse to be used by members of enterprise- or traders associations.

Value Chain 3: Dairy

o Output 1.1.3.1 Farmers increase milk yields and quality through increased supply of

AI services, improved forage and fodder for dairy animals and improved dairy shed

management;

o Output 1.1.3.2: Dairies get better quality milk through improvement of equipment and

practices at collection/chilling centres;

o Output 1.1.3.3: Small dairies increase productivity through capacity development and

machine and equipment upgrading;

o Output 1.1.3.4: Dairies increase value added and sell more. Based on applied research

on new products and markets, the dairies will develop new products and market new

products in new markets.

It is envisaged that one or two additional value chains will be included in year 2.

Sub-component 1.2: Access to Finance has the following immediate objective: Improved

access to and use of a range of financial services by rural households and MSMEs.

The sub-component has the following main outputs:

o Output 1.2.1: Deepened financial services for smallholder farmers and MSMEs

(focus on improving product value proposition by developing and offering

appropriate financial products that meet the financial needs of smallholder farmers



14

and MSMEs supplemented by strengthening of their financial capabilities to make

best use of the financial services on offer)

o Output 1.2.2: Improved capacity of financial institutions (focus on strengthening the

management systems and skills needed by financial institutions to take new products

to market and to manage banking operations sustainably)

o Output 1.2.3: Broadened Financial Services for Smallholder farmers and MSMEs)

(focus on establishment of branches and agent networks needed to take new products

to market)Implementation arrangement and partners; A consortium comprising local

and international experience in similar programmes will be engaged through

international competitive bidding as the management contractor of sub-component

1.1 (as well as of component 2). The management contractor will utilize a number of

modalities for managing the sub-component including a value chain development

fund for provision of grants. In addition the management contractor will have access

to funds for technical assistance, facilitation and networking, training, capacity

development, research and possible other modalities to be defined. Most support will

be provided through private and public service providers. The beneficiaries of the

sub-component will be the primary actors within each value chain including:

commercial, semi-commercial and subsistence farmers with a commercial potential as

well as producers’ and commodity associations and MSMEs. Beneficiaries will

mainly access support on a competitive basis.

Implementation of sub-component 1.2 will be delegated to UNCDF who has vast experience

in implementing similar programmes in Nepal. The direct partners of UNCDF will be Nepal

Rastra Bank and the Access to Finance will be implemented through National

Implementation Modality (NIM) where other partners include banks and micro finance

institutions. Most support will be provided through service providers, and beneficiaries of the

sub-component and the modalities available for UNCDF to manage the sub-component are

similar to those mentioned for sub-component 1.2 including a challenge fund.

For further details see Component Description for Component 1.

4.2. Component 2: The Infrastructure Component

The rationale for the component is that Nepal’s road network is less developed than that of

other countries in the region and the general rural infrastructure is inadequate and

underdeveloped in terms of market places, storage facilities and productivity enhancement

facilities. At the district and village level, the quality of the road network is poorer. The

unreliability of the transport network affects the timely movement of people and goods and

delivery of services. Post-harvest losses are high due to lack of appropriate road network and

of marketing and storages facilities. The main justifications for external support under the

component are low capacity, particularly at district level, leading to weaknesses in planning,

lack of local, targeted investment, lack of attention to maintenance and lack of a specific and

consistent focus on inclusive growth. These are the main underlying causes of poor and

missing infrastructure in the selected value chains.

The intermediate objective of the component is sustained improvement of rural

infrastructure. The component comprises two sub-components with the following immediate

objectives and main outputs:

Sub-component 2.1: Rural Transport Infrastructure. The immediate objective is

improvement of rural transport infrastructure. The main outputs are:



15

o Output 2.1.1 Improved rural transport infrastructure (RTI) including motorable roads,

motorable bridges, foot trails, trail bridges and gravity ropeways.

o Output 2.1.2 Enhanced local capacity to identify, plan, develop and maintain RTI.

o Output 2.1.3 Established systems, procedures and resources for maintenance of RTI.

Sub-component 2.2: Public Market-Related Infrastructure. The immediate objective is

improvement of public market-related infrastructure. The main outputs are:

o Output 2.2.1: Provision of more and better collection centres, storage facilities and

market place facilities for the value chain products.

o Output 2.2.2: Enhanced local capacity to identify, plan, develop and maintain

collection centres, storage facilities and market infrastructure including small

community irrigation systems;

o Output 2.2.3: Established systems, procedures and resources for maintenance of the

collection centres, storage facilities and market infrastructure.

The implementation arrangement and partners for this component will be the local

government authorities in the programme districts supported by the Ministry of Federal

Affairs and Local Development and the Department of Local Infrastructure Development and

Agricultural Roads (DoLIDAR). Responsibility for implementation will be with these

partners. Day-to-day support will be provided by a Management Contractor appointed by

Danida and based in the programme districts. The component will complement activities

supported under the Value Chain Component and will adopt a district-based focus. Support

to development and maintenance of rural infrastructure will address connectivity, post-

harvest losses, market access and productivity enhancement. Funding will be based on annual

plans prepared by the respective local government units and will leverage local development

funding. The programme will promote labour intensive construction methods and also

support local governments in quality assurances and financial control of the works

undertaken. Design standards will promote road safety and minimise the effects of climate

change e.g. adverse weather conditions may cause more landslides in the hilly areas.

Initially, Danish funds for the component’s infrastructure improvements under the DDCs will

be transferred directly into a ring-fenced, non-freezable16

bank account in the DTOs’ offices

via the District Development Fund in each programme district. The account will be operated

by joint signatories of the Management Contractor and the District Technical Officer. At a

later stage and subject to a joint Government of Denmark and Government of Nepal review,

the flow of funds may be changed to a single periodic transfer from the Danish Embassy to

central Government of Nepal authorities that would then transfer the funds to the programme

districts. The exact details of this would be decided by the joint review.

For further details see Component Description for Component 2.

4.3. The Enabling Environment Component

Inclusive growth figures prominently on the Government’s agenda, as just a fraction of the

more than 300,000 new entrants to the labour market every year are able to find employment

in the formal sector. Private business together with government and the cooperative sector

are considered the engine of inclusive growth and employment.

The Enabling Environment Component is designed to address macro- and meso- level policy

challenges pertaining to the inclusive growth. These include: (i) a need for improvement of

16

Government funds not spent by 15 July of the fiscal year will have to be returned to the central government Treasury



16

the business environment. Inclusive growth and job creation in the long term will come from

a better investment climate and private sector-led growth; (ii) absence of a comprehensive

policy and strategy for development of the private sector; (iii) insufficient infrastructure,

inadequate labour skills and continuous labour unrest, restrictive labour relation, political

instability; (iv) a public-private dialogue based on presumptions rather than accurate

knowledge; and (v) district plans reflecting the lobbying ability of various local interest

groups rather than the economic potential of the particular district.

By addressing policy challenges related to the pattern and pace of economic growth, the

component contributes to achievement of the Government’s desire to provide even

opportunities for all groups of society regardless of their gender, ethnicity or religion.

The intermediate objective of the component is “Sustained improvement in the enabling

environment”. The Enabling Environment Component comprises two sub-components:

Sub-component 3.1: Public-private dialogue

The immediate objective of sub-component 3.1 is “Enhanced public private dialogue for

improved policy and regulation”. The sub-component will be implemented by Nepal

Business Forum and has the following outputs

o Output 3.1.1: Enhanced public private dialogue (Nepal Business Forum – including

Eastern Region Business Forum) for improved policy regulation.

o Output 3.1.2: Regulations focusing on reducing the economy wide regulatory

constraints, for starting and operating businesses, and addressing sector specific

regulatory constraints are improved.

Sub-component 3.2: Advocacy for Responsible Business. The immediate objective is

improved advocacy for responsible business including rights and good corporate

governance. The sub-component will be implemented by an Advocacy Fund Manager and

has the following main outputs:

o Output 3.2.1: Building capabilities for advocacy and dialogue: Selected private sector

organisations (business associations, commodity associations, labour unions and civil

organisations) in target districts and beyond are actively engaged in advocating the

interests of their members.

o Output 3.2.2: Promoting sustainability: Selected private sector organisations become

financially, managerially and technically sustainable and are able to provide services

to their members.

o Output 3.2.3: Promoting broad public awareness of the importance of responsible

business including rights and corporate governance issues.

The activities under sub-component 3.2 will be implemented through an Advocacy Fund with

three “windows” reflecting the three outputs.

The implementation arrangements and partners include the opportunity to collaborate with

existing programmes concerning sub-component 3.1, namely the NICRP programme

implemented by IFC. The NICRP supports further development of the Nepal Business

Forum for policy dialogue in support of private sector development. While IFC continues to

provide technical support to NBF, UNNATI programme will directly support NBF in making

it a sustainable institution to promote public-private dialogue. NBF will also provide support

to various sections of Ministry of Industry and other relevant GoN agencies on regulatory

reforms on specific agenda discussed at NBF. A challenge fund to support evidence-based



17

policy dialogue and capacity building of business associations, labour unions, CSOs etc. will

be managed by an Advocacy Fund Manager. Beneficiaries are envisaged to include district

chambers of commerce and industries, labour market organisations as well as producers’ and

commodity associations in field of evidence-based advocacy work and capacity building.

For sub-component 3.1 the Danida supported activities will be part of Nepal Business Forum

annual work plan. NBF is currently supported by a larger IFC programme, NICRPIII

supported by other development partners. The first phase of the programme was designed in

the immediate post conflict period to help build consensus for reform and to support

economic growth and job creation. It was expected that Nepal’s peace process would be

completed early, while a new constitution would be promulgated by May 2010, the original

deadline set by the Constituent Assembly. Both the peace process and the constitution

writing process remain incomplete and as a result of this political uncertainty, legal changes

have been stalled. The establishment of the Nepal Business Forum through a GoN executive

order has provided an opportunity to work towards necessary legal changes conducive to

private sector development. GoN has allocated office space for the Secretariat within the

Industrial Enterprise Development Institute building, Kathmandu. A number of issues have

been taken up in the NBF including improvement of customs working hours, launching of an

informational license e-portal comprising information on 130 licenses, establishment of a

business registration system and many other issues. Also a number of working groups have

been set up and most of them are well functioning. UNNATI will support the continuation of

these efforts and in addition put emphasis on regional issues related to the Eastern Regional

Business Forum. As appropriate, business environment issues related to improvement of the

three UNNATI supported value chains will be taken up in the NBF and the ERBF and in the

concerned working groups.

At present NBF does not have a full-fledged secretariat and operational guidelines. GoN is in

the process of making NBF a sustainable institution and has requested the support of Danida

in this endeavour. A capacity assessment of NBF will be done as soon as the UNNATI

programme agreement has been signed. IFC has agreed to provide technical assistance in

making NBF sustainable.

For sub-component 3.2: The sub-component is designed so it complements the activities of

the NBF and the ERBF and provides support to business associations, Commodity

Associations, labour market organisations and other formal and informal organisations who

are related to the value chain development to assist them conducting evidence based

advocacy and provide good services to their members on a sustainable basis. Special

emphasis will be put on addressing responsible business issues including rights and corporate

governance issues in the policy dialogue.

There is a need for strong coordination between the activities of the two sub-components of

component 3, as the two sub-components will work in the same region and in some cases

with the same PSOs who may apply for support through both programmes. During the

Inception Phase there is a need for the Advocacy Fund Manager and NBF to agree on how

best to coordinate interventions and omit overlaps. It is also expected that the two sub-

components will consider supporting advocacy and policy issues identified during

implementation of component 1 and 2.

For further details, see the Component Description for Component 3.

5. Specific measures to address other issues

UNNATI will include a number of cross-cutting thematic areas such as skills development,

industrial relations, security and stability and good governance. In terms of gender and youth



18

the programme will work to identify and overcome gender and youth-based constraints that

hinder their effective participation in value chain development and in benefitting from

inclusive growth and as such being able to improve their living conditions and realise their

rights. This focus is driven by the assumption that these groups are capable, yet they are

currently unable to contribute and benefit from the agricultural and rural development, a

situation that contributes to poor performance of the economy. Thus, addressing these

constraints will ensure more effective and efficient performance of the economy in general

and in particular the rural economy and by creating good jobs maintain the labour force in

rural productivity in Nepal. Reference is made to the Gender Rolling Plan in Annex 6.

The Eastern Development Region is perhaps the most socially diverse region of Nepal. It

counts more than 100 groups (castes, ethnic and sub-ethnic groups); and more than 28

languages are spoken in the region. The poverty incidence in the programme districts ranges

from minimum 34% (Ilam) to a maximum of 56% (Paanchthar), which is higher than the

national poverty incidence (25 percent as per NLSS 2009/2010). Similarly, the UNDP Nepal,

Human Development Report, 2009 indicates that in the mountain districts of the EDR the

poverty index is 38% and 34% in the hill districts. This reflects that the programme districts

have a higher poverty incidence than the national average. Besides vertical and horizontal

inequalities, the area has a long history of resistance along ethnic lines. Even the occupation

and household level economic activities are based on ethnicity, religion and tradition. For

example, commercialisation of dairy is prominent among the Brahmins and Chettri groups,

whereas the Janajatis (Limbus and Rais and others) raise livestock for manure and household

consumption. Even in the livestock sector, the Janajatis are primarily engaged in pig poultry

rearing for household consumption. This social stratification (vertical and horizontal)

requires a careful and thorough analysis in order to make the programme inclusive and attain

economic growth in real terms. These issues have been further elaborated in the socio-

economic studies prepared for all districts17

. The challenges identified in these studies will be

factored into the implementation modalities and monitored by the management contractor.

The technical assistance staff will be capacitated in understanding and monitoring these

potential conflict areas.

Sound environmental and natural resource management is another cross-cutting concern of

the programme. The programme will ensure that value chain development not only “does-no-

harm” but upgrades degraded local ecosystems where possible. Development of agricultural

and agribusinesses is closely linked to environmental issues including natural resource

management with the potential conflict between increased agricultural production and

protection of natural resources. The environment is negatively affected by the fact that

electricity grid is mainly limited to urban areas and the supply is erratic and consequently

most MSMEs therefore rely on diesel generators. This is not only costly for the MSMEs –

negatively affecting the competitiveness, but the generators also pollute and contribute to the

CO2 emission. Pilot projects for renewable energy may be supported by the programme in

close collaboration with the Danida supported NRREP programme. The use and application

of pesticides and chemicals is another environmental concern - importation, labelling and

handling of pesticides and chemicals must be properly regulated. This poses a potential

health hazard and environmental risk and is exacerbated by many illiterate farmers not

knowing how to handle them properly. It is also a concern that pesticides and chemicals may

be marketed in shops next to foodstuff. The programme will support the management of

input supplies including awareness raising, training and education of farmers, entrepreneurs

and stockists. Support to agriculture and agribusinesses will be subject to a positive

environmental screening by the programme and major investments and construction works

17

Consolidated Summary of the Findings for the Seven Hill Districts in East Nepal, IDA May 2013



19

will be subject to environmental impact assessment in accordance with the requirements of

the Ministry of Environment– this will also apply to MSME lending by the partner banks.

The programme will extend support to organic18

as well as non-organic farming, but from the

environmental perspective, the organic farming will have fewer negative environmental

effects, as it does not make use of either chemicals or pesticides, as it promotes diversified

crop rotation and management at the household levels and thus also provides for food

security and resilience against weather fluctuations. Major infrastructure projects funded

under the programme will be subject to environmental impact assessments in accordance

with government regulations. Reference is made to the Environmental Screening Note in

Annex 7.

Private sector actors participating in the programme such as financial institutions, business

associations, contractors and enterprises will, as appropriate, be required to comply with the

UN Global Compact 10 principles19

. The appreciation and adherence to these principles will

also be actively promoted through the challenge fund under Component 3:

UN Global Compact 10 Principles

Human Rights Principle 1: Businesses should support and respect the protection of

internationally proclaimed human rights; and

Principle 2: make sure that they are not complicit in human rights

abuses.

Labour Principle 3: Businesses should uphold the freedom of association and the

effective recognition of the right to collective bargaining;

Principle 4: the elimination of all forms of forced and compulsory labour;

Principle 5: the effective abolition of child labour; and

Principle 6: the elimination of discrimination in respect of employment

and occupation.

Environment Principle 7: Businesses should support a precautionary approach to

environmental challenges;

Principle 8: undertake initiatives to promote greater environmental

responsibility; and

Principle 9: encourage the development and diffusion of environmentally

friendly technologies.

Anti-Corruption Principle 10: Businesses should work against corruption in all its forms,

including extortion and bribery.

18

Support will mainly focus on organic tea as it is enjoying the highest export potential, especially in Europe 19

The UN Global Compact's ten principles in the areas of human rights, labour, the environment and anti-corruption enjoy

universal consensus and are derived from: i)The Universal Declaration of Human Rights; ii) The International Labour

Organization's Declaration on Fundamental Principles and Rights at Work; iii) The Rio Declaration on Environment and

Development; and iv) The United Nations Convention Against Corruption

(http://www.unglobalcompact.org/aboutthegc/thetenprinciples/index.html)

http://www.unglobalcompact.org/aboutthegc/thetenprinciples/principle1.html

http://www.unglobalcompact.org/aboutthegc/thetenprinciples/Principle2.html


http://www.unglobalcompact.org/aboutthegc/thetenprinciples/Principle4.html







http://www.un.org/Overview/rights.html

http://www.ilo.org/public/english/standards/decl/declaration/text/

http://www.ilo.org/public/english/standards/decl/declaration/text/

http://www.un.org/esa/sustdev/agenda21.htm

http://www.un.org/esa/sustdev/agenda21.htm

http://www.unodc.org/unodc/en/treaties/CAC/index.html



20

6. Budget

The indicative budget for UNNATI is shown in the table below. Detailed budgets can be

found in the respective component descriptions. It should be noted that the Management

Contractor and the Advocacy Fund Manager will be recruited through international tenders,

and the costs for these services will only be known after the tender processes are finalised.

Hence, some adjustments in the programme may be made before final agreements with the

implementing partners can be entered - after UNNATI has been finally approved by the

Danish appropriation authorities.

It is envisaged that the amount provided under “unallocated funds”, could be used for

inclusive growth policy development interventions, if the political environment is adequate

for such initiatives at a later stage. Alternatively it could be used for adding another value

chain into sub-component 1.1. This should be considered during implementation year 2.

An overview of budget is provided in the table below:

Development Objective: Promotion of sustainable inclusive growth to reduce poverty and raise living

standards

Component Implementing

Partner

Year 1 Year 2 Year 3 Year 4 Year 5 Total

C.1. The Value Chain Component

Intermediate objective: Sustained improvement in competitiveness of selected value chains

C1 Budget 21.3 24.6 24.5 23 11.6 105.0

Subcomponent 1.1:

Commercialisation of

selected value chains

M.C. 8.0 17.0 17.0 17.0 6.0 65.0

Subcomponent 1.2:

Access to finance

NRB with support

from UNCDF

13.3 7.6 7.5 6.0 5.6 40.0

C.2: The Infrastructure Component

Intermediate objective: Sustained improvement in rural infrastructure

C2 Budget 16.9 42.1 45.0 45.0 41.0 190.0

Subcomponent 2.1:

Rural transport

infrastructure

DDC/DTO/DoLIDAR 14.6 37.9 38.5 38.7 36.3 166.0

Subcomponent 2.2:

Public market – related

infrastructure

DDC/DTO/DoLIDAR 2.3 3.2 3.5 3.3 2.7 15.0

Contingency 1.0 3.0 3.0 2.0 9.0

C 3. The Enabling Environment Component

Intermediate Objective: Sustained improvement in the enabling environment

C3 Budget 6.5 7.6 7.4 7.2 6.3 35.00

Subcomponent 3.1:

Public private dialogue

for improved policy and

regulations

Nepal Business

Forum

3.2 3.4 3.1 3.0 2.3 15.0

Subcomponent 3.2:

Improved advocacy for

rights and good corporate

governance

Advocacy Fund

Manager

3.3 4.2 4.3 4.2 4.0 20.0

Technical Assistance (EoD) 11.0 6.0 6.0 6.0 6.0 35.0

Reviews, M&E, Research (EoD) 2.8 2.8 4.0 4.0 4.7 18.3



21

Unallocated Funds (EoD) 4.7 4.0 4.0 4.0 16.7

Total Budget 57.8 87.9 91.1 88.9 74.3 400.0

Detailed budgets are provided in the three components descriptions.

7. Management and Organisation

Support to an inclusive growth and value chain programme comprises a large number of

intervention areas. It is cutting across various sectors including agriculture, trade and

commerce, industries, infrastructure, energy, labour relations, skills development,

environment and possibly others. As such multiple actors from the private and public sector

will directly or indirectly be engaged in the activities supported by the programme. And

obviously quite a number of programmes and projects supported by development partners are

targeting similar interventions as well. The activities supported by UNNATI will be

implemented by a mix of public and non-public actors and in coordination with a number of

development partners as illustrated in the figure below. Ministry of Agriculture Development

will be the lead agency of the programme, and will chair the Programme Steering Committee

and the Management and Coordination Committee.

The management structure is illustrated in the figure overleaf. The main features of the

management structure are as follows:


The Programme Steering

Committee decides on the

overall priorities of the

programme in accordance

with the programme

document, government

programme agreement, and

other legal documents.

Where major deviations

from the programme

document are considered

necessary, the steering

committee makes the

decisions. The committee

cannot alter overall

programme objectives, but

may recommend changes in

immediate objectives. The

mandate of the Programme

Steering Committee

includes decisions regarding

major implementation issues. The Steering Committee will be chaired by Secretary of MoAD

and representatives from Ministry of Finance and the Embassy of Denmark will be members.

It is envisaged that the committee will meet twice a year – in May in advance of the

Government of Nepal’s fiscal year and in November in advance of the Danish fiscal year.

Ad-hoc meetings may be called. The Danish Embassy will function as secretariat to the

Programme Steering Committee.



22

The Chairperson of the Management and Coordination Committee will report to the

Programme Steering Committee and present consolidated progress reports including

consolidated M&E reports specifying major achievements and impact according to

programme level indicators as well as bring to the attention of the committee any deviations

from plans or other important implementation issues. The members of the Programme

Steering Committee may want to hold internal consultations with relevant stakeholders prior

to the meetings in order to solicit comments and views on programme related matters

included in the agenda. The PSC members may want to consult on special issues with

relevant government ministries and agencies and other development partners. In special cases

they may also want to invite resource persons/stakeholders to address a specific issue on the

agenda in order to clarify issues or offer specialised expert knowledge to the discussion.

Management and Coordination Committee

The Management and Coordination Committee is responsible for the management of sub-

component 1.1 and of sub-component 3.2. In addition, the committee will have the

responsibility of coordinating the three components and ensuring that they are mutually

reinforcing and contributing to the programme objective in a coherent manner as discussed

earlier in this document. This committee will, furthermore, be responsible for overseeing the

performance of the Management Contractor and the Advocacy Fund Manager.

The committee will meet on a quarterly basis. The meetings in advance of the Government of

Nepal’s fiscal year and of the Danish fiscal year will take place before the meetings of the

Programme Steering Committee. At these meetings a consolidated progress report covering

the entire UNNATI programme will be presented to the committee. The report will be

consolidated by an independent MRM Coordinator and comprise a presentation of progress

versus plans of all sub-components including an analyses of achievements according to the

ERBF

DECISIONS

ENDORSEMENT

CONSULTATION/INFO

D1-D7: 7UNNATI DISTRICTS

SUB

CO

MP

1.1

SUB

CO

MP

1.2

SUB

CO

MP

2.1

SUB

CO

MP

2.2

SUB

CO

MP

3.1

SUB

CO

MP

3.2

PROGRAMME STEERING COMMITTEE

MANAGEMENT AND COORDINATION COMMITTEE M & E

NRB

MC

DOLIDARR MC NBF AFM

IFC UNCDF

INFRASTRUCTU

RE COMMITTEE

MC

AFM

D1 MC D2 MC D3 MC D4 MC D5 MC D6 MC D7 MC

OR

THO

DO

X T

EA –

VC

STA

KEH

OLD

ER F

OR

UM

GIN

GER

– V

C S

TAK

EHO

LDER

FO

RU

M

DA

IRY

– V

C S

TAK

EHO

LDER

FO

RU

M



23

indicators. The analyses will comprise suggestions for improvements, possible coordination

of interventions between the various sub-components, etc.


Mandate and scope:

Responsible for the management of sub-component 1.1 and sub-component 3.2.

Coordinates the three components and their activities.

Oversees the performance of the management contractor and the Advocacy Fund Manager.

Monitors – outputs, outcomes and impact at programme level

Oversees the financial management system and annual audits.

Consolidates work plans, budget, financial/progress reports and audit reports.

Recommends on reallocating of budget between the components.

Recommends on use of unallocated funds.

Decides on major implementation issues – procurement, TA, studies at programme level.

Members: Chairpersons of the value chain forums (3), the Embassy of Denmark, Chairperson of the

Infrastructure Committee, representatives from Nepal Rastra Bank and UNCDF, representative from

Advocacy Fund manager, Representative from Ministry of Industry and two prominent private sector

persons (representatives from Eastern Region Business Forum and Commercial Agriculture Alliance)

chaired by Ministry of Agriculture Development.

Secretariat: MoAD with support from an independent MRM Coordinator.

Reporting: The MCC Chair reports to the PSC

Management of Components and Sub-components

The three components are very different in nature, and therefore the management and

coordination of activities within each component and sub-component will be different. The

MCC is overall responsible for the management of sub-components 1.1 and 3.2. An

Infrastructure Coordination Committee (ICC) will have overall responsibility for the strategic

management for component 2 while UNCDF will follow National Implementation Modality

decision making procedures. However, all reports, work plans and budgets will be presented

to the Management and Coordination Committee for endorsement, meaning that MCC will

ensure that all plans and budgets are mutually reinforcing and contributing to the programme

objective in a coherent manner.

