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Operations Evaluation Department Operations Evaluation Division 1

Not for Quotation: Work-in-Progress

Title: Country Assistance Program Evaluation for Nepal —Evaluation Approach Paper

Author: Kus Hardjanti, Principal Evaluation Specialist, OED1

Date: 1 August 2008 ____________________________________________________________________________ A. Introduction

1. This Country Assistance Program Evaluation for Nepal (the CAPE) is an update of the first CAPE that was completed in September 2004. The current Country Strategy and Program (CSP), which covers the period 2005 to 2009 is ADB’s first pilot results-based CSP. It identifies the Government’s intended results and impact to which ADB will contribute and the outcomes to be achieved during the implementation of this CSP. The Nepal Country Partnership Strategy (CPS) mid-term review has been circulated for interdepartmental review, and the CPS for 2010 to 2014 will be prepared in 2009. Therefore, to enable providing inputs to the CPS preparation, it is timely to conduct the CAPE starting August 2008. The proposed schedule for the CAPE is given in para. 47. 2. The CAPE will assess operations not covered in the 2004 CAPE, subsequent and ongoing ADB support to Nepal, and update previous findings, particularly for the operations ongoing at the time. Indicators of this results-based CSP will be the basis for evaluating the CSP’s achievements, keeping in mind the in-country situations that may have affected results achievements. The CAPE will also obtain inputs from the Sector Assistance Program Evaluation (SAPE) on Agriculture and Natural Resources (ANR), which is conducted separately. In addition, it will take into account the priorities and issues raised by the CPS mid-term review. The CAPE’s objectives, approach and methodology are discussed in Section D of this evaluation approach paper. B. Nepal’s Socioeconomic Performance and Development Strategy

3. Nepal is one of the poorest countries in the world with about 31% of its 26.4 million people living below the poverty line.1 The country is characterized by small landholdings, rapid population growth (2.3% annually),2 and a fragile ecology, which make poverty persist in many parts of the country. Past insurgencies in Nepal have hampered the achievement of development results. Previous Governments3 have initiated peace negotiations, which have not been effective. After several attempts, compromise agreements were eventually reached that

1 Ministry of Finance. 2007. Economic Survey 2007. Kathmandu. 2 ADB. 2007. Basic Statistics 2007. Manila. 3 The first peace negotiations in July 2001 was initiated by the elected Government of Prime Minister Deuba but

broke down in November 2001, leading to the imposition of a state of emergency. The second initiative was made by the Chand Government (appointed by the palace), which conducted two rounds of negotiations during April–May 2003. The subsequent Thapa Government (also appointed by the palace), resumed negotiations for the third time in August 2003, but it too was unsuccessful.


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led to the historic Constituent Assembly (CA) elections in early 2008. The 575 elected4 members of the CA (representing various ethnic minorities and political parties with the Party of Nepal, Maoists (CPN/M) winning 230 of the 601 CA seats) will draft a new constitution5 and serve as Parliament. However, political analysts6 have identified several post-election bottlenecks that need to be overcome, for instance, the need to address concerns related to ethnicity and regionalism. In addition, since the people did not give a clear majority of the mandate to any single political party in the CA elections,7 there would be the issue of establishing a balance of power within the new government. 4. The Maoists were expected to lead the new government as they won most seats in the April 2008 elections. However, Nepal's former Maoist rebels have abandoned efforts to form the country's next government. This decision and the alliance of rival parties follow their failure for the presidential election held on 21 July 2008. The Maoists' presidential candidate, Ramraja Prasad Singh, lost a run-off in the constituent assembly to Nepali Congress party candidate Ram Baran Yadav. The vote to elect the president was the first major decision by the assembly since lawmakers decided to abolish the 239-year-old monarchy and declare a republic, part of a peace process that ended a decade-long civil war with Maoist insurgents. Nepal will face challenges in implementing its policies and getting all parties and civil society to work together towards a new era. 5. The insurgency situation and consequent political instability coupled with the poor performance of the agriculture sector8 have contributed to the declining GDP growth from 2003/04 to 2006/07. Inflation rate in Nepal heightened to 8% in 2005/06 from an average of 4.4% in the previous three years, and declined to 6.6% in 2006/07. The investment climate remains unfavorable due to the fragile law and order situation and infrastructure deficiencies. The country’s current account surplus decreased to 1.1% of GDP in 2006/07 as compared to around 2% annually from 2002/03 to 2005/06 (Table 1). In view of the unstable economic environment in the country, the Government adopted macroeconomic policies that aimed to prevent from further economic decline. The Government’s macroeconomic management has helped steer the country through conflict and low growth periods. 6. About 80% of Nepal's population lives in rural areas where poverty incidence is at 34.6%.9 As noted in the Government’s Tenth Plan for fiscal year (FY) 2002–2007 (Poverty Reduction Strategy Paper), the level and intensity of poverty is closely linked to the pace and pattern of economic growth in the rural and urban areas and economic/income generating opportunities generated with such growth. Rural areas normally lack access to basic social and economic infrastructure (education, health, roads, drinking water, and markets). Remote districts and regions are far away from the centers of economic activity and are the most neglected. It appears that Nepal’s poverty situation may be traced to a combination of the country’s difficult topography, limited infrastructure base, low rates of productivity improvement 4 The remaining 26 seats for the 601-member CA are to be nominated by the interim Government. 5 Under the terms of the 2006 peace deal, it was agreed that the future of the monarchy would be decided by a

democratically elected constitutional body, or constituent assembly, which would decide the country's future by devising a new constitution.

6 Based on analyses from S. Chandrasekharan (http://www.southasianalysis.org); Shobha Gautam (http://www.fesnepal.org); Rabindra Mishra (http://www.bbc.co.uk); and Gopal Siwakoti (http://www.rediff.com).

7 Although the CPN/M won the largest number of seats in CA elections (220 seats), the party only cornered less than 50% of the total votes cast.

8 The agriculture sector is the main driver of Nepal’s economy, contributing about 36% to GDP and employs about 60% of the labor force.

9 According to Nepal’s Poverty Reduction Strategy Paper Review (2005/2006), poverty incidence in rural areas is at 34.6% and 9.6% in urban areas.

http://www.southasianalysis.org/

http://www.fesnepal.org/

http://www.bbc.co.uk/

http://www.rediff.com/


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in agriculture, weak governance, unequal pace of rural and urban growth, widespread poverty, and deeply rooted social exclusion that also fueled insurgency in the country.

Table 1: Selected Economic Indicators Fiscal Year Economic Indicator 2002/03 2003/04 2004/05 2005/06R 2006/07P

Per capita GDP ($, current prices) 261.0

293.0 328.0 350.0 383.0 GDP Growth, constant prices 3.9 4.7 3.1 2.8 2.5 (% change per year) CPI (% change per year) 4.8 4.0 4.5 8.0 6.6 Overall Fiscal Surplus/(Deficit) (% of GDP)

2.8 2.8

3.1 3.0 2.5

Export growth (% change per year) 6.4 8.0 8.9 2.6 0.0 Import growth (% change per year) 15.8 9.6 9.7 16.3 7.0 Current account Surplus (% of GDP) 2.4

2.7 2.0 2.2 1.1

Total Outstanding Foreign Debt (% of GDP)

45.4 43.4 37.3 36.2 32.6

Exchange Rate (NRs/$, average) 75.0 74.4 70.6 74.4 70.9 CPI = consumer price index, GDP = gross domestic product, NRs = Nepali Rupees, P = preliminary, R = revised. Source: Ministry of Finance. 2007. Economic Survey Fiscal Year 2006/2007. Kathmandu.

7. Despite low income levels, steady progress has been noted in terms of the country’s achievement of the Millennium Development Goals (MDG) targets, as shown in Table 2.

Table 2: Selected Development Indicators

Development Indicator Previous Value Latest Value Poverty incidence (% below poverty line) 42.0 (1996) 31.0 (2004) Primary school net enrollment (%) 64.0 (1990) 86.6 (2006) Enrollment ratio of girls to boys (%) Primary 63.0 (1990) 98.0 (2006) Secondary 46.0 (1990) 87.0 (2006 Under-5 mortality (per 1,000 live births) 145.0 (1990) 61.0 (2006) Maternal mortality (per 100,000 live births) 515.0 (1990) 281.0 (2006) People living with HIV (ages 15–49, in %) 0.3 (2000) 0.5 (2005) Forest area as share of total land area (%) 37.0 (1990) 29.0 (2005)

Sources: United Nations Development Programme. 8. The Tenth Plan's poverty reduction strategy is built on four pillars: (i) broad based economic growth; (ii) social sector development including human development; (iii) targeted programs including social inclusion, in order to bring the poor and marginalized groups into the mainstream of development, together with targeted programs for the ultra poor, vulnerable and deprived groups (who may not adequately benefit from the first two pillars); and (iv) good governance. The Government’s recently adopted the Three-Year Interim Development Plan (TYIDP) that aims to generate change among the people by reducing unemployment, poverty, and inequality and contributing the establishment of durable peace.10 Through the TYIDP, the Government targets an economic growth rate of 5.5% at the end of the plan period (FY 2010) from 2.5% in FY 2007, thereby reducing the proportion of the population living below the poverty line from 31% to 24% by FY 2010. To help achieve these goals, the TYIDP’s priority areas include: (i) physical infrastructure (through physical reconstruction and rehabilitation with conflict-affected people provided with relief for re-integration); (ii) investments (to support development through the inclusion of excluded groups); (iii) revitalizing the national economy

10 National Planning Commission. 2008. Three-Year Interim Development Plan (2007/08–2009/10). Kathmandu.


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(through increased investments in physical infrastructure supporting agriculture, tourism, and industry); and (iv) increased investments in education, health, water supply and sanitation for enhancing the quality of human resources. 9. As noted in the 2001 Poverty Partnership Agreement between the Government and ADB, the Government’s paramount goal is to reduce the incidence of poverty in the country to less than 10% of the population by FY 2017. Other key goals for FY 2017 include (i) increasing life expectancy from 56.1 to 68.7 years, (ii) increasing the adult literacy rate from 40% to 100%, (ii) increasing annual economic growth to 8.3%, and (iii) bringing down population growth from 2.3% to 1.5%. The Government and ADB agree that accelerated broad-based economic growth coupled with continued reduction in population growth and the expansion of opportunities for the poor and the marginalized groups to participate in the development process are essential to reducing poverty in Nepal. To achieve such growth, there is a need for social and economic infrastructure development. Thus, the Government and ADB will work together to facilitate broad participation in the development process which is carefully structured so that participants recognize trade-offs and arrive at a broad-based consensus on change. Development initiatives will be designed to improve equity between the poor and the better-off, rural and urban populations, women and other vulnerable groups and those who have not been disadvantaged. C. Findings from the 2004 Nepal Country Assistance Program Evaluation11 and other

OED Evaluation Studies for Nepal

10. Portfolio and Sector Performance. The analysis of 37 projects implemented in Nepal from 1988 to 2003 showed that, overall, most projects (i) were selected and designed within the priorities of the country strategy, (ii) had a positive development impact, and (iii) were relatively successfully implemented, incorporating important cross-cutting issues. The overall effect of ADB’s lending program was positive in terms of social, environmental, economic, and direct poverty impact but was not so in terms of implementation efficiency. The CAPE also noted that implementation in the agriculture, transport, and water supply and sanitation sectors were relatively efficient and addressed most of ADB’s strategic priorities. However, the CAPE observed that there appears to have been a general tendency for institutional and governance issues to impede efficient project implementation. A number of factors that constrain the effective and efficient implementation of projects were also identified including (i) deficient project design, (ii) complex implementation and institutional arrangements, (iii) conditionality inclusion for further implementation; (iv) lengthy procedures in addressing implementation problems; and (v) ongoing insurgency and unstable political environment. 11. Strengths and Weaknesses of the Country Program. Program strengths include (i) the ability for the Government and ADB to improve on past performance and build on successes, especially in certain key sectors (e.g., water supply and sanitation, agriculture, and roads); (ii) the willingness of the Government and ADB to tackle difficult policy and institutional issues in some major productive sectors; and (iii) the ability of the Government to initiate and complete most of the projects it started in the past 15 years despite facing difficult circumstances and limited human, institutional, and financial resources. Program weaknesses identified include (i) the absence of clear and shared visions (shared by the Government, ADB, and other key stakeholders) on ultimate sector development objectives hampered the effective delivery of assistance to strengthen key development and market institutions; (ii) the overestimation on the part of ADB staff of the ability of government staff and agencies in

11 ADB. 2004. Country Assistance Program Evaluation for Nepal. Manila. The summary of the findings of the 2004

Nepal CAPE can be found in Appendix 1.


