World Bank approves $150 million Urban Governance and Infrastructure Project for Nepal

KATHMANDU: The World Bank approved today a $150 million project to help Nepal strengthen service delivery and institutional capacities in strategic secondary cities, and to support the post-COVID-19 economic recovery.

The project is unique in that it puts the municipalities in front and center in project implementation, in full alignment with federalism principles enshrined in the 2015 Constitution of Nepal.

“In the context of rapid urbanization, federalism and COVID-19, providing support to strengthen institutions for effective local service delivery in Nepal’s secondary cities, and extending targeted support to vulnerable groups affected by the impact of the pandemic is critical,” stated Faris Hadad-Zervos, World Bank Country Director for Maldives, Nepal and Sri Lanka. “Our support will help build capacity of key municipalities, enhance local accountability, and accelerate COVID-19 recovery by short-term employment for vulnerable groups as well as service delivery”.

The Nepal Urban Governance and Infrastructure Project will support municipalities located in two strategic urban clusters: Eastern-Terai region (Provinces 1 and 2) and Western region (Gandaki Province and Province 5). The selected municipalities in these areas are key to Nepal’s economic development and are centers for commercial and administrative activities.

Through the creation of Nepal’s’ first dedicated Urban Sector Grant, the project will finance strategic infrastructure in the targeted cities, based on the priorities of the municipalities and their citizens.

The project will also support capacity building for the municipalities for improved urban management and with strong focus on citizen engagement, enabling targeted municipalities to better plan, manage and execute service delivery and urban management activities. In this way, the project ensures that the capacity of municipalities is built in relation to functions that they perform (learning by doing), and that municipalities are held to account (by citizens and national government).

The project will finance small scale labor intensive public works, thus creating temporary jobs for at least 20,000 people across the country, including women and other vulnerable groups. The project also includes a contingency emergency response component to reallocate project funds to support emergency response and recovery.

“The project is a critical milestone in that it is the first World Bank project in Nepal to directly support federalism,” stated Jonas Ingemann Parby, the Project Task Team Leader and Senior Urban Specialist of the World Bank. “Equally importantly, the project includes best practices in climate resilience, gender equality, social inclusion and citizen engagement, which the federal, provincial and local governments can take on.”

The project is fully aligned with government policies and strategies, including the National Urban Development Strategy, and is harmonized with the overall support provided by the government and development partners towards the implementation of federalism in Nepal.