Component 1: The management contractor will be responsible for facilitating

implementation of the activities under sub-component 1.1, while UNCDF will be responsible

for sub-component 1.2. The activities should be planned according to the binding constraints

and opportunities within the three value chains. Therefore, a consultative stakeholder forum

will be established in each value chain. Representatives of each stakeholder forum should be

key primary actors, service providers, business associations and relevant Government

organisations within the respective value chain. Meetings in the stakeholder forums will be

held every six months to provide comments and inputs to reports, plans and budgets. The

management contractor will, in close collaboration with UNCDF, be responsible for

arranging these forums. The management contractor will consolidate plans and budgets

concerning activities within the selected value chains (sub-component 1.1). These plans and

budgets will be approved by the Management and Coordination Committee. UNCDF will

identify needs for financial services and incorporate these in plans and budgets that will be

approved within UNCDF’s own governance structure. UNCDF’s plans and budgets will be

presented to the Management and Coordination Committee for endorsement to ensure that



24

plans are well coordinated with other programme interventions and that they are contributing

to achieving the programme objectives.

Component 2: An Infrastructure Coordination Committee (ICC) will have overall

responsibility for the strategic management of this component. This will be the formal

decision making body for most component issues e.g. component work plans and budgets.

The ICC will also be responsible for the overall monitoring of the outputs, outcomes and

impacts of the component and for financial management and control. The ICC will report to

the Management and Coordinating Committee who will endorse plans and budgets to ensure

that plans are well coordinated with other programme interventions and that they are

contributing to achieving the programme objectives. Details concerning composition of

membership of the ICC and day-to-day activities are elaborated further in the component

description for component 2.

Component 3: NBF will be responsible for implementing interventions under sub-

component 3.1 while an Advocacy Fund Manager will be responsible for implementing

interventions under sub-component 3.2. For sub-component 3.1 NBF will prepare plans and

budgets following the procedures defined in its operating guidelines, which are currently

being worked out. Finally, plans and budgets for sub-component 3.1 will be presented to the

MCC for endorsement. For sub-component 3.2 the Advocacy Fund Manager will prepare

plans and budgets and present them to the Advocacy Board. Plans and budgets

recommended by the Advocacy Board will subsequently be approved by the MCC. Specific

decisions on supporting advocacy projects will be made by the Advocacy Board. The Board

will have five members, of which one should represent the Embassy. The remaining four

members are appointed by the Management and Coordination Committee. The members

must have a solid knowledge of the business environment in Nepal including the responsible

business agenda, the situation of private business in the country, and the international

discussion on good corporate governance and issues related to business and human rights. It

is envisaged that the NBF and the Advocacy Fund manager will participate in the meetings of

three value chain stakeholder forums to understand the needs of the three value chains. The

MCC will ensure that plans are well coordinated with other programme interventions and that

they are contributing to achieving the programme objectives.

Coordination at District Level

The management contractor will ensure that appropriate management and coordination

mechanisms are established in each district of the programme. The purpose of these

mechanisms will be to enhance a close interaction and working relationship with not only

private partners, but also with relevant government officials from ministries and departments

such as agriculture, roads, cooperatives, commerce etc. In order to further ensure local level

coordination with relevant programmes, the management contractor will report periodically

on the progress and activities to District Development Committee, District Agriculture

Development Office and District Livestock Services Office, District Chamber of Commerce

and Industry (DCCI) and other relevant stakeholders at the district level. The issues discussed

will be brought to the sub-components as appropriate. The mechanism may differ from

district to district depending on local conditions and priorities.

More details of the management structure of each component and sub-component is provided

in the component descriptions. Detailed terms of reference for the Programme Steering

Committee can be found in Annex 4 and for the Management and Coordination Committee

in Annex 5.

Implementation Arrangements



25

Since the programme has multiple partners, the implementation arrangement is designed

according to the partner and the nature of the component. The management contractor will be

responsible for day-to-day implementation of sub-component 1.1 (commercialisation of

selected value chains). This is the preferred option, as a single host cannot be identified for

these interventions. The advantages of using a management contractor are that the

management of programme implementation will be delegated to a single entity including

management of technical assistance. A concern is the institutionalisation of the support

provided. This concern will be addressed by building capacity in partner organisations and

focus on their sustainability (see also Section 3.4 Exit Strategy). The opportunity has been

exploited to provide support through programme being implemented by other development

partner such as UNCDF in sub-component 1.2 on Access to Finance. This will further

streamline the programme implementation, enhance donor coordination and harmonisation,

and reduce transaction costs. This will allow the programme to benefit from institutional

arrangements already in place and to build on existing experiences. The whole of component

2 on infrastructure will be implemented by the seven district level local governments with

technical support from the management contractor. Nepal Business Forum will implement

sub-component 3.1 on public private dialogue, where IFC is already providing technical

support. Danida will fund the annual plan of Nepal Business Forum and will work towards

making the Forum a sustainable institution. Close cooperation with IFC’s Nepal Investment

Climate Reform Programme is anticipated. An Advocacy Fund Manager will be contracted to

manage the Advocacy Fund (sub-component 3.2). In its nature an advocacy fund shall be

managed by an independent entity in order to omit conflicts of interest. Danida is supporting

advocacy funds in several countries and the design of the advocacy fund for responsible

business is building on the experience from this support.

8. Financial Management and Procurement

UNNATI will be implemented through partnerships with both the public and private sector

institutions. Different modalities for organising financial management will be adopted for the

different institutions. Funds will be reflected in the fiscal budgets of the Government of

Nepal – the Red Book – as direct payment in order to capture the inflow of development

assistance into the country. Two mainstreams of funding modalities will be applied by the

programme: one for public infrastructure funding and support to Nepal Business Forum

which is a common forum of both public and private sector actors and one for other

programme support e.g. funding through other development partner like UNCDF, the

management contractor and the advocacy fund manager. The two funding streams are

discussed in more detail in the subsequent sections.

8.1. Budgeting and Flow of Funds

Public Infrastructure

Public infrastructure is mainly funding of rural roads, bridges, ropeways, markets, storage

facilities and small-scale irrigation systems under component 2. The ultimate aim of the

component is complete alignment of the financial management and fund flows with the

Government of Nepal system. However, this will be achieved in phases to reduce the

fiduciary risks and gain experience of the local systems.

Following a review of district plans, an overall budget for support to public infrastructure

will be prepared by the management contractor in close collaboration with Department of

Local Infrastructure Development and Agricultural Roads (DoLIDAR), the programme

districts’ District Technical Officers (DTO) and other relevant implementing organisations.

This will be included in the Inception Report and will provide a framework for the annual



26

work plan and budgets. The overall budget will be updated periodically and reported in the

half-yearly reports.

Annual work plans will be drawn up for each programme district by the DTO and

consolidated into an annual work plan for the component by the management contractor

following the Government of Nepal’s fiscal year. To the extent possible, these work plans

will be based on existing Nepalese Government systems. However, activities and budgets

will be linked to the component’s sub-components and outputs.

Initially, the Danish grant funds for

public infrastructure at the district level

will be transferred directly from the

Embassy of Denmark to the programme

districts and deposited in dedicated bank

accounts at district level. These

accounts will be ring fenced for the

component activities only and the funds

would be not freezable at the end of the

Government of Nepal’s fiscal year.

Transfers will initially be quarterly but

later, and subject to satisfactory performance, may be changed to be on a trimester basis,

which is the normal government practice. Although the component funds will be kept

separate from other district funding, they will be budgeted and reported in the Government

budget and accounts in the same way as for other local government expenditure. Transfers

will be initiated based on written requests from the Government of Nepal’s Ministry of

Finance. This will be based on information provided by the districts and consolidated by

DOLIDAR with support from the Management contractor. The condition for transfer of the

funds will be:

o A pre-disbursement study conducted in each district by a recognised auditing

company contracted by the Embassy will have a positive assessment of accounting

systems and procedures before the first transfer is disbursed.

o Satisfactory financial reporting has been submitted on previous periods.

o No other accounts are unsettled with the same partner.

o There is an approved work plan and budget for the period to be financed.

o The quality of works carried out is satisfactory.

At a later stage and subject to a joint Government of Denmark and Government of Nepal

programme review, the flow of funds may be changed to a single periodic transfer from the

Embassy of Denmark to central Government of Nepal authorities who would then transfer

the funds to the programme districts. The exact details of this would be decided by the joint

programme review. Funds for capacity building, technical assistance and other activities not

directly related to district activities under this component will be paid directly by the

management contractor.

Non-public Infrastructure

UNCDF, NBF, the management contractor and the advocacy fund manager will develop

annual work plans and budgets for programme supported activities. It is the responsibility of

the Management and Coordination Committee to ensure that the work plans of the different

implementers are well coordinated and harmonised. The work plans and budgets will be

approved as mentioned earlier.

DanishEmbassy

Ministryof

Finance

DistrictDevelopment

Fund

ComponentAccount

ManagementContractor

Futurefunding

GoNtransfers Ini alfunding

Directfunding



27

Transfer of funds to UNCDF, NBF, the management contractor and the advocacy fund

manager will take place against the approved annual work plans and budgets. Requests for

release of funds will be submitted to the Embassy of Denmark on a half-yearly basis and will

be supported by a financial report on the utilisation of previous allocations and a cash flow

projection for the coming period. The funds will be transferred directly from the Embassy of

Denmark into dedicated bank accounts maintained by the respective organisations in the

name of the programme. The Ministry of Finance will, as appropriate, be informed about

such transfers.

8.2. Accounting

In general, the accounting procedures of partners in different sub-components will be

applied. Below is an overview of accounting system to be applied by different partners.

Management Contractor:

Accounting of programme funds will be the responsibility of the management contractor’s

Financial Controller. The management contractor’s Financial Controller will prepare an

accounting manual during the first six months of implementation of the programme, which

will be approved by the Embassy of Denmark. The accounting systems and procedures will

comply with internationally accepted accounting standards.

In respect of infrastructure funding, the accounting of all funds from the Component Account

(Component 2) with the District Development Fund and the DTO’s office will follow

Nepalese accounting procedures. Payments from the component account will be authorised

by two signatories – one from the District Technical Officer and one from the management

contractor. They will jointly be responsible for ensuring that works and services paid for

from this account have been satisfactorily delivered. For this purpose, the district authorities

will make available to the management contractor all component account bank statements,

vouchers and other relevant documents.

Accounting for non-infrastructure funding will be done in accordance with the

aforementioned accounting manual.


Funds will be managed according to the Danida Financial Management and Procurement

guidelines, which follow internationally recognised accounting and auditing principles. When

an application is approved the Fund Manager will disburse funds to the concerned

organisation or business service provider. The Fund Manager will monitor that funds are

utilised by the organisation/service provider that has received the support, whereas the

concerned organisation/service provider will be responsible for managing the funds. The

Fund Manager will prepare detailed budgets for each financial year to be approved by the

Management and Coordination Committee after recommendation from the Advocacy Fund

Board.

Other Partners

Financial management and accounting will be done in accordance with the systems and

procedures of the UNCDF in case of sub-component 1.2. Accounting procedures will have

to be developed by NBF. Ministry of Industry will be working for preparing the accounting

system along with guidelines for the secretariat of NBF. Danida funding to NBF is subject to

satisfactory development in this regard.



28

8.3. Procurement

Management Contractor and the Advocacy Fund Manager

Management contractor.

The Management contractor’s Financial Controller will prepare a Procurement Manual

during the first six months of implementation of the component, which will be approved by

the Embassy of Denmark.

Procurement of infrastructure works and services from the Component’s District Accounts

(Component 2) will follow the normal procedures for procurement of works by the District

Technical Offices except that:

o Only works approved in the annual plan will be procured, and

o The management contractor will provide a written no objection before contracts are

signed.

Larger, more complex procurements and decisions on any local procurement issues will be

referred to the Infrastructure Technical Committee for decision and approval. The

procurement of the works and services paid for directly by the Danish Embassy will be

organised by the management contractor in collaboration with DOLIDAR or other relevant

implementer.

Procurements for non-infrastructure funding will be done in accordance with the

aforementioned procurement manual.

Advocacy fund manager

Procurement will follow Danida’s rules.

Other Partners

Procurement will take place in accordance with the systems and procedures of the respective

organisation i.e. UNCDF and NBF.

8.4. Auditing

Management Contractor and the Advocacy Fund Manager

For each year of the programme, there will be an independent financial audit of the accounts

maintained by the management contractor in addition to the internal and external government

audits in terms of public infrastructure. Preferably, this will be combined with a technical

audit to provide a verification of both physical works and finances. A similar annual audit

will be carried out of the accounts of the Advocacy Fund Manager. These audits will be

commissioned annually by the Danish Embassy. Terms of Reference will be approved by the

Management and Coordination Committee.

The annual audit will include:

o Inspection of accounting records including examination of supporting documentation

of the transactions;

o Confirmation of cash and bank holdings including checking of bank reconciliation;

o Confirmation of accounts receivables;

o Verification of physical inventories and fixed assets;

o Examination of the procurement function; and



29

o Compliance with the programme’s accounting manual.

Other Partners

Auditing will take place in accordance with the systems and procedures of the respective

organisation e.g. UNCDF and NBF. The Embassy of Denmark will at the end of each

financial year receive an external audit report for the utilisation of the Danish financial

contributions. The external auditor shall be of an internationally acceptable standard and

approved by the Embassy of Denmark. The Embassy of Denmark or its appointed agent shall

have access to inspect all financial statements, accounting records and other documents

relating to activities and assets financed from Danish funds.

9. Results Measurement and Reporting at Programme Level

The monitoring and results measurement system for UNNATI has been developed both to

facilitate credible reporting of results to stakeholders and to foster learning that feeds into the

improvement of programme strategies and implementation. UNNATI is a new type of

programme for the Embassy of Denmark in Nepal. In addition, it is operating in a complex

and dynamic political, economic and social context. Thus, it is important that UNNATI has

an effective and practical monitoring and results measurement system that regularly channels

information on results into programme decision-making. There is no doubt that some

programme activities will not lead to expected results. At the same time, some activities may

lead to results that exceed expectations. The programme monitoring system must highlight

when activities are not leading to expected results and why, as well as when activities are

exceeding expectations and why. This information will help managers of implementing

partners, the Management and Coordinator Committee and the EoD to adjust activities,

strategies and portfolios to maximize long-term results from the programme. At the same

time, credible information on results will help EoD and Danida assess value for money from

the programme and feed lessons learned into other programmes. Thus, the monitoring and

results measurement system will not only measure results, but will also contribute to quality

assurance and results-based management.

The UNNATI monitoring and results measurement system will comply with the Donor

Committee for Enterprise Development Standard for Measuring Achievements in Private

Sector Development (DCED RM Standard). The DCED RM Standard is based on existing

good practice and outlines the minimum components of a credible and useful, internal,

monitoring and results measurement system.20

It provides a framework that will help to

ensure that UNNATI’s results measurement system is sufficiently robust both for

accountability and for management.

9.1. Results Framework

The foundation of the monitoring and results measurement (MRM) system is the programme

theory of change, presented in the figure below. This diagram shows how the programme

interventions contribute, through a series of intermediate changes, to sustainable inclusive

growth.21

The implementing partners – the MC, DDC/DTO/DOLIDAR, UNCDF, NBF and

20

For more information, see http://www.enterprise-development.org/page/measuring-and-reporting-

results 21

An “intervention” is a coherent set of activities that are designed to achieve a specific and limited

change. According to the programme LFAs, an intervention is generally a subset of an output.

http://www.enterprise-development.org/page/measuring-and-reporting-results




30

the Advocacy Fund Manager - in collaboration with other government and private

implementing organizations work with a sustainable “provider.” The “providers” are

permanent public or private players in the value chains and governance systems that

UNNATI aims to influence, for example agricultural input retailers or District Technical

Officers. As a result of the implementing organizations’ work with a provider, that provider

creates an opportunity for farmers, MSMEs and/or households to improve their performance,

by changing the way they behave. If farmers, MSMEs and/or household recognize the

potential benefits of the opportunity, then they take advantage of the opportunity and

improve their performance, for example increasing the yield of their crops or selling products

to a new market. This improvement in the performance of many farmers, MSMEs and

households increases their incomes and makes value chains more competitive, which

contributes to long-term, broad-based, sustainable and inclusive growth.

Sub-component results chains have been developed based on this theory of change and

summarized in an overall results chain. These are included in concerned Component

Description. These results chains show in more detail the specific changes expected as a

result of sub-component activities and how these changes will contribute to the overall

programme development objective of sustainable inclusive growth.

Logical Frameworks (LFAs) for the overall programme and for each component have been

developed. The LFAs summarize the results chains, providing specific objectives and key

indicators for the overall programme and for each component and subcomponent. Targets

have been developed for key indicators based on expert opinions, experience in other

programmes and projections of results using the above theory of change. The programme

LFA is included in Annex 1. The Component LFAs are included in the Component

Descriptions.

Throughout the programme, more detailed, intervention results chains, based on the

programme theory of change, will guide measurement to assess to what extent expected



31

results are happening. Information from these measurements will enable the programme to

identify ineffective interventions early and improve strategies to maximize results. Results

from the measurement of interventions and outputs will be aggregated in order to report

against the programme LFA, providing an overall summary of progress and results. This

summary will provide accountability to stakeholders as well as provide input into decisions

on the adjustment of key strategies and the overall programme portfolio.

9.2. Monitoring and Results Measurement

This section summarizes the programme monitoring and results measurement system. The

system is described in more detail in Annex 13.

The UNNATI monitoring and results measurement system is based on the following

principles:

o Thorough: The M&E systems will examine programme processes and results at

different levels and include regular monitoring of progress, annual reviews and

special studies to look at areas of particular interest.

o Integrated: The M&E systems will be integrated with the management and

implementation of the programme so that information gathering responds to the

decision-making needs of field staff and management, and results are used to inform

decision making at all levels of the programme.

o Timely: The M&E systems will support rapid learning and information-based

decision-making; information gathering and analysis will be appropriately timed so

that M&E outputs are available when decisions need to be made.

o Practical: The M&E systems will be manageable within the overall programme

structure and will be streamlined with operating procedures.

o Credible: To ensure the credibility of reported results, the M&E systems will draw on

thinking and methodologies developed by other programmes and codified in the

DCED Results Measurement Standard.

Monitoring Results

The MRM system has been designed based on existing good practice using the framework of

the DCED Results Measurement Standard. The MRM system is an integral part of

programme planning and management. The MRM system operates at three levels:

o Interventions: The MRM system helps implementing partners to think through

interventions before they implement them as well as feed information on results into

active management of interventions.

o Sub-components: The MRM system helps implementing partners to further develop

and improve subcomponent strategies and the balance of activities across the

subcomponent portfolio, based on information on results of interventions and the

changing context in Nepal.

o Programme: The MRM system aggregates the results of the subcomponents to

provide a summary of results for the programme as a whole. This helps the

Management and Coordination Committee to assess the overall progress of the

programme and work with the implementing partners to adjust the overall programme

strategy.

At the intervention level, the MRM system is based on a cycle of tasks as shown in the

diagram below.



32

Draw results chain: Before an intervention is implemented, the implementing partner will

articulate a detailed results chain, in line with the overall theory of change and the

subcomponent strategy, which shows how the intervention will contribute to the programme

development objective. Articulating results chains at this level helps managers think through

the details of the intervention, explicitly outline assumptions and plan for measurement of the

intervention.

Define indicators: For each expected change, the implementing partner will outline a

indicator. Some indicators will be standardized, based on the LFA indicators; others will be

specific to the intervention. A mix of quantitative and qualitative indicators will be used to

understand not only the extent of change but also assess the likely sustainability of change

and the reasons for change.

Project results: Based on existing information, supplemented if necessary by additional

information gathering, the implementing partner will estimate the expected results from the

intervention. This helps managers check whether the intervention is likely to sufficiently

contribute to results and fine tune the indicators.

Establish baseline: The implementing partner will establish the baseline for each of the

indicators in the results chain. In some cases, all information may already be known, but in

many cases, a small baseline study will be needed with those organizations and target farmers

or enterprises expected to benefit from the intervention.

Collect data: Based on a plan developed at the beginning of the intervention, information

will be gathered for each indicator as change is expected to happen at that level. This

generally means gathering information on changes among providers first, then among

farmers and/or enterprises. For some interventions, only one follow up measurement will be

needed. For others, several will be conducted to gather sufficient information on results.

Information gathering will also include methods to assess the extent to which observed

changes are plausibly due to programme activities. These methods include trend analysis,

comparing benefiting groups to national averages, quasi-experimental surveys and participant

opinion. The method chosen will depend on the intervention.



33

Analyse data: The implementing partner will analyse the data to estimate the change

attributable to programme activities. This process often involves triangulating data from

several sources to improve accuracy. Then, the implementing partner will assess the reasons

why results exceeded or fell short of expectations.

Use results: The programme team in each implementing partner will sit regularly, at least

twice per year, to discuss results to data and draw lessons learned. At these meetings, the

team will decide how to improve the implementation of individual interventions, the balance

of the subcomponent portfolio of activities and the overall subcomponent strategy. These

decisions will be summarized in adjustments to the intervention and subcomponent results

chains. The meetings will also inform adjustments to the current annual plan and the design

of the next year’s annual plan.

Report results: Each implementing partner will keep a database of plans and results for each

intervention, which will be updated regularly – at least twice per year. Once a year, the

implementing partner will aggregate results for their subcomponent(s). The aggregated

results, together with the analysis and use of the results will be summarized in the annual

plan.

The MRM system will also address the following issues:

Cross-cutting issues related to inclusivity: The MRM system will integrate monitoring of

four crosscutting issues related to inclusivity: gender, poverty, disadvantaged groups and

remoteness. The focus will be on two aspects: “do no harm” and monitoring the spread of

benefits among different groups. At the programme mid-term, a decision will be made

whether to take a more pro-active stance towards promoting inclusivity.

To ensure that interventions will “do no harm,” the implementing partners, with support from

the MRM Coordinator, will develop a checklist on the four issues. Every intervention will be

screened against the checklist before implementation. If the screening raises any concerns,

the intervention will be redesigned or, if the concerns are more moderate, indicators will be

added to the monitoring to check for negative impacts.

In order to proactively address inclusion, the implementing partners will build on their sub-

component designs, identifying specific ways they can have a positive effect on aspects of

inclusion. Subsequently, indicators to monitor the expected positive effects will be included

in the intervention monitoring.

In order to help understand the extent to which benefits from the programme are inclusive,

data on farmers will be disaggregated by gender, poverty status, disadvantaged groups and

location as much as possible and practical.22

In addition, implementing partners will carry out

regular qualitative information gathering to assess the impact of subcomponent activities on

these four issues, as well as other issues of inclusivity identified during the programme,

among farmers and in enterprises. In some cases, implementing partners may work together

on this qualitative information gathering, with support from the MRM Coordinator. To keep

the system practical, the following categories will be used for disaggregation:

o Gender: Sex of the person interacting with the provider. For example, the person

who gets a loan from a financial service provider.

o Poverty status: Land size ownership – more or less than 0.5 hectares.

o Disadvantaged groups: Caste Hindus, Janajatis, Dalits.23

22

There has been work in Nepal on a “social exclusion index” which could, if simpler, be used instead of

disaggregating by these for issues. A decision on this will be made during the inception phase and reviewed

at the programme mid-term. 23

The groups have been determined by reviewing the frameworks the GoN (National Planning Commission)



34

o Location: more or less than 4 hours walk from a motorable road.24

Environment and Climate Change: The focus of monitoring related to issues of the

environment and climate change will be on two aspects: “do no harm” and positively

affecting the environment. As with the other cross-cutting issues, the implementing partners

will develop a screening checklist to ensure that programme activities do not lead to

environmental degradation. In order to positively impact the environment, the implementing

partners will build on their subcomponent designs, identifying specific ways they can have a

positive impact on aspects of the environment. Then, indicators to monitor the expected

positive effects will be included in the intervention monitoring.

Links to national monitoring systems: The GoN National Planning Commission coordinates

monitoring and evaluation across all Ministries. Many of the key indicators chosen for the

programme, as well as the parameters for disaggregation, fit with the National Planning

Commission guidelines.25

Thus, information from the programme will feed into the GoN

monitoring system. The information regularly gathered by government is not sufficiently

disaggregated by location or frequent enough to provide data that can be used to assess the

programme’s results. However, the implementing partners will work together with

government agencies or relevant private sector organizations to monitor the programme’s

results whenever possible. Details are provided in the Component Descriptions.

Capturing wider systemic changes: It is expected that the programme will contribute to

results beyond those direct results generated by programme partner providers. It is important

that the programme MRM system also captures information on the extent to which direct

changes caused by programme activities are having a wider influence on agricultural and

private sector development in Nepal. Therefore, progressively throughout the first 2 years of

the programme, expected “systemic” changes will be included in results chains and

measurement plans, so that this aspect is fully integrated by the programme mid-term.

Implementing partners, with support from the MRM Coordinator, will also conduct

qualitative information gathering to assess the extent to which direct activities are

encouraging wider changes in Nepal.

Special Studies

To complement regular monitoring, the implementing partners and the MRM Coordinator

will design and manage studies on areas of particular interest. These might include: the

effects of the programme on gender roles, women’s burden of labour and women’s economic

empowerment; the contribution of the programme to economic and social progress among

disadvantaged groups; the effects of the programme on human rights; the contribution of the

programme to green growth; and the long-term and economy-wide effects of the programme

on job creation. The MRM Coordinator will be responsible for choosing, designing,

outsourcing and managing these studies in consultation with the implementing partners and

the Management and Coordination Committee.

Structure and Roles

and other donors use and cross-referencing them against the social groups present in the 7 focus districts. A

more detailed discussion is included in the annex on Monitoring and Results Measurement including

definitions from the DFID/ADB/Word Bank publication: “Sectoral Perspectives on Gender and Social

Inclusion: Agriculture”, 2011 24

The categories used by the GoN National Planning Commission for Hill areas. 25

Government of Nepal, National Planning Commission. “National Monitoring and Evaluation Guideline 2013”

Draft.



35

Each implementing organisation – the MC, UNCDF, NBF and Advocacy Fund Manager, will

monitor results throughout the programme. International experience has shown that

implementing organisations are well placed to both monitor their progress and regularly

feedback the findings into improving implementation. An external MRM coordinator will

provide support and coordination for this work to ensure that systems across the programme

are coherent and sufficiently robust. The MRM Coordinator will also aggregate programme-

wide results and ensure that they are clearly communicated to the Management and

Coordination Committee. A draft TOR for the MRM Coordinator is provided in Annex 10.