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understanding institutional, crosscutting, and policy concerns that resulted in loans containing conditions that could not be met and inadequate attention was also given to building broad-based support for policy reforms that adversely affected some interest groups; and (iii) the propensity to spread investment too thinly over too many sectors. 12. Stakeholder Performance. The performance of the Government, ADB, and beneficiaries was also examined as part of the evaluation exercise. Government performance was mixed. Past analyses cited a large number of deficiencies on the part of the Government (as a whole) and executing/implementing agencies (in particular). However, significant achievements were noted by the CAPE particularly in reforming fundamental policies in the agriculture sector and improvements in the enabling environment for private sector development. In addition, improvements in project design and implementation performance were also noted for projects implemented in the irrigation and livestock subsectors, water supply and sanitation, and road and rural infrastructure sectors through efforts initiated by the Government. On the other hand, ADB performance appears to be constrained by limited resources allocated to project preparation and supervision. When project design included a mechanism for beneficiary participation, projects showed a high degree of success in achieving its goals through efficient implementation and project sustainability. Thus, there is merit in incorporating beneficiary consultation and participation into the project design and implementation process. 13. Lessons. Lessons from the evaluation include the following: (i) a CSP can only be successful when the strategy and country program are consistent; (ii) a clear and well-defined strategy is crucial to achieving this consistency; (iii) a clear and well-defined country program can be developed within the Nepalese context, according to experience over the study period; (iv) the analysis indicates that projects that actively consider the crosscutting priorities of ADB and the Government in their design have a greater chance of success than projects that do not; (v) a sound institutional base is generally required for effective projects; (vi) a sector approach and long-term assistance are needed for institution building; (vii) a project’s success is most likely if the project design is based on a proven development model; (viii) the executing agency, the Government, and ADB must show sound governance and commitment to ensure effectiveness of project implementation and ultimate project success for difficult and complex projects; (ix) the conditions for disbursement in either project or program loans should be reasonable and attainable to avoid stalled implementation; and (x) a range of benefits can be generated from large-scale projects, concomitant with the size of investment, but these projects can also generate challenges of a similar size. 14. Implications for Future Strategies and Programs. The following implications for ADB’s future strategies and programs in Nepal were identified: (i) the CSP should be sharply focused and well-defined; (ii) the strategies should have a large degree of flexibility to account for the evolving economic and political situation in the country; (iii) the strategies should be clearly focused on sectors and investments that have already proven to be successful and could contribute directly to the improvement of incomes of disadvantaged groups; (iv) sector loans proved more successful than either project or program loans and sector development programs are preferable to simple program loans; and (v) large-scale projects can have significant environment and social impact, hence, should be included in future strategies. 15. Recommendations for the Government of Nepal. The CAPE highlighted the need for the Government to (i) take ownership of the CSP and CSP preparation process by taking a more proactive role in providing guidance and feedback to the team preparing the CSP; (ii) make a clear presentation of its priorities, policies, issues, and procedures so these can be


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addressed in the CSP; (iii) enhance the monitoring of ongoing and completed projects; and (iv) address issues related to operation and maintenance financing for completed projects. 16. Summary of findings, key issues, lessons, recommendations, and/or follow-up actions from past OED evaluation studies for Nepal (Appendix 2) were derived from (i) 2008 special evaluation study (SES): Effectiveness of ADB's Capacity Development Assistance: How to Get Institutions Right that involved Nepal as one of its country case studies; (ii) 2007 SES: Long Term Strategic Framework: Lessons from Implementation (2001–2006); (iii) 2004 project performance audit report (PPAR) of L1604-NEP(SF): Second Agriculture Program; (iv) 2004 PPAR of L1011-NEP(SF): Seventh Power Project; (v) 2004 PPAR of L1196-NEP(SF): Second Education Development Project; (vi) 2000 Country Synthesis of Evaluation Findings in Nepal; and (vii) 1995 special study: Effectiveness of Bank assistance for Capacity Building in Nepal. 17. The SES on the Asian Development Fund VIII and IX Operations (December 2007) that included Nepal, concluded that in Nepal, ADB had mixed experiences regarding its coordination and harmonization with development partners. There was competition for projects and lead positions. However, the adoption of sector wide approaches (SWAp) in the education and health sectors was expected to lead to broader coordination. D. ADB’s Country Strategies and Programs

18. ADB’s initiatives for Nepal are guided by various strategy papers and programs and aimed to assist the country in achieving a sustainable reduction in poverty. These strategies and programs are developed in support of the Government’s own development plans. ADB’s strategies and programs for Nepal from the period 2002–2004 to 2008–2010 can be found in Appendix 3. The more recent strategies and programs are summarized below. 19. Country Operations Business Plan (2008–2010).12 The country operations business plan (COBP) for the period 2008–2009 continued to emphasize the overarching objective of the CSP 2005–2009 of achieving sustained poverty reduction. The political and security situation in Nepal has evolved since the preparation of the CSP 2005–2009 in 2004 but its underlying objectives remained relevant given that the causes of poverty in the country are still unchanged and since Nepal will remain in a conflict environment until lasting peace is achieved. ADB’s strategy for Nepal will continue to involve careful monitoring of the peace process and following a conflict sensitive approach in its operations. The conflict-sensitive implementation strategy adopted in CSP 2005–2009 aimed to facilitate effective and safe implementation of ADB’s operations during the conflict period. 20. ADB’s lending program for Nepal for the 2008–2010 period focuses on the following sectors as these are deemed crucial in addressing acute poverty: (i) agriculture, (ii) education, (iii) energy, (iv) finance, (v) public policy, (vi) transport and communications, and (vii) water supply, sanitation, and waste management. The emphasis of ADB’s non-lending activities in the country will be on (i) providing support to strengthen the institutional capacity of the Government and (ii) preparing the future lending program. However, ADB’s assistance program to Nepal would need to retain maximum flexibility given the economic challenges and volatile political environment.

12 ADB. 2007. Country Operations Business Plan: Nepal 2008–2010. Manila. The annual updates of CSPs have been

replaced with a Country Program Strategy mid-term review report and the annual indicative rolling country business plans (COBP) effective August 2006.


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21. Country Operations Business Plan (2007–2009).13 In view of Nepal’s political transition and given the Government’s emphasis on reconstruction and rehabilitation in its development programs, the focus of ADB’s CSP for the period 2005–2009 remains relevant. However, in view of the political situation and outlook over the next three years and the uncertainties associated with the peace process, it was agreed with the Government not to specify detailed annual country programs beyond 2007. Thus, the 2008–2009 program only indicates annual priority projects without specific allocations for each. It was also agreed with the Government that the delivery of the program will depend on ADF resource availability and the political and security situation. ADB’s assistance to Nepal for the period 2007–2009 presents a shorter but more responsive and flexible program while remaining aligned with the CSP’s framework. The tentative lending program supports institutional and policy reforms in road transport, rural and urban infrastructure (specifically in water supply and waste management), energy, education, finance, reconstruction and rehabilitation, economic management, and agriculture. The non-lending program focuses on capacity building of sector institutions. A more strategic approach in developing TA has been adopted to shift the focus from small and ad hoc TA projects to fewer cluster TA projects, focusing on implementation capacity and project preparation. 22. Country Strategy and Program (2005–2009).14 The overarching objective of the CSP for the period 2005–2009 is to help the Government address the root causes of conflict, in addition to achieving sustained poverty reduction by fostering more inclusive processes of broad-based growth, social development, and good governance. The CSP adopted a medium- to long-term perspective to help reduce poverty and achieve the MDGs while recognizing that the conflict situation and political instability in the country present bottlenecks that impede development. 23. The CSP's cross-cutting initiatives include: (i) supporting the creation of an enabling environment for increased private sector participation and investment by fostering better policy, and more effective implementation of policies and regulatory reform in key sectors; (ii) addressing gender, ethnic, and caste discrimination through policy reform, targeted investments, and the mainstreaming of equal opportunity measures in key sector investments; (iii) improving social, environmental, and resettlement assessment policies, procedures, and practices as these relate to investment projects; and (iv) tapping benefits from regional cooperation initiatives in the areas of transport connections and trade facilitation, energy, tourism, and communications with neighboring countries. The CSP is fully aligned with the Government’s Tenth Plan (which is also Nepal’s Poverty Reduction Strategy). All lending products for the country involve poverty intervention projects. ADB’s assistance program for Nepal for the period 2005–2009 will prioritize inclusive social development through the (i) development of rural areas, (ii) improvement of basic social services and infrastructure, (iii) women empowerment, (iv) private sector development, and (v) improvement of governance in the public and private sectors. Special emphasis is given to project design to ensure the project’s primary objectives are fully in line with the aforementioned priorities and are results oriented. 24. As mentioned in para. 1, this is ADB’s pilot results-based CSP. Given the emphasis on achieving development results, CSP identified (i) the results sought by the Government and that ADB is helping to achieve, (ii) the expected outcomes of the program implementation period, (iii) mechanisms and indicators for monitoring progress toward achieving these outcomes, and (iv) a

13 ADB. 2006. Country Operations Business Plan: Nepal 2007–2009. Manila. 14 ADB. 2004. Country Strategy and Program 2005–2009; Nepal. Manila.


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basis for evaluating success of the strategy. The CSP includes a results framework that serves as a management tool in delivering development results. Appendix 4 presents the CSP’s results framework (the original and the revised versions). 25. The Government took steps in developing core elements of results-based management for planning, budgeting, implementation and monitoring. It also initiated a poverty-based resource allocation for local governments and taken initiatives in strengthening the monitoring and evaluation system in key ministries to align with a results-based management system. A district-level poverty monitoring and analysis system was also established to effectively assess development interventions and their impact. 26. CSP (2005–2009) draft Midterm Review.15 Since the drafting of ADB’s CSP for Nepal (2005–2009), the country’s political landscape has changed considerably. The constituent assembly (CA) elections held on 10 April 2008 were generally peaceful with 61% voter turnout and the CPN/M won the largest number of seats. Despite these achievements, however, the peace process still faces difficult challenges. 27. During the CSP period, the Government’s sound macroeconomic policies helped preserve the country’s macroeconomic stability. Continued prudent policy perspective, particularly in addressing emerging challenges caused by new fiscal pressures, higher food and fuel prices, and the chronic fuel and power shortages is important to ensure future macroeconomic stability. 28. The dramatic decline of poverty incidence (from 42% in 1996 to 31% in 2004) was driven by growth in per capita consumption and income (each averaging 4.5% per annum), supported mainly by increased remittance inflows, higher agricultural wages, increased connectivity, greater urbanization, and a decline in the dependency ratio. Progress in human development has also been quite remarkable. However, the socioeconomic disparities are widening. The Nepal Living Standards Survey shows that income inequality increased significantly (the Gini coefficient rose from 34.2% in 1996 to 41.1% in 2004. Moreover, the 11% decline in poverty was unevenly distributed geographically and across caste, ethnic and minority groups. 29. Broad based growth, along with inclusive development, is crucial during transition and will remain the basis of ADB’s strategy. To ensure development impacts and to support the peace process, ADB operations must maximize inclusiveness while fostering higher growth. ADB will maintain social inclusion in alignment with Nepal’s Three-Year Interim Development Plan. ADB will aim for greater inclusion of disadvantaged groups in its operations. 30. ADB’s Assistance Portfolio in Nepal. Nepal has been one of ADB’s development partners since its establishment in 1966.16 ADB’s assistance portfolio in Nepal is funded by the Asian Development Fund (ADF) except for the private sector that has been funded by the Ordinary Capital Resource (OCR) since 1990. From 2004 to 2007, ADB approved seven loans17 amounting to $196.0 million and nine grants totaling $195.9 million, out of which 25% are multi-sector projects,18 23% are in agriculture, 21% are in transport and communications, 17% are in

15 Draft NEP CSP (2005–2009) circulated for interdepartmental review end of May 2008. 16 ADB’s assistance to Nepal began in 1968. From 1968 to 2007, ADB approved $2.3 billion to finance 111 loans;

nine grant projects amounting to $195.9 million; 270 technical assistance projects amounting to $127.6 million; and private sector loans and equity investments totaling $58.6 million.

17 ADB had no lending activities in Nepal in 2007. 18 These multi-sector projects cover agriculture and natural resources, transport and communication, water supply,

sanitation and waste management.


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finance, 13% in education and 1% in health (Table 3). During the same period, ADB also approved 39 technical assistance (TA) amounting to $18.9 million (Table 4). ADB’s lending and non-lending assistance programs to Nepal are shown in Appendix 5.

