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Nepal
The Development Challenge: In the last 53 years, Nepal has made a transition from an isolated kingdom to a constitutional monarchy. Progress has been notable - substantial road infrastructure, large decreases in child mortality and fertility rates, functioning ministries such as education, finance, and health, gains in literacy and increased access to basic services. Nonetheless, Nepal remains one of the poorest countries in the world, with an annual per capita income of $250 and 42% of the population living below the national poverty line. Although 80% of the population depends on agriculture for their livelihood, population growth has fragmented land holdings and depleted forest products. Life expectancy at birth has increased, but at 59 years, it is still lower than neighboring South Asian countries. Maternal mortality is amongst the highest in the region. One of eleven children dies before they reach their fifth birthday - the vast majority during their first year. Moreover, Nepal is in the midst of a concentrated HIV epidemic, the World Health Organization/United Nations Joint Programme on HIV/AIDS (UNAIDS) estimates that 14 Nepalese adults become infected with HIV in Nepal every day.
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While Nepal's human development indicators are low by any standard, they are particularly low for the very poor, and include wide disparities by region, gender and ethnic group. Economic growth has been almost exclusively in urban areas, while the rural economy has been virtually stagnant, particularly in the hill and mountainous regions. Life expectancy in Kathmandu is over 70 years, while it is under 42 years in the far western mountains. The literacy rate is 54% nationwide, but only 26% for women.
The most pressing problem facing the country today is the profound impact of a Maoist insurgency on political and economic development and security. The Maoist insurgency, which began in 1996, found fertile ground due to Nepal's poor governance, poverty and exclusion. The initial pro-people approach, which won the Maoists converts among the disenfranchised of Nepal, has degraded into a campaign of violence, lawlessness, intimidation, and destruction. More than 8,000 people have been killed by the Maoists and security forces, with almost 6,000 deaths occurring since 2001. In addition to the human toll, the conflict has severely disrupted the fragile national economy. The U.S. Embassy estimates losses to national property and the economy at $1.5 billion.
Since a breakdown of peace talks in late August 2003, the Maoists have expanded their activities in eastern Nepal and the Terai (the fertile flatlands on the Nepal-India border), robbed banks, increased the extortion of food and money from both locals and tourists, and continued to destroy infrastructure. During the cease-fire, the Government of Nepal (GON) and Royal Nepalese Army (RNA) fortified their positions, effectively prohibiting the Maoists from launching any major scale assault on the security forces. However, by focusing their strength in a few places, the RNA has reduced its presence in much of the countryside where the Maoists have significant influence. Human rights abuses committed by both parties to the conflict are rampant.
The U.S. has an interest in an economically and politically stable multi-party democracy in Nepal. Nepal serves as a geographic buffer between the world's two most populous nations in a volatile region. By supporting efforts to resolve the Maoist insurgency and addressing the underlying causes of poverty, inequality, and poor governance in Nepal, the U.S. is making an important contribution to fighting terrorism, promoting regional stability, and diminishing the likelihood of a humanitarian crisis.
The USAID Program: The principal aims of USAID programs are to promote peace through good governance and increased incomes, improve primary health care, curb population growth, improve democracy and governance, expand economic development, and promote the expansion of environmentally-friendly hydropower. All components of the USAID program support improved governance and mitigation of the root causes and major effects of the Maoist insurgency. Although GON capacity at the central and local level is generally weak, it works cooperatively with USAID to implement programs through numerous partners, primarily international non-governmental organizations that work both directly and through local non-governmental organizations. The USAID program engages the private sector significantly, for example in the hydropower sector, the delivery of health and family planning services, and through three public-private alliances.
Other Program Elements: In addition to the efforts described in the Program Data Sheets, other USAID regional and central programs provide assistance to Nepal. USAID's South Asian Regional Initiative for Energy Cooperation and Development is actively involved in regional energy cooperation, and its South Asia Regional Initiative for Women's and Children's Equity strives to eliminate trafficking of women, violence against women, and child labor. USAID's Regional Program of the Office of Economic Growth/USAID/India has granted the Kathmandu Metropolitan City Office $25,000 to improve household and medical waste management in selected areas of the capital city through community mobilization and training of policy makers. USAID supports the Bangladesh, Bhutan, India and Nepal Network through its Environmental Health Project to coordinate inter-country cross-border issues on malaria, kala-azar, Japanese encephalitis and other vector-borne diseases in all four countries. The Asia Regional Office of USAID's Office of Foreign Disaster Assistance (OFDA) enhances medical first response, collapsed structure search and rescue, and hospital preparedness capacities of emergency responder agencies, thereby reducing the potential for earthquake damage and injury in Kathmandu Valley. OFDA also enhances regional cooperation between countries in the Hindu Kush Himalayan region for the exchange of flood information and data and develops adaptive strategies for flood and drought mitigation to enable basic and tangible reduction in vulnerability, as well as providing training in emergency management to non-governmental organizations.
Other Donors: Donor coordination in Nepal is good. The GON budget report shows that donors provided roughly $106 million in grants and $113 million in loans directly to the GON from June 2002 to June 2003 (the Nepali fiscal year). In addition, donors contribute approximately $230 - $280 million to Nepal's development outside of the GON budget. The United States is the second largest bilateral donor, after Japan, in terms of funds disbursed. Other major bilateral donors and their principal areas of focus include Denmark (education, decentralization, governance, and environment), the United Kingdom (governance, rural development, health, and HIV/AIDS), Germany (rural and urban development and health), Switzerland (roads and rural infrastructure and technical training), Norway (hydropower, water, governance, and human rights), Netherlands (community development), Finland (environment and rural water), and Canada (civil society, environment, and gender). The major multilateral donors include the United Nations Development Program (local planning and governance, urban infrastructure, rural energy and HIV/AIDS), the Asian Development Bank (governance, education, water, power, agriculture and roads), the World Bank (education, roads, water, power, telecommunications, financial sector reform and health sector reform), the European Union (urban development and education), and the United Nations World Food Program (food for work programs). Other multilateral agencies such as United Nations International Children's Emergency Fund (UNICEF), United Nation Fund for Population Activities (UNFPA), United Nations Joint Programme on HIV/AIDS (UNAIDS) and United Nations International Labor Organization (ILO) are also active in Nepal.
Coordination between USAID and the British Department for International Development (DFID) has been exceptional, such that Britain contributed $774,000 to USAID's Special Objective program to promote peace through improved incomes and governance. DFID and USAID also work closely in the health sector to address the immediate health needs of Nepalese families in conflict affected areas. USAID and the Japan International Cooperation Agency (JICA) have a Memorandum of Understanding (MOU) to collaborate closely on Maternal and Child Health and HIV/AIDS activities. USAID also funds a rural roads program initiated in collaboration with the European Union.
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