The diagram below summarizes the structure and roles of the UNNATI MRM system.

Managing the Monitoring and Results Measurement System

Effectively managing MRM has two key aspects: establishing an appropriate organisational

culture and consistently enforcing MRM processes. For monitoring and results measurement

to effectively contribute to accountability and programme improvement, a culture of honest,

open enquiry is essential. The culture must promote acceptance of failures that leads to

concretely improving implementation. Programme implementing organisations and the MRM

Coordinator will be responsible for fostering this culture within their organisations. The EoD

will be responsible for ensuring that this culture is established within the Steering Committee

and the Management and Coordination Committee. MRM must also be a priority, not an

afterthought, among all implementing organisations and governance committees. Managers

and staff at every level will be held accountable for adhering to the MRM cycle described

above, completing MRM tasks to a high standard and constantly being reflective about the

extent of progress and how to maximize long-term results from the programme.

Monitoring Programme Processes

Implementing partners will also monitor and report on both external and internal programme

processes.

MRM

Coordinator

MRM System Structure and Roles



Infrastructure

Committee

Managing

Contractor

DDCs/DT

Os &

DoLIDAR

UNCDF NBF AFM

Val

uec

hai

n S

tak

eho

lder

Fo

rum

Report Coordinate and Support Cooperate and Inform



36

External: The monitoring of programme activities will be centred on the Human Rights

Based Approach (HRBA), specifically the principles of transparency, accountability,

inclusion, participation and non-discrimination. Implementing partners will develop

indicators, specific to their subcomponents, to assess each activity according to these

principles. These process indicators will form part of the regular monitoring system;

assessment of the indicators for each activity will be recorded in the partners’ databases.

This information will then flow into the regular monitoring system to improve strategies and

implementation. This process will help implementing partners ensure that all programme

activities are conducted respecting the principles of the HRBA. When possible, this process

will be done in cooperation with government or private sector partners.

Internal: It is equally important to monitor the quality of MRM and management processes

internal to the programme. All implementing organizations, with support from the MRM

Coordinator, will assess the quality and functioning of their MRM systems annually. In Year

2 and Year 4, the programme will undergo an audit of the MRM system according to the

DCED Results Measurement Standard. An external, certified auditor will conduct this audit

and the report will be shared with the implementing organizations, the MRM Coordinator

and the Steering Committee.

Regular assessment of management systems will focus on the effectiveness of HR

management such as performance and training systems for staff, the appropriate functioning

of the consultation and governance committees, the appropriateness of partner contract

management systems, the efficacy of systems to monitor and respond to fraud and weak

transparency and the value of administrative and financial management systems. The

implementing organizations and committees will routinely monitor these aspects of

management according to their own procedures. This monitoring will be supplemented by an

assessment of management processes as part of the annual programme review. These

procedures will promote a cycle of continuous learning within the programme at all levels of

management.

Reviews

Joint review missions will be undertaken annually as follows: after the inception phase, 1.5

years, 2.5 years, 3.5 years and close to programme completion. The review after the

inception phase will assess the proposed adjustments of the programme and advise the

Programme Steering Committee on possible revisions or adjustments of the programme and

its components and sub-components. Joint annual reviews will be planned just after receipt

of the annual report and the next year’s work plan. The review will assess programme

performance in light of these documents and take into account any changes in the programme

context. The reviews may issue recommendations on modifications to the programme

strategies and annual work plans.

The review at 2.5 years will look more in depth at the relevance, effectiveness and efficiency

of the programme as well as its progress towards promoting sustainable improvements in

value chains, rural infrastructure and the enabling environment. This review will inform the

decision on a second phase of the programme. The final review will aim to draw lessons from

an analysis of the programme’s performance, effectiveness, efficiency and the extent to

which improvements are likely to be sustained in order to inform implementation of a

possible second phase and the design of other Danida programmes.

The EoD, with support from the MRM Coordinator, will be responsible for scheduling and

coordinating the reviews. The Management and Coordination Committee will be responsible

for following up the recommendations of the reviews.

Evaluations



37

Danida’s Evaluation Unit may select the programme for an in-depth and wider ranging

evaluation. This will be an independent evaluation that will serve to document the short-term

and expected longer-term results of the programme at different levels and the extent to which

the programme promoted sustainable improvements in value chains, infrastructure and the

enabling environment that will promote inclusive growth over the long term. An evaluation

would also document lessons learned and best practices developed for use in other Danida

programmes and sharing with the wider development community.

Implementing partners may also conduct evaluations of their subcomponents according to the

procedures of their own institutions. These evaluations will be shared with the MRM

Coordinator, the Management and Coordination Committee and the Programme Steering

Committee.

Reporting

Regular reporting will comprise of semi-annual and annual progress reports. Each of the

implementing partners will be responsible for reporting on their subcomponent. The MC will

report on Subcomponent 1.1 and on Component 2 with input from the DDCs, DTOs and

DoLIDAR. The MRM Coordinator will be responsible for consolidating information on

results across the components and preparing a consolidated programme report. The semi-

annual reports will address progress against annual work plans, performance against process

indicators, issues encountered, lessons learned and revisions to annual work plans with

rationale, as well as financial reporting. The annual reports will address the above as well as

progress to date against LFA results indicators and projections of results to the end of the

programme based on the activities to date. The annual report will also include projections of

results for the programme development objective 2 years beyond the end of the programme.

Finally, the annual report will include an analysis of performance to date and relevant

changes in the context in Nepal, as well as the implications of that analysis for improving

programme strategies. The results reporting will enable the Programme Management and

Coordination Committee to assess not only progress to date but also how that progress can be

expected to contribute to the results by the end of the programme and 2 years beyond. The

annual reports will also provide input into Programme Management and Coordination

Committee’s analysis of programme performance and decisions on programme strategy.

In addition to the above regular reporting, the MC and implementing partners will also

provide the following special reports: inception phase report, midterm report and programme

completion report. The reporting requirements are summarised in the table below.

Report Main Content Timing and Frequency

Inception report Situation analysis

Approach and methodology

Five-year investment plan,

1 year work plan

Manning schedule with annexes (norms, guidelines, process documents etc.)

Monitoring and results measurement guide

7 months after

commencement – once

Semi-annual report Progress against annual work plan

Performance against process indicators

Issues and challenges encountered

Lessons learned in implementation

Revisions to annual work plan with rationale

First report after one year

– every six months



38

Report Main Content Timing and Frequency

Financial reporting

Annual report Will be combined with semi-annual reports.

Content above for semi-annual report

Progress to date against LFA indicators

Projections of results to the end of the programme (and 2 years beyond for programme development objective indicators) based on activities to date

Analysis of programme performance

Analysis of relevant changes in the context of Nepal

Recommended changes in strategy with rationale

Annual work plan for the next year

1.5 years, 2.5, 3.5 years,

4.5 years

Mid-term report Will be combined with the annual report

produced at 2.5 years.

Content above for annual report

Revised investment plan for the remaining 2.5 years

Recommendations on major strategy changes (if appropriate) with rationale

Recommendations on the design of a second phase is appropriate

2.5 years - once

Programme

completion report


Analysis of programme strategy, performance and lessons learned

End of the programme;

once

9.3 Inception Phase Requirements

The following summarises the tasks related to monitoring and results measurement that will

be completed during the inception phase.

Each implementing organizations with support from the MRM Coordinator:

o Develop a detailed MRM guide for programme managers and staff, building on the

design of the MRM system included in the annex and including the details of all

processes required in the DCED Results Measurement Standard and by Danida.

o Prepare MRM documents for the opening portfolio of interventions including

intervention results chains, projections and measurement plans.

o Gather baseline data needed for the opening portfolio of interventions.

o Ensure all staff fully understand and are capable of playing an appropriate and active

role in the MRM system.

o Develop “do no harm” intervention screening checklists on gender, poverty,

disadvantaged groups, remoteness and environment/climate change.

o Finalize criteria for data disaggregation.

o Review and propose revisions to the subcomponent results chain and LFA.

EoD with support from the MRM Coordinator:

o Organise training for all implementing partners on the DCED Results Measurement

Standard. (A draft TOR is provided in Annex 11)



39

o Orient the Management and Coordination Committee on the UNNATI Monitoring

and Results Measurement system, what they can expect from it and their roles in it.

o Finalise all reporting formats and ensure that implementing partners are fully briefed

on them.

MRM Coordinator

o Develop an MRM guide for the programme. This will be a reference document for

all programme stakeholders on the programme MRM system, how to feed

information into it and how to use the results from it.

o Finalize criteria for data disaggregation in consultation with the implementing

partners.

o Develop a system for aggregation of the subcomponent results to the programme

level. The system will have a clear and transparent method for addressing overlap in

results among the subcomponents.

o Review and propose revisions to the programme LFA and results chain.

o Prepare a five-year plan for MRM in the programme and a detailed work plan for the

first year.

10. Key assumptions and risks

10.1 Assumptions

The design of the programme has been based upon a number of critical assumptions:

o The Government of Nepal will continue to see the private sector as the engine of

economic growth and sustainable employment creation;

o Continued committed to the decentralisation process and empowerment of local

governments;

o Creation of good job opportunities in rural areas will maintain and possibly expand

the workforce available for rural development.

10.2 Risks

Risks Probability Impact Mitigation

1. The political situation continues

to be fragile and government

structures of an interim nature at

national as well as at local levels

High

High

Strengthen evidence-based dialogue

mechanisms at national, regional and district

level including capacity building of public and

private stakeholders. Maintain a sound balance

of private sector and public sector

interventions.

2. Political interference High Medium Funding of programme elements will be

subject to approval of annual plans and follow



40

Risks Probability Impact Mitigation

transparent and accountable procedures. The

programme will be pro-active in ensuring

annual plans reflect the needs of the

stakeholders. In terms of infrastructure

funding programme funds will be kept

separate from other district funds and funds

will only be transferred for approved projects.

The focus on capacity building at DDC and VDC

levels and the emphasis on improved

governance should assist in mitigating this risk

at the local level.

3. A continued high level of

corruption will discourage private

sector investments

High Medium Promotion of corporate social responsibility

and good governance throughout the

programme. All beneficiaries of programme

support will, as relevant, be required to adhere

to the UN Global Compact Principles

4. Low private sector investments

due to uncertainties and

unpredictable private sector

policies and regulations

Medium

Medium

Strengthen policy analysis and monitoring

especially of policies relating to private sector

development. Promotion of a coherent and

transparent strategy for private sector

development

5. Migration out of rural districts

may influence the availability of

workforce. Including prevalence of

female-headed households and

lack of youth in rural areas

Medium

Medium

Focus on creating sustainable and meaningful

employment in rural areas and especially for

the youth. As relevant introducing new

technologies and mechanisation

6. Insufficient capacity of Nepal

Business Forum to support private

sector development as part of

Component 3.

Medium Medium A number of preconditions must be met prior

to channelling funding directly to NBF and

support will be given to ensure an

organisational strengthening of NBF. Ensuring

that relevant technical assistance is given to

NBF will be very important for success.

Conditionalities

The conditionality to be met before there is a transfer of funds from the Embassy of Denmark

for infrastructure works is that there is a jointly-approved annual work plan in place. The

additional conditionalities to be met before the first transfer of funds to a district takes place

are:

o Local Development Officer in post.

o District Technical Officer in post.

o District Treasury Officer in post.

o Dedicated component bank account opened.

o A positive pre-disbursement assessment of accounting systems and procedures.



41

11. Indicative Implementation Plan

Inception phase

The programme will have a six-month inception period. The following key activities will be

undertaken during the inception period:

Embassy of Denmark

o Finalise agreements with implementing partners – DDCs, UNCDF, NBF,

Management Contractor and Advocacy Fund Manager

o Establish and operationalize programme management structures.

o Support mobilisation of management contractor.

o Prepare terms of reference for Joint Inception Review.

Management Contractor26

o Mobilise the technical assistance team;

o Establish programme offices and logistics;

o Establish management and coordination mechanism for district-based interventions;

o Develop financial and procurement manual including value-for-money auditing;

o Develop operational manual;

o Develop communication strategy;

o Operationalise the M&E framework and manual;

o Undertake baseline surveys as described in the M&E framework;

o Review District Transport Master Plans;

o Prepare inception report including detailed work plan and budget for the first year of

full-scale operations.

Implementing Partners

o Establish implementation and management structures (all);

o Operationalise monitoring and reporting framework (all);

o Establish systems and procedures through their partner organisations as relevant for

reporting on the overall programme indicators to the programme management and as

relevant linking up to the NPC’s M&E Framework;

o Prepare inception report including detailed work plan and budget for the first year of

full-scale operations (all).

Independent M&E Consultant

o Operationalise the M&E system at programme level

o Initiate collaboration with implementing partners to agree sequence of reporting

results

o Prepare a consolidated inception report including the M&E framework and

specification of key targets.

26

It is envisaged that the tender process for the management contractor will be initiated August/September

2013 when a desk appraisal of the programme is finalised.



42

The inception reports will summarise and document all activities undertaken and key

management issues identified during the inception phase. It will be presented to the Joint

Inception Review for comments nine months after programme commencement.


Mapping of Stakeholders

43

Annex 1: LFA Matrix Note: All indicators are additional change attributable to the programme. Targets for the programme development objective

are by 2020, which is 2 years after the end of the programme.27

All other targets are by the end of the programme in 2018.

Objective

Assumptions Objectively

Verifiable Indicators Target

Means of Verification

Methodological

Guidance

UNNATI Nepal Inclusive Growth Programme

National Objective: To transform the country from a least developed country to a developing country.

Programme Development Objective

Promotion of

sustainable,

inclusive growth

that reduces

poverty and raises

living standards

Given the fragile political situation in Nepal, the government continues to see the private sector as the engine of sustainable and inclusive economic growth

Increases in income contribute to improvements in living standards

Improvements value chain competitiveness, infrastructure and the enabling environment contribute to broad-based, inclusive growth

Number of households with additional income (by gender, social group, poverty status and location)

Changes in living standards

28

Number of farms and enterprises financially benefited

Net additional income

Programme benefits/costs

29

Additional FTE jobs in MSMEs

By 2020 100,000 24,000 DKK 640 million 1.4 230

Surveys and qualitative

data collection

conducted by the MC,

DDCs/DTOs/DoLIDAR,

UNCDF, NBF and


27

Projections 2 years beyond the end of the programme are recommended in the DCED Results Measurement Standard. 28

Living standards will include key dimensions covered in the Nepal Living Standards Survey such as health, education and livelihoods.

29 Calculated as the Net Present Value at the beginning of the programme of programme benefits / programme costs accrued to 2020

which is 2 years after end of the programme. Programme benefits are defined as cumulative net additional income to households, farms and enterprises attributable to the programme. Programme costs are according to the budget. Only Component 1, Subcomponent 2.1 and Subcomponent 3.1 have been considered in benefits and costs. All costs for technical assistance and reviews, M&E and research have been included. For details on the calculation, see Annex 15.



44

Objective

Assumptions Objectively

Verifiable Indicators Target

Means of Verification

Methodological

Guidance

Component 1. The Value Chain Component

Intermediate Objective

Sustained

Improvement in

competiveness of

selected value

chains

Market conditions remain favourable for tea, ginger, dairy and other selected value chains

Improvements in farms’ and enterprises’ performance lead to increases in their profits

Additional private investment and changes in MSME behaviours will lead to modest increases in jobs in MSMEs even in the short term

Increase in value of products sold in selected value chains

Additional private sector investment in selected value chains

Number of farmers who improve performance

Number of MSMEs who improve performance

DKK 75

million

DKK 30

million

Surveys and qualitative

data gathering

conducted by the MC

and UNCDF in

cooperation with value

chain players, FIs and

DDCs when appropriate

Sub-component 1.1 Commercialisation of Value Chains

Commercialisation

of selected value

chains

Contract farming legislation is enacted

Conditions for investment in agriculture and agri-business improve

Positive changes in farmers and MSMEs’ behaviours will lead to improvements in performance and long term competitiveness of value chains

For each value chain:

Additional volume sold (MTs)

Additional volume exported (MTs)

Additional value of exports

Additional MSMEs engaged in value chain

Qualitative improvements in competitiveness and inclusiveness of value chain

30

14,000 MT31

Surveys and qualitative data gathering conducted by the MC in cooperation with value chain players and DDCs when appropriate

30

For example, improvements in relationships among farmers and other value chain enterprises. 31

Total across all value chains.



45

Sub-component 1.2 Access to Finance

Improved access to

and use of a range

of financial services

by rural

households and

MSMEs

Profitability of agriculture value chain activities is sustained

Limited or no political interference

Banks and financial institutions show and maintain greater commitments to expand their offerings to agricultural value chains

Additional clients reached

Number of small holder farmers and MSMEs actively using appropriate and affordable financial products to support their value chain activities

Additional clients enrolled in mobile and branchless banking

Additional clients actively using mobile banking services

250,000

150,000 32

100,000

25,000

Quarterly Portfolio33

reports prepared by

FSPs and verified by

UNCDF

Qualitative case studies on specific issues of interest

34

Component 2: The Infrastructure Component

Intermediate Objectives

Sustained improvement of rural infrastructure

DDCs, DTOs and DoLIDAR increase emphasis on maintenance of rural infrastructure

Access to improved rural infrastructure encourages farmers to grow more crops for sale

Access to improved rural infrastructure enables and encourages farmers to increase productivity

Increase in per cent of crops grown for sale vs consumption

Change in annual volume of marketed crops in selected sectors (MTs)

Change in annual value of marketed crops in selected sectors (MTs)

Qualitative changes in agricultural production and marketing

35

Government and donor investment in infrastructure in 7 targeted districts

Avg 10% Baseline & follow-up surveys with farms and enterprises

FGDs with farmers

Government and donor records on infrastructure expenses

32

Out of the 150,000: at least 55% women; 37,500 from disadvantaged social groups, 55,000 in UNNATI districts and 7,000 from disadvantaged social groups in UNNATI districts

33 UNCDF verifies data of financial institutions through multiple methods. Triangulation of information, trend analysis, client

interviews, and field visits are some of the methods used. 34

For example, benefits of mobile banking, impact of finance on women bargaining power in HH, workload burden, gender and do no harm review within FSPs, cost effectiveness of agricultural finance.

35 For example, changes in use of inputs, access to agricultural extension services and farmers’ attitudes towards growing commercial crops.



46

Sub-component 2.1 Rural Transport Infrastructure

Improvement of rural transport infrastructure

DDCs, DTOs and DoLIDAR prioritize improvement, repair and maintenance of RTI

Improved RTI leads to increased traffic, reduced travel time and reduced transport costs all year round but particularly during the monsoon

Reduction in travel times for people within 4 hours of improved roads

Reduction in transport costs for people within 4 hours of improved roads

Increase in traffic flow by season

Avg 20% annual; 30% in monsoon season

Baseline and follow up

surveys with

households, farms and

enterprises

Before and after traffic

surveys

Sub-component 2.2 Public Market-Related Infrastructure

Improvement of public market-related infrastructure

DDCs, DTOs and DoLIDAR prioritize construction and improvement of public market-related infrastructure

Improved public market-related infrastructure leads to reductions in post-harvest losses

Reduced losses in storage & marketing of goods

10% reduction

Baseline and follow up

surveys with farms and

enterprises

Component 3: The Enabling Environment Component

Intermediate Objective

Sustained improvement in the enabling environment

The government will continue to consider the private sector one of the pillars of sustainable and inclusive economic growth

Improvements in the enabling environment lead to increased profits for enterprises and financial or qualitative benefits for workers

All proposed regulations enacted and processes simplified leading to increased compliance cost savings

Number and type of laws, regulation, amendments, codes, policies, procedures and standards changed

Additional public investment

Additional private investment

Qualitative improvements in national and district enabling environment

36

123 DKK 17 million DKK 228 million

Government records from the Office of the Company Registrar, Department of Industry, Board of Investment and relevant ministries and departments

Surveys and qualitative data gathering conducted by the implementing partners in cooperation with relevant providers

36

For example, improvements in labour relations, safety regulations or transparency of government decision-making.



47

Sub-component 3.1 Public Private Dialogue

Enhanced public private dialogue for improved policy and regulations

Political process is not disruptive of the reform implementation process

Mandate for NBF survives with the change in government

Additional firms registered

NBF score on application of the PPD Charter of Good Practice improved

2,500

From 37 to 80 (out of 100)

Records of the Office of the Company Registrar (OCR)

IFC assessment of NBF capacity, practices and sustainability based on the PDD Charter of Good Practice

Sub-component 3.2 Advocacy for Responsible Business

Improved advocacy for responsible business

The concept of responsible business including economic and social rights and corporate social responsible is well received and understood by private sector stakeholders There are sufficient private sector, labour market and civil society organisations interested to work with the programme

To be finally decided in the inception phase when an Advocacy Fund Manager is recruited Members of supported PSOs find that the business environment has improved significantly

Enterprises within the selected value chains show improved compliance with Global Compact principles Qualitative changes in the recognition of and respect for rights Qualitative changes in the processes for influencing the enabling environment

To be agreed with Advocacy Fund Manager

To be agreed with Advocacy Fund Manager

UNNATI – Inclusive Growth Programme in Nepal Mapping of Stakeholders

48

Annex 2: Mapping of Stakeholders

Description Role in Economic Growth and Employment

Creation

Issues raised/challenges gaps Synergies

GOVERNMENT INSTITUTIONS

National Planning Commission

National Planning Commission (NPC) is the

advisory body for formulating development plans

and policies of the country under the directives of

the National Development Council (NDC). It

explores and allocates resources for economic

development and works as a central agency for

monitoring and evaluation of development plans,

policies and programmes. Besides, it facilitates the

implementation of development policies and

programmes. Moreover, it provides a platform for

exchange of ideas, discussion and consultation

pertaining to economic development of the

country. It also serves as an institution for

analysing and finding solutions to the problems of

civil societies, non-governmental organizations and

the private sector in the country.

NPC is an apex body for formulation of

development plans and policies. It provides

guidance and framework on matters related with

socio economic development of the country. Its

role in Economic Growth and Employment

Creation is of a lead agency as it provides over all

guidance and framework through its Three Year

Plan Approach 2010/11 – 2012 -2013. It is the body

that is responsible for formulation of policies and

programs related with growth and employment.

NPC also carries out periodic monitoring visits to

different national projects and programmes.

NPC is chaired by the Prime Minister and has one

full- time Vice-Chairman, seven members and one

Member-Secretary. The appointment for the

position of the Vice Chairman and other members

of the NPC is a political decision thus the frequent

change of government in recent years has

adversely affected the functioning of the NPC. In

addition to that the serious challenges and

questions can be raised on continuation of planned

programs and policies with frequent change in the

top leadership of NPC.

The Three Year Plan Approach Paper

serves as a guiding document for

preparation of Danish Programme

on Growth and Employment. Being a

policy making body at the national

level synergies exist in matters

related with overall national plans

and programmes for growth and

employment. The synergy will likely

be on matters related with policy

level issues, involvement in creating

an enabling environment for the

growth of private sector, policy

matters related with adaptation of

technology and technology transfer.

Ministry of Finance

The Ministry of Finance (MOF) is the central

authority of Government of Nepal charged with

the responsibilities for maintaining both micro and

macro economic stability in the country.

Moreover, the key role of the Ministry lies with the

more rationale allocation of resources; better

The MOF is a key partner dealing with external

support from development partners. A Foreign Aid

Division within the MOF is primarily responsible for

mobilisation and optimal utilisation of resources

through foreign aid in accomplishing the

development goal of poverty reduction and

The MOF has a division called Economic Affairs and

Policy Analysis Division, which carries out research

and analysis on matters related with macro

economic issues. Being a part of the MOF it is

rather difficult to ascertain how independent he

division could be in terms of formulation and

The MOF is a lead strategic partner

in preparation and finalisation of the

Growth and Employment

Programme. There is synergy with

MOF as it is the apex institutions at

national level will be playing a role


49


Creation


management of public expenditure; enhanced

mobilization of both internal and external

resources; greater performance in public

investments and strengthening of public

enterprises productive capacity; open and simple

foreign exchange policies and regulation, and

prudent fiscal and monetary policies. Finance

Minister remains at the Apex in the Ministry,

whereas, bureaucratically it is headed by Finance

Secretary. For practical purposes, the Ministry is

further divided into various organisations -

Divisions and Departments. The Divisions are

located within the Ministry and manned by the

Joint Secretaries, Under Secretaries

realising sustainable high economic growth. It is a

key institution to enhance the ownership of

Government of Nepal and people of Nepal in

foreign aided programmes, maximise the benefit

of aid; and achieve the ultimate goal of self-

reliance through sustainable high economic

growth. MOF is a focal point for finalising and

coordinating with other ministries and

departments on matters related with policies and

programs related with economic growth and

employment creation.

designing of economic policies and programs. MOF

mandated a special mission The MOF was the

executing agency for ADB supported Economic

Policy Network which was later called Policy

Analysis and Network Unit (PANU), The PANU was

mandated to hold extensive consultations with

experts in the public and private sectors, and come

up with analysis and recommendation on following

themes: Macroeconomic management; Economic

policy on international trade, investment, and

employment; Economic policy on infrastructure

development; and Economic policy on tourism,

agriculture, and regional development. Although

this unit was envisaged to be an independent

institution this has not been realised yet in

practice.

of coordinating the entire process.

MOF is planning to establish the

Policy Analysis and Network Unit,

which will play an important role in

coordinating and harmonising

policies for private sector

development.

Ministry of Industry

The Ministry of Industry (MOI) is an apex

institution of Government of Nepal for formulation

of industrial Policies, Acts, Regulations and Rules in

order to create employment opportunities,

enhance industrial productivity, foreign currency

earning through promotion of export and trade

and hence contribute in rapid economic growth of

the country.

Being an apex body in matters related with the

promotion of industry the MOI definitely has a role

to play in growth and employment program

especially with policy matters related with

enhancing of industrial productivity, adaptation of

new technology, issues related with industrial

safety and environment. It also carried significant

importance in issues related with clean energy and

energy savings. The MOI has also relevance in

matters related with formulation of new Industrial

Policies and Acts, Foreign Investment and

Technology Transfer Policies, Industry Property

Rights etc.