Table 3: Total ADB Loans and Grants to Nepal, by Sector (2004–2007)

Number Approved Amount

($ million) Total Amounts

of Loans Sector Loans Grants Loans Grants and Grants % Share Agriculture and Natural Resources 3 2 70.0 19.0 89.0 23 Education 2 1 50.0 2.0 52.0 13 Finance 1 1 56.0 8.7 64.7 17 Transport and Communications 1 2 20.0 64.2 84.2 21 Health, Nutrition, and Social Protection - 1 - 2.0 2.0 1 Multisector* - 2 - 100.0 100.0 26 Total 7 9 196.0 196.0 391.9 100

Note: Multisector projects cover agriculture and natural resources; transport and communications; and water supply, sanitation, and waste management. Source: Central Operations Services Office.

Table 4: Total Technical Assistance to Nepal, by Sector (2004–2007) Approved Amounts Sector Number ($ million) % Share Agriculture and Natural Resources 4 1.4 7 Education 5 1.5 8 Energy 5 2.1 11 Finance 1 0.5 3 Health, Nutrition and Social Protection 1 0.7 4 Law, Economic Management, and Public Policy 7 3.0 16 Transport and Communications 7 3.6 19 Water Supply, Sanitation, and Waste Management 5 5.0 26 Multisector* 4 1.2 7 Total 39 18.9 100 Note: Multisector projects cover agriculture and natural resources; energy; law, economic management, and public policy; transport and communications; and water supply, sanitation, and waste management. Sources: Central Operations Services Office; Loans, TAs, Grants and Equity Approvals database.

31. As of April 2008, cumulative disbursements of loans (ADF) and grants to Nepal approved from 2004 to 2007 amounted to $136.4 million (Figure 1). The total disbursed amount is 34.8% of the total portfolio. In terms of sector distribution, projects focusing on finance had the highest disbursements ($57.2 million) followed by multisector projects ($50.0 million). 32. Two public sector program loans were approved in 2006. The fast disbursement of these loans during the last two years (2006–2007) helped reverse the negative net resource transfer from ADB to Nepal recorded from 2002 to 2005. Nepal had been experiencing a favorable net transfer of resources annually from 1988 until 2001. However, a negative net transfer of resources was recorded from 2002 to 2005 (Figure 2 shows the disbursements, payments and net resources transfers of public sector loans). It appears that the performance of these loans was significantly affected by the volatile political situation as well as the generally unstable economic environment in the country during that period.


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Figure 1: Cumulative Disbursements of ADF Loans and Grants to Nepal Approved in 2004–2007, by Sector

(Disbursements as of 3 April 2008, in $ ‘000)

Multisector, 50.00

Finance, 57.15

Health, Nutrition, & Social

Protection, -

Education, 16.74

Transport and Communications,

5.43

Agriculture and Natural

Resources, 7.05

Source of Basic Data: ADB Controller’s Department and Loan Financial Information System.

Figure 2: Public Sector Loans - Disbursements, Payments, and Net Resource Transfers (1988–2007)

(40,000)

(20,000)

-

20,000

40,000

60,000

80,000

100,000

120,000

1988

1989

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199119

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9619

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9920

0020

0120

0220

0320

0420

0520

062007

Am

ount

($ '0

00)

Loan Disbursements Loan Service PaymentsNet Resource Transfers Linear (Net Resource Transfers)

Source of Basic Data: ADB Controller’s Department.

33. Within the private sector, ADB approved a total of five loans and equity investments to Nepal from 1988 to 2007 amounting to $58.6 million. All of these loans and equity investments have been fully disbursed, with only one loan having been fully repaid as of 31 March 2008. The rest of the loans and equity investments are either still being repaid or were restructured. Unlike the public sector loans, the negative net resource transfers never picked up since 2001. This is mainly because of the absence of new loans and equity investments since 1997 vis-à-vis the full disbursement of all approvals by 2000. Figures 3 and 4 show the disbursements, payments and net resource transfers of private sector loans, and both public and private sector loans, respectively.


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Figure 3: Private Sector Loans - Disbursements, Payments, and Net Resource Transfers (1988–2007)

(10,000)

(5,000)

-

5,000

10,000

15,000

20,000

1988

1989

1990

1991

1992

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1994

1995

1996

1997

1998

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2000

2001

2002

2003

2004

2005

2006

2007

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ount

($ '0

00)

Loan Disbursements Loan Service PaymentsNet Resource Transfers Linear (Net Resource Transfers)


II. OBJECTIVES, SCOPE, APPROACH AND METHODOLOGY OF THE CAPE

Figure 4: Public and Private Sector Loans - Disbursements, Payments, and Net Resource Transfers (1988–2007)

-40,000

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

Am

ount

($ '0

00)

-20,000 1988

1989

1990

1991

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1994

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1996

1997

1998

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2000

2001

2002

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2007

Loan Disbursements Loan Service Payments 34. Objectives and Scope. The CAPE will (i) update the evaluation of ADB’s program in Nepal conducted in 2004; (ii) assess ADB’s strategy and program in Nepal; (iii) assess the operations during the last five years, particularly the years covered by the current CPS (2005–2009) period against its results-based framework as revised in the mid-term review; (iv) assess how the country strategy and ADB’s operations responded to the needs of a state qualified as

Net Resource Transfers Linear (Net Resource Transfers)



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fragile; and (v) provide findings and forward-looking lessons to assist in the preparation of the next CPS of 2010–2014. 35. Approach and Methodology. The CAPE will be generally based on the CAPE Guidelines (February 2006).19 Keeping in mind the changing political landscape in Nepal, when deemed necessary, the CAPE will also apply an approach that will respond to country contexts, development issues, and emergent needs. This may entail some modifications of the CAPE guidelines template. A preparatory phase, which included an Operations Evaluation Mission (OEM) in Nepal for consultations and close collaboration with the Nepal Resident Mission (NRM) and relevant government institutions was conducted during 2–11 June 2008, guided by a draft proposed evaluation approach paper. This OEM’s objectives were to (i) strengthen the approach and methodology of the CAPE; (ii) identify appropriate consultants for the CAPE; (iii) propose the schedule for the CAPE; and (iv) produce a revised/final draft Evaluation Approach Paper that will be circulated to SARD and NRM for comments. 36. The OEM for the CAPE, planned for August 2008 will be guided by the Evaluation Approach Paper that has been approved by OED management and has incorporated the comments from SARD and NRM. It will also refer to the approved NEP CPS Midterm Review. The OEM will be conducted by the CAPE team and results of the OEM and preliminary findings of the CAPE will be presented to the NRM and relevant government officials. The CAPE report will be drafted, circulated for OED peer review, and presented to SARD for inputs and comments prior to the interdepartmental circulation. 37. Data collection and information gathering for the CAPE include the following processes and techniques: (i) literature and desk reviews that are available from ADB, the Government or independent sources; (iii) interviews of professionals associated with or knowledgeable about ADB-funded; (iv) semi-structured meetings with civil society organizations (CSOs), development partners, and private sector representatives; (v) key informant interviews with beneficiaries and a range of people influenced by ADB operations; and (vi) observations in the field from selected project sites.20 The CAPE will use secondary data and available statistics for quantitative assessment of development trends. 38. The CAPE will identify and assess key issues (related to relevance, effectiveness, efficiency, sustainability and other effects) of a selected ADB assistance, covering the main or core sectors in which ADB is engaged in Nepal: (i) agriculture and natural resources;21 (ii) transport and communications; (iii) finance; and (iv) education. Within each sector, the CAPE reviews the major program thrusts of ADB’s assistance. Each program thrust includes a combination of completed and ongoing projects and programs, associated TAs, economic and sector work, policy dialogue, and donor coordination. A sector assistance program evaluation (SAPE) for the agricultural and natural resources in Nepal is being prepared separately by OED. The findings, lessons and recommendations of this SAPE will be incorporated in the CAPE. In addition, the CAPE will examine ADB’s support on governance related interventions.22 Brief profiles of the above sectors and theme are provided in Appendix 6.

19 The CAPE methodology is covered in Chapter II of these guidelines, and is not repeated in this approach paper. 20 Local security conditions and travel advisory will be considered in the selection of project site visits. 21 OED is conducting a Sector Assistance Program Evaluation (SAPE) for Nepal’s agriculture and natural resources

sector. The SAPE will evaluate links between ADB’s assistance and the country’s socioeconomic performance and identify opportunities for improving program performance.

22 Since 2000, ADB has approved three loans totaling $72.3 million from the ADF. Nine TA projects totaling $8.85 million have been approved to support reforms to corporate and financial governance public sector governance.

http://www.adb.org/Documents/Guidelines/Country-Assistance-Program/guide-peparation-0206.pdf



13

39. The CAPE will assess the overall performance against the Nepal CPS results framework at design stage and its revised version at midterm review stage. In assessing the loan and TA portfolio, the CAPE will use information derived from the portfolio management indicators, contextual information synthesized from project and TA performance reports, and other sources of information and records available in ADB Headquarters and NRM. It will also focus on assessing outcomes. In addition, it will draw pertinent information from OED’s Annual Report on Portfolio Performance for the Year Ending 31 December 2007. 40. Within the main program thrusts, the CAPE will cover various facets and roles of ADB’s assistance in Nepal including the following: (i) economic and sector work; (ii) thematic studies and initiatives; (iii) non-lending services, such as: policy dialogue, development partner coordination, harmonization, and fostering ownership and participation, and; (iv) reported results (outputs and outcomes) based on portfolio performance data. The CAPE will also take into account country contexts and development issues. 41. The CAPE will search for answers to questions23 relevant to the following:

(i) Assessment of ADB’s country strategy and operations: (a) relevance of ADB’s assistance program and strategy; (b) responsiveness and performance of ADB; and (c) results and contributions to development.

(ii) Development effectiveness of ADB sector operations. (iii) Lessons, good practices and future strategy.

42. The detailed questions are given in Appendix 7. These questions are meant to guide the CAPE, which will be refined to reflect the issues and concerns identified during the OEM. 43. The CAPE’s features that differ from the 2004 Nepal Cape, among others, are:

(i) Involve an assessment and rating of the performance of ADB’s operations in key sectors (i.e., a bottom-up approach) and an assessment and rating of ADB’s overall contribution to development results at a national level (i.e., a top-down approach). A combination of the top-down and bottom-up approaches is then used to derive an overall performance assessment of ADB. This performance assessment and rating will generally follow the CAPE Guidelines (Appendix 2 of the CAPE Guidelines) of February 2006.

(ii) Highlight the analytical work and avoid presenting repetitive information. (iii) Include a section on private sector development and how the public and private

sectors could work effectively. (iv) Carefully assess the socio-economic and particularly the political landscape of

the country, as well as the development assistance needs that have changed considerably since the previous CAPE.

(v) With the changes in the country as well as in ADB vis-à-vis the core operational areas of Strategy 2020 and ADB’s transformation to 2020 operational goals, has there been a change of the country’s strategy and a change of modality in ADB’s assistance in Nepal? This will be assessed by the CAPE.

(vi) This CSP (2005–2009) is the first pilot results-based CSP. Therefore the CAPE will assess the achievements against the targets set in the results framework. It will also review how the results framework has contributed to managing ADB’s operations in Nepal. If not, what were the reasons, and how this could be improved.

23 These questions are based on the list of questions used by the Philippines CAPE.



14

(vii) Examine whether recommendations from the previous CAPE have been incorporated in the CSP, and if not what are the reasons. The CAPE will provide practical and implementable recommendations.

(viii) Assess cross-cutting themes such as governance, capacity building, partnering and harmonizing with development partners as well as aligning with the country’s system.

44. The CAPE will also look into Nepal’s development constraints taking into account ERD’s RETA 6397: Strengthening Country Diagnosis and Analysis of Binding Development Constraint in Selected DMCs, which included Nepal. This RETA highlights the private sector and aims to enhance the development impacts of the DMCs’ own interventions and ADB’s lending and non-lending operations in the DMCs. The expected outcome is improved DMC capacity to undertake development diagnostic studies and formulate development plans or poverty reduction strategies targeting the binding constraints. Hence, ADB will also improve its understanding of binding constraints, which will contribute to better formulated rationale for ADB’s intervention in its DMCs. 45. The CAPE process encourages interactions between the CAPE team and ADB operations staff in the respective sectors, and also with the CPS team, government staff, executing agencies, and other stakeholders. The CAPE process promotes participation, dialogue, information sharing, and dissemination of findings. 46. The CAPE team will be led and managed by a Principal Evaluation Specialist (the team leader), supported by an economist from OED, two international consultants and three local consultants (two in Nepal and one at ADB Headquarters). The SAPE on ANR will provide substantial input to the CAPE, particularly on issues related to the sector as well as rural connectivity and poverty reduction. The terms of reference for the consultants are given in Appendix 8. E. Proposed Schedule24

47. The following schedule for the CAPE is proposed: Operations Evaluation Mission (OEM) Stage II II/III August 2008 OED’s Internal Review II October 2008 Presentation to get feedback from RD I/II November 2008

Interdepartmental Draft II December 2008 Editor’s Review I February 2009 Director General’s Review for Approval III March 2009

cc. R. Adhikari, Director, OED2; H.S. Hettige, OEOD; A. Anabo, OED1.

24 The proposed schedule will be subject to the Government’s concurrence to the OEMs, OED's staffing situation,

and ability to recruit and field consultants on time. OEM Stage I and circulation of the draft evaluation approach paper for the review of SARD and NRM have been conducted and completed on time as planned. Comments received from SARD and NRM have been incorporated in this proposed evaluation approach paper.

Not for Quotation: Work-in-Progress Appendix 1 15

FINDINGS FROM CAPE NEPAL 2004

A. Portfolio (1988–2003)

• 48 loans approved (amounting to $1.4 billion) 42 project investment loans 6 program loans

- 3 agriculture sector loans - 1 industry sector loan - 2 thematic loans

• 167 technical assistance grants (amounting to $74.5 million) 50 PPTA ($21.2 million) 117 ADTA ($53.3 million)

B. Trends in Portfolio Performance

• Lending Program. Large amount of over-programming and slippage1 in terms of actual loan approvals vs. firm loans in annual lending program.

Resulted in the transfer of resources significantly below that of the indicative planning figure (IPF).

Overall, the balance of the lending program reflects the priorities and recommendations of various Country Operational Strategies2 (COSs). However, there appears to be a declining emphasis on rural and agriculture sectors in the operating program.

Expectations about the sector balance for the 1999–2004 COS period was that the lending program would continue to support the implementation of the Agriculture Perspective Plan, but the focus seems to have been lost in the 4 years since the COS was prepared.

For the 2000–2003 COS period, only 25% of lending was for projects related to agriculture and roads and out of this only 8% of lending was for agriculture sector projects.

Given the past history of annual slippage in the approval of firm projects in the early 1990s, the potential for year-to-year slippage should continue to be a matter of significant concern.

The analysis of a sample of 37 completed and ongoing projects approved between 1988 and 2000 was carried out. - Most projects were selected and designed within the priorities of the 3 COS

periods; had a positive development impact; and were or are being relatively successfully implemented and incorporated important crosscutting issues.

- There is a general indication that institutional governance issues delay or impede implementation, but most were at least partly successful and some were outstanding. However, the effect was as positive as it might have been in terms of implementation efficiency.

- The overall effect of ADB’s lending program was positive in terms of social, environmental, economic, and direct poverty impact.

1 Projects approved in the loan pipeline but implementation is postponed to another year. 2 Country Operational Strategies covering the periods 1988–1992, 1993–1998, and 1999–2003 were used to aid in

the analysis for the CAPE.

Appendix 1 Not for Quotation: Work-in-Progress 16

- Sector Performance. Projects within the priority sectors identified in the COSs generally had a higher degree of success than low-priority sectors. This may be because ADB has more experience and a longer history in designing projects of this kind than projects in new sectors (e.g., tourism or urban development). The program had relative success in projects related to water supply and sanitation, and agriculture, in terms of implementation efficiency, reaching the desired target group, and fostering social equity and economic growth. Transportation and education projects also performed relatively well but these projects were constrained by institutional problems and lack of innovativeness in project design. The impact of energy projects in Nepal’s overall economic growth was also significant.

- Lending Modalities. Sector loans were more successful than either project or program loans.

• Non-lending Program. Total approved ADTA was bout 2.5 times the PPTA level. Average annual level of ADTA approvals declined consistently from $4.0 million

yearly (1988 COS period) to just under $3.0 million during the 1999 COS period. - The decline in approvals resulted from a sharp decline in ADTA to agriculture

and natural resources (from $1.8 million during the 1988 COS period to $260,000 during the 1999 COS period).

- The decline in ADTA approvals was directed at addressing the priority needs identified during the 1999 COS period.

PPTA approvals increased from an average of $0.9 million yearly during the 1988 COS period to $2.2 million yearly during the 1999 COS period. - The agriculture sector received bulk of PPTA approvals. - However, the agriculture sector’s share of approvals declined from 56%

(during the 1988 COS period) to 34% during the 1999 COS period. - Increased PPTA allocations reflect the concern expressed in the 1999 COS

study on past weaknesses in project design and the need for more project preparatory resources to facilitate increased stakeholder participation in project design processes and allow more intensive fieldwork to better understand local needs.

There is a fairly high degree of success for most PPTAs as almost all resulted in a subsequent project. But deficiencies are noted in many preparation exercises. Thus, there is a need for a better focus on project design.

Economic and Sector Work. Economic and sector work financed by ADTAs was good, particularly in the agriculture sector through policy reforms and a series of more clearly focused and better designed/implemented projects. Economic and sector work in other sectors also contributed to improved policies and clearer view of sector priorities and directions.

Project Design. Projects showed a high degree of success when the project design included a mechanism for beneficiary participation.

C. Strengths and Weaknesses of the Country Program

1. Program Strengths

• The ability of Government and ADB to improve on past performance and build on successes, especially in certain key sectors (e.g., water supply and sanitation, agriculture, and roads).


• The willingness of the Government and ADB to tackle difficult policy and institutional issues in some major productive sectors. • Nepal was able to initiate and complete most of the projects it started in the past 15 years despite facing difficult circumstances and limited human, institutional, and financial resources.

2. Program Weaknesses

• Past experience in project implementation was either not adequately taken into account, or promising implementation models and experiences were not followed up. The absence of clear and shared visions (shared by the Government, ADB, and other key stakeholders) on ultimate sector development objectives. This hampered the effective delivery of assistance to strengthen key development and market institutions. • The overestimation on the part of ADB staff of the ability of government staff and agencies to understand institutional, crosscutting, and policy concerns and be able to do something about them. This resulted in loans containing conditions that could not be met. Inadequate attention was also given to building broad-based support for policy reforms that adversely affected some interest groups. • The propensity to spread investment too thinly over too many sectors.

D. Lessons

The analysis generated the following lessons learned: - a CSP can only be successful when the strategy and country program are consistent; - a clear and well-defined strategy is crucial to achieving this consistency; - a clear and well-defined country program can be developed within the Nepalese

context, according to experience over the study period; - the analysis indicates that projects that actively consider the crosscutting priorities of

ADB and the Government in their design have a greater chance of success than projects that do not;

- a sound institutional base is generally required for effective projects; - a sector approach and long-term assistance are needed for institution building; - a project’s success is most likely if the project design is based on a proven

development model; - the executing agency, the Government, and ADB must show sound governance and

commitment to ensure effectiveness of project implementation and ultimate project success for difficult and complex projects;

- the conditions for disbursement in either project or program loans should be reasonable and attainable to avoid stalled implementation; and

- a range of benefits can be generated from large-scale projects, concomitant with the size of investment, but these projects can also generate challenges of a similar size.

E. Implications for Future ADB Strategies and Programs

The following implications for future ADB strategies and programs in Nepal were identified: (i) Need for a Well-Focused Program. Since the role of a CSP is to provide clear and

Appendix 1 Not for Quotation: Work-in-Progress 18

explicit guidance for the programming of ADB investment and other activities, the CSP should be sharply focused and be easily understood and acted upon by ADB. (ii) Need for Flexibility. Notwithstanding the need for a well-defined, sharply focused strategy, the current situation in Nepal calls for a large degree of flexibility in the strategy. There are many unknowns in the current environment that makes the task of formulating a robust strategy that is valid for up to 5 years difficult. (iii) Sector Focus. The next strategy is strongly recommended to be clearly focused on sectors and investments that are already proven to be successful and that will, additionally, contribute directly to the improvement of incomes of socially and regionally disadvantaged groups. In terms of particular sectors that should receive priority in future strategies, the report underscores the importance of road transport to the country’s economy and in furthering the well-being of its people. In addition, given the relative dearth of road transport projects in the CAP over the last 15 years, a stronger emphasis on road or rural infrastructure projects is thus recommended. (iv) Modality Focus. The analysis undertaken during the evaluation shows a higher rate of success than average for sector loans and a lower rate of success than average for program and project loans that contain a large number of conditions. On this basis, it is recommended that whenever possible, sector loans should be preferable to simple investment loans. Furthermore, sector development programs (of which there has so far only been one in Nepal) are a preferable modality to simple program loans. (v) Large-Scale Projects. This CAPE does not recommend completely excluding large-scale projects from a future strategy. It will, however, be important to ensure that possible large-scale projects are in conformity with the future strategy.

F. CAPE Recommendations for the Government of Nepal

(i) Ownership of and Direction for the Future Country Strategy and Program. The Government must take ownership of the CSP and the CSP preparation process. It must clearly be made known to ADB consultants and personnel preparing the CSP what its points of view, policies, and constraints are and what it wants the CSP to emphasize. It needs to be active in providing guidance and feedback to the CSP preparation team. The Government’s development priorities and directions are spelled out in the Tenth Plan, and the Government must ensure that these policies and directions are incorporated into the CSP. (ii) Clear Presentation of Priorities, Policies, Issues, and Procedures. During consultations on the next CSP, government representatives should ensure that their concerns, as expressed during the Participatory Stakeholders’ Workshop, are raised and communicated to ADB’s CSP preparation team in a constructive manner. Raising these issues at the time of CSP preparation is critical, so that they can be addressed in the strategy and guidance can be provided to future country programming and project formulation missions. (iii) Enhanced Monitoring of Ongoing and Completed Projects. Few mechanisms are available to the Government to monitor the implementation or operation of its projects. Moreover, monitoring is considered a low-priority expense. In the long run, this attitude is counterproductive and will surely cost the country substantial sums in lost resources. Consideration should be given to establishing a small monitoring unit in one of the key ministries (perhaps the Ministry of Finance or the Planning Commission), to monitor the implementation


and operation of development partner-financed projects, so that problems can be quickly brought to the attention of the responsible decision makers in the Government and ADB. (iv) Operation and Maintenance Financing. Significant strides were made in addressing the issue of operation and maintenance (O&M) financing for completed projects. However, O&M financing was still raised as an issue during the Participatory Stakeholders’ Workshop, and it clearly continues to be a significant concern. In a similar vein to the recommendation made regarding monitoring, the ultimate parties to suffer from poor O&M are the Government and the country. Resources allocated to project implementation will be lost if completed projects are not maintained. Sustainability should thus be an issue and a consideration on the part of the Government from the time that a project is identified and should continue to be such after a project has been physically completed.

20 Appendix 2 Not for Quotation: Work-in-Progress

SUMMARY OF FINDINGS FROM PAST OED EVALUATION STUDIES FOR NEPAL

A. SES: Effectiveness of ADB's Capacity Development Assistance: How to Get Institutions Right (February 2008)

1. Overall, ADB’s capacity development (CD) performance in Nepal was mixed—generally effective in education (Box 1), effective only for more recent assistance in roads (Box 2), evolving results in governance (Box 3), and ineffective in public financial management (PFM) (Box 4). Success was achieved in some sectors despite the country’s challenging political economy situation at the contextual level.

Box 1: CD Performance in Nepal’s Education Sector: A Case wherein Success Should Have Been More Fully Achieved

ADB support to basic education in Nepal since the early 1990s has been provided through five loans (three of which are ongoing, one being a program loan) and five CD-related advisory technical assistance (ADTA) grants. This is an example of a generally successful case in which CD outcomes could have been achieved more fully had it not been for some design weaknesses in not addressing certain CD constraints, particularly at the contextual level. For example, while low salary structure in the public sector exists, as in Cambodia, it was not the main factor reducing the retention and utilization of trained teachers and head teachers at the individual level, or trained management staff at the organizational level. Rather, the main deterrence factor was the government’s regulation of transferring public servants among ministries every 2 years (except for teachers and statisticians). While this frequent transfer policy did not affect trained teachers, it led to low retention and utilization of trained management staff at the Ministry of Education and Sports—the executing agency (EA). Another deterrence factor that was inadequately addressed during the design stage was the nonconducive teaching environment, especially in rural areas (e.g., overcrowded classrooms, inadequate teaching and learning materials, high teacher absenteeism, and low teacher salaries). Nonetheless, overall ADB assistance was generally effective in achieving CD outcomes, particularly (i) at the organizational level in integrating the National Center for Education Development (which was established under ADB assistance as an apex teacher training institution for primary and secondary education) into the administrative framework of the EA, as reflected in its successful implementation of the comprehensive teacher training and management training policy and plans on a regular basis; and (ii) at the network level in coordinating closely with other aid agencies, as reflected in the adoption of the sector-wide approach (SWAP) to support the government’s “Education for All.” The key success driver was ADB’s long-term support in the sector, with appropriate mix and sequencing of modalities.