MOI has its own limitation in implementation of

various Acts and Regulation related wit the

promotion of industries. Its prompt response to

the challenges faced by the industries is another

major challenge which ash resulted in closure of

number of industries in different parts of Nepal

due to labour problems, acute power shortage, red

tape and delay in export of commodity etc.

Currently MOI is a implementing agency for Micro

Enterprise Development Program (MEDEP)

supported by UNDP. The question arsis if MEDEP

should be a part of MOI as the project deals with

micro enterprises, which are regarded as informal

sector.

MOI could be part of lead strategic

partner at central level in matters

related with improved business

environment – e.g. implementation

and adherence to the Industry Policy

2010 – promotion of MSMEs and

generally in supporting the private

sector.


50


Creation


Ministry of Commerce and Supplies

The ministry of Industry, Commerce that was in

existence since long time by single name, was

separated in 1981. The jurisdiction of the then

Ministry of Commerce was expanded in 1983.

Under the expanded jurisdiction, it was given the

responsibility of supply sector, bearing its name as

"Ministry of Commerce and Supply". Again in the

same year, the separate Ministry of Supply was

created. In this way, three ministries i.e. Ministry

of Industry, Ministry of Commerce and Ministry of

Supply come into existence as different ministry.

Later in the year 2000 three ministries were

amalgamated and united into one as "Ministry of

Industry, commerce and Supplies". But in later

years the Ministry was again divided and at

present stands as a Ministry of Commerce and

Supplies. The Ministry of Commerce and Supplies

(MOCS) primarily deals with activities related to

corporations & companies in connection with

commerce and supplies. Policies and Programmes

related to Productivity improvement, Activities

related to technology transfer & development.

Study, Research & Survey concerning to internal &

international Trade. Decisions related to import

export trade policy & operation of International

trades Operation of governmental & public trades,

treaty, Agreement, Bilateral & Multilateral

intergovernmental trade negotiation & evaluation

activities related to trade & transit. Co-operation &

Co-ordination with agencies related to national,

regional, international trade & transit.. Protection

of consumer rights & welfare.

The MOCS has role to play as lead strategic partner

in matters related with recently formulated Nepal

Trade Integration Strategy (NTIS) 2010. It role in

becomes significant when issues come with

standardization and certification of products for

export and national market.

The history of MOCS is its frequent amalgamation

and splitting guided by political interest and

equation rather than from professional and service

orientation in trade and commerce. There is also

duplication of activities with Ministry of Industry

especially in matters related with productivity

enhancement and coordination. Similar to MOI the

MOCS is not very strong in terms of

implementation of various rules and regulation

regarding export and trade. The decision making

process is long in the Ministry. In recent days the

MOCS has been more pro active in terms of quality

assurance and checking of consumer products in

the market.

There could be synergy in the form

of basket finding mechanism for the

implementation of NTIS 2010. A

meeting will be organised by MOCS

to seek financial and technical

support from development partners

in implementation of NTIS 2010.

With a value chain approach

focussing on rural and agriculture

development there might be

possible collaboration around some

of the 19 priority products and

services identified in NTIS 2010.


51


Creation


Ministry of Agriculture Development

The Ministry of Agriculture Development bears

overall responsibility for the growth and

development of agriculture sector.

The Ministry is the central apex body of

Government of Nepal to look after the agriculture

and allied fields. The Ministry of Agriculture

Development consists of five divisions, two

centres, one research and development council,

four departments, four projects and autonomous

bodies of one research council, four corporations

and a few development committees and boards.

The MOAD being an apex body for development of

agriculture sector in the country. As a policy

formulation body it is in position to determine the

priority sector in agriculture as well for designing

various programs and incentives for select value

chain development.

Although 2/3rd

of GDP comes from the agriculture

sector and with dependence of over 74% of the

population in agriculture the programs are still

limited and agriculture sector consist on 2-5% of

budget allocation. The focus on agriculture has

slightly increased in recent years but it is still not

adequate. The coordination function of MOAD

with other concerned Ministries is still weak in

terms of input supply, land distribution and other

issues.

Support to agro-based value chains

will have to be done in close

collaboration with MOAD at central

level and probably even more so at

district and village level. District

Agricultural Offices are functional,

however, with limited budget and

capacity especially for technical

inputs in productivity enhancement.

The MoA is in the final stages of

developing Agricultural

Development Strategy (ADS) as its

long term vision paper to replace

APP. The priority/approach of ADS

with respect to proposed UNNATI

value chains will have impact on

how government supports

programme priority areas.

Ministry of Cooperatives and Poverty Alleviation

Ministry of Cooperatives and Poverty Alleviation Taking into consideration the ever growing

importance of the cooperatives in Nepal and

realizing the potential of this sector to poverty

reduction and overall economic development of

the Nation. Government of Nepal has established

the Ministry of Co-operatives and Poverty

Alleviation in May, 2012..

The interim constitution of Nepal 2006 has taken

up cooperatives sector as one of the three pillars

of economic development along with the private

and public sector. The cooperative movement of

Nepal, which formally began in 1960's, has now

matured with around 25,000 cooperatives spread

all over the country encompassing more than 3.5

million members covering almost all sector of the

economy.

The newly formed ministry has a mandate to

The programme will work with

farmers and farmers’ groups and

many of them will be organised as

cooperatives.


52


Creation


formulate policies, rules and regulations and

promote, regulate, monitor and coordinate various

activities related to the development of the

cooperatives in Nepal. In addition, the ministry has

also mandated to implement programs and

activities for the alleviation of poverty in Nepal.

Therefore, it has very important role in socio-

economic development of the country.

Ministry of Federal Affairs and

Local Development

Ministry of Local Development (MoFALD) is one of the ministries of the government with widespread network up to grass-root level (VDCs and Municipalities). As per the main guiding policy of local development, Local Self Governance Act, 1999, this ministry has been placed at the apex of three-tier structural framework and accredited with the role of coordination, cooperation, facilitation and monitoring and evaluation of activities undertaken by local bodies (75 District Development Committees, 58 Municipalities and 3915 Village Development Committees). Being the focal organization for local development, it has to coordinate, cooperate, facilitate and synergize the initiatives taken by different development partners. Taking the very fact that until and unless the pace of local development is accelerated, overall development of the nation is impossible, ministry has adopted participatory development approach and promoted social inclusion, capacity building of indigenous, dalit, marginalized and oppressed community at local level for ensuring sustainable, balanced and broad-based development based on equity and social justice.

MoFALD leads on-going process for federal

structure of the country; governance and

accountability in affairs related with local

development. It does not have direct relevance to

Growth and Employment. Being an apex body for

local development issues related with local

infrastructure development (rural roads, market

place) does create some kind of relationships as

process has to go through the DDC and VDCs which

are under the jurisdiction of MLD. Its various

policies regarding rural infrastructure development

for setting norms could be relevant to the

program,

The major issue with MoFALD is that it is already

over loaded with various development

programmes related with local development.

Absence of elected body at local level is another

challenge at local level to ascertain the proper

utilization of fund available for rural infrastructure

development.

The MoFALD representative at the DDC (i.e. LDO)

and the technical wing of the DDC (the DTO, led by

DoLIDAR staff) are usually at loggerheads over

authority on implementing infrastructure projects,

leading to delays in their implementation.

Synergy in terms of adapting local

norms and procedures for rural

infrastructure development works as

set by the MOFALD. Quality of

outputs from development

programmes is dependent on

genuine ownership and

commitment of DDCs and VDCs and

devolution of functions from central

level.


53


Creation


Ministry of Labour and Employment

Ministry of Labour & Social Welfare was first established in 1981. In 1995 the Social Welfare part of the Ministry was taken away to form another portfolio and since last year mid 2011 Ministryis called the Ministry of Labour and Employment . The Ministry was created with an objectives of development of Pure Industrial Relationship, ending unemployment and development of productive and qualitative employment system, alleviation of child labour and development of development of safe managed help based transport system. The Ministry primarily works on following issues:

Labour policy and Work completion

Study, investigation, data collection and verification of labour power and labour market.

Contact and relationship development of labour with national and international chambers and corporations

Relationship between Labour and management.

Help Employee and Labour supply.

Foreign Employments

Promotion, supply and organize vocational trainings

Training on child, women and disabled labours.

MOLE does have a crucial role in growth and

employment creation as being the Apex body

dealing with labour related issues, skills

development. Its role in promoting industrial

safety and creating favourable work environment

is quite important. It also acts as an arbitrator in

settlement of various labour and industrial

relations disputes.

The major issue with MOLE is that it is already over

loaded with massive maintaining industrial safety

and cordial relationships between the employers

and the labour unions. It lacks adequate and

trained human resources particularly dealing with

foreign employment and industrial peace. It does

not have adequate law enforcement authority thus

number of times becomes a silent observer in

matters of labour unrest and foreign employment.

Private sector development is

dependent on cordial industrial

relations. The establishment of such

relations requires capacity building

at all levels in order to facilitate the

tri-partite dialogue mechanism.

Synergy in terms of promoting JTUC

and linking up with various unions

and employer associations.

Ministry of Culture, Tourism & Civil Aviation

Ministry of Tourism first came into existence in

2035 BS (1978 AD). In 2039 (1982 AD), Civil

The tourism sector has high potential for creating

employment and earning foreign currency. It can

Private sectors still unable to provide adequate

services as per license and permission given for

The Ministry is a key player in

promoting tourism as a growing


54


Creation


Aviation was also merged into the Ministry of

Tourism and it became the Ministry of Tourism &

Civil Aviation. In August – September, 20112057,

Culture was also re integrated in the Ministry and

called the Ministry of Culture, Tourism & Civil

Aviation (MOCTCA).

The Nepal Tourism Board (NTB) is a National

Organization newly established by an act of

Parliament in the form of partnership between

Government of Nepal, and the private sector

tourism industry of Nepal. The NTB will now be

responsible for all the marketing activities aimed at

promoting Nepal as a premier destination. Apart

from NTB the other important arms of MOT CA are

Nepal Academy for Tourism and Hotel

Management, an institutions devoted in

developing required human resources in tourism

sector.

definitely contribute in poverty alleviation by

creating back ward linkages with other sector such

as agriculture, transport and skills development.

The concept of destination management and

marketing if properly promoted can create

employment at local level in substantial manner.

them, programs like rural tourism and home-stay

have not been realized to yield benefits. In the

same way, frequent strikes, obstructions, forcefully

shutting down businesses, even destructions of

physical infrastructures are affecting tourism

businesses severely.

sector in Nepal and there is

significant scope for creating

synergies in promoting rural

development and skills development

tourism and creating backward

linkages with agriculture.

Department of Local Infrastructure Development and Agricultural Roads - Ministry of Federal Affairs and Local Development

The objective of Department of Local

Infrastructure Development and Agriculture Roads

(DoLIDAR) is to undertake development programs

in accordance with decentralization policies for

attaining the goals set forth by the GON’s National

Strategy for Rural Infrastructure by making the

local authorities technically capable and

competent and ensuring accountable participation.

One of the primary functions of DoLIDAR is

implement or arranges to implement Agriculture

and Rural Roads programs under Agriculture

Perspective Plan. The major departments in

DoLIDAR include Rural and Agriculture Roads

DoLIDAR has crucial role in Growth and

Employment Programme, as it is national

department dealing with rural infrastructure

development in particular its role in implementing

Rural Roads and Agriculture Roads Program as

highlighted in Agriculture Perspective Plan. It is

mandated to support planning and construction of

rural infrastructure for the DDCs, which it does

through the DTOs.

DoLIDAR supports implementation of several

infrastructure projects and programs funded by

various development partners. In an ideal situation

the department does not well fit in with the spirit

of decentralization. DoLIDAR is noted to have

conflict of authority with MoFALD, reflected by

similar situation between DTO and LDO at DDC

level..

Synergy lies in joining current

running programmes such as RRRSP

through basket funding mechanism,

The fiduciary risks is quite high in

this respect and needs thorough

analysis and provision of a strict

follow up and monitoring

mechanism.


55


Creation


Division, Planning, Monitoring and Foreign Aid

Coordination Division, other infrastructure

development division. It has District Technical

Offices (DTOs) in all 75 districts under District

Development Offices.

Local Governments – District Development Committees and Village Development Committees

There is a two-tier local authority system in Nepal.

The lower level consists of Village Development

Committees (VDCs) and Municipalities. The second

tier consists of District Development Committees

(DDCs).

There are altogether 75 DDCs, 3915 VDCs and 58

Municipalities. VDCs and Municipalities are formed

on the basis of direct popular election, while DDCs

are formed through indirect voting, their

electorate consisting of all elected representatives

of VDCs and municipalities.

Therefore, DDCs are aggregate institutions of

Village and Municipal Governments in district

levels. Their main function of DDC is to coordinate

the development initiatives of entire district as

district governments. A Local Self-Government Act

was enacted in 1999; as a means to uplift the state

of decentralization in Nepal from the

delegation/de-concentration phase, paving the

way for eventual devolution of state authority to

Local Government in accordance with subsidiary

principle in governance.

The purpose of village development committees is

to organise village people structurally at a local

DDCs and VDCs are the permanent institutions at

local level dealing with various socio economic

issues of the population. Indeed they are the

government at local level thus in an ideal situation

their role in growth and employment program can

not be underestimated. This is an ideal situation

where the authority and power has been fully

devolved. But at present considering the existing

capacities of the DDCs and VDCs they can play a

secondary role rather than the primary role. Both

DDCs and VDCs receive annual grant from the

central government for development works.

At present DDCs are led by representative, a Local

Development Officer (LDO), from MoFALD.

Similarly at the village level all administrative work

of VDC is carried out by VDC Secretary. Since 2002

after the expiry of tenure of elected

representatives both DDCs and VDCs are. This is an

informal set up being put in place in absence of

elected representatives. The issue of accountability

and transparency are the major issues at local level

in absence of elected bodies. DDC and VDC have

limited capacity to address issues of growth and

employment in particular promotion of private

sector in the area. The technical capacity of VDC is

particularly very low, disabling it to take any

meaningful role in technical functions. Until now

the focus of DDC and VDC has been very much on

development of infrastructure (construction)

without much notice on issues of local economic

development through promotion of private sector.

In terms of synergy as DDCs and

VDCs have financial budget

allocations for rural development

they could be part of local

infrastructure development as well

eligible for financial support for

activities related with economic

development in the area. DDC and

VDC are also key players in

economic planning and monitoring

and as such will play a key role in

implementation of programme

activities at district and village level.


56


Creation


level and to create a partnership between the

community and the public sector for improved

service delivery system. A VDC has a status as an

autonomous institution and authority for

interacting with the more centralised institutions

of governance in Nepal

Nepal Rastra Bank

Nepal Rastra Bank (NRB), the Central Bank of

Nepal, was established in 1956 under the Nepal

Rastra Bank Act, 1955. Nepal Rastra Bank to

function as the Central Bank to formulate

necessary monetary and foreign exchange policies,

to maintain the stability of price, to consolidate

balance of payment for sustainable development

of the economy of Nepal, and to develop a secure,

healthy and efficient system of payment; to

appropriately regulate, inspect and supervise in

order to maintain the stability and healthy

development of banking and financial system; and

for the enhancement of public credibility towards

the entire banking and financial system of the

country

Nepal Rastra Bank and its division dealing with

supervision and monitoring of micro finance

institutions have some degree of role in growth

and employment program. The role of the bank is

more at the policy level in dealing with creation of

business environment especially dealing with rural

finance programme.

Although the country has embarked on free

market economy there are still several directives

and policies formulated by the central bank in

areas like fixing the interest rate, lending directives

to cover poor and the disadvantaged,. Although

there are several provisions for access to finance

by micro enterprises gap is still there for small and

medium enterprises for easy access to loan.

Current lending policies are very much collateral

oriented.

Nepal Rastra Bank is setting the

policy and regulatory framework for

the financial sector and monitoring

its performance. Hence, any

programme support to the financial

sector will have to be coordinated

closely with the bank. There is,

furthermore, some degree of

synergy in developing the human

resources and capacities for dealing

with SMEs and for deepening of

financial services to rural areas.

Synergy exists with UNCDF support

to Rastra Bank in a project

Enhancing Access to Financial

Services (EAFS).

Trade and Export Promotion Centre

The government of Nepal has established Trade

and Export Promotion Centre a national trade

promotion organization of the country in 2006.

This is a focal point established by merging Trade

Trade and Export Promotion Centre (TEPC) does

have an indirect role in growth and employment

creation by working as a facilitator in identifying

various markets for export, providing trade related

Currently TEPC is not fully equipped in terms of

adequate human resources as well as in matters

related with expertise in certification and

standardization of exportable goods and services.

Synergy with TPEC is closely linked

with the implementation of NTIS

2010 and possible inclusion of a

value chain approach in the


57


Creation


Promotion Centre, Export Promotion Board and

Carpet &Wool Development Board with an

objective of promoting foreign trade in general and

export trade in particular. It functions under

Ministry of Commerce and Trade.

information on certification and export

procedures. Until now the role of TEPC has been limited to

organising and participating in Trade Fair and has

limited contribution in promoting the export of

goods and services.

programme.

Dairy Development Corporation of Nepal (DDC)

Dairy Development Corporation, established

under corporaton Act 2021 BS. DDC-a fully state

owned corporation, initiated for the economic

advancement of the poor farming communities.

DDC has flourished into a nationwide movement

with an annual collection over 60 million litres

of milk from more than 75 thousand milk

producers through 888 milk cooperatives

spread out in 33 district. With the sate-of-art

infrastructure comprising of fully modern dairy

plants, 11 cheese manufacturing units, 45 milk

chilling plants and highly qualified dairy

specialists.

One of the major unit of DDC is located in

Biratnagar , Morang called Biratnagar Milk

Scheme producing Standard and Full Cream

Milk, Butter, Cream, Ghee, SMP (Skim Milk

Powder) with a plant capacity of 5000 Lts per

hours primarily catering for small scale dairy

farmers in Mechi and Koshi corridor through its

chilling and collection centres.

Has been not able to serve all dairy farmers in the

hilly areas due to lack of infrastructure. The chiiling

vats and dairy equipment at various collection

centres and in Biratnagar are over 25 years old

supplied under Danida support. No subsidy from

the government in operation. The Dairy

Development Board is not functional due to

political interference.

Could be under Danida Business

scheme for large investment. In

rural areas could be major actor in

reaching the dairy farmers especially

in Ilam and Dhankuta area.

PRIVATE SECTOR ORGANISATIONS

Federation of National Chambers of Commerce and Industry

The Federation of Nepalese Chambers of

Commerce and Industry (FNCCI) is an umbrella

organisation of the Nepalese private sector. It was

established in 1965 with the aim of promoting

business and industry while protecting the rights

and interests of business and industrial

communities, FNCCI has been playing a key role in

promoting business and industry in the country. It

FNCCI being an umbrella organisation for the

private sector has significant role in growth and

employment creation as by large it represents the

interest of the private sector. Since it ha its district

and municipal chapters in terms of coverage it has

a wide coverage through out the country. The role

FNCCI could be more pertinent in holding dialogue

with government sector in process of creating

FNCCI has been in operation for a very long time

and to some degree it is politicized as well. It does

not represent the entire private sector and in

recent years Confederation of Nepalese Industries

(CNI) has been established particularly serving the

interest of big business houses. CNI is a beak away

from FNCCI. Further more it practically has no link

with informal sector and small business. Although

Synergy exists in terms of creating a

conducive business environment in

general and specifically in

developing the advocacy capacity of

FNCCI.


58


Creation


provides, inter alia, information, advisory,

consultative, promotional and representative

services to business and government and organises

training / workshop/ seminar on a regular basis. It

has 76 commodity association members, 92

District/Municipalities Chambers, 436 Associated

members. The operation of FNCCI is primarily

through membership, government grant and

support from developing partners for specific

projects and programs.

Agro Enterprise Center (AEC), the agricultural wing

of the Federation of Nepalese Chambers of

Commerce and industry (FNCCI) was established in

September 1991 under the Cooperative

Agreement between FNCCI and USAID/Nepal.

Within past fifteen years, FNCCI/AEC made

valuable contributions in Agro Business

Development and Promotion.

favourable environment both for investment and

functioning of the private sector. it has received support from many development

partners and government FNCCI still lacks capacity

in areas like Issue based dialogue with government

in absence of thorough research and analysis.

Federation of Nepalese Cottage and Small Industries

FNCSI is a not for profit, non-political, non-

governmental Business Membership Organization

(BMO). It has its networks in 72 districts out of 75

districts in Nepal. These district chapters, as per

the constitution of the FNCSI, are either

autonomous or branch chapters. Autonomous

district chapters are governed by their own

constitution formulated in compliance with FNCSI's

constitution where the branch chapters are

governed directly by FNCSI's constitution. At

present 8 district chapters are autonomous and 64

district chapters are as branch. Besides, the district

chapters, FNCSI's membership comprises of 14

FNCSI is an umbrella organisation dedicated to the

interest of cottage and small industries. It also has

links with Association of Micro Enterprise in Nepal.

In terms of its role in growth and employment

creation FNCSI has a role to play in strengthening

and promotion cottage and small-scale industries,

which provides substantial employment in the

country at household level.

This federation has also been politicized and once

again is not affiliated to FNCCI. It claims to

represent and protect the interest of cottage and

small-scale industries but it is rather difficult to

judge its contribution in real terms. Like FNCCI the

federation also lacks adequate and qualified

human resources in carrying out research and

analysis.


conducive business environment for

micro and small-scale industries in



FNCSI.


59


Creation


national level commodity associations.

District Chambers of Commerce and Industries

District chamber of Commerce and Industries are

members affiliated to FNCCI. They do have their

representations in central executive committee of

FNCCI. They are operational in all districts as well

in selected Municipalities. Their operation of these

chambers is from membership fees, execution of

projects as allotted by FNCCI and through

certification fees for exportable items.

(Base on the interaction with of Nepalgunj

Chamber of Commerce and Industries, Morang

Industry Association (Biratnagar) and Dharan

Chamber of Commerce and Industry

These district chamber of commerce and industries

are recognised body at district level representing

private sector. Their role in creating growth and

employment varies significantly.

The district chapters are still in early stage apart

from some well-established chambers like in

Biratnagar, Pokhara, Nepalgunj etc. It is definitely a

platform for the private sector for lobbying but

they lack adequate resources both human and

physical to lobby for their interest. The district

chambers are not very positive especially on

government failure to resolve the problem of

labour dispute and industrial un rest, power supply

conditions, frequent closures and transport, red

tape in customs, government failure to meet its

obligations and promises.


conducive business environment in



chambers.

Producers’ and Commodity Associations

There are several producers’ organisations in the

country. They operate in the form of cooperative

or informal groups. A number of these producers’

organisations are supported by NGOs and projects

from development partners. Usually these are

primary producers group that include vegetable

producers, livestock raising. The membership

varies from 5 – over 25 members. Normally these

members are involved in savings programs. The

focus on these groups is more on enhancing

production. The elements of market and marketing

are quite lacking. There are number of women

producers associations. These are basically

informal sector operators and sizable number of

people is involved in these producers associations.

These primary level producers associations and

organised commodity associations do have a role

in growth and employment creation. Their

contribution in creation of employment cannot be

ascertained exactly as majority of them operate as

informal sector.

Characterised by small land holdings, limited crops,

using traditional agriculture, limited access to

financial services . At the receiving end of the

supply chain and have very little power in

bargaining. Left at the mercy of middlemen on

price fixations

Capacity building for advocacy work

including research, analytical work

and awareness raising.


60


Creation


Usually the producers association is the stepping-

stone for formation of cooperatives. There are no

facts and figures available on number and nature

of producers associations operating as they form

the part of informal sector.

Commodity Associations These associations are

formed by those entrepreneurs who have entered

the formal sector in the economy. There are over

76 commodity associations affiliated to FNCCI and

around 14 associated with FNCSI. Normally these

commodity Associations have a national body as

well as district associations and even goes up to

Municipality level.

These commodity associations have mushroomed

in recent times. Basically formed with a view to

strengthen the commodity sub sector

Their role not properly defined, most of the time

politicised. Not aware on product standardization,

certification. More focused on membership drive

than providing services to its members.

Labour Unions including the Joint Trade Union Cooperation Centre

There are around 57 recognized labour unions

active in Nepal. The three major Trade Unions in

Nepal are Nepal Trade Union Congress, General

Federation of Trade Unions (GEFONT) and All

Nepal Trade Unions (Revolutionary). All these

three trade unions are affiliated to major political

parties, Nepali Congress, United Marxists Leninist

and Maoists respectively.

Key role in ensuring cordial industrial relations,

which are of paramount importance for economic

growth, employment creation and protections of

workers’ rights and benefits.

Highly politicised and fractionalised. The labour

issues are often distracted from dealing directly

with industrial relations by political influenced

agendas.

Support for developing conducive

industrial relations including

capacity building for advocacy work

including research, analytical work

and awareness rising.

Cooperative Societies

By the end of mid-April 2010, the number of

cooperatives had reached nearly 23,000. Among

them, more than 2,500 cooperatives were solely

operated by women groups – it distinctly shows

that the development of cooperatives also

contributes to women empowerment. There are

The number of members involved in cooperatives

has crossed 2.9 million, of which the number of

women alone is 40 percent. More than 50,000

individuals have received direct employment in

this sector while more than 500,000 individuals

have been indirectly employed in this sector The

Are at growth stage with majority of cooperatives

being primary cooperatives. Still not regulated and

monitored properly. Has provided good access to

financial services in rural area. Traditional method

of business. Competitiveness (Products, prices,

service); Collective responsibility among network

Synergy in terms of enhancing the

efficiency and effectives of market

linkages and value addition.


61


Creation


central level cooperative unions, one each for

dairy, coffee, fruits and vegetables, consumers,

and savings and credit.

It is clearly realized that the attraction towards

cooperatives is growing in backward areas and

communities.. As more than Rs 140 billion capital

has been mobilized under all cooperatives across

the country, this has significantly contributed to

the promotion of trade, industry and agro-

production from villages to cities. Cooperative

sector has shown potentials for the promotion of

large, medium and small-scale industries.

contribution of the cooperative sector to gross

domestic product is estimated around 1% while

their contribution in the financial sector is 7%

as well as cooperative members; Management

efficiency; Internal resource mobilization

Skills development; Market intelligence; Risk

management and Application of modern

technology to expand their business.