Box 2: CD Performance in Nepal’s Road Sector: A Case of Mixed Results

ADB support to the road sector in Nepal has been provided to two EAs through four projects (two of which are ongoing) and three ADTA grants (two of which are ongoing) within the Department of Roads (DOR) under the Ministry of Physical Planning and Works, and one project and one ADTA grant to the Department of Local Infrastructure Development and Agricultural Roads (DOLIDAR) under the Ministry of Local Development. This is an example of mixed results—with successful results in ongoing assistance and partly successful results in the early phase for the DOR. Although ADB has been working with the DOR for a much longer period (since 1989) than with the DOLIDAR (since 1996), the CD outcomes in the former have been limited, because the first two projects at the DOR focused primarily on achieving physical results, with little attention paid to CD activities. The two ongoing projects and ADTA grants at the DOR have significant CD components, with evolving outcomes. However, while they were generally well designed, the project management unit (PMU) is remotely located both physically and organizationally, so the CD activities are isolated from the DOR mainstream operations.


Box 3: CD Performance in Nepal’s Governance: A Case of Strong Government Commitment amid Contextual-Level Constraints

ADB’s CD-related support for governance in Nepal was provided through one program loan and two ADTA grants. This is an example of generally effective CD outcomes due to strong commitment and ownership of the EA (the Ministry of General Administration) for the program loan amid political instability (e.g., insurgencies and frequent changes in government)—a contextual-level factor causing delay in the achievement of outcomes. For example, some CD outcomes at the organizational level (e.g., endorsement by the Parliament and institutionalization of the Civil Service Act Ordinance and anticorruption acts—Anti-Money Laundry Act and Whistle Blowing Act) were delayed due to political instability. However, the former was endorsed in August 2007.

Box 4: CD Performance in Nepal’s PFM: A Case of Lack of Strategic Direction and Continuity

ADB CD-related support to PFM in Nepal was provided to the Ministry of Finance through three ADTA grants. This is an example of an unsuccessful case, with no achievement in CD outcomes, mainly due to scattered assistance and lack of strategic direction and continuity. For example, a one-off TA was provided in 1989 to strengthen program budgeting, project monitoring, and management information system. More than a decade later, two TA grants of modest amounts were provided to strengthen other aspects of the Ministry of Finance (e.g., public debt management and economic policy network). While these three TA grants delivered some CD outputs, they failed to achieve CD outcomes. At the individual level, CD outcomes (e.g., high retention and utilization of the trained technical skills) were limited, as most of the trained staff transferred in accordance with the nonconducive policy of transferring civil servants every 2 years. At the organizational level, expected CD outcomes in terms of policies implementation were not achieved (e.g., the proposed public debt management system was not approved, the Nepal Macroeconomic Model was not used, and the debt software was not in operation).

2. The following success drivers were generally common across sectors, except for PFM: (i) ADB’s appropriate mix of modalities, consisting of loans and attached advisory technical assistance (ADTA); (ii) strong involvement of the executing agencies (EAs) during design and implementation; and (iii) generally good consultants. Common deterrence factors across sectors were (i) lack of baseline assessment at the contextual level, resulting in inability to address the civil service requirement of frequent staff rotations, except for teachers and statisticians, every 2 years (which adversely affected the retention of trained staff) and the problem of political instability (which delayed the legislation and implementation of some CD activities); (ii) lack of baseline assessment at the organizational level, resulting in difficulties to diagnose CD deficiencies of some EAs; and (iii) long delays in recruiting consultants, especially in the education sector. Major deterrence factors in PFM were (i) limited consultations with the EA, leading to lack of government involvement during TA design; (ii) lack of government commitment and ownership during implementation; (iii) lack of evaluability to measure and monitor CD; (iv) lack of strategic direction with realistic CD goals and objectives for the sector; (v) lack of long-term continuity, with scattered assistance; and (vi) lack of an appropriate mix of modalities. Source: ADB. 2008. Special Evaluation Study: Effectiveness of ADB’s Capacity Development Assistance: How to Get Institutions Right. Manila (pages 12–14). B. SES: Long-Term Strategic Framework: Lessons from Implementation (2001–2006)

(December 2007)

3. Findings from Independent Evaluation Findings. The more relevant components of the country assistance program evaluations (CAPEs) in terms of illustrating the responsiveness of ADB country assistance to the Long-Term Strategic Framework (LTSF) guidance are the ratings on ADB performance and the overall assessment. The first refers to the assessment of the quality and responsiveness of the institution’s services in designing and delivering development results. This evaluates ADB’s efforts in providing lending and nonlending services,


upholding good corporate governance practices, being responsive to client needs, fostering client ownership, and working toward more harmonized efforts with other development partners. The overall rating on country program performance is a combination of a top-down assessment (which includes the rating on ADB performance along with ADB’s choice of the right issues and instruments and contribution to development results) and a bottom-up assessment of performance in ADB sectors (based on the relevance, effectiveness, efficiency, sustainability, and impact of sector interventions). Table 1 summarizes these ratings.

Table 1: Overall Performance Ratings of Country Assistance Program Evaluations Country Year ADB Performance Overall Assessment India 2007 Partly Satisfactory Successful Sri Lanka 2007 Satisfactory Partly Successful Pakistan 2007 Partly Satisfactory Partly Successful People’s Republic of China 2007 Partly Satisfactory Successful Lao People’s Democratic Republic 2006 Satisfactory Successful Uzbekistan 2006 Satisfactorya Successful Indonesia 2005 Partly Satisfactory Partly Successful Bhutan 2005 Satisfactory Successfula

Nepal 2004 Partly Satisfactorya —

Cambodia 2004 Satisfactory Successful Papua New Guinea 2003 Partly Satisfactorya

Partly Successful–

Unsuccessful a Bangladesh 2003 Partly Satisfactory — Philippines 2003 — Partly Successful Mongolia 2002 Satisfactory Successful a

Viet Nam 2000 — Successful a — = not available; CAPE = country assistance program evaluation. a Derived from narrative information from relevant CAPE document. Source: ADB. 2007. Special Evaluation Study of Long-Term Strategic Framework: Lessons from Implementation (2001–2006). Manila (pages 55–56). 4. Of the CAPEs surveyed, seven out of 13 rated ADB’s performance as partly satisfactory. In terms of the overall assessment rating, eight out of 13 CAPEs were assessed successful. This suggests that the achievements in the other criteria may have helped to compensate for the institutional performance. 5. The key messages and recommendations commonly raised in the 10 most recent CAPEs (completed from 2004 to 2007) regarding the effectiveness and efficiency of ADB as an institution were presented. Those specific for Nepal mentioned that ADB interventions should focus on a few sectors where ADB built good experience, undertaking adequate sector analysis, and develop a strategy for longer term involvement to achieve a critical mass. Given this, the related LTSF message is that ADB’s operations, guided by the strategic agenda and by agreement with each DMC, will be far more selective than previously, focusing on sectors and areas wherein ADB has clear strengths and resources to maintain an effective long-term program in a country (page 31). C. PPAR (2004): Second Agriculture Program (Loan 1604-NEP)

1) Main Findings

6. The Second Agriculture Program Loan (SAPL) was designed over a period of about 1 year without PPTA, although six earlier TA studies provided detailed sector and subsector analysis. The loan for $50 million equivalent was approved by ADB in January 1998 from Special Funds resources and became effective on 9 March 1998. To facilitate the reforms,


advisory TA was approved in April 1998 comprising two components: Part A – Support for the Reforms of Agriculture Institutions; and Part B – Strengthening of the Management Capability for Local Infrastructure Development. 7. The Second Agriculture Program (SAP) is rated relevant. The SAP was broadly consistent with the APP and ADB’s country and sector strategy in 1998. The Government’s long-term agricultural strategy stipulates policy actions to remove structural constraints and introduce other major institutional reforms to ensure market-oriented growth. The SAP is rated efficacious, due primarily to complete deregulation of the fertilizer sector and corresponding increase in the timeliness and availability of fertilizer. The SAP is rated efficient. Of the 28 SAP reforms and measures, 22 were implemented or substantially completed/complied with or completed with delay, 4 were not completed, 1 was partly completed, and 1 was technically completed but not implemented. The SAP is rated likely sustainable. Significantly, with the exception of a brief return to STW subsidies (5 months due to drought in 2001), all other completed reforms have been maintained. Based on the analysis, especially the major positive outcomes and impacts of successful fertilizer deregulation, the overall rating of the SAP is successful.

2) Issues

8. Although it was rated as successful, the full impacts that could have resulted from the SAP were not realized, because several outputs were not fully completed. This goes back to the original problems of (i) not adequately defining the final status of outputs for privatization of Agriculture Inputs Corporation (AIC) and reorganization of Nepal Food Corporation (NFC), (ii) not taking steps to ensure that SAP funds and savings on subsidies would be allocated to priority Agriculture Perspective Plan (APP) investment areas, since the SAP was designed to support the APP, (iii) failing to adequately address the need to continue steps to expand groundwater development following cessation of subsidies, and (iv) failure to work with other development partners to address the lack of rural credit.

3) Lessons 9. The overall lesson is that policy reform targets under a program loan need to be specified in a verifiable and monitorable manner. In the SAP this was most evident in loan policy covenants dealing with privatization of AIC and subsequent privatization of National Seed Company Limited (NSCL), spun off from AIC during restructuring. Additional analysis of NFC operations should have been able to come up with less costly alternatives for supplying rice to remote hill areas, where it is used primarily by public servants and security forces. Many elements of loan compliance were not easily verifiable under the accounting and reporting practices followed by the state-owned enterprises (SOEs) subject to loan covenants. In many cases, acceptance of a study was all that was required. In no case did the studies set out a complete blueprint to be followed, which would lead to majority private sector ownership or options that would wind up the company.

4) Follow-Up Actions

(i) Farmers in the areas of the Terai with groundwater capable of utilization by shallow tubewells (STWs) need to be provided more low cost options and the development of local water markets needs to be encouraged.


(ii) The legal and institutional framework is now in place for a substantial expansion of rural micro credit, which is badly needed to continue the growth of purchased inputs and assist with financing groundwater expansion. (iii) Nepal still has a rural roads network that is inadequate to support a commercializing agriculture sector. High cost of transporting inputs and outputs reduces incentives to intensify and commercialize.

(iv) The PCR identified project specific recommendations covering (a) future monitoring of the APP, (b) legislation for a Fertilizer Act, (c) the privatization of AIC and NFC, (d) private STW development, (e) rural infrastructure development, and (f) pesticide disposal and management. All of these recommendations remain highly relevant but have not been completed. NRM should actively engage the relevant government entities to implement these recommendations and ensure that others are incorporated into ongoing and future sector assistance.

D. PPAR (2004): Seventh Power Project (Loan 1011-NEP)

1) Main Findings

10. The Seventh Power Project (the Project) was formulated to help the Nepal Electricity Authority (NEA) improve the efficiency and reliability of its power system through rehabilitation in urban areas, and to meet the growing energy demand in rural areas through electrification. This was in line with the Government of Nepal’s objectives for power sector development, as described in its Seventh Five Year Plan (fiscal year [FY] 1984–1985 to FY1989–1990). The main project objectives were to rehabilitate existing distribution networks in five larger towns to improve the quality of electricity supply and to reduce system losses, and to extend subtransmission and distribution networks to rural areas. The Project consisted of Part A: rehabilitation of existing distribution networks in five larger towns, Part B: extension of subtransmission and distribution networks to rural areas, and Part C: construction of a concrete pole factory. The Project was implemented largely as envisaged. Through the Project, electricity was provided to almost 1,000 previously unelectrified load centers, providing access to electricity to more than 200,000 new customers. The quality and reliability of power supply in five major towns and two significant load corridors were improved. 11. The Project is assessed as relevant and conformed to Nepal’s needs for power sector development and ADB’s strategy for assistance at appraisal to support the development of integrated power supply in urban and rural areas. The Project is rated efficacious as it achieved its primary objectives of improving quality and reliability of power supply in areas with rapid growth demand, and of extending the availability of a reticulated distribution system. The Project is rated as efficient. Full completion of the Project took more than 10 years. During the early stages, ADB considered it an at-risk project. While credit should be given for the fact that significantly more rural electrification was achieved than envisaged at appraisal, this was made possible by factors largely outside the control of project participants. Although the rural component is not viable financially, the Project has achieved more favorable EIRRs than estimated at appraisal. The rehabilitation component and the pole factory are considered highly sustainable. The rural electrification component is sustainable only with a significant and continuing subsidy, which was not envisaged at appraisal. Overall project sustainability is considered less likely on the basis of NEA’s weak financial position and continuous resource injections required to ensure continued operation of project facilities. Overall, the Project is rated successful. This assessment recognizes the Project’s success in terms of physical


achievements and socioeconomic impact at project levels, but also takes into account the requirement for ongoing subsidies to sustain the rural electrification component.