Micro, Small and Medium Enterprises

The term micro-enterprise is generally considered

to be a very small enterprise with an average

investment of NR 200, 000/=excluding land and

building (US$2500) and annual revenues of less

than NR 2,000.000/= with 9 workers including the

owner. The Industrial Policy 2010 classified

cottage industries as traditional industries that

utilize specific skills and local raw materials, are

labour intensive, and are related to national

traditions, art and culture. Industries with a fixed

capital investment of up to fifty million Nepalese

rupees are classified as small industries.

Enterprises with a fixed capital investment of

between 10 and 50 million Nepalese rupees are

classified as medium-sized,

Micro, Small and Medium enterprises (MSMEs) do

have direct role in growth and employment

creation. 13,020 cottage industries were registered

while until mid-December in the FY 2010/11, a

total of 8,184 industries were registered. In FY

2009/10, a capital amounting to NPR 15.3288

billion was invested in the 13,020 industries

registered. Among the total cottage and small scale

industries registered until FY 2009/10,

Traditional method of business. Competitiveness

(Products, prices, services); Collective responsibility

among network as well as cooperative members;

Management efficiency; Internal resource

mobilization. Skills development; Market

intelligence; Risk management and Application of

modern technology to expand their business.

Access to finance especially small enterprises as

Micro enterprises have access to micro credits but

their graduation from micro to small is a big

challenge because of limited financial access.

Synergy in terms of enhancing the

efficiency and effectives of market

linkages and value addition.

Development Banks

Development Banks fall under category “B” as per The development banks in operation have limited It is mandatory for the banks to invest 3.5% to 5% Synergy in terms of promoting


62


Creation


Central Bank’s classification. They are the

aggregate sources of funds of development banks

reached NPR.125.70 billion by mid-January 2010

with a growth of 15.6 percent. The total deposit,

which is the major source of sources for banks

reached NPR 87.38 billion in the review period.

Meanwhile, rate of total borrowing increased by

42.4 percent reaching NPR 6.04 billion mid January

2011 as compared to the figure of mid July, 2010.

Loans and advances that occupy a major portion in

the utilization of resources increased by 19 percent

to NPR.78.16 billion. There are 31 commercial

banks, 87 Development Banks, 80 Finance

Companies, 16 licensed cooperatives (limited

banking transaction), and 45 NRP licensed NGOs

dealing in Micro Finance.

contribution in growth and employment creation

as all of them function in the manner of

commercial banks. Even their operation is limited

to urban centres in the country.

of their total portfolio in deprived sector. The

banks lack human resources for dealing with SMEs

and even the credit line to SMEs is collateral

oriented. There is no system of term financing in

capital good.

outreach including deepening and

widening of financial services.

Capacity development for MSMEs

financing including agribusinesses.

Micro Finance Institutions

Normally MFIs are under category “ D” as per

Central Banks regulations. There are 5 rural

development Banks, 16 Grameen Bank replicators,

and wholesale micro finance institutions. 5 rural

development banks

established in 5 development regions of the

country. These banks have been providing

microfinance services through 5,598 centres

established in 1,179 VDCs of 52 districts by mid-

January, 2011.

Microfinance institutions engaged in wholesale

Do have a role to play ion growth and employment

through financial services and their outreach

program in various parts of the country.

Credit amounting NPR 23 billion has been

disbursed to 167,000 rural women members

through these banks. Credit of about NPR 50 billion

has been disbursed through other microfinance

development banks including Rural Development

Bank by mid-January, 2011.

The Rural Self Reliance Fund has been providing

benefits directly to a total of 26,000 households of

Although the MFIS have highest outreach in the

country they have not been able to cover the

entire nation. The other challenge is limited credit

facility from these MFIS and they cannot go

beyond that as the enterprises. The maximum loan

amount is limited to NPR 200,000 in the final cycle.

More based on group schemes rather than

enterprise potential.

Synergy in terms of promoting

outreach including deepening and

widening of financial services.

Capacity development for MSMEs

financing including agribusinesses.


63


Creation


lending of micro finance activities, Rural

Microfinance Development Center (RMDC)

has already made loan investment of NPR 5.35

billion to 92 microfinance partner organisations.

Small Farmer Development Bank that is engaged in

microfinance wholesale transactions has made

investment of NPR 6 billion by mid-March, 2011.

This Bank has NPR 1.4 billion amount in

investment. Rural Self-Reliance Fund that was

established in 1991 has its paid-up capital of NPR

443 million. As of mid-March 2011, the Fund has

disbursed loan of NPR 509 million to a total of 548

organisations including 53 nongovernmental

organizations and 495 cooperatives

57 districts through the execution of various

income generating and self-employment oriented

programmes.

UNNATI – Inclusive Growth Programme in Nepal Mapping of Development Partners

64

Annex 3: Mapping of Development Partners

The projects and programmes listed here focus on the major initiatives relating to economic growth and employment creation. The Consultant has been informed that the Joint Donor Group on Economic Growth will take the initiative to develop and institutionalise a comprehensive donor matrix. Please note that the information in the matrix was correct at the time of collection but that all information provided below should be validated with the source before being replicated. All abbreviations are included in the acronyms and abbreviations section in the main body of the report. The matrix will continue to be updated and revised during the preparation of the Growth and Employment Programme in Nepal

Project / programme Development

Partner(s) Partner /

beneficiary Budget Dates Description Geographical coverage

National Rural and Renewable Energy Programme

Multi donor programme including Danida and Norad

AEPC and CREF USD 170.1 million

July 2012 – July 2017

Support to accelerate renewable energy service delivery

Business development for renewable energy and productive energy use focussing on MSMEs

Establish CREF as the core financial institution for the renewable energy sector

National

Business Oxygen (Bo2) IFC Private sector financial Institutions (Bank of Kathmandu)

$ 14 million

Four years from 2012

Primarily working through a Fund Manager – private sector organisation _ BEED and Bank of Kathmandu are the major promoters . The company will make equity investment in SMEs after carrying out due diligence. The equity investment will be for 4 years duration and investment ranges from US $ 500,000 – 1,000,000. 00. IFC has technical support component to render business development services to the SMEs. The SMEs have to be registered companies under Company Act of Nepal. The fund management company will be liquidated after eight years and IFC paid back. The SMEs are required to invest 50% as equity of the total investment.

All Nepal with focus on women and other groups. Any type of enterprise. The fund plans to invest in 6 Eco Lodges in Kanchanjunga Park area in Taplejung district, the proposed GEPIN district. The company plans to invest in 70 SMEs in the period of four years.

Strengthening Planning and Monitoring Capacity of NPC

UNDP NPC USD 0.9 million

October 2009-September 2012

Support provided to NPC to prepare an inclusive and MDG based national development plan

Capacity of NPC enhanced for gender and social inclusion responsive and results oriented planning, monitoring and evaluation

Poverty environment initiatives (PEI) Mainstreaming

National

Enhancing Access to Financial Service

UNDP MoF USD 3.0 million

July 2008 - December 2012

Enhancing Access to Financial Service by 20 partners National


65




Capacity Building for Rural Finance Sector Development

ADB MoF USD 0.3 million

June 2010-September 2012

Support to Capacity Building for Rural Finance Sector Development

Nepal Investment Climate Reform Program

IFC (lead), DFID and Norad

Nepal Business Forum, MoF and private sector

USD 7.5 million

2010-2013 (Possible two-year no-cost extension)

With support from DFID-Nepal, SEDF commenced a three-year Program with the broad scope of Investment Climate Reforms (Nepal ICRP) in 2009/10. The Program includes the following components: • Public-Private Dialogue and Stakeholder Engagement to support the environment for investment climate reform – establishment of institutionalized and sustainable reform mechanism (Nepal Business Forum) involving private sector’s participation in policy and reform formulation. Increase awareness, understanding and support to the reform agenda by improving communications and facilitating stakeholder engagement. • Regulatory Simplification to make it easier to do business in Nepal - identification, prioritizing and implementation of reforms to reduce regulatory, administrative and procedural burdens for the private sector. These reforms will comprise assistance with simplification of registration, permits and licensing, inspections, tax administration and standards regulation, trade facilitation, Doing Business (DB) related reforms as well as related institutional capacity building. • Promoting private sector investments in key growth areas and regions of Nepal – this includes development of legal, regulatory and institutional framework and assistance with implementation of efficient Economic Zones as well as work on the investment climate issues of Nepal’s key growth sectors such as tourism and hydropower.

National

Human Rights and Good Governance Advisory Unit (HUGOU) Phase III

DANIDA National Human Rights Commission, Election Commission, Ministry of Local Development, and civil society

At present, DKK 170 million (US$33 million)

2009 - 2013 Promoting human rights and good governance in Nepal during

this critical, post-conflict transition period. Danida HUGOU

provides strategic partners with financial, technical and

strategic guidance to build institutional capacity within the

organizations.

The program supports initiatives by government and state institutions as well as civil society organisations in order to

National level Presently HUGOU is supporting 17 partners – 14 of which are CSOs.,


66




organisations deepen democracy and contribute to the realisation of human rights and effective, inclusive and accountable local governance. It promotes synergies between government, state and non-state actors and is closely linked to the Nepali policy framework and reflects the strategic priorities of the Danish development policies.

Program for Agriculture Commercialisation and Trade - PACT

World Bank MoAC USD 23 million

2009-2015 The development objective of the Agricultural Commercialization and Trade Project for Nepal is to improve the competitiveness of smallholder farmers and the agribusiness sector in selected commodity value chains in 25 districts supported by the project. There are three components to the project. The first component of the project is agriculture and rural business development, this component will finance demand-based sub-projects proposed by farmer groups, cooperatives, agribusinesses and other value chain participants to build strategic linkages with a view to increase competitiveness, productivity, quality, and market access. The second component of the project is support for sanitary and phyto-sanitary facilities and food quality management, this component will finance activities to strengthen the efficiency and effectiveness of sanitary and phyto-sanitary services in order to reduce existing obstacles to agricultural and food trade. It will also support the private sector's efforts to gain market advantage through improved food quality management. The third component of the project is project management, monitoring and evaluation, this component will finance overall project management, monitoring and evaluation and reporting.

25 districts

Poverty Alleviation Fund - PAF

World Bank, DFID, SDC

Poverty Alleviation Fund

WB – USD 12 million SDC-USD 4 million DFID-UK£ 30 million

Ongoing The Poverty Alleviation Fund (PAF) was designed to address the root causes of Nepal’s conflict – poverty, inequality and lack of services. The program began implementation at the height of the conflict in 2004. Central to the idea of the PAF is a conviction that the poor themselves are best suited to manage their own needs and resources. Community groups organize themselves and collectively identify, prioritize, plan, fund, and implement their development needs. They are free to choose from an open menu to correspond to local priorities.

Through income-generating activities and community infrastructure projects, the PAF works with over 12,000 community organizations in 59 of Nepal’s 75 districts. Under the ongoing second phase of the project, the PAF will support activities in all 75 districts and around one million households


67




will benefit by 2011.

The Rural Access Improvement and Decentralization Project - RAIDP

World Bank DoLIDAR 2005-2013 To date the project has rehabilitated and upgraded 540 kilometres of existing dry-season rural roads to all-season standard. Additionally the remote hill project districts have upgraded another 38 kilometres to dry-season standard. The project financed maintenance of about 3,500 kilometres of rural roads, constructed 102 trail bridges, and developed small community infrastructures. Approximately 2.4 million people are expected to benefit by the time the project ends in 2013.

RAIDP ,active in 30 districts, has so far focused on remote, rural, and hilly areas of the country, but since 2009 also including district in Terai plains.

Centre for Inclusive Growth

DFID MoF UK£ 5.6 million

January 2009-January 2014

Addressing measures to key binding constraints to inclusive growth including hydropower.

National

Nepal Enhanced Capacities for Trade and Development (NECTRADE)

EIF MoCS USD 0.9 million

April 2010 -

March 2013 Support EIF National Implementation Unit (NIU) in NTIS Implementation and TRTA/Aid for Trade Mobilization

National

Support to Nepal's WTO Accession

GIZ MoCS EUR 0.6 million

December

2010 -

December

2012

Enhance the Capacities of the GON, Private Sector and Service

Providing Organizations, and enable them to implement WTO Commitments

National

Support for Strengthening Institutional and National Capacities Related to Standards, Metrology Testing and Quality (SMTQ)

NORAD MoI EUR 0.4 million

September

2007 -

December

2011

Recognize the product certification system of Department of Nepal Bureau of Standards & Metrology

Plan for Quality Control of Imported Goods

Textile laboratory of Department of Nepal Standards & Metrology strengthened and accredited

Training on ISO 22000

National

Support to Compliance with the Technical Barriers to Trade (TBT) and Sanitary and Phytosanitary measures agreements

EU MoI EUR 2.2 million

September 2007-December 2011

Upgrading the infrastructure of NBSM

Strengthening NBSM as an effective quality control body

Enhancing the accreditation and certification capability

Organizing seminars and specialized workshops

Designing and implementing a university outreach program

Operationalizing Technical Barriers to Trade enquiry point

National


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Support to Trade and Economic Development

EU MOCS EUR 9 million

2013-2016 Detailed information still pending from EU.

Support to the Nepal Trade Integration Strategy in the areas of TBT and SPS

Nepal Agriculture Development Strategy

ADB/IFAD/Danida MoAC USD 2.0 million

February 2011 – Dec. 2012

Preparation of Nepal Agriculture Development (20 years) Strategy Danida is providing two Value Chain Specialists

National

Commercial Agriculture Development Program - CADP

ADB MoAC USD 18 million

2007-2012 The Project aims to accelerate the process of agricultural commercialization in the EDR by building on earlier project initiatives, and responding to the needs of stakeholders by strengthening linkages and ensuring fair benefits to poor disadvantaged communities and women. PROJECT OUTCOMES

To Improve efficiency of marketing and processing of High Value Crops (HVCs) such as vegetables, fruits, tea and spices in the EDR.

To increased rural employment and income.

11 districts in the Eastern Development Region (EDR)

High Value Agriculture in Hill and Mountain Areas - HVAP

IFAD/SNV MoAC, AEC/FNCCI

USD 19 million

July 2010 - September 2017

To integrate rural poor, especially women and marginal groups in high value agriculture and NTFP/MAPs value chains and markets, have improved income, employment opportunities and ability to respond to market demand and opportunities based on marketing agreements with private agribusiness. SNV engaged as implementing partner for parts of the programme.

Seven districts served by three north-south corridors: Surkhet-Chhinchu-Jajarkot, Surkhet-Dailekh and Surkhet-Jumla roads. Further, three districts as Dolpa, Mugu and Humla as the road network expands.

High Mountain Agribusiness and Livelihood Improvement Project

ADB MoAC USD 30 million

2011-2017 The project will assist farmers and downstream enterprises to strengthen linkages, taking advantage of the gradual improvement in infrastructure, to realize the existing demand for mountain products. A demand-driven approach will be used to (i) mobilize interested producer groups; (ii) provide support for quality improvement, value adding, and product aggregation into quantities of scale sufficient to attract demand-side business; (iii) stimulate private sector agribusiness development; and (iv) reduce risk exposure to businesses investing in the high mountain districts. Project grants will be provided to eligible entities for implementing viable agribusiness plans that demonstrate income and employment benefits in the project districts. The private sector has expressed interest in a range of suitable business development, including (i) organized production of high-value products

Ten districts in four development regions: (i) Central Development Region – Dolakha and Rasuwa; (ii) Eastern Development Region – Sankhuwasabha and Solukhumbu; (iii) Mid-Western Development Region – Dolpa, Jumla, Humla and Mugu; and (iv) Western Development Region – Manang and Mustang.


69




through contract or supply agreements; (ii) established collection, post-harvest quality grading, and storage facilities; (iii) processing and value adding; and (iv) quality certification to access high-value markets.

Technical Assistance for Leasehold Forest and Livestock Program in Nepal

Finland MoFSC USD 3.5 million

2010 - 2014 To improve the effectiveness of the LFLP and building appropriate institutional and technical capacities and scaling up of the leasehold forestry.

National

Strengthening Capacity for Managing Climate Change and Environment

ADB MoE USD 0.5 January 2009 - Dec 2011

To strengthen country's capacity for environment and climate change management.

National

Rural Reconstruction and Rehabilitation Sector Development Program- RRRSDP

ADB, World Bank, , SDC, DFID, OFID

DoLIDAR USD 106.8 million 2008 - Dec

2013. The Project outputs include: (i) improved rural roads; (ii) developed and improved community-based supplementary rural infrastructure; (iii) enhanced equity, employment, and income opportunities for the poor and disadvantaged; (iv) strengthened institutional capacity of Ministry of Local Development (MLD), Department of Local Infrastructure Development and Agricultural Roads (DOLIDAR), district development committees (DDCs), and communities; and (v) improved project management.

The Project covers 20 districts including Panchthar, Ilam, Jhapa, Morang, Sunsari, and Dhankuta from the Eastern Development Region; Sindhuli, Dolakha, Sindhupalchowk, Kabhrepalanchok, Lalitpur, Bhaktapur, Kathmandu, and Chitawan from the Central Development Region; Manang, Mustang, and Parbat from the Western Development Region; Rolpa and Rukum from the Mid-Western Development Region; and Dadeldhura from the Far-Western Development Region. In addition, the Project will provide complementary support to the existing 18 Decentralized Rural Infrastructure and Livelihood Project (DRILP) districts, which are Baitadi, Bajhang, Bajura, Darchula, Dolpa, Jumla, Jajarkot, Kalikot, Mugu, Baglung, Gorakha, Lamjung, Myagdi, Okhaldhunga,


70




Ramechhap, Sankhuwasabha, Solukhumbu, and Taplejung.

Inclusive Development of the Economy Programme – INCLUDE

GIZ MoLD, FNCCI and district CCIs

Phase I: 2008-2011 Phase II: 2011-2014

The programme comprises of three, densely interwoven components working on multiple levels:

Public Private Dialogue (PPD) for economic development and peace-building

Local/Regional Economic Development (LRED)

Access to Finance

Three areas: Regional Cluster 1 programme districts: Chitwan, Makwanpur, Bara, Mahottari, Dhanusha, Ilam&Jhapa Regional Cluster 2 programme districts: Palpa, Rupandehi&Kapilvastu Regional Cluster 3 programme districts: Kailali, Surkhet, Dang &Pyuthan

Nepal’s Education for Income Generation Program – EIG

USAID MoAC, DDC, VDC

USD 15 million

January 2008 –January 2013

The Education for Income Generation Program aims to increase income and employment for disadvantaged youth. Specifically, the program was designed to mitigate conflict by training disadvantaged youth between the ages of 16 and 30 in the Mid-Western Region of Nepal. The program has four components: (1) literacy, life skills, and entrepreneurship training, (2) vocational education, (3) agricultural productivity and microenterprise, and (4) scholarships. . To implement the program, USAID awarded a $14.7 million contract to Winrock International, covering a 5-year period from January 3, 2008, through January 2, 2013. The program’s activities are expected to directly benefit 70,220 individual participants throughout the 15 districts of the Mid-Western region of Nepal. In addition, each component of the program is expected to give particular consideration to beneficiaries in the five districts of the Karnali Zone

1 in the

northern half of the Mid-Western region. The Karnali Zone is the most impoverished and underdeveloped region in Nepal. As of June 30, 2010, obligations and disbursements under the program totalled $8.5 million and $6.2 million, respectively.

15 Districts in Mid-Western Region

http://www.includenepal.org/page-Public-Private-Dialogue

http://www.includenepal.org/page-Public-Private-Dialogue

http://www.includenepal.org/page-Local-Regional-Economic-Development

http://www.includenepal.org/page-Access-To-Finance


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Nepal Economic, Agriculture and Trade Activity - NEAT

USAID MoF, FNCCI, CNI, District CCIs

USD 30 million

January 2011 – July 2013

PROGRAM OVERVIEW USAID’s Nepal Economic Agriculture and Trade (NEAT) Program is focused on improving Nepal’s economic foundations to promote rapid, sustained, and inclusive economic growth that will lessen the potential for conflict, reduce poverty, and improve lives. The strengthening of these foundations will involve substantial reform in governance related to business. The NEAT project is committed to partnering with the people of Nepal to create “measurable progress in expanding and deepening democracy, strengthening public and private institutions, and supporting policies to promote economic growth and poverty reduction.” (Country Assistance Strategy Nepal, 2009-2013) COMPONENTS NEAT addresses the challenges listed above and promotes positive political and social change through five main components:

Fostering a conducive business environment for private sector led growth

Encouraging competitiveness and exports in selected agricultural commodities

Enhancing food security

Improving trade and fiscal policies and practices to facilitate trade and increase revenues without distorting the economy

Strengthening microfinance policy and institutions to increase the access of women, poor and disadvantaged to financial services.

National focus. NEAT Offices: Kathmandu, Butwal, Nepalgunj, Ilam, Ghorahi

Micro Enterprise Development Programme - MEDEP

UNDP, CIDA, AusAID, NZAID

MoI, FNCSI; DDC, VDC

Phase I: 1998-2007 Phase II: 2008-2011 Phase III: 2012-2016

The Micro-Enterprise Development Programme is a multi-lateral donor funded poverty reduction initiative supported by the Ministry of Industry (Nepal Government) and the United Nations Development Programme in Nepal since 1998. To support Nepal's poverty reduction efforts, the Micro-Enterprise Development Programme has been identifying the poorest of the poor. The programme has been working with poor people, especially women, Indigenous Nationalities, Dalit, Muslim, Other Madhesi groups and involving them in micro-enterprises.

Phase III Map 1.Jumla 2.Kailkot 3.Dailekh 4.Surkhet 5.Dolakha 6.Baglung 7.Rukum


72




The programme's objectives and goals have been to translate the broader vision of the government Interim Three Year Plan, which is to address poverty through the development of micro-enterprises and generating employments among low income families. This programme is a multi partnership initiative between state institutions and the private sector to promote micro-enterprises amongst the poor for economic empowerment.

8.Rolpa 9.Salyan 10.Mohatari 11.Rautahat

Establishment of a business service centre for Women's micro and small enterprises in Nepal

EU USD 0.7 million

December 2007 - December 2011

Establishment of a business service centre for Women's micro and small enterprises in Nepal .

Kathmandu, Lalitpur and Bhaktapur

Agriculture-based Micro-enterprises Development Project

CIDA USD 1.2 million

March 2011 - March 2012

Will train 2,500 individuals in entrepreneurship and technical skills; create 1,500 new agro-based micro-entrepreneurs

UN Interagency Rehabilitation Program - UNIRP

UNDP, UNICEF, UNFPA and ILO

Ministry of Peace and Reconstruction

USD 15 million

June 2010–May 2012

UNDP led the establishment of UN Interagency Rehabilitation Programme (UNIRP) in 2010 to facilitate the transition of discharged personnel from military to civilian life. The programme is equipping the 4,008 Verified Minors and Late Recruits with different types of skills to facilitate their socio-economic rehabilitation. The primary objective of UNIRP is to have as many as possible of the minors and late recruits involved in gainful employment or livelihood opportunities by supporting their rehabilitation. Within this joint programme, UNDP facilitates vocational skills training and micro-enterprise development support, UNICEF manages the education and psycho-social counselling programme, the UNFPA coordinates the health related training along with gender and health support while the ILO builds the capacity of the vocational training providers. The programme also supports discharges with special needs. It provides child care and support for women with young children and to those suffering from physical health and psychological problems. After completion of course, the trainees get toolkits and undergo skill test through National Skill Test Board of Nepal,

National focus


73




which further enhances opportunity for employment.

The Employment Fund World Bank, DFID, SDC

MoE, CTVET WB: USD 12 million DFID: UK£ 30 million SDC: USD 4 million

Ongoing The Employment Fund (EF) is governed through the framework of an agreement between the Swiss Development Cooperation (SDC) and the Government of Nepal with the aim to implement the Employment Fund’s Employment for Youth (EfY) project. The purpose of establishing the Employment Fund was to promote private sector training provider to extend skills training to young people from disadvantaged groups that will lead them into gainful employment in national and international labour markets, to enhance the training and management capacities of private sector training providers so that they are able to deliver quality, outcome and incentive based market led vocational training and to establish EF as a model for funding Technical Education and Vocational Training (TEVT) for youths from disadvantaged groups that leads into gainful employment by attracting public and private sector investors into the fund. All trainees are between 16-35 year-old, are school drop-outs (below 10th class, i.e. below SLC) and come from economically poor backgrounds. A special focus is put on young women and men from disadvantaged groups, which means that they are not only economically poor, but they also suffer from caste/ethnic-based discrimination.

National focus

Skills Enhancement for Employment Project (SEEP)

ILO MoLT USD 0.9 million

January 2008 - December 2011

Training of youths to make them employable as per the market demand in Far Western districts of Nepal

Model enterprises run in cooperative model by trained youths

Improve the capacity of technical training providers and collaboration of stakeholders

National and Far Western districts

Skill development and employment for the informal sector in Nepal

EU USD 0.5 million

January 2011 - Dec 2015

Action for sustainable employment through skill Enhancement

Achham, Kailali and Surkhet

Alleviate unemployment by upgrading skills

EU USD 0.7 million

May 2011 - May 2014

Alleviate unemployment by upgrading skills Dang, Dolakha and Ramechap

Joint Trade Union Cooperative Centre

Danida/LO FTF Council of Denmark

JTUCC DKK 2.5 million

2009-2012 Support to JTUCC in the form of joint financing of conferences, policy research and analysis and campaign activities.