2) Key Issues

12. An issue relevant to ADB’s ongoing Rural Electrification, Distribution, and Transmission Project (REDT) deserves particular attention. The rural electrification component of REDT will probably further constrain NEA’s financial position, considering NEA’s poor financial performance and the unlikelihood of significant tariff increases in the near future. It may be useful to explore the possibilities of subsidizing initial connection charges for rural customers, and reducing their costs of payment of electricity bills, to raise the tariff for rural electricity supply to at least a break-even level.

3) Lessons

13. The Project has yielded three main lessons.

(i) Delays associated with abandoning the use of single wire earth return (SWER) might have been avoided if a more substantive project preparatory consultancy had been undertaken, and the technical feasibility of using SWER been researched more thoroughly during appraisal. On one hand, innovation by consultants should be encouraged. But a project of this size and complexity should include a full-scale project preparatory TA that includes investigation into the use of new and alternative technologies. (ii) Annual review missions were insufficient during the first 5 years of project implementation.

(iii) Many problems associated with poor performance of the contractors were not unique to the Project, and should be avoided in future. An ADB procedure to evaluate performance of both international and local contractors, similar to evaluation procedures used for individual consultants, would be useful. The performance of contractors would be recorded in files for eligibility check before qualification for future contracts.

4) Follow-up Actions

14. Proper and regular maintenance of the project facilities deserves special attention. In particular, NEA should undertake a technical assessment of the problem of unavailable spare parts for the Indian-manufactured 11-kV indoor switchgears, and ensure that resources are sufficient for continued operation of project facilities. Otherwise, no specific follow-up actions are suggested. But issues and lessons identified in this PPAR are highly relevant to the successful implementation of the ongoing REDT project. E. PPAR (2004): Secondary Education Development Project (Loan 1196-NEP)

1) Main Findings

15. The objectives of the Project were to improve the quality and efficiency of lower secondary (grades 6–8) and secondary (grades 9–10) education nationwide, thereby producing middle-level human resources and qualified entrants into higher secondary education (grades 11–12). The Project had five components: (i) enhancing teacher effectiveness by improving


teacher training curricula and providing teacher training in core subjects; (ii) developing new secondary curricula and textbooks in the core subjects; (iii) improving the student assessment system; (iv) providing learning materials, science equipment, and civil works for school laboratories and buildings extension; and (v) strengthening the capacity of the Ministry of Education and Sports (MOES) in planning, management, and benefit monitoring and evaluation. The Project was consistent with the Government’s plan and ADB’s education strategy, which shifted its focus since the early 1990s from technical education and vocational training to basic education. The Project achieved most of the outputs envisaged at appraisal. 16. On balance, the Project is considered relevant. The Project was consistent with the objectives of the Government’s plans, from the Eighth Five-Year Plan (1992–1997) to the Tenth Five-Year Plan (2002–2007). The Project continues to be consistent with ADB’s education strategy, which shifted its focus since the early 1990s from skills development and technical education and vocational training to basic education. The Project achieved most of the outputs envisaged at appraisal and built a foundation for quality and efficiency improvements is considered efficacious. Project facilities were generally well utilized, including those provided to lower secondary and secondary schools, OCE, Secondary Education Development Center, and secondary education development units. The exception is that the science equipment, laboratories, and library book packages provided to higher secondary schools were not well used, because these schools lacked resources for maintenance as well as library space. However, this was a minor part of the Project (5.4% of the total project cost). Since the Project had an EIRR of 15.5% (para. 44), the Project as a whole is considered efficient. Many of the training and reform activities initiated under the Project are likely to be sustained with the follow-up support from the Secondary Education Support Project (SESP). However, the Government still bears a high fiscal burden, as it finances 100% of teacher salaries. Since public secondary schools are now allowed to collect tuition fees from students, and since many schools are expected to generate additional resources under ADB’s ongoing SESP, the fiscal burden on the government budget is expected to decrease in the future. Thus, overall sustainability of the Project is considered likely.

2) Key Issues

17. Six key issues emerge from the evaluation: (i) Weak governance in the education sector, (ii) Weak school leaving certificate (SLC) examination system, (iii) Weak school supervision system by MOES’ district education offices (DEOs) to monitor teacher attendance and performance, (iv) Lack of detailed teacher training policy framework and action plan to develop an effective teacher training system, (v) Lack of appropriate regulatory framework to promote public-private partnerships, and (vi) Lack of integration of higher secondary education with the core secondary education system.

18. The first two issues are addressed as lessons for ADB’s ongoing interventions, whereas the remaining four issues are addressed as follow-up actions by MOES.

3) Lessons

19. The following are lessons for ADB’s ongoing and future interventions:


(i) Under the SESP, ADB should conduct policy dialogue with MOES to explore ways to improve governance in the education sector, particularly the allegation that people have to pay certain amounts of money to get the teaching jobs. Opportunities to extract bribes from unqualified persons in return for jobs should be reduced when only qualified persons (with 10-month teacher training) can be recruited in accordance with the new teacher policy. ADB’s policy dialogue with MOES should support the actual enforcement of this policy. (ii) Under the ongoing SESP, ADB should conduct policy dialogue with MOES and the Ministry of Finance to explore the possibility of undertaking further SLC examination reforms to improve the SLC pass rate, make the SLC examination more reflective of students’ learning achievement, and improve Office of Controller of Examination’s (OCE) efficiency and autonomy in providing SLC services in the light of its increased responsibilities.

(iii) In-service teacher training should not last more than a few months. Otherwise, it would lead to prolonged absence of teachers. In-service training should be followed-up by 1- or 2-week refresher courses.

(iv) If a project will be cofinanced, the Government should sign agreements with the cofinancing agencies prior to Board approval to avoid delays in implementation.

4) Follow-up Actions

20. MOES agreed to implement the following follow-up actions, in conjunction with the ongoing projects and technical assistance. The proposed timeframes are tentative, depending upon the timing in the relevant ongoing projects.

(i) MOES should prepare a school supervision and monitoring framework, in conjunction with the ongoing SESP, by December 2005 and an indicative action plan by June 2006. The framework should aim to empower the roles of school management committees and parent-teacher associations in monitoring teacher attendance and performance and improve DEOs’ school supervision system. (ii) MOES should expand the teacher training policy framework, in conjunction with the ongoing Teacher Education Project and SESP, by December 2005 and prepare an indicative action plan by June 2006. The expanded framework should identify the number of teachers needed per subject and per student; the number of teachers needed for initial, in-service, and refresher training; the number of teacher trainers needed; appropriate deployment scheme; management training needs; training needs for DEOs’ school supervisors to enable them to monitor teachers’ application of the training acquired to classroom teaching.

(iii) MOES, in close collaboration with private schools and in conjunction with the ongoing SESP, should develop a regulatory framework and incentive system to encourage some good private schools to provide in-kind support (e.g., books, management, study visits, and teachers) to some public schools in the locality by December 2005 and prepare an indicative action plan by June 2006.

(iv) MOES, in conjunction with the ongoing technical assistance on the Preparation for Education Sector Development Policy and Strategy, should develop an overall


secondary education framework to integrate the curricula of secondary and higher secondary education by December 2005 and prepare an indicative action plan by June 2006.

F. Country Synthesis of Evaluation Findings in Nepal (2000)

21. The 1999 Country Synthesis of Evaluation Findings in Nepal provides a summary of postevaluation experience in Nepal and covers ADB’s operations in the country as of June 1999. Of the 32 postevaluated projects reviewed, 50% were considered “generally successful,” 25% were “partly successful,” and 25% “unsuccessful.” In terms of approval period, the percentage of generally successful projects have dropped significantly from the 1970s (67%) to the 1980s (35%). PPAR findings suggest that this decline may be due to an increase in the number of more complex social infrastructure projects and decline in generally successful ratings of agriculture projects.

1) Main Findings

22. Factors that affected implementation performance include: (i) Weaknesses in project preparation and design; (ii) Lack of stakeholder participation; (iii) Insufficient assessment of institutional environment and EA capabilities; (iv) Weaknesses in ADB supervision; and (v) Inadequate assessment of policy and sector issues. (vi) A major problem common to most projects is implementation delays. The average delay was about 2.3 years, or a 48% time overrun.

23. Factors that contributed to implementation delays were:

(i) Slow and complex procurement processes of the Government and the EAs; (ii) Changes in project scope; (iii) Use of inexperienced contractors; (iv) Delays in the release of counterpart funds and compliance with loan covenants, and; (v) Overestimation by the Bank of the capabilities and commitment of the EAs.

24. In terms of project cost, 66% of the postevaluated projects were completed below appraisal budget while only 28% had cost overruns.

2) Lessons

25. Among the key lessons learned across projects and sectors were:

(i) ADB fact-finding and appraisal missions require more rigorous feasibility studies, more in-depth sector analysis, and more extensive fieldwork. More resources and focus should be given to processing missions. TA outputs, in particular, require improved supervision to ensure that feasibility studies are more realistic and to enhance Government accountability for and ownership of TA projects. (ii) Participation of local communities during both design and implementation is crucial for project sustainability and success. Bank review missions should encourage frequent and rigorous interaction between EAs and beneficiaries.


(iii) Project design should institute appropriate O&M mechanisms and properly delineate responsibilities. Political will to support sustained O&M through recurrent budget allocation should be realistically assessed and supported by Government operational guidelines and policies. (iv) The institutional capability of the EA to supply qualified staff and services should be more rigorously assessed. Project design should consider alternative approaches, such as strengthening sector institutions prior to the implementation of loan projects or simplifying scope, possibly with fewer agencies involved or smaller loans.

(v) Project planning and design should consider the issues of good governance and anticorruption to contribute to a more favorable project implementation environment.

(vi) Relying on administrative sources of information gathered in Kathmandu rather than on information gathered from field investigations can lead to inaccurate assessment of local needs, inappropriate project siting, and inadequate technical design.

(vii) To maximize project impact on poverty reduction, project design should include specific measures targeting the poor.

(viii) Project design should emphasize the role of women in development by including components that specifically target women both as direct beneficiaries of projects and participants in their implementation.

(ix) Stronger environmental monitoring programs, particularly for agriculture and large infrastructure projects are needed in project design, including the collection and/or use of environmental baseline and monitoring data. Environmental monitoring should focus more on assessing whether environmental impacts have reduced project effectiveness and sustainability.

(x) Project and TA designs need effective benefit monitoring and evaluation systems and performance indicators. Appraisals should make clear linkages between project inputs and expected benefits in the project framework.

(xi) Consultants with prior work exposure in Nepal, or in similarly remote, mountainous, and human resource-constrained areas are more effective. ADB should more carefully evaluate the capacity of local contractors and project design should consider special interventions for strengthening the capacity of local contractors.

(xii) Bank review missions need to more closely supervise the quality of project implementation and construction work despite remoteness of the project areas.

(xiii) Private sector involvement should be encouraged especially in the marketing, distribution, and maintenance of project outputs.

(xiv) Greater staff resources are needed to effectively formulate, supervise, and evaluate projects in Nepal and for site inspection outside Kathmandu. Without such resources, ADB could consider concentrating its existing resources on improving the implementation of ongoing projects, perhaps deferring new projects until such time as implementation performance has significantly improved.


3) Key Issues for the Future

26. The Country Synthesis identified important issues for the future, among which were: (i) Beneficiary and private sector participation; (ii) Poverty alleviation; and (iii) Strengthening institutional capacity of the Government/EAs to implement projects.

G. Special Study (1995): Effectiveness of Bank Assistance for Capacity Building in

Nepal

27. The Special Study evaluates the effectiveness of 10 ADTA projects approved between 1985 and 1993 and provided to the Government of Nepal for capacity building in the social sector. The Study is based on an analysis of documents relating to the TAs and on a series of structured interviews and consultations with officials from executing agencies and other government staff, including those previously associated with TA implementation. The results of capacity building interventions are not as easily measured as those of typical investment projects and should, therefore, be interpreted cautiously.