National


74




Great Himalaya Trial Development Programme (GHTDP)

DFID SNV as implementing partner

UK£ 2.1 million

July 2011 – July 2013

GHTDP will result in an improved environment for private sector investment in tourism related activities in GHT districts, to increased tourism numbers, and increased expenditure by tourists and tour operators. 1072 Primary micro small and medium enterprises (MSMEs) in targeted 5 GHT districts will benefit directly from the interventions. The result will be an estimated increased (cumulative) net income of US$ 1.21 million in targeted and US$ 3.45 million in non-targeted districts by 2013; and US$ 6.40 million in targeted and US$ 11.38 million in the non-targeted districts by 2016. The primary effects of this intervention are microeconomic but it is expected to positively impact on the investment climate, and promote investment and growth. The revenue to the government, increased tourism business and incremental employment are expected to have a macro level effect on the poverty headcount. The project is expected to generate incremental revenue in the form of visa fee, airport taxes and other taxes to the government. It is estimated that cumulative government revenues would be £0.443 million by 2015, £1.89 million by 2020, £4.55 million by 2025, and £9.8 million by 2030.

National and five Great Himalaya Districts - Humla, Dolpo, Gorkha (including Manaslu), lower Solukhumbu and Taplejung.

Inclusive Development support Program.

Poverty and Inclusive Growth Unit - UNDP

NPC and MoF and other sectoral Ministries

???? Formulation phase – potential partner for GEPIN C3

The proposed program primarily focuses on development of Policies to create growth and more employment opportunities for the poor, disadvantaged and women, strengthening of data and monitoring to track development results and promote evidence-based policy development, planning, budgeting and programming There are three interlinked pillars in this currently formulated program; 1) Inclusive economic policies; 2) Comprehensive information systems; and 3) Affirmative action policies and programs promoting inclusion. Each of these pillars is described below in brief.

Primarily at central policy level with NPC and MOF and other line ministries in Kathmandu

Enhancing Access to Financial Services (EAFS)

UNCDF

Nepal Rastra Bank

????

Formulation

EAFS aims to increase outreach by promoting linkages between

Financial Services Providers (FSPs/MFIs) and Saving Credit

Groups (SCGs). It will also encourage innovation, carry out


75




phase – potential partner for GEPIN C1

public information campaign for increasing the frontier of

microfinance services. The Fund for Inclusive Finance (FIF) is the

one of the major working mechanism to promote inclusive

finance. It is a new technical assistance fund to promote the

development of inclusive financial sectors. The project works

partnering with FSP/MFIs to increase outreach, strategic

partnership will be forged with wholesalers and innovative

partnership with FSPs/MFIs. In the context of this project,

inclusive finance refers to an extension of full range of financial

services to the bankable households, SCGs and enterprises

through different financial services providers (i.e. FSP, MFIs,

FINGOs, Dev. Banks, Credit union, credit cooperatives, financial

companies, remittance companies). Technical assistance to the

partner FSPs and SCGs will be provided through Business

Development Service Providers (BDS).

Decentralized Rural

Infrastructure and

Livelihoods Project

(DRILP) Phase II

ADB and SDC DoLIDAR/MoFA

LD and DDCs

USD

134.75

million

Jan 2012 to

2015

The scaled up project scope will improve 260 kilometers (km) of

rural roads in the 18 districts (200 km new and 60 km

upgrading). The design phase of sub-projects will consider the

impact of climate change which includes avoiding unstable

slopes, high risk soil erosion prone areas and landslide areas,

and water logged areas near streams; strictly implementing

slope stability measures and robust road drainage systems;

graveling the road in high risk areas; using more and better

maintenance approaches; and encouraging community

plantations. Rural roads of 1,200 km will be fully maintained in

the 18 districts and 6,500 meters (m) of trail bridges will be

constructed.

18 districts of Baglung, Baitadi, Bajhang, Bajura, Darchula, Dolpa, Gorkha, Humla, Jajarkot, Jumla, Kalikot, Lamjung, Mugu, Myagdi, Okhaldhunga, Ramechhap, Solukhumbu, Taplejung.

Rural Access

Programme (RAP II)

DFID DoLIDAR/MoFA

LD and DDCs

$ 50.3

million

2008 to 2013 Support the Government in building feeder and district roads with labor-based and environmentally sound methods.

Doti, Achham, Dailekhast: Khotang, Bhojpur, Sankhuwasabha, Terhathum

UNNATI – Inclusive Growth Programme in Nepal Programme Steering Committee Environmental Screening Note

76

Annex 4: TOR for Programme Steering Committee

1. Background

The UNNATI Programme Steering Committee is the highest decision-making mechanism concerning over

all priorities of the programme in accordance with the programme document, government programme

agreement and other legal documents.

The Steering Committee reports to the Government of Nepal and the Government of Denmark.

2. Mandate and scope

The role of the Steering Committee is to provide overall oversight of and guidance on the priorities of the

programme as per the programme document and the programme agreement. The committee cannot alter

overall programme objectives, but may recommend changes in immediate objectives.

3. Composition

The Steering Committee will be chaired by Secretary of Ministry of Agriculture Development. The

members of the Steering Committee will be the signatories to the government agreement for the

programme i.e. the Ministry of Finance and the Embassy of Denmark. Decisions are by consensus.

4. The specific tasks of the Steering Committee comprise:

Decisions concerning overall priorities of the program based on the program document,

government programme agreement and other legal documents.

Decisions on the major deviations from the programme design

Decisions on use of unallocated funds and reallocations among budget lines between components

Recommends changes on immediate objectives

Ensures timely approval of programme plans, budget and progress reports.

Ensures the approval of the audit report

Endorses Programme Review and Aide Memoires

Agrees on the timing and terms of reference for the joint programme reviews

Ensures follow-up in the recommendations made by the joint programme reviews

Ensures that the Chairperson of the Management and Coordination Committee will report to the

Steering Committee and presents work plans, budgets, progress and other reports as well as bring

to the attention of the committee any deviations from plans or other important implementation

issues.

Appoint the members including the Chairman of the Advocacy Fund Board.

5. Working procedures

The Steering Committee will meet on a regular basis twice a year – in May in advance of the

Government of Nepal’s financial year and in November in advance of the Danish financial year.

Ad-hoc meetings may be called by either member of the committee

The secretariat for the Steering Committee will be the MoAD.

The Steering Committee secretariat shall announce the meetings with at least two weeks’ notice.

All documentation for the meetings shall be distributed to the members at least one week in

advance together with a draft agenda

The members of the Steering Committee may hold internal consultations with relevant stakeholders

prior to the meetings in order to solicit comments and views on programme related matters.

UNNATI – Inclusive Growth Programme in Nepal Programme Steering Committee Environmental Screening Note

77

The members of the Steering Committee may invite resource persons/stakeholders to address a

specific issue on the agenda in order to clarify issues or offer specialised expert knowledge to the

discussion, if required.

The Steering Committee secretariat is responsible for drafting the minutes of the Steering

Committee meetings and distributing these to the members.

UNNATI – Inclusive Growth Programme in Nepal Management and Coordination Committee

78

Annex 5: TOR for Management and Coordination Committee

1. Background

The UNNATI Management and Coordination Committee (MCC) is responsible for the management of sub-

component 1.1 and of sub-component 3.2. In addition, the committee ensures that the programme activities

of the three components are well coordinated and implemented in a coherent manner and that they are

mutually reinforcing as envisaged in the programme design. The Chairperson of the MCC reports to the

Programme Steering Committee.

2. Mandate and scope

The role of the MCC is to coordinate, harmonise and ensure that synergy is enhanced between the three

components. The committee is also responsible for the management and oversight of the performance of the

management contractor and the advocacy fund manager.

3. Composition

The chairperson of MCC will be appointed from the Ministry of Agriculture Development. The members of

the MCC will be the Chairperson of the Infrastructure Committees (1), Chairpersons of the value chain

forums (3), , representative from Nepal Rastra Bank and UNCDF, representative from Advocacy Fund

manager, Representative from Ministry of Industry and two prominent private sector persons

(representatives from Eastern Region Business Forum and Commercial Agriculture Alliance) Management

is by consensus.

4. The specific tasks of the MCC comprise:

Coordinates the three components and their activities

Oversees the performance of the Management Contractor and the Advocacy Fund Manager

Monitors the outputs, outcomes and impact at the programme level

Oversees the financial management system and annual audits

Consolidates work plans, budget, financial/progress reports and audit reports

Recommends on reallocating of budget between the components

Recommends on use of unallocated funds

Decides on major implementation issues – procurement, TA, studies at programme level

5. Working procedures

The MCC will meet regularly on a quarterly basis. The meetings will take place in advance of the

Government of Nepal’s financial year and of the Danish financial year. They will be before the

meetings of the Programme Steering Committee.

The secretariat for the MCC will be MoAD supported by Programme Monitoring and Results

Measurement Coordinator.

The Chairperson of MCC will report to the Programme Steering Committee with consolidated

work plans, budgets, progress and other reports as well as bring to the attention any deviations

from plans or other important implementation issues.

The MCC secretariat shall announce the meetings with at least two weeks’ notice. All

documentation for the meetings shall be distributed to the members at least one week in advance

together with a draft agenda

The Chairperson of the MCC may invite resource persons/stakeholders to address a specific issue

on the agenda in order to clarify issues or offer specialised expert knowledge to the discussion, if

required.

UNNATI – Inclusive Growth Programme in Nepal Management and Coordination Committee

79

The MCC secretariat is responsible for drafting the minutes of the MCC meetings and

distributing these to the members and other relevant stakeholders, if required.

UNNATI – Inclusive Growth Programme in Nepal Gender Rolling Plan

80

Annex 6: Gender Rolling Plan

Basic Information

Programme Title Growth and Employment in Nepal

Sector Private Sector

Country Nepal

Budget (Danida’s Contribution) 400 mio. DKK

Starting date and duration 1.January 2014 – 31 December 2018

Phases in

programme cycle

and

documentation

Action required

Responsibility

Preparation phase

GERP Annexed to

the Concept Note

Include the following information:

Donor harmonisation and alignment in the area of gender.

Availability of sex-disaggregated data.

Assessment of major gender issues at national and sector level.

Opportunities/constraints for addressing these issues.

Gender Studies to be used/up-dated/prepared including Country Gender Analysis (Gender Toolbox booklet 4), Sector Gender Analysis (Gender Toolbox booklet 5). Proposed gender equality objectives/outputs to be addressed by the programme.

The Danish

Representation

Formulation and

appraisal phase

GERP and

programme support

document, partner

document/

component

description

Describe how gender issues will be addressed in the programme, Specify gender specific purpose, strategy, activities, expected outputs and financial allocations of planned interventions (Gender Toolbox booklet 5 provides examples of how to mainstream gender in selected sectors).

List identified gender equality indicators aligned with national targets on gender.

List how gender equality will be included in proposed monitoring and evaluation systems.

The Danish

Representation

Gender Equality and Social Inclusion (GESI)

The Interim Constitution and through new legislation women’s rights have been promoted and

protected in Nepal – women’s citizenship rights, inheritance rights and other human rights are

guaranteed in the Interim Constitution. In addition, the state has introduced affirmative action to


81

achieve a better gender balance in elected and administrative government and is increasingly trying to

influence negative behaviours in the community and domestic spheres that had previously not been

considered as an area to be addressed by the formal legal system and state policy. Gender Based

Violence – including areas like marital rape, which was previously not even spoken about – has been

recognized as a criminal offence. Laws against trafficking of women and children have also been

enacted and the prime minister declared 2010 the year against gender violence. The state has also

continued to make major investments to reduce disparities in female access to education and health

care and continues its long standing support to many programs to increase women’s empowerment

through their participation in women’s groups and other mixed users groups at the community level.

Overall, the woman’s movement in Nepal has made significant gains since 2006. In addition, efforts

are also being made to enhance the access and control of women to and over income generation and

resources by increasing their participation and access to credit, skills and market opportunities. There

have been significant achievements with women’ literacy increasing, improved health and other

human development indicators. But women’s access to literacy, education and decision-making roles

as administrators, legislators or professionals is far below that of men. This is indicated also by the

lower scores for Gender-related Development Index (0.499) and Gender Empowerment Measure

(0.496) in comparison to the Human Development Index which stands at 0.509.37 Women continue to

experience greater vulnerability to poverty38 and score lower in other areas of human development

because of gender‐based discriminatory practices such as patriarchal norms that govern societal

relations,39 unequal access to services like health and education, and inequitable control over

resources such as property. Women’s ownership of property is an important factor for women’s

empowerment but land is inherited almost universally in all communities from father to son. Women

therefore face much greater economic insecurity than men since their access to what has traditionally

been the primary means of production has always been indirect and dependent on their status as

daughter, wife or mother of a land-owning male.40 In 2001, the percentage of household with female

ownership of land was just 11 percent in all of Nepal, indicating their financial dependency.

Until the increase in female literacy and the emergence of women’s credit and savings and other types

of development groups over the last 20 to 30 years, women in most communities have had very little

social or economic role beyond those of the family and the maintenance of the household subsistence

enterprise. Current data on occupational status of women and men shows that even though women

are economically active, the earlier pattern has continued with women working mainly as unpaid

family labour and/or in the agriculture while men predominate in the higher return, modern sector

jobs (Bennett et al. 2008, Acharya, Subba, et al. 2008). In terms of employment patterns, better off

Brahman women from Hill/Mountain areas are less likely to be employed (68 percent employed) than

Dalit women (80 percent employed) which is indicative of a common pattern in all of South Asia, i.e.,

the withdrawal of women from the paid labour force in response to increased economic status. But it

is not just economic factors alone that influence women’s employment rates. The Madhesi Other

37 UNDP, Nepal Human Development Report, 2009.

38 Because poverty (generally measured in terms of per capita income or consumption levels) in Nepal is measured at the household level instead of individual levels, it is not possible to compare poverty levels between men and women. However, various analysis and understanding of poverty in Nepal does suggest that the number of women who are poor outnumber the number of poor men. See NHDR 2009.

39 Early child marriage of girls persist, though it has decreased significantly from the eighties, and in spite of the legal prohibition on polygamy, many women still face the indignity of having to accept co-wives. Further, Madhesi Other Castes and the Muslims continue to practice the system of purdah, or seclusion (See Acharya, Subba, et al. 2008).

40. A bill passed in 2000 did ease some restrictions on women’s access to property in their marital household but still did not accord full inheritance rights to daughters.


82

Castes and the Muslims who practice the system of purdah, or seclusion vary greatly in their economic

levels and yet all three groups have markedly lower female employment rates (56 percent and 39

percent respectively) than groups like the Tarai Janajatis (79 percent) where seclusion is not practiced

(Bennett et al. 2008).41

41

Forging Equal Citizenship in a Multicultural Nepal, 2011 (drat, to be published as an update of the GSEA study of 2005), WB/DFID, 2011


83

Availability of Gender Segregated Data

Disaggregated data and information is key to understanding the existing situation of women,

including of caste/ethnic differences. There are efforts at collecting disaggregated data, and sex-

disaggregated data is most common in government statistics and data of other programs/projects.

Butconsistent disaggregation against all social groups with regional identities (women and men of:

Hill and Madhesi Dalits, Adivasi Janajatis [except Newars], Newars, Muslims, Other Backward Classes

[OBCs], Hill and Madhesi Brahmins/Chhetris) is not followed. Ministries, including MLD, report on

M&E formats issued by NPC, (specifically the Poverty Monitoring Division of NPC which has the key

responsibility to work in this area). For effective GESI mainstreaming, integrating gender and social

inclusion into the M&E systems is crucial. As such, the NPC has established a system of gender

coding for PRSP monitoring and demands reporting, with some disaggregation on intermediate and

outcome indicators in the Poverty Monitoring and Analysis System (PMAS). It has also developed

(with donor support) a District Poverty Monitoring Analysis System (DPMAS), which was piloted in a

few districts and could potentially be adapted for poverty monitoring in the new federal units once

these are determined. But at present, neither PMAS nor DPMAS are actively used.

Donor harmonisation alignment

Nepal has ratified as many as 16 international human-rights instruments, including international

conventions and covenants on women (CEDAW, Beijing Platform of Action), child rights (CRC),

indigenous people’s rights (ILO 169) and against racial discrimination (CERD). It has also committed

to international agreements on targets (MDGs) set for women’s empowerment, education, drinking

water and sanitation, health, hunger and poverty. Nepal has also agreed to the UN Security Council

Resolution (UNSCR 1325) that establishes legal standards governing the protection of women during

conflict, for their participation in peace and security processes, and for protection against multiple

forms of violence.

For the country’s development partners, including DFID, WB and ADB, mainstreaming gender

equality in their overall work is mandated by global and national agency directives42. For instance, in

its Country Partnership Strategy (2010-12), the ADB recognises the need to ‘address gender, ethnic,

and caste discrimination through policy reform, targeted investments, and the mainstreaming of

equal opportunity measures in key sector investments,’ and aims to guide and ensure that in all ADB

operations and sectoral assistance, gender and social-inclusion concerns are adequately addressed43.

DFID’s Country Business Plan states that ‘Gender is at the heart of our work … all our work considers

impacts on women and girls44. Efforts to promote social inclusion are likewise an integral part of the

World Bank’s Interim Strategy of Nepal

42

For the World Bank, the gender-mainstreaming strategy (2001) and Operational Policy and Bank Procedures statement (2003) provide the policy framework for promoting gender issues as part of strategically focused analytical work, policy dialogue and country assistance (World Bank, Gender Equality as Smart Economics: A World Bank Group Gender Action Plan (Fiscal years 2007–10), September, 2006). The Policy on Gender and Development (1998), Strategy 2020 and ADB results framework articulate ADB’s commitment to gender, and require that gender inequalities be addressed in all aspects of ADB’s work (ADB, Gender Mainstreaming in ADB Projects Report of the Technical Working Group, Feb 2010). The principal elements of DFID’s gender policy and strategy are contained in ‘Poverty Elimination and the Empowerment of Women’ (2000) and the ‘Gender Manual’ (2002). A ‘twin track’ approach based on mainstreaming of gender issues in all areas and sectors, while maintaining a focus on the empowerment of women as a disadvantaged group, has been adopted (Rikke Ingrid Jensen et al, Evaluation of DFID’s Policy and Practice in Support of Gender Equality and Women’s Empowerment, COWI Evaluation Team, 2006).

43 Nepal: Country Partnership Strategy 2010 – 2014, A strategy for a country in transition, September 2009.

44 The UK Government’s Programme of Work to fight poverty in Nepal 2009-12.


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GESI STRATEGY Gender Equality and Social Inclusion (GESI) purpose: Women and people from excluded groups have enhanced capacities for commercial/semi-commercial farming and agro-enterprises in tea, ginger and dairy sub-sectors.

The programme will adopt a strategy to address the issues of women and of people from excluded

groups in each component and sub-component, as relevant. A GESI analysis will be done to identify

the barriers experienced by women and the excluded for accessing resources and opportunities in the

identified value chains and for moving into the field of commercial/semi-commercial farming and

agro-enterprises from subsistence agriculture. The social groups, which experience systematic

historical gender/caste/ethnicity/regional identity based exclusion in the programme districts will

need to be mapped and the specific causes of their exclusion relevant to the programme mandate

identified. The social–cultural and economic constraints impacting women and people from excluded

groups in the programme districts will be identified and coping mechanisms adopted by local

communities to address such practices reviewed. The existing power relations of women and men and

of people from advantaged and disadvantaged social groups will be analysed in order to understand

the decision making power of the target groups. Existing enabling factors like GoN’s/MoAD’s positive

policies and legal frameworks, women’s groups/cooperatives working on agricultural products,

existing technologies, market linkages and rural infrastructure that can specifically address the

gender/caste/ethnicity/location based barriers of women and the excluded will be identified and built

upon.

Based on this GESI analysis in each of the value-chain sectors (tea, ginger and dairy), the programme

will develop appropriate policy directives, institutional arrangements and budgeted interventions to

address the identified barriers of women and the excluded and strengthen their existing capacities for

improved production and income from commercial/semi-commercial farming and the agro-

enterprises.

Recognising that the realities of women and the excluded and their abilities to use opportunities are

different from the more advantaged, the programme will adopt a more comprehensive approach and

address three inter-linked domains of change: i). Increasing assets and capacities i.e. measures will be

taken to increase women’s and the excluded access to programmes’ resources and opportunities.

Access to finance, post-harvest management such as warehouse storages, processing facilities and

market outlets, production technologies and other such interventions will be appropriately designed

to ensure access of the excluded; ii) building voice and influence i.e. strengthening capacities of

women and the excluded to be better informed about the resources available to them, what other

service providers can provide, what government has provisioned for them, what the programme will

support them with, their ability to influence how these services reach them, capacities to ensure that

the service providers are delivering according to their commitment and to make these agencies

accountable. Strengthening of associations and cooperatives must prioritize women-led cooperatives

and invest adequately in strengthening necessary skills to manage an enterprise; and iii) revising

formal and informal policies, institutions, mind-sets and values that discriminate against women and

the excluded i.e. sectoral government policies that impact on women’s and the excluded access to

required resources for establishing/developing enterprises in the selected sub-sectors, the socio-

cultural practices that determine women’s mobility, their work-burden, the social permission to

interact with outsiders and people outside of community and family; the limited decision making

power of women, their financial dependency on men are issues that negatively impact the


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opportunities for engaging at decision making levels and rising above unskilled labour in the

agriculture sector. This means that in each of the component and sub-components, specific

interventions will be developed and implemented to ensure that women and the excluded are able to

benefit from the programme’s interventions

OUTLINE OF GESI ACTIVITIES Component 1: The Value Chain Component

Identify and promote win/win opportunities where is is in the interests of private providers

and value chain players to effectively serve and do business with women and excluded people.

Conduct GESI analysis and identify existing situation of women and the excluded in the

selected value chains in the programme districts

Review the existing policy, institutional arrangements, socio-cultural practices which would

promote or constrain women and the excluded from being involved in the value chain sectors

Map the existing women’s groups, women’s cooperatives and representative CSOs/CBOs of

the excluded in the programme area and conduct their capacity assessment

Identify the potential groups/cooperatives/CSOs/CBOs, ensuring they represent women and a

diverse population, to work with during the programme implementation

Conduct advocacy with family and community decision makers to create a GESI responsive

enabling environment for women producers and producers from excluded social groups

Design and implement a sub-project focusing on women and invest in building their capacity

to establish agri-enterprises, access the required inputs, identify market linkages and access

markets, do business planning, financial management and marketing.

Invest in R&D to develop processing technologies which would support women

Support construction of post harvest management infrastructure that are prioritized by the

women and the excluded

Train extension agents and business development providers on working with women and the

excluded

• Identify the specific processing, marketing, storage, input supply requirements of enterprises

led by women and the excluded

Component 2: The Infrastructure Component

• Identify infrastructure needs of enterprises led by women and the excluded

• Provide opportunity for employment during construction and ensure equal wages for women

workers

• Support women to participate in meetings. Ensure that they take decision making positions in

committees

Component 3: The Enabling Environment Component

• Advocate for policy reform, where required to strengthen women’s abilities to develop and

manage an agri-business

• Support government to identify tax policies which would support women in doing business


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• Prepare and influence Government to adopt policies on affirmative action and to give

direction to service providers to work with positive discrimination for women led businesses

EXPECTED OUTPUTS

Improved business environment for women-led agro-enterprises i.e. commercial/semi-commercial farms and agribusinesses;

Increased number of commercial/semi-commercial farms and agri-business of women and the excluded in the three sectors; and

Higher income of women and the excluded from their agricultural enterprises.

M&E FRAMEWORK FOR GESI

The UNNATI components will further develop detailed M&E frameworks during the Inception Phase.

Based on the GESI analysis, also conducted during the Inception Phase by the management contractor,

the M&E frameworks and baseline surveys should include GESI sensitive indicators and data. The GESI

indicators in the M&E frameworks should inter alia monitor the inclusion of women and excluded

groups in agricultural sector activities within the value chains; their economic advancements; access to

business development services and financial services; promotion of a GESI sensitive policy and

business environment; as well as monitor that the programme interventions have no negative impacts

on GESI.

UNNATI – Inclusive Growth Programme in Nepal Environmental Screening Note

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Annex 7: Environmental Screening Note

Basic Information

Programme support title (title of appropriation):


Sector: Private Sector - Economic Growth

Country: Nepal

Danida budget: DKK 400 Million

Description of the Programme support:

Promotion of inclusive economic growth in Nepal

Dates: Programme committee: May 2012; Appraisal: December 2012

Module 1: Screening of Country and Sector Environmental Framework

Assessment of the adequacy of the legislation, policies, procedures in Environmental Management and Environmental Assessment in the country and sector. (Click yes or no. If no, comment and further work is required in the right hand column – and to be included in Next Step - PAP section).

Issue: Yes No Comments and further work to be done:

1. Do national procedures for Strategic Environmental Assessments and Environmental Impact Assessments (e.g. legal framework) exist?

2. Do operational national environmental action plan(s) or environment sector programme(s) exist?

3. Do up-to-date state of the environment reports and environmental monitoring systems and indicators exist?

4. Have sufficient assessments been made of


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environmental aspects of policy reforms and budget support (and underlying PRSP’s or similar)?

5. Is environmental management sufficiently integrated into sector plans (the sector to be supported)?

6. Is sufficient institutional capacity for environmental management available to/in the sector (to be supported)?

7. Are there adequate harmonization, alignment and coordination for environmental management in the sector (to be supported)?

Summarize the overall impression of the Country and Sector Environmental Framework:

From the beginning of the 8th plan period (1992–1997), environmental issues have been consistently included in Nepal’s periodic development plans. The concept of sustainable development, advocating economic growth with sustainable resource utilization, was integrated in Nepal’s development planning process. The basic legal framework for environmental appraisal and mitigation in Nepal are founded in the Environmental Protection Act 2053 (1996) and the Environmental Protection Rules 2054 (1997), revised 2055 (1999) and supported by provisions in other acts such as the Forest Act, the National Parks and Wildlife Conservation Act, and the Local Self- Governance Act. National Environmental Impact Assessment Guidelines and some sectoral guidelines have been prepared. Salient features of the legal provisions for environmental appraisal and mitigation are:

• Projects that have potential to create significant environmental impacts are required to undergo an environmental assessment. Typical projects that require EIAs or IEEs are listed below.

• The project proponent is responsible for commissioning the environmental appraisal. • The ToR for, and report of, an IEE and EIA must be approved by the responsible Ministry and the Ministry of Environment

respectively. • The population likely to be affected, and other concerned stakeholders, must be consulted as part of the IEE and EIA processes. A

public hearing at site is required in the case of an EIA. • Implementation of mitigation measures capsulated in the environmental management plan is the responsibility of the project proponent. • Monitoring is the responsibility of the concerned line Ministry.