1) Main Findings

a. TA Effects and Impacts

28. Three TAs in the education subsector were provided for the improvement of teacher education and strengthening the Ministry of Education and Culture. These TAs are considered to have been effective at pre-service and in-service training of teachers and laying the basis for a larger program of primary teacher training. The three TAs in the rural water supply subsector have significantly strengthened the Department of Water Supply and Sewerage and resulted in a strategic plan for the development of this agency and the subsector which is presently being implemented by the Government. The four TAs in the environment subsector have had marginal impact only for a variety of reasons, including lack of ownership on the part of executing agencies. The training components of most TAs had unsatisfactory results owing to budgetary constraints, management neglect, lack of Government commitment, and inadequate Bank supervision. A major deficiency in the blueprints for the administrative reforms recommended under many TAs is the absence of a process for instituting meaningful changes along with the suggested improvements. A process is needed for strengthening the recipient organization's culture and orientation for efficient and timely delivery of services. The process should include (i) changing of the perception, commitment, and social and behavioral skills in dealing with communities; (ii) organizational streamlining; and (iii) policies and procedures. Such processes were not clearly identified in the TAs nor reflected in their objectives.

b. Findings of Broader Applicability

29. ADB's concern for capacity building in a sector-specific context originates from its preparation of sector studies and investment projects. An advisory TA must be carefully designed and not only involve external experts but also key officials of the recipient organization. The involvement of stakeholders is vital for administrative reforms in any sector, and for an undertaking in capacity building and institutional strengthening. Indeed, capacity building no only involves preparing of a policy framework, long-term plans and programs, institutional structures, human resource skills, and information systems, but also the culture and management of change in terms of specific institutions or beneficiaries. Program management


strategies should be used to allow the flexibility and time needed to bring about administrative reforms through capacity building interventions.

2) Key Issues

30. The Study has identified a number of specific issues, some of which are interlocked while others are of a general nature.

(i) Strategy for Capacity Building. The TAs were isolated attempts by ADB at capacity building in the social sector and its subsectors and were implemented without the benefit of clear objectives and an overall framework for capacity building. Moreover, under most of the TAs, capacity building was only one of several objectives. For capacity building efforts to be successful, ADB needs to formulate DMC-specific, clearly defined sectoral objectives and be prepared for a long-term involvement. Particularly in the area of administrative reforms in the public sector, a program type approach towards capacity building could be useful. It would allow for more flexibility, speed in decision-making and larger room for interventions on a continuing basis, rather than in the form of one-shot project interventions. (ii) Project Design and Preparation. Most of the TAs covered under the Study were designed and prepared without adequate analysis of prevailing policies and institutions in the concerned subsectors. Also, those TAs that were piggy-backed to loans had in their design elements that could have been better covered under the loans. Impact indicators and related baseline data were generally not provided in the documents. As a result, many TAs were less effective than they could have been while piggy-backed TAs do not necessarily contribute to capacity building. Impacts in any case are difficult to measure, if at all. (iii) Follow-up Action. Potential impact of TAs is lessened by lack of follow-up on the part of ADB and the concerned government to ensure that the output of the TAs is utilized. ADB should develop a mechanism for consistent follow-up and, if necessary, provide further assistance through loans or grants. The relative success of the water supply TAs in creating a stronger DWSS can be attributed to ADB’s long-term involvement in the subsector which allowed for follow-up. (iv) Beneficiary Participation. Most of the TAs had little or no provision for beneficiary participation in their preparation and implementation. Such participation must be enhanced to ensure the relevance of the interventions, improve the sense of ownership on the part of the recipient agency, as well as other beneficiaries, and contribute to sustainability. (v) Counterpart Provisions. The Government and executing agencies generally failed to provide adequate counterpart staff and budget for the implementation of the TAs which resulted in consultants often working in isolation thereby not only minimizing transfer of knowledge and technology but also resulting in output that lacked ownership on the part of the executing agency. ADB needs to ensure that TAs are only implemented when it is assured that the agreed counterpart provisions have been made available. A second issue in respect of counterpart staff is that ADB has not always thoroughly examined the availability of staff nor their capacity to take part in the TA activities. As a result, requirements for counterpart staff were not always realistic and were a contributing factor in training targets not being met.


3) Lessons (i) ADB should develop a capacity building framework based on the needs and demands of sectors, strategic planning, organizational development, and change strategy. (ii) The preparation of advisory TAs must be preceded by rigorous institutional and needs analysis, and the framework should be beneficiary-directed. Accordingly, the conceptualization, design, and formulation of TAs for capacity building should include an experienced capacity building expert and experienced representatives of the targeted agency or ministry.

(iii) ADB should utilize the concept of impact evaluation right from the preparation stage of the TA. If impact indicators are emphasized, the TA design will inevitably include perspectives and defined ultimate benefits.

(iv) The TA design should also foster the executing agency's sense of project ownership and involvement of domestic expertise. Factors leading to failure experienced during project implementation should be thoroughly analyzed and discussed with the executing agency and experts in capacity building to facilitate requisite adjustments in ongoing efforts and in future interventions.

(v) Priorities must be set carefully and as a function of technical precision or financial capability. However, such important factors as social acceptability by the targeted people and political considerations must be given due weight. 4) Recommendations

31. ADB's initiatives at capacity building in Nepal's social sector have made some progress but much more has to be done. The following recommendations take into consideration the challenges expected for the coming years:

(i) ADB should develop a capacity building framework based on the needs and demands of a sector, strategic planning, organizational development, and change strategy. This framework should be beneficiary-directed. The formulation of an advisory TA at its earliest stage should involve an experienced capacity building expert and adequately qualified and experienced representatives of the targeted agency or ministry. (ii) Expertise within ADB must be developed to attend to consistent and recurring problems of project and program management and organizational reforms. The formulation of plans and project preparation and management are important steps to the larger issue of capacity building.

(iii) The need for impact evaluation should be built into the design of projects, particularly those for capacity building. At the fact-finding stage, indicators for impact evaluation and benchmark data should be established. Indicators such as outputs should be supplemented with desired results in terms of effects and impacts. If these indicators are emphasized, the project design will inevitably encompass strategic perspectives and defined ultimate benefits.


(iv) Problems faced during TA implementation should be thoroughly analyzed during ADB supervision of the projects, and discussed with executing agencies and experts in capacity building. The lessons learned from such discussions should be incorporated in implementation strategies and should be used in the preparation of future advisory TAs. (v) Setting priorities is a careful exercise which, in DMCs, cannot be a function only of technical precision or financial capability; it also involves sensitive social acceptability by the targeted people and political considerations. An information or public relations component is therefore important in capacity building TAs.

(vi) Local involvement is crucial: beneficiaries should be involved right from TA preparation through implementation and evaluation, as the success of such interventions depends on the commitment of its stakeholders.

(vii) TA projects should foster executing agency ownership.

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FEATURES OF CSPs, CSPUs AND COBPs FOR NEPAL

Item Strategic Focus Directions for Lending and Non-Lending Operations

Linkage to Poverty Reduction

External Funding Coordination and Partnership

Arrangements Country Strategy and Program Update (2002–2004)

The overarching objective of ADB’s CSP is to achieve sustainable reduction in poverty through (i) job generation and increased rural incomes resulting from faster and broad-based pro-poor economic growth, (ii) equitable improvements in basic social services to enhance human development, and (iii) good governance.

ADB will sharpen its focus to support a smaller number of key sectors in which ADB has been active and has a comparative advantage, although the sectors and projects in the program are generally similar to those in the previous strategy. The CSP will focus on up to seven sectors: (i) agriculture and rural development as the key sector; (ii) transport; (iii) energy; (iv) finance; (v) education (including nonformal education); (vi) water supply, sanitation, and urban development; and (vii) environmental management. When appropriate, program projects will be designed to target excluded groups to reduce poverty and inequality. The strategic approach of the program will continue to emphasize institutional strengthening. The TA program focuses on (i) institutional strengthening and capacity building needed to develop more effective sectoral institutions, (ii) the strategic approach of the proposed CSP, and (iii) project preparation.

The proposed lending program in 2002–2004 consists of 12 projects totaling $306 million. The proposed program is consistent with the strategic thrust of the proposed CSP, emphasizing poverty reduction. Core poverty and poverty intervention projects constitute 75 percent of the total program in 2002–2004.

Country Strategy and Program Update (2003–2005)

Pressures on the economy, and thus the fiscal position of the Government, will remain, and have a significant impact on operations of ADB in Nepal. Reducing poverty through improved delivery of services and effective governance remain essential to a lasting solution to the insurgency. ADB’s country strategy and priorities

The proposed lending program for 2003–2005 consists of 14 projects, of which poverty intervention projects constitute 93% of the total program. The lending program supports the Government’s poverty reduction strategy, focusing on rural development, improvements in basic services and infrastructure, women’s empowerment, and private sector

The lending program supports the Government’s poverty reduction strategy, focusing on rural development, improvements in basic services and infrastructure, women’s empowerment, and private sector development. Major emphasis in the program is placed on improving access to

To strengthen aid coordination and effectiveness, in March 2002 the Government finalized its Foreign Aid Policy, prepared in cooperation with its development partners, with input from civil society. In 2002 the Swiss Development Corporation agreed to fund two key TAs for awareness building

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Arrangements remain fully consistent with these objectives. Effective implementation of government policies, projects, and programs will also be critical in contributing to resolving the conflict. Given the worsening fiscal situation, ADB and other development partners will need to provide more program assistance to support the Government’s reform agenda. Like its other development partners, ADB will need to work with the Government to devise ways to remain engaged in supporting development activities in affected areas, rather than trying to work around the conflict. Ensuring a strong and direct antipoverty focus and strong community participation in all projects and programs, therefore, is critical. Working more closely with local government at the district level will also help, although institutional strengthening of decentralized bodies is necessary to ensure accountability and effective implementation. Given the significant uncertainty in the short to medium term, the Government and ADB will need to show flexibility in carrying forward the proposed 2003–2005 program.

development. ADB assistance will be planned and formulated to enhance economic opportunities and status of women in, for example, agriculture, rural finance, education, and water supply and sanitation. The nonlending program focuses on institutional strengthening and capacity building needed to develop more effective sectoral institution and project preparation. Given the increasing scarcity of TA resources, concerted efforts will be required to augment the resources through cofinancing. To strengthen the lending pipeline, the TA program is largely focused on project preparatory activities.

basic resources, in particular, those resources most vital to escaping poverty, and the removal of institutional constraints that constrain the poor from accessing these resources. Access to priority inputs (e.g., fertilizers, irrigation, roads, electricity, and agricultural technology) with suitable credit and extension services is crucial to effectively improve rural poverty.

and program monitoring under the Government’s Governance Reform Program, which is assisted by ADB. Efforts to secure joint cooperation and joint financing for ADB-assisted projects and programs in the pipeline for 2003–2005 continue. ADB is working jointly with Danish International Development Agency to finance the first phase of a secondary education support program. ADB is also working with various funding agencies to adopt a coordinated approach to sector development in rural water supply and sanitation. Cooperative efforts in 2002 have included an agreement with the United Kingdom’s DFID and UNICEF for collaboration in implementing the ADB-assisted PPTA for the proposed community-based rural water supply and sanitation project.

Country Strategy and Program Update (2004–2006)

The overarching objective of ADB’s CSP is to achieve sustainable reduction in poverty, through a combination of accelerated broad-based economic growth, social development, and good governance. During 2004–2006, subject to the improved security

The 2004–2006 lending program is consistent with the strategic thrust of the proposed CSP. Core poverty intervention projects constitute 93% of the total 2004–2006 program. In support of the Government’s emerging need for reconciliation, rehabilitation, and reconstruction, the

The country strategy and priorities of the ADB remain fully consistent with the objective of addressing poverty and targeting development in poor and conflict-affected areas. While ADB’s proposed operational program for Nepal

Significant progress has continued in Nepal, under the Government’s leadership, in the areas of aid coordination and collaboration. In 2003, the Danish International Development Agency agreed to provide $30.0 million in

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Arrangements situation, priority will be given to assisting the Government’s reconciliation, rehabilitation, and reconstruction efforts, through developing rural areas; improving basic social services and infrastructure; empowering women; enabling private sector development; and improving governance in the public, corporate, and financial sectors. When appropriate, programs and projects will also be designed to target neglected areas and excluded groups, to reduce poverty and inequality. The strategic approach of the program will continue to emphasize institutional strengthening.

timing of the projects with greater potential to benefit rural communities and conflict-affected areas has been adjusted, and their proposed scope and geographical focus will be reviewed. The nonlending program focuses on institutional strengthening and capacity building, which are needed to develop more effective sector institutions and project preparation. While providing advisory TA activities remains consistent with the 1999 Country Operational Strategy, which stressed the critical importance of building effective institutions to maximize the development impacts of ADB assistance, there is a growing need to optimize the use of increasingly scarce TA funds.

directly addresses these priorities, there is a need to provide further support for the Government’s rehabilitation and reconstruction program and for strengthening the fiscal position and improving governance. In addition, to ensure accountability, effective implementation, and improved service delivery, ADB will need to continue to work closely with the Government to promote the wider and stronger participation of local bodies and communities in all projects and programs.

cofinancing for the first phase of an ADB-assisted secondary education support program, and the Swiss Agency for Development and Cooperation provided about $470,000 in grant funding for public awareness and monitoring of the Governance Reform Program. The United Kingdom’s Department for International Development agreed, in principle, to provide a technical assistance fund to complement a public enterprise reform program assisted by ADB.