CRITERIA FOR DECIDING LEVEL OF ENVIRONMENTAL ASSESSMENT OF PROJECTS IN NEPAL

Projects requiring Initial Environmental Projects requiring Environmental Impact


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Examination (IEE)

Assessment (EIA)

District Road, Village Road, Agricultural Road (1 to 5 km long), Ropeway 1 to 5 km long, Main motorable bridges

National Highway, Feeder Road, Agricultural Road longer than 5km, Ropeways longer than 5km

Upgrading, rehabilitation or reconstruction of National Highway and Feeder Road, Irrigation scheme of 10 to 200 ha. on hill slopes, or 15 to 500 ha. in valleys Rehabilitation of irrigation system that irrigates more than 100 ha. on hill slopes, or more than 200ha. in valleys Hydropower Project of 1 to 5 MW size, Sand and gravel extraction from river at daily rate of 10 to 50 cubic metre, Small-scale mining of non-metallic minerals, Small-scale extraction of construction materials, Stone crushing industries

Any sub-project located in the following environmentally sensitive areas:

National parks, wildlife sanctuaries, and protected areas

Ecologically fragile areas and wet lands

Semi-arid, alpine or snowy areas

Flood or other hazardous zone

Residential, school, and hospital areas

Major sources of drinking water supply for public

Unique areas of historic, cultural and archaeological significance

More than 1km long river training works

Any project that requires clear cutting of more than 5ha. of National Forest, Any project that displaces more than 100 persons

Project that requires investment of NRs 10 million to 100 million

Any project that requires investment of more than NRs 100 million

Note: Construction of minor motorable bridges (span less than 20m), trails and trail bridges, community buildings and schools, and upgrading or rehabilitation of rural roads and community water supplies are not included in the prescribed lists of sub-projects requiring IEE or EIA. Hence, these categories of sub-project are exempted from the requirement for formal environmental appraisal as long as they are not located in sensitive area, investment is below NRs 100 million and they do not displace more than 100 people.

It seems that IEE will be sufficient for the sub-projects envisaged in Growth and Employment Program in Nepal.


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2: Screening of environmental opportunities and risks of programme support

Assess the possible environmental impact of the programme support on the following issues in terms of opportunities and risks:

Will the programme support... Opportunity: Risk: None:

1. ... have an impact on soil, water or air pollution through emissions or similar?

2. ... lead to changes in land and resource tenure and access rights?

3. ... include activities within or adjacent to protected and environmentally sensitive areas?

4. ...result in livelihood changes (including resettlement) that can increase or decrease the pressure on available natural resources?

5. have an impact (direct/indirect) on occupational health and safety?

6. ... have an impact (direct/indirect) on environmental health?

7. ... include economic and sector policy initiatives with direct or indirect impacts on the use of natural resources and the environment?

Summarize and elaborate on Environmental Opportunities:

The program will help create market-based opportunities and employment in rural areas of Nepal. The poorer segments of the population will have enhanced access to opportunities created in market. Due to changes in livelihoods, it will help reduce dependency on forests. The growing concern on chemical use in agriculture will be addressed by supporting organic production and its market linkages. It will have a positive impact on occupational safety as well as environmental health. The program will support initiatives on environmental friendly technologies and policies. Furthermore, a close coordination with Rural Renewable Energy Programme will be maintained so that both programs have maximum synergy and impact.


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Summarize and elaborate on Environmental Risks:

There would be new micro, small and medium sized enterprises established or expanded and new infrastructures constructed, which may have some negative impact on environment. However, these will be minimized with appropriate measures integrated into the programme support.

Identify requirements for Environmental Impacts Assessment. EIA categories: [ A ] Full EIA required; [ B ] Partial EIA required; [ C ] No EIA required45. Component Name: Category A, B or C:

1: Policy environment for inclusive growth C

2: Market linkages and value addition B

3: Infrastructure for rural connectivity and growth A

Will activities of the programme support with potential environmental impacts be subject to national regulation and procedures for EIA? – Yes - No

When will the EIA be done? According to rules and regulations of Nepal, the projects of cost NRs. 10 million to 100 million require Initial Environmental Examination (IEE), whereas projects with a cost of NRs. more than 100 million require EIA. As we don’t know the costs of individual infrastructure projects now, the EIA or IEE will be done on a case-by-case basis for the projects identified in the programme during implementation. (Note: 1 DKK = NRs. 16)

Next Steps – process action plan (PAP) NB! To be attached to module 1, and updated and attached to module 2

Need for further work (click the box if action is needed during preparation or formulation and appraisal phase, or implementation): Suggested activity: Action needed Comments and elaboration:

1. Assessment of Environmental Management in sector development plan.

The formulation stage should assess the environmental management in the Infrastructure and MSME sector development plan.

2. Assessment of capacity for Environmental Management in the sector.

The formulation stage should assess the capacity for environmental management in the Infrastructure and MSME sector development plan.

3. Prepare ToR for and conduct Country Analytical Work.

4. Prepare ToR for and conduct SEA(s) of sector

45

Category A = Intervention is likely to have adverse environmental impacts that may be sensitive, irreversible, and significant in scale/scope; B = Intervention is likely to have

negative impacts, but which are less significant, not as sensitive, numerous, major or diverse; C = The environmental risk of the intervention are of little or no concern.


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policies or plans.

5. Prepare ToR for and conduct EIA(s) for programme support activities.

6. Initiate donor harmonisation in the sector on environmental assessment and management.

7. Other...?

Signing of the Environmental Screening Note

Kathmandu Saroj Nepal ………………………………………………………. Embassy of Denmark, Kathmandu

Growth and Employment Programme in Nepal Budget Support Assessment

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Annex 8: Budget Support Assessment

Principle

Specific SBS Related Analysis

Comments

Governance

1. Good governance,

encompassing a minimum

respect for human rights, a

free press, pluralistic

democracy and rule of law,

including independence of

the judiciary

Country Level

Changing governments have all - in theory - recognised that good governance

in the form of implementation of reforms, protection of human rights,

satisfactory service delivery to the population and combating of corruption is

key to meeting Nepal’s development challenges. However, when it comes to

implementing concrete steps to remedy the problems, little progress has been

achieved. The number of human rights violations has decreased now that the

armed conflict has ended. However, institutions that should protect human

rights and the rule of law are weak and a deeply embedded culture of

impunity persists. However, public security has improved compared to the

period of conflict few years ago. But the official law enforcement is weak and

ineffective, due to lack of capacity, ineffectiveness, excessive use of force in

others, and regular political interference in arrests. In the present context of

political instability, also, the supreme court has to some extent become part

of the political power struggle and its status of a non-political entity has been

compromised.

The present inconclusive political situation has

slowed down, and will still further slowdown, the

adoption of the legal framework for the sector

wide development. This leads further on to slow-

down in building-up the institutional capability and

capacity to manage the problems in the society.

2. Anti-corruption with

implementation of

prevention and control

measures, as well as follow-

up with a view to improving

the country’s standing in the

international corruption

Country Level

Corruption has an endemic and institutionalised nature in Nepal. Discussions

on anti-corruption have not been prominent in the political debate, however

there is some improvement to the situation in recent years as high profile

corruption cases involving political leaders and police chiefs has been exposed

and booked. The reputation of the national body to fight corruption

With the definition of corruption as the

“misuse of entrusted power for private

gain” corruption is a risk factor in the

infrastructure projects and contracting.

http://www.um.dk/en/menu/DevelopmentPolicy/AntiCorruption/FormsOfCorruption.htm


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Principle


Comments

league table (Commission for the Investigation of the Abuse of Authority/CIAA) has not

improved as it still lacks commissioners. On the Transparency International

Corruption Index Nepal has fallen to no. 154 in 2011.

Poverty reduction policies

3. A solid poverty reduction

strategy and the will to

implement it

a) Assessment of Sector Level/Thematic plan/Strategy/Programme Poverty reduction is the main objective of the Three Year Interim Plan as with

the earlier periodic development plans. There are sectoral plans and strategies

that are prepared according to the overall plan. However, due to insufficient

inter-ministerial coordination, the implementation of the plan and strategy is

weak.

The sectors captured in Growth and Employment program has direct positive

effects on the livelihoods and poverty reduction in rural areas. With the future

decentralisation of public activities and increased focus on income generating

activities, poverty reduction will be one of the prime objectives for

decentralised governmental institutions.

b) Assessment of Commitment and Capacity to Implement it. In general, the government seems to be committed to implement poverty

reduction activities. Almost all political parties agree that Nepal should enter

into economic agenda now but because of current focus on peace process and

constitution writing, concrete steps to show commitment towards poverty

reduction is lacking. However, the capital budget spending is low due to

insufficient administrative capacity and political obstacles at the different

levels.

Risks will be financial resources allocated from the

governmental funds to poverty reduction activities.

As part of the decentralisation process it will take a

long time for the district level institutions to build

up capacity. Furthermore, establishment of new

federal units will require a lot of capacity building

activities to function as a sub-national government

units.


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Principle


Comments

4. Positive experiences of

development cooperation

generally and of budget

support specifically, as well

as ongoing documentation of

concrete development

results

a) Assessment of Sector Level/Thematic plan/ Strategy/ Programme Generally there is a good working relationship with various ministries of

Government of Nepal at programme level. The issues and problems are

discussed in open and frank manner, which has helped in reforms in various

sectors. At national level the high level dialogue is rather formal. However,

due to weak financial management system and lack of clear strategies and

accountability of changing governments, general budget support doesn’t

seem possible. Danish support is increasingly aligned to national systems, for

example, SWAp in education sector, multi-donor cooperation with Ministry of

Local Development to implement nation-wide Local Governance and

Community Development Program and with Ministry of Environment to

implement renewable energy program. According to information available to

the Embassy, no other international development partner provides budget

support to Nepal – apart from China.

b) Assessment of the monitoring/performance measurement system at sectoral/thematic level

In general, the National Planning Commission collects data from various

ministries, departments and Central Bureau of Statistics to feed on the

Poverty Monitoring and Assessment System periodically. The Bureau also

conducts Nepal Living Standard Survey every 8 years to assess changes in

poverty situation. Usually monitoring is confined within programmes with no

harmonised approach to data sharing and comparability.

Public Financial Management

5. The Finance Act process,

with publication of budget

and accounts, as well as

Country Level

The Finance Act process is well established but the present political instability

has had negative effects on the budget process (such as long delays of the

Denmark has joined World Bank’s Multi-donor

Trust Fund for Public Finance Management. The

Fund has been pursuing various projects targeted

to improve Public Financial Management at


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Principle


Comments

parliamentary consideration Budget due to power struggles between the political parties over government

formation). The legislature’s procedures for budget review are also well

established but when, for example, parliament is blocked- delays are

inevitable. Nepal has for some time been developing a Medium-Term

Expenditure Framework to inform its budget but the process has stagnated

since the finalisation of the Public Expenditure Financial Assessment (PEFA) in

the beginning of 2008. This reflects a short-term focus on projects rather than

the longer term focus on programmes and strategies.

national and local levels.

6. Rules for procurement

broadly in accordance with

international standards

Country Level

The Public Procurement Act (2007) is the supreme law on procurement and is

broadly in line with international standards. This law was enacted in January

2007 and regulations were issued in August of the same year. The

procurement law is applicable to all entities including the semi-government

institutions. However, there are still directives and documents that need to be

revised and developed in conformity with the Act and the regulations. There is

a general problem of the effective implementation of the law and the

institution responsible for public procurement – the Public Procurement

Monitoring Office/PPMO) has very low capacity. Technical assistance

programmes provided by the ADB and the World Bank are currently in place

to support PPMO for implementing the Public Procurement Law and to

strengthen institutional capacity. There have been growing concerns of

malpractices in public procurement, such as collusion/cartelling amongst the

bidders both at the central level and in the districts.

7. Presence of an independent

National Audit Office or

inspection body with similar

functions

Country Level

The Auditor General (OAG) audits annual financial statements in a timely

manner; however, there is a significant backlog of audit reports going to the

Public Accounts Committee (PAC) as external scrutiny has been a casualty of


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Principle


Comments

recent political instability. The absence of a fully functioning Public Accounts

Committee (PAC) means that there is still an enormous backlog of audit

hearing to be conducted. Audit reports tend to focus on irregularities rather

than systemic issues although the OAG is conducting some performance

audits, which focus on more topical thematic issues. There has been an

absence of leadership in the OAG due to a lacking nomination of a new

Auditor General since 2006.

8. Public Financial Management

Expert appraisal of quality

and capacity in public

financial management

Country Level

The overall picture for public financial management (PFM) in Nepal is very

mixed. The Government together with the World Bank initiated a PFM review

in 2005. The results were published in February 2008. Nepal scored 1 “A”

score, 3 “B” scores, 17 “C” scores and 7 “D” scores. It concluded that the PFM

system is “relatively well designed but unevenly implemented”. In other

words, the laws and regulations are moving in the direction of good

international practice but there are chronic problems with their

implementation. The budget has become a tool that is largely credible but

there are gaps in the control framework and implementation. Large fiscal

activities remain outside the scope of the Government budget - for example

only 50% of donor aid uses national procedures. Despite some progress

towards transparent and accountable management of public finances, critical

gaps remain.

Sector Level

The Fiduciary Risk Assessment carried out in 2009 as preparation for the Local

Governance and Community Development Program concluded that “Fiduciary

risks are high for Public Financial Management in local governments as risk of

Fiduciary and procurement risk mitigation

measures should be built within the programme.


98

Principle


Comments

corruption is high”.

Partnership

9. Mutual observance of agreed

obligations

Assessment of the partnership situation at

sectoral/thematic level

In general, the Government respects the obligations

agreed under projects/programs. Nonetheless, due

to the fragile context, weak capacity in Government

and weak institutions it remains a challenge to

attain full national ownership of many activities.

Many donors are or have been actively supporting

in some way the economic growth sector in Nepal.

There is a Development Partners group on

economic growth and private sector development

that meets bi-monthly. Danida has experience in

some multi-donor programs, where agreed

obligations are well respected.

10. Consensus among all budget

support donors regarding the

approach (incl. rules for

transfer and monitoring) and

conditions for general

budget support

Assessment of any existing joint financing

arrangements in the sector.

There is no joint donor program on the areas where

present Danida support is proposed. However,

possibility of joint support will be considered once

opportunity arises.


99

Principle


Comments

Conclusion Based on the assessment, the GEPIN will strengthen

alignment and harmonisation, wherever possible.

Due to the nature of partners and high fiduciary risk

and risk of corruption in infrastructure

procurement, sector budget support is not possible

in GEPIN. The Danish engagement in both internal

dialogues within the donor group and with the

government should be continued in order to move

towards sector budget support in future.


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Annex 9: Key Reference Documents

Danida

1. The Right to a Better Life, Strategy for Denmark’s Development Cooperation, June 2012;

2. Strategic Framework for Priority Area: Growth and Employment 2011-2015, March 2011;

3. Guidelines for Programme Management, September 2011;

4. Technical Note on Programme Support Preparation, September 2009;

5. Guide to Political Economy and Stakeholder Analysis at Sector Level, 2009;

6. Nepal - Business Development Profile. Danida Business-to-Business (B2B) and Public Private Partnership

(PPP) Programmes;

7. Rural and Renewable Energy Programme (2012-2017) - Draft Formulation Report, August 2011;

8. Promotion of Industrial Peace in Nepal Through Support to JTUCC Activities – Project Document;

9. Nepal Peace Support Programme Phase III – Programme Document;

10. Agricultural Value Chains in Nepal – Assessment Report; September 2011;

Government of Nepal

11. Three Year Plan Approach Paper 2010/11 – 2012/13, National Planning Commission, August 2010;

12. Nepal Peace and Development Strategy 2010-2015, National Planning Commission and Development Partners

including Danida, January 2011;

13. Economic Survey, Fiscal Year 2010/2011, Ministry of Finance, July 2011;

14. Nepal Living Standard Survey, Central Bureau of Statistics, 210/11.

15. Tenth Plan 2002-2007, National Planning Commission, March 2002;

16. Nepal Trade Integration Strategy 2010, Ministry of Commerce and Supplies, 2010;

17. White Paper on Public Private Partnership, National Planning Commission, March 2011;

18. Implementation Evaluation of Foreign Direct Investment Policy in Nepal – Policy Paper no 1, Ministry of

Finance/ADB, August 2005;

19. Strategy for Promoting Business Incubation Centres in Nepal – Policy Paper no 21, Ministry of Finance/ADB,

November 2006;

20. Promoting Nepal as a Manufacturing Hub – Policy Paper no 31, Ministry of Finance/ADB, October 2006;

21. Sustainable Tourism for Improved Livelihoods of Local Communities – Policy Paper no 4, Ministry of

Finance/ADB, December 2005;

22. Policy Reform Networking in Nepal: A Suggested Framework – Policy Paper no 11, Ministry of Finance/ADB,

May 2006;

23. Constraints and Approaches for Developing Market Access and Vertical Linkages in High Value Agriculture –

Policy Paper no 16, Ministry of Finance/ADB, May2006;

24. An Overview of DoLIDAR – PowerPoint Presentation by Deputy Director General;

25. Guideline Integrated Rural Access Planning, DoLIDAR, September 2005;

26. Interim Guideline for District Transport Master Plan Preparation, DoLIDAR, May 2010;

27. Agriculture Perspective Plan – Implementation Status Report, April 2006.

28. ADS (2012): Draft Assessment Report

29. ADS (2012): Agriculture Value Chains – Assessment and Vision Report

30. Statistics of Strategic Road Network. Department of Roads, Ministry of Physical Planning and Works,

Government of Nepal, 2009/10.

31. DoLIDAR: Summary of Rural Road Networks in Nepal, 2010/2011.

32. MoLD, Local Infrastructure Development Policy 2061.

33. MoLD, Local Infrastructure Development Strategic Action Plan 2064.MoLD, Public Expenditure and Financial

Accountability and Fiduciary Risk Reduction Action Plan, March 2012

Development Partners

34. Basic Operating Guidelines signed by the major development partners in Nepal including Danida;


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35. ADB, DFID, ILO: Nepal – Critical Development Constraints, 2009;

36. ADB, DFID, ILO: Highlights Nepal – Critical Development Constraints, 2009;

37. ADB: Unleashing Economic Growth – Region-based Urban Development Strategy for Nepal, 2010;

38. ADB: Proposed Grant Nepal High Mountain Agribusiness and Livelihood Improvement Project, March 2011;

39. ADB: Nepal Climate Change Assessment, May 2009;

40. ADB: Country Operations Business Plan – Nepal 2011 – 2013, July 2010;

41. ADB: Nepal: Economic Policy Network II – TA Report, December 2007;

42. EU: Country Strategy 2007 – 2013;

43. DFID: Nepal Investment Climate Reform Programme, Project Memorandum and Framework, November 2009;

44. DFID: Centre for Inclusive Growth – Main Programme Document;

45. DFID: The UK Government’s Programme of Work to Fight Poverty in Nepal 2009 – 2012;

46. World Bank: Access to Financial Services in Nepal, 2006;

47. World Bank: Project for Agriculture Commercialization and Trade (PACT) – Financing Agreement, August

2009;

48. United Nations Policy for Post-conflict Employment Creation, Income Generation and Reintegration, May

2008;

49. ILO: Local Economic Recovery in Post-conflict, 2010;

50. ILO: Socio-economic Reintegration of Ex-combatants, 2009;

51. ILO: Labour and Social Trends in Nepal 2010

52. Nepal Human Development Report, UNDP, Nepal, 2009.

53. Nepal: Country Partnership Strategy (2010-2014), ADB, September 2009.

54. Nepal Millennium Development Goals Progress Report 2010 (Kathmandu, National Planning Commission and

UNDP, 2010).

55. WB: Inclusive Green Growth: Pathway to sustainable development, May 2012.

Others

56. Nepal Economic Forum: Docking Nepal’s Economic Analysis - Exploring Nepal Tourism Year 2011, March

2011;

57. Nepal Economic Forum: Docking Nepal’s Economic Analysis - Forestry Special, June 2011;

58. AEC, (2007): Value chain Perspectives on Present Status, Issues and Support Needed for Selected Agro- and

Forest Commodities

59. Economic Intelligence Unit: Nepal Country Report, May 2011;

60. Economic Intelligence Unit: Nepal Country Report, August 2011;

61. The LO/FTF Council in Asia;

62. Profiles of the 7 UNNATI Districts – Main document and profiles of each districts, IDA May 2013

63. Value Chain Studies in 7 UNNATI Districts, HURDEC May 2013.


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Annex 10: TOR for Programme Monitoring and Results Measurement Coordinator

Draft

Terms of Reference Programme Monitoring and Results Measurement Coordinator


1. Introduction and Background

The Governments of Nepal and Denmark have agreed to implement an Inclusive Growth Programme (UNNATI). The programme will be implemented at national level, but focus on 7 districts in the Eastern Development Region (EDR). The programme focuses on support to the private sector, and to local government through DoLIDAR and the DDCs in the 7 programme districts. The budget for the programme is DKK 400 million for the five-year period, equivalent to approximately USD 65 million. The budget allocation is expected to strengthen market-based inclusive growth that reduces poverty and raises living of standards. The strategic focus of the programme will be on private sector development in compliance with Danida’s strategy for support to growth and employment. The private sector will be a beneficiary and also as direct implementing partner. The public sector is expected to play an important role in terms of setting national objectives, policies and plans; carrying out improvements to key infrastructure; providing the regulatory frameworks; and creating an enabling environment for the private sector to contribute efficiently and effectively to inclusive growth and employment creation

The overall objective of the programme is “Promotion of sustainable inclusive growth that reduces poverty and raises living standards” To achieve the above objectives, the programme will support three components as follows:

C1: The Value Chain Component

C2: The Infrastructure Component

C3: The Enabling Environment Component

The three components are interlinked with the Value Chain Component as the core of the programme. The Infrastructure Component will support development of infrastructure to improve the performance of the strategic value chains supported through the Value Chain Component.. Advocacy, policy and regulatory issue identified by the Value Chain Component and the Infrastructure Component will be addressed by the Enabling Environment Component.

The intermediate objective of the Value Chain Component is: “Sustained improvement in competitiveness of selected value chains.

The intermediate objective of the Infrastructure Component is: “Sustained improvement of rural infrastructure”

Monitoring and Results Measurement in UNNATI

The monitoring and results measurement system for UNNATI has been developed both to facilitate credible

reporting of results to stakeholders and to foster learning that feeds into the improvement of programme strategies

and implementation. UNNATI is a new type of programme for the Embassy of Denmark in Nepal. In addition, it

is operating in a complex and dynamic political, economic and social context. Thus, it is important that UNNATI

has an effective and practical monitoring and results measurement system that regularly channels information on

results into programme decision-making. There is no doubt that some programme activities will not lead to

expected results. At the same time, some activities may lead to results that exceed expectations. The programme

monitoring system must highlight when activities are not leading to expected results and why, as well as when

activities are exceeding expectations and why. This information will help managers in implementing partners, the

Management and Coordination Committee and the EoD to adjust activities, strategies and portfolios to maximize

long-term results from the programme. In addition, credible information on results will help EoD and Danida


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assess value for money from the programme and feed lessons learned into other programmes. Thus, the monitoring

and results measurement system will not only measure results but will also contribute to quality assurance and

results-based management.

The UNNATI monitoring and results measurement system will comply with the Donor Committee for Enterprise

Development Standard for Measuring Achievements in Private Sector Development (DCED RM Standard). The

DCED RM Standard is based on existing good practice and outlines the minimum components of a credible and

useful, internal, monitoring and results measurement system.46

It provides a framework that will help to ensure that

UNNATI’s results measurement system is sufficiently robust both for accountability and for management.

2. Objective

The objective of the consultancy is to support the UNNATI implementing partners, governance committees and

the EoD in monitoring, results measurement and reporting and to coordinate MRM and reporting across the entire

programme. The consultancy will promote results-based management and clear reporting for accountability at

every level of the programme. The consultancy will also manage special studies on the programme results and

assist the Management and Coordination Committee, the Programme Steering Committee and the EoD in the

coordination of reviews and evaluations.

3. Outputs

The Consultant will be responsible for the following outputs

Semi-annual and annual programme reports that aggregate and analyse progress and information on

results across the programme.

Inception, mid-term and completion reports for the programme that summarise the reports of the

implementing partners and highlight key issues relevant to the entire programme.

Technical support to the design, installation and adjustment of effective and efficient MRM systems for

each of the programme components and sub-components.

Consistent and coherent implementation of the MRM system across the programme.

Implementation of special results measurement studies on areas of particular interest to the programme

stakeholders.

Effective support to the Management and Coordination Committee and the EoD in matters related to

MRM and management of the programme.

4. Scope of Work

The roles of the MRM Coordinator are outlined below.

Technical support to the implementing partners:

Provide technical support to the implementing partners in the design, establishment, implementation and

adjustment of their MRM systems.

Ensure consistent MRM practices across the programme components and subcomponents so that the

overall system is coherent and can deliver information on programme-wide progress and results.

Ensure a consistent approach across the implementing partners to MRM related to cross-cutting issues.

46

For more information, see http://www.enterprise-development.org/page/measuring-and-reporting-results



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Facilitate cooperation among the implementing partners so that MRM across the programme is both

effective and efficient.

Assist the implementing partners to develop methods for assessing the effects of interventions on wider

systems in Nepal and integrating those methods into their MRM systems.

Assist the implementing partners to link programme MRM with national systems when possible.

Assist implementing partners in the design, outsourcing and management of baseline and impact studies

throughout the programme.

Assist implementing partners to consistently monitor programme activities and processes using the

principles of the Human Rights Based Approach.

Assist the managing contractor to organise and manage “Value for Money” audits of infrastructure

constructed or improved under Component 2.

Promote an appropriate culture of analysis, learning and results-based management across the programme.

Attend semi-annual meetings in the implementing partners to review results to date and use findings to

improve strategies and implementation.

Support implementing partners in managing the systems for MRM and reporting.

Assist implementing partners to assess the quality and functioning of their MRM systems annually using

the DCED Results Measurement Standard framework. This will include reviewing the subcomponent

results chains and LFAs and proposing adjustments in the annual report.

Reporting:

Aggregate and analyse information on progress and results across the components and subcomponents.

Produce clear semi-annual and annual reports on the overall programme.

Produce clear inception, mid-term and completion reports for the programme that summarise the progress

of the components and highlight key issues relevant to the entire programme.

Studies:

Review and recommend approval or revision of the plans for baseline and impact studies.

Design, outsource and manage, in cooperation with the implementing partners, special studies to examine

results in areas of particular interest to the programme stakeholders.

Support for Programme Management and Governance:

Support MoAD to act as a secretariat for the Management and Coordination Committee.

Assist the EoD in its tasks related to MRM, reviews, evaluations and reporting.

Provide recommendations to the Management and Coordination Committee on the topics for special

results measurement studies of the programme.

Coordinate the audit of the programme MRM system according to the DCED Results Measurement

Standard in Year 2 and Year 4.

The MRM Coordinator will have particular roles during the inception phase of the programme as follows:

Technical support to the implementing partners:

Assist each implementing partner to develop a detailed MRM guide for programme managers and staff,

building on the design of the MRM system included in the programme document and including the details

of all processes required in the DCED Results Measurement Standard and by Danida.


105

Assist each implementing partner to develop “do no harm” intervention screening checklists on gender,

poverty, disadvantaged groups, remoteness and environment/climate change.

Assist implementing partners to review and propose revisions to subcomponent results chains and LFAs.

Assist implementing partners to prepare MRM documents for the opening portfolio of interventions

including intervention results chains, projections and measurement plans.

Assist implementing partners to gather baseline data needed for the opening portfolio of interventions; this

will involve outsourcing baseline studies when appropriate.

Assist implementing partners to orient and build the capability of all staff to fully understand and play

appropriate and active roles in the MRM system.

Assist the managing contractor to develop a TOR for “Value for Money” audits and contract an appropriate

firm with approval from the ICC and EoD.

Assist the managing contractor to develop a TOR for the impact studies for Component 2 and contract an

appropriate firm with approval from ICC and EoD.

Support to EoD:

Assist EoD to organise training for all implementing partners on the DCED Results Measurement

Standard.

Assist EoD to orient the Management and Coordination Committee on the UNNATI Monitoring and

Results Measurement system, what they can expect from it and their roles in it.

Assist EoD to finalise all reporting formats and ensure that implementing partners are fully briefed on

them.

Establishment of the Programme MRM System:

Develop an MRM guide for the programme. This will be a reference document for all programme

stakeholders on the programme MRM system, how to feed information into it and how to use the results

from it.

Finalize criteria for data disaggregation in consultation with the implementing partners.

Develop a system for aggregation of the subcomponent results to the programme level. The system will

have a clear and transparent method for addressing overlap in results among the subcomponents.

Review and propose revisions to the programme LFA and results chain.

Prepare a five-year plan for MRM in the programme and a detailed work plan for the first year.

5. Method of work

The consultancy will refer to the Embassy of Denmark in Nepal and report to the Programme Management and

Coordination Committee. The consultant will maintain an office in Nepal, either in Kathmandu or in Dhankuta.

If in Kathmandu, frequent travel to Dhankuta will be required.

6. Requirements for the Content and Timing of Reports

The reporting requirements are outlined in the table below. The consultant’s reports will contain 2 parts:

A summary of the reports from the implementing partners which shows the overall progress of the

programme and aggregated results;

A section on MRM at the programme level describing the consultant’s activities and progress against

annual work plan, issues and challenges encountered, lessons learned, proposed revisions to the annual

work plan with rationale, the next year’s annual work plan and, if appropriate, recommended changes in

the programme MRM system and the programme results chain, LFA and targets.


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Report Main Content Timing and

Frequency

Inception report Situation analysis

Approach and methodology

Five-year investment plan

1 year work plan

Manning schedule with annexes (norms,

guidelines, process documents etc.)

Monitoring and results measurement guide

7 months after

commencement – once

Semi-annual

report

Progress against annual work plan

Performance against process indicators

Issues and challenges encountered

Lessons learned in implementation

Revisions to annual work plan with rationale

Financial reporting

First report after one

year – every six

months

Annual report Will be combined with semi-annual reports.

Content above for semi-annual report

Progress to date against LFA indicators

Projections of results to the end of the

programme (and 2 years beyond for

programme development objective

indicators) based on activities to date

Analysis of programme performance

Analysis of relevant changes in the context of

Nepal

Recommended changes in strategy with

rationale

Recommended changes in the results chains,

LFAs and/or targets with rationale

Annual work plan for the next year

1.5 years, 2.5, 3.5

years, 4.5 years

Mid-term report Will be combined with the annual report

produced at 2.5 years.


Revised investment plan for the remaining

2.5 years

Recommendations on major strategy changes

(if appropriate) with rationale

Recommendations on the design of a second

phase if appropriate

2.5 years – once

Programme

completion report


Analysis of programme strategy,

performance and lessons learned

End of the programme;

once


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7. Inputs by the Consultant

The consultancy will require 2 positions, as well as administration and financial management adequate to support

the roles described above and effectively manage the budget for the programme MRM. The two positions are

MRM Team Leader (international) and MRM Coordinator (national). These two positions will be responsible for

the outputs, roles and reporting described above. The MRM Team Leader will serve as the contact point between

the Consultant and EoD and supervise and guide the work of the MRM Coordinator. The duration and

qualifications for the positions are outlined below.

MRM Team Leader (International)

Duration: The consultant will provide an MRM manager full time for the first 2 years of the programme and half

time for the following three years of the programme. It is anticipated that the MRM manager will be based in

Nepal for the first two years of the programme and may be based elsewhere for the remainder of the programme

but with frequent travel to Nepal. However, other arrangements will be considered provided that they will

effectively meet the requirements of the consultancy.

Qualifications:

A relevant university degree or equivalent

At least 8 years of relevant professional experience

Excellent interpersonal and cross-cultural skills

Strong skills in analysis, identification of lessons learned and results-based management

Excellent written and verbal communication skills; fluency in the English language

Demonstrated ability to be methodical and detail oriented

Demonstrated technical competence and experience in monitoring and results measurement for private

sector development, preferably in several countries

Experience in the provision of technical assistance in monitoring and results measurement

Demonstrated technical competence and experience in the application of the DCED Results Measurement

Standard either within a programme or as a consultant

MRM Coordinator (National):

Duration: The consultant will provide an MRM Coordinator full time for the 5-year duration of the programme.

The MRM Coordinator may be based in Kathmandu or Dhankuta. If based in Kathmandu, it is expected that the

MRM Coordinator will spend at least 50% of his/her time in Dhankuta to support the implementing partners

there.

Qualifications:

A relevant university degree or equivalent

At least 5 years of professional experience

Excellent interpersonal skills

Strong skills in analysis, identification of lessons learned and results-based management

Excellent written and verbal communication skills in both Nepali and English

Demonstrated ability to be methodical and detail oriented

Experience in private sector development and research

Experience in the provision of technical assistance

Knowledge of the DCED Results Measurement Standard preferred


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8. Reference Documents

UNNATI – Inclusive Growth Programme in Nepal Programme Document

UNNATI – Inclusive Growth Programme in Nepal Component Descriptions (3)

9. Time Schedule

UNNATI – Inclusive Growth Programme in Nepal is expected to start in January 2014 with a 6 month inception

phase and last through December 2018. The consultancy will cover the full duration of the programme.


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Annex 11: TOR for Training and Technical Assistance in the DCED Results

Measurement Standard


Terms of Reference Training and Technical Assistance in the DCED Results Measurement Standard

1. Introduction and Background

The Governments of Nepal and Denmark have agreed to implement an Inclusive Growth Programme

(UNNATI). The programme will be implemented at national level, but focus on 7 districts in the Eastern

Development Region (EDR). The programme focuses on support to the private sector, and to local

government through DoLIDAR and the DDCs in the 7 programme districts. The budget for the

programme is DKK 400 million for the five-year period, equivalent to approximately USD65 million.

The budget allocation is expected to strengthen market-based inclusive growth that reduces poverty and

raises living of standards. The strategic focus of the programme will be on private sector development in

compliance with Danida’s strategy for support to growth and employment. The private sector will be a

beneficiary and also as direct implementing partner. The public sector is expected to play an important

role in terms of setting national objectives, policies and plans; carrying out improvements to key

infrastructure; providing the regulatory frameworks; and creating an enabling environment for the private

sector to contribute efficiently and effectively to inclusive growth and employment creation

The overall objective of the programme is “Promotion of sustainable inclusive growth that reduces

poverty and raises living standards” To achieve the above objectives, the programme will support three

components as follows:

C1: The Value Chain Component

C2: The Infrastructure Component

C3: The Enabling Environment Component

The three components are interlinked with the Value Chain Component as the core of the programme.

The Infrastructure Component will support development of infrastructure to improve the performance of

the strategic value chains supported through the Value Chain Component.. Advocacy, policy and

regulatory issue identified by the Value Chain Component and the Infrastructure Component will be

addressed by the Enabling Environment Component.

The intermediate objective of the Value Chain Component is: “Sustained improvement in competitiveness

of selected value chains.

The intermediate objective of the Infrastructure Component is: “Sustained improvement of rural infrastructure”

To help ensure that the programme monitoring and results measurement (MRM) system is both useful for

management and generates credible information for reporting, UNNATI will apply the Donor Committee for

Enterprise Development Standard for Measuring Achievements in Private Sector Development (DCED RM

Standard) across all components. Thus, it is essential that the managing contractor and all implementing partners

are capable of developing, implementing and managing MRM systems that meet the compliance criteria in the

DCED RM Standard.


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2. Objective

The objective of the consultancy is to build the capacity of the UNNATI implementing partners in developing,

implementing and managing internal MRM systems in accordance with the DCED RM Standard and the

principles and practices embedded in it.

3. Outputs

The outputs of the consultancy are:

An agenda, training plan and materials for a course on the DCED RM Standard for UNNATI

implementing partners.

Conduct of the training course.

A follow-up report from the training, highlighting areas where participants are likely to need additional

support.

A brief plan of technical assistance to implementing partners based on the follow-up report and

consultation with the UNNATI MRM Coordinator and implementing partners.

A brief report on technical assistance provided and its immediate results among implementing partners.

4. Scope of Work

The scope of work will comprise the following:

Review the programme document and component descriptions to become familiar with the

programme.

Consult with the EoD, programme MRM Coordinator and implementing partners to get input into the

training plan.

Develop the training agenda, plan and materials for a course on the DCED RM Standard. The course

will combine theory with practical application, enabling implementing partners to contribute to the

development of their MRM systems as part of the course work.

Conduct the training course.

Based on interaction with and feedback from the participants, prepare a follow-up report on the

training, highlighting skills learned and areas where participants are likely to need additional support.

Recommend activities for further support to participants in the identified areas.

Consult with the MRM Coordinator during the inception phase to gather information on the progress of

implementing partners in designing and installing their MRM systems.

On the basis of the follow-up report and consultation with the MRM Coordinator and implementing

partners, prepare a brief plan of technical assistance to be provided to the implementing partners.

Provide technical assistance to the implementing partners towards the end of the inception phase to

assist them in completing the design and installation of their MRM systems in accordance with the

DCED RM Standard.

Prepare a brief report on technical assistance provided, its immediate results among implementing

partners and areas where further support to implementing partners is likely to be required.

5. Method of work

The consultancy will refer to the Embassy of Denmark in Nepal. The consultant will work closely with the MRM

Coordinator throughout the assignment, consulting and involving the MRM Coordinator in all tasks. It is

envisaged that the international consultant will visit Nepal twice in 2014.


111

The first visit will take place soon after the implementing partners have assembled their teams and begun work on

the programme. During this visit the consultant will conduct the training on the DCED RM Standard with

involvement from the MRM Coordinator. The MRM Coordinator, in consultation with the EoD and the

consultant, will handle the administration of the training. Participants will be nominated by their own

organizations and confirmed by the MRM Coordinator in consultation with the EoD and the consultant.

The consultant’s second visit to Nepal is envisaged to take place towards the end of the inception phase,

approximately in May 2014. During this visit, the consultant will work closely with the MRM coordinator to

deliver technical assistance to the implementing partners to complete their MRM guides and install their MRM

systems.

Between the two visits, the consultant will communicate with the MRM Coordinator and the implementing

partners to design the technical assistance plan.

UNNATI - Inclusive Growth Programme in Nepal Monitoring and Results Measurement System

112

Annex 12: Data, Calculations and Assumptions for Programme Targets

This annex shows the data, calculations and assumptions used to generate the programme targets. It should be noted that these targets are estimates of what the

programme can achieve based on currently available data and assumptions. The targets should be reviewed annually and revised if necessary as more information

becomes available. The information below will provide a useful basis for reviewing and revising the targets.

To estimate programme targets, the results for each component were projected based on expert opinions, experience from other programmes, partner proposals and

consideration of the opening portfolio of interventions. When no data was available, targets have not been estimated. The calculations and assumptions per component

and for the overall programme are shown below.

1. Component 1: The Value Chain Component

Calculations

Data

1.1 Commercialisation of Value Chains

Subtotal

1.2

Access to

Finance

Overlap Total/DKK

Orthodox

Tea Ginger Dairy

Total Number of Farmers in 7 Districts 8,000 15,000 100,000

Number Farmers Expected to Benefit (with

increased profits) 2,500 7,000 10,000 19,500 9,500 4,875 24,125

Number MSMEs expected to increase profits 50 75 30 155 - 155

Expected Cumulative Additional Private

Investment NPR 118,140,000 225,215,000 117,110,625 460,465,625 30,697,708

Total Current Volume Sold MT/Yr 44,808 58,032 35,696

Current Volume Sold by Farmers Expected to

Benefit MT/Yr 14,003 27,082 3,570

Current Price per kg/litre 30 35 30

Current Value Sold by Farmers Expected to

Benefit NPR/Yr 420,075,000 947,856,000 107,088,000

Expected Increase in Volume for Farmers

Expected to Benefit 20% 40% 25%

Expected Annual Additional Volume Sold

MT 2,801 10,833 892 14,526


113

Data


Subtotal

1.2

Access to

Finance

Overlap Total/DKK

Orthodox

Tea Ginger Dairy

Expected Number of Years of Benefits 3 3 3

Expected Cumulative Additional Volume Sold

MT 8,402 32,498 2,677

Expected Cumulative Additional Value Sold

NPR 252,045,000 1,137,427,200 80,316,000 1,469,788,200

Expected Increase in Price to Farmers 25% 30% 10%

Expected New Price to Farmers per kg/litre 37.50 45.50 33.00

Expected Cumulative Additional Income to

Farmers from Higher Prices NPR 378,067,500 1,194,298,560 40,158,000 1,612,524,060

Expected Cumulative Additional Net Income

Farmers NPR 630,112,500 2,331,725,760 120,474,000 3,082,312,260 205,487,484

Expected Cumulative Additional Net Income

MSMEs NPR 150,000,000 75,000,000 100,000,000 325,000,000 21,666,667

Expected Total Cumulative Additional Net

Income NPR 780,112,500 2,406,725,760 220,474,000 3,407,312,260 227,154,151

Expected Additional FTE Jobs MSMEs 100 75 60 235

Annual Net Income Increase 260,037,500 802,241,920 73,491,333 1,135,770,753 75,718,050

Assumptions


Data is based on estimates from the value chain study but targets have been reduced in some cases to address optimism bias.

There is a 25% overlap among the farming households expected to benefit in the 3 sectors.

Current prices (from the value chain study) have been used for calculations.

Expected per cent increases for volume and price take into account the types of interventions in the opening portfolio and

the likely increases they are expected to lead to, based on the value chain study.

Expected per cent increases for volume and price have been applied only to benefiting farmers.

There are no benefits to farmers and MSMEs in Years 1-4. All benefits to farmers and MSMEs start in Year 5 (assuming

that the benefits generated in Years 1-4 will balance out those not yet generated in Year 5).

Benefits have been accrued to 2020, 2 years beyond the end of the programme.

For Orthodox Tea, the sapling nurseries intervention will not increase farmers' incomes until Year 9 because of the time it

takes for tea bushes to mature; only investment has been considered for this intervention; no other benefits have been


114

included.

Only direct results are included. No indirect results are included.

DDK1=NPR15

1.2 Access to Finance

Within the 7 programme districts, the benefits generated from access to finance have already been included in the sector

specific interventions.

Outside the 7 programme districts, 10% of those getting access to finance are expected to increase their profits because of

the programme.

Only direct results are included. No indirect results are included.

2. Component 2: The Infrastructure Component

Calculations and Assumptions

Data Amount Unit Sources Notes

Total budget for RTI 166,000,000 DDK UNNATI budget

Assumption: RTI other than road/bridge network has

the same benefits as improvement to the road/bridge

network.

NPR/DKK Exchange rate 15 NPR/DKK

www.xe.com May

2013

Total budget for RTI 2,490,000,000 NPR

Avg. cost for road work per km 6,000,000 NPR

Various, see Source

Data below

Kms of road improved 415 Kms

Total length of roads in 7 districts 1,317 Kms District profile study

% of roads improved 32%

Assumption: 32% of roads improved is high enough

to improve the entire road network in the 7

programme districts

Total HHs in 7 districts 265,981 HHs District profile study

% of HHs affected by road

network improvements 75%

Approximate % of households in the 7 districts

within 4 hours walk of the road network considering

the average walking times to a road from the district

profile study

HHs affected by road 199,486 HHs


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Data Amount Unit Sources Notes

improvements

% of affected HHs who increase

income due to road improvements 50% Assumption

# of HHs with additional income 99,743 HHs By end of 2020

Average annual income per HH 170,712 NPR District profile study

Increase in average annual income

in Year 5 2%

Assumption: There will be no attributable increases

in income for the first 4 years because it takes time

after road improvements for incomes to increase.

After that income will increase slowly due to road

improvements. Income increase for Year 5 is an

estimate considering results from other infrastructure

projects (see Source Data below).


in Year 6 5%

Estimate considering income increases from other

infrastructure projects (see Source Data below)


in Year 7 10%

Estimate considering income increases from other

infrastructure projects (see Source Data below)

NPR DKK

Total additional attributable

income in Year 5 681,091,979.94 45,406,132


income in Year 6 1,702,729,950 113,515,330


income in Year 7 3,405,459,900 227,030,660

Total cumulative attributable

income by 2020 5,789,281,829 385,952,122

Assumption: Roads are maintained for 2 years after

the end of the programme.

Source Data


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Costs for Road construction, upgrading, rehabilitation and maintenance

DoLIDAR for the design of the next phase of SDC funded DRSP (called Local Roads Improvement Programme)

Type of work Cost Unit Notes

Maintenance 100,000 NPR/km/year referring to all types of maintenance

Upgrading 4,000,000 NPR/km

Rehabilitation 4,000,000 NPR/km

New construction 7,000,000 NPR/km

Draft Component Description

Infrastructure - roads 10,000,000 NPR/km

Sources

Road Type Cost Source Date

Single lane earth rd in

hills NR 6 mio/km

Practical

Action 19/06/12

Earth road incl.

Structures NR 8 mio/km SDC 20/06/12

“Surfacing” NR 4,000/sq.m. SDC 20/06/12

“Otta seal” NR 5 mill/km SDC 20/06/12

Fair weather road NR 3.4-1 mio.km RAP 21/06/12

Earth rd in hills NR 5-6 mio/km RRRSDP 21/06/12

Gravel rd NR 5-6 mio/km RRRSDP 21/06/12

Blacktop NR 10 mio/km RRRSDP 21/06/12

Earth to Blacktop NR 10 mio./km RRRSDP?

Earth to Gravel NR 3-4 miio./km RRRSDP?

Earth road by villagers NR 0.4 mio./km

Ilam Field

notes 23/06/12


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Table 2.15: Length of roads (in km) by type by district

District Black Topped Graveled Earthen District &

Urban Road Total

Taplejung 0 25.5 7.6 11.6 44.7

Panchthar 34.86 57 107 48 246.86

Ilam 108.75 12.1 127.1 168.5 416.45

Dhankuta 76.68 49 9 108.7 243.38

Terhathum 8.42 0 76.25 30.55 115.22

Sankhuwasabha 47.7 25 62 0 134.7

Bhojpur 0 7.5 108.5 0 116

Source: Department of Road 2009/10 (Downloaded from www.dor.gov.np)

Total 1,317

Income increases for Infrastructure

projects

Project Income increase

RAP

Avg hh income increased from 33,515 to 106,652 in RAP areas (218%) compared to natl avg of 153%

over 10 years

DRSP 25% increase over about 13 years - attribution likely taken into account although not clear how

http://www.dor.gov.np/


118

Weighted average of household income and number of HHs (District Profile Study)

Nominal

average

household

income (NPR)

Number of

households

Calculation Weighted Avg

Nepal 202,374

Taplejung 173,879 26,509 4,609,358,411

Panchthar 158,291 41,196 6,520,956,036

Ilam 224,048 64,502 14,451,544,096

Dhankuta 169,418 37,637 6,376,385,266

Terhathum 171,812 22,094 3,796,014,328

Sankhuwasabha 140,804 34,624 4,875,197,696

Bhojpur 121,177 39,419 4,776,676,163

Total/Weighted average 265,981 45,406,131,996 170,712

Source: NLSS 2010/11


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3. Component 3: The Enabling Environment Component

Calculations

Projections provided by the IFC47

Objectively Verifiable Indicators 2018 2020 Total by 2020

Goal/Impact Increased Employment Number of formal sector jobs creation 5,000 2,000 7,000

Purpose/ Objective Objectively Verifiable Indicators 2018 2020 Total by 2020

Outcome

Improved investment

climate resulting in creation

of formal jobs and new

investments

Reduced Regulatory

Compliance Cost

Amount (US$) compliance cost savings to

private sector from regulatory reforms US$ 5 million US$ 4 million

US$ 9 million

Number of firms registered with tax authority 7,500 5,000

Number of additional registered firms over

current trend 2,500 2,000

4,500

Increased Private

Investment and sustained

Amount (US$) of GoN and private sector

budget allocated to sustain NICRP

interventions

US$ 3 million --

US $ 3 million

Improved Investment

Climate

Number of NICRP supported reforms

reported by the Doing Business Report 5 --

5

Number of firms financially benefiting from

reforms ? ?

Amount (US$) increase in private investment US$ 40 million US$ 20 million US$ 60 million

NBF score on application of the PPD Charter

of Good Practice improved

From 37 to 80

(out of 100) --

% of NBF secretariat costs covered by the

public and private sectors in Nepal 50% --

Calculation of Targets

47

IFC was originally thought to be the direct implementing partner, but after consultations with GoN, NBF will be the implementing partner with technical assistance from IFC.


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NPR/USD 85

DKK/USD 5.7

Year 5 Year 6 Year 7 Total

USD NPR DKK DKK DKK DDK

Additional Net Income 5,000,000 425,000,000 28,500,000 11400000 11400000 51,300,000

Additional Public Investment 3,000,000 255,000,000 17,100,000

Additional Private Investment 40,000,000 3,400,000,000 228,000,000

Assumptions

Compliance Cost Savings = Net Additional Income (to enterprises)

Benefits accrued in 2019 and 2020 are split evenly between the two years.

4. Programme

Aggregated Projections by 2020

Indicators C1 C2 C3 Total Assumptions and Notes

Number of households with additional

income 100,000 100,000 All benefitting HHs from C1 and C3 are within this.

Number of farms and enterprises

financially benefited 24,280 24,280

Benefited farms and enterprises from C2 are included

within this. IFC does not have sufficient data to project

results for C3. No indirect results are included.

Net additional income 227,154,151 385,952,122 28,500,000 641,606,273

Only from Component 1, Subcomponent 2.1 and

Subcomponent 3.1

Additional FTE Jobs in MSMEs 235 235 Only from Subcomponent 1.1


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Aggregated Costs for Benefit/Cost Analysis

Components Year 1 Year 2 Year 3 Year 4 Year 5 Total

Component 1 6,000,000 27,000,000 30,500,000 28,500,000 13,000,000 105,000,000

Subcomponent 2.1 14,600,000 37,900,000 38,500,000 38,700,000 36,300,000 166,000,000

Subcomponent 3.1 2,500,000 3,500,000 3,500,000 3,000,000 2,500,000 15,000,000

Technical Assistance 11,000,000 6,000,000 6,000,000 6,000,000 6,000,000 35,000,000

Reviews, M&E, Research 2,800,000 2,800,000 4,000,000 4,000,000 4,700,000 18,300,000

Total 36,900,000 77,200,000 82,500,000 80,200,000 62,500,000 339,300,000

Note: Only the above costs are included because only benefits from Component 1, and Subcomponent 2.1 and 3.1 are included in the analysis. All costs for technical

assistance, reviews, M&E and research are included. No costs for contingency or unallocated funds are included.

Benefit/Cost Analysis

Discount Rate 12%

Net Present

Value Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7

Costs $239,644,395 36,900,000 77,200,000 82,500,000 80,200,000 62,500,000

Benefits

Component 1 $115,576,576 - - - - 75,718,050 75,718,050 75,718,050

Subcomponent 2.1 $185,972,199 - - - - 45,406,132 113,515,330 227,030,660

Subcomponent 3.1 $27,104,041 - - - - 28,500,000 11,400,000 11,400,000

Total $328,652,816 - - - - 149,624,182 200,633,380 314,148,710

Ratio

(Benefits/Costs) 1.4

The above ratio implied that for every DKK10 invested, farmers and MSMEs will gain DKK14 by 2020. The calculations have been made as of the beginning of the

programme, using the net present value of costs and benefits and a discount rate of 12%. The analysis is sensitive not only to the assumptions in the programme


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projections but also to the discount rate and the assumption on how long the benefits last after the programme. The table below shows the results of the analysis when

the discount rate and the length of time benefits last are varied.

Discount Rate Last Year of Benefits Benefits/Costs

12% 2020 1.4

6% 2020 1.6

18% 2020 1.2

0% 2020 2

12% 2023 2.8

12% 2028 4.3


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Annex 13: Monitoring and Results Measurement System

See separate report.