Country Strategy and Program (2005–2009)

Fostering an inclusive development process will be ADB’s strategic approach over the next 5 years to contribute to the long-term goal of poverty reduction in Nepal. The CSP's cross-cutting intiatives include: (i) supporting the creation of an enabling environment for increased private sector participation and investment by fostering better policy, and more effective implementation of policies and regulatory reform in key sectors; (ii) addressing gender, ethnic, and caste discrimination through policy reform, targeted investments, and the mainstreaming of equal opportunity measures in key sector investments; (iii) improving social, environmental, and resettlement

ADB’s program during 2005–2007 will focus on helping the Government foster more inclusive development by providing assistance to develop rural areas, improve basic social services and infrastructure, empower women, promote private sector development, and improve governance in the public and private sectors. Special emphasis will be placed on project design to ensure that the projects’ primary objectives are fully in line with these priorities and are results oriented. ADB will assist the Government to scale up good practices in poverty reduction and to carry out realistic policy and institutional reforms. From 2005 to 2007, program lending assistance will constitute about a third of overall lending. The higher level of program

The overarching objective of the CSP is to achieve sustained poverty reduction by fostering more inclusive processes of broad-based growth, social development, and good governance. All lending products are poverty intervention projects.

ADB makes maximum effort to coordinate with its development partners during the preparation of CSPs and CSPUs, and at different stages of project processing. As a result, cofinancing has been obtained for a number of ADB projects from the DANIDA under the first phase of the ADB-assisted Secondary Education Support Program; consulting inputs to help prepare the ongoing Community-based Water Supply and Sanitation Project from the United Kingdom’s DFID; TA support for the Governance Reform Program from the Swiss Agency for Development and Cooperation; and support for capacity-

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Arrangements assessment policies, procedures, and practices as these relate to investment projects; and (iv) tapping benefits from regional cooperation initiatives in the areas of transport connections and trade facilitation, energy, tourism, and communications with neighboring countries. ADB’s strategy will rest on three pillars: broad-based economic growth, inclusive social development, and good governance. The Nepal CSP represents ADB’s first pilot results-based CSP. It is results-based because it (i) identifies the “results” sought by the Government to which ADB will contribute; (ii) identifies what “outcomes” are expected during the implementation of this CSP; (iii) provides a mechanism and indicators for monitoring progress made toward achieving those outcomes; and (iv) provides a basis for evaluating the success of this CSP, thereby providing a basis for adjusting future plans to improve results. This document, therefore, describes the main ways in which ADB will assist the Government in achieving its national goals and objectives; it does not, however, establish the “share” or quantitative measure of ADB’s contribution to national goals and objectives.

assistance is warranted to support the Government's wide-ranging policy reform effort, and to ensure that priority sector-specific poverty reduction activities are adequately financed. The 2005–2007 nonlending program comprises 26 TAs and five economic, thematic, and sector work activities. The TA program includes 16 project preparatory TAs to support project preparation and 10 institutional development TAs to support institutional capacity building and managing for development results. The economic, thematic, and sector work program forms the basis of ADB’s support for policy reform, capacity building, and institutional strengthening.

building interventions under the Governance Reform Program from the United Nations Development Programme. DFID has provided TA support for the ongoing Public Sector Management Program and an agriculture and natural resource expert in NRM. A number of ongoing projects in the energy and water supply sectors have also received assistance from JBIC and the Japan International Cooperation Agency. In the past year, formal action plans have been agreed on with DFID and the Deutsche Gesellschaft für Technische Zusammenarbeit (GTZ) to guide cooperation more effectively. NRM has also initiated a bimonthly harmonization series with the World Bank’s resident office to improve coordination and collaboration. In conjunction with its lending program, ADB will continue to actively pursue cofinancing from grant and concessional loan sources. While continued efforts will be made to mobilize cofinancing, core components of large projects, and especially those relating to engineering design, will be financed directly by ADB to ensure coherence, timeliness, and technical soundness. Close coordination is being maintained through regular contact and dialogue with the major development

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Arrangements partners, and a special effort is being made to involve development partners early on in the identification stage of new projects.

Country Operations Business Plan (2007–2009)

The political changes in Nepal have not altered the policy and strategic development implications for addressing the root causes of conflict and poverty. The Government is considering a reconstruction and rehabilitation program following a peace accord to help build peace, restore service delivery, and revive economic activity throughout the country. The peace accord will allow long-term strategic development objectives to be addressed effectively. The CSP is fully aligned with these efforts and thus remains relevant.

In view of the political transition, ADB’s assistance program should be more responsive and flexible to meet the Government’s short-term development needs and priorities while remaining within the CSP’s framework. The country program will therefore need to be shorter— 1–2 years. The tentative country program for 2007–2009 comprises nine firm and two standby loans and aims to reduce poverty by supporting institutional and policy reforms and operations in road transport, rural and urban infrastructure (water supply, waste management), energy, education, financial sector, reconstruction and rehabilitation, public finance and economic management, and agriculture. The proposed medium- to long-term program is tentative and will remain under review to ensure proper sequencing and political relevance. In particular, the 2008–2009 program will be closely reviewed with the Government against the evolving political and economic context during the forthcoming country program confirmation mission and the country programming mission. Depending on progress in the peace talks and Nepal Development Forum, ADB along with other donors may be requested to provide post-conflict assistance beyond the reconstruction

The tentative country program for 2007–2009 comprises nine firm and two standby loans and aims to reduce poverty by supporting institutional and policy reforms and operations in road transport, rural and urban infrastructure (water supply, waste management), energy, education, financial sector, reconstruction and rehabilitation, public finance and economic management, and agriculture. The program is in line with the Medium-Term Strategy II priority sectors and subsectors.

Aid coordination and harmonization of government-donor practices have become particularly important. Donor coordination remains effective with regular meetings of the local donor group, various thematic groups, and the Basic Operating Guidelines Group to assess the evolving political and security situation and its implications for development activities. There is still significant room to better harmonize government–donor practices. While harmonizing local procurement procedures has made significant progress, harmonizing international procurement procedures remains challenging and constrains ADB’s participation in sector-wide/program-based approaches (SW/PBAs) with other donors. ADB’s participation in such an approach would be useful for the development of specific sectors as well as for furthering donor harmonization. Close and stronger government–donor engagement is also needed on development effectiveness as stipulated in the Paris Declaration. While managing for development

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Appendix 3

39




Arrangements and rehabilitation project planned for 2007. While ADB is committed to provide such assistance, no new assistance has been included in 2008–2009 program, since timing is difficult to predict and the resource requirements are not known already. However, ADB is undertaking background work to assess rehabilitation and reconstruction needs, which will help guide 2008–2009 programming. The nonlending program for 2007–2009 has also been adjusted to reflect the modified lending program and to accommodate priority Government requests for institutional and sector capacity development in the changed context.

results (MfDR) is a key instrument for development effectiveness, most donors in Nepal are unaware of it. ADB is working with donor partners to be more focused on harmonizing support for capacity building of weak institutions. ADB is also taking the lead in involving other donors in the Government-led MfDR process. This will improve development effectiveness and enhance absorptive capacity for development assistance.

Country Operations Business Plan (2008–2010)

The political and security context in Nepal has changed since the preparation of the Nepal Country Strategy and Program (CSP, 2005–2009) in 2004 and its review last year. The decade-long conflict has come to an end and the country is moving toward lasting peace, but the underlying causes of poverty remain unchanged. The conflict-sensitive implementation strategy adopted in the CSP has facilitated effective and safe implementation of ADB’s operations during the conflict period. Since Nepal’s Tenth Five Year Plan (FY2003–FY2007) ends in mid-July 2007, the Government is preparing a three-year interim development plan—rather than an Eleventh Five Year Plan—to address development challenges

The lending and nonlending program for 2008–2010 has been adjusted to reflect the Government’s priorities in the current transitional period, the expected annual allocation, performance of specific sectors, and project preparedness. The tentative country program for 2008–2010 was discussed and preliminarily agreed with the Government. However, given the challenges and political milestones ahead, the program will need to retain maximum flexibility and the 2010 pipeline in particular should be considered indicative at this stage. The 2008–2010 program includes ten firm and two standby projects in the agriculture, education, finance, transport and communications, energy, water supply, sanitation and waste management, and law, economic

The CSP includes a framework comprising monitoring indicators for evaluation and midcourse adjustments if needed. The CSP’s results framework was updated in March 2007 with information obtained from the National Planning Commission and the relevant line ministries. The Government has taken some encouraging steps to develop core elements of results-based management for planning, budgeting, implementation, and monitoring. The Government has started poverty-based resource allocation to local bodies, and is strengthening the monitoring and evaluation system in key ministries to streamline results-based management. Following

The 2006 country portfolio review mission, conducted jointly by the Government, Japan Bank for International Cooperation, the World Bank, and ADB, was a results-based exercise. The review assessed whether ADB’s portfolio has been effectively contributing to CSP outcomes and discussed the necessary corrective actions for achieving better results. Preparation of sector results profiles (SRPs) was an important output of the review; SRPs have been prepared for those sectors in which ADB provides significant assistance in all developing member countries falling under ADB’s South Asia Department (i.e. Bangladesh, Bhutan, India,

40

Appendix 3 N

ot for Quotation: W

ork-in-Progress




Arrangements during the transitional period. The potential for long-term strategic development in Nepal and pursuit of the CSP’s objectives has increased as a result of the peace accord, the interim constitution, and formation of the parliament. However, Nepal will remain in a conflict environment until a lasting peace is achieved. Therefore, ADB will continue to carefully monitor the peace process, follow a conflict-sensitive approach in its operations, and closely coordinate with other donors.

management, and public policy sectors. Support in these sectors is crucial to address acute poverty and is also aligned with the Government’s priority sectors. The proposed nonlending program for 2008–2010 comprises 12 PPTA projects, 8 institutional development TA (IDTA) projects and 3 economic, thematic, and sector works. The proposed annual IPF for the nonlending program is up to $4.0 million. Apart from the ADF trust funds and the Japan Special Fund, other trust funds available within ADB and cofinancing will be explored. The programmed nonlending activities focus on (i) providing support to strengthen the institutional capacity of the Government, and (ii) preparing the future lending program. Grants may be allocated to either stand-alone projects or to blended projects with both loan and grant financing with distinct grant-funded activities. Accountability obligations under grant financing have been fully discussed with the Government, and the latter has expressed its firm commitment to these obligations. In particular, ADF grant financing will allow the Government to continue its poverty reduction initiatives much more effectively.

establishment of a poverty monitoring and analysis system at the central level, the Government has prepared a district poverty monitoring and analysis system for assessing development interventions and their local impact.

Maldives, Nepal and Sri Lanka). Sectors include (i) transport and communications; (ii) energy; (iii) education, agriculture and rural development; (iv) finance and governance; and (v) water supply, sanitation and urban development.

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41

COUNTRY STRATEGY AND PROGRAM RESULTS FRAMEWORK (FY2005–2009)

Medium-Term Development Agendaa Asian Development Bank Strategic Focus Long-Term Development Goals Strategic Goalsb Key Constraintsc Intermediate Outcomesd Intermediate Indicatorse Risks and Assumptions

Pillar I: Broad-based Economic Growth • Accelerate broadbased economic growth to 8.3% per annum by FY2017 • Reduce poverty level to 10% by 2017.

• Achieve annual average growth rate of 6.2% during 2002– 2007.

• Political instability and conflict. • Poor linkages between urban and rural areas, and to markets. • Regional, ecological, and rural–urban disparity in income and economic opportunity. • Weak infrastructure, particularly transport and ICT.

• Improved connectivity of different parts of the country, particularly of the rural poor, to markets and livelihood opportunities. • Improved economic status of backward regions and rural areas.

• Expanded national road network. • Enhanced domestic air transport services. • Improved access of communications services to VDCs. • Increased number of districts connected through road network.

• No further deterioration of conflict or political instability. • Public confidence. • Project designs are appropriate to country conditions. • Timely implementation of projects.

• Increase overall private investment to 23.5% of GDP by 2007.

• Weak financial service delivery mechanism.

• Enhanced access of the rural poor to financial services. • Strengthened financial intermediaries.

• Reduction in nonperforming assets of the Agricultural Development Bank of Nepal • Increased number of small loans and borrowers.

• Continued government commitment to restructuring and reform of financial sector. • Improved institutional capacity and financial viability of financial institutions.

• Achieve annual average agricultural growth of 4.1% by 2007.

• Low productivity and slow growth of output in agriculture sector • Lack of rural infrastructure to connect production pockets to markets • Poor access to basic productive resources for agriculture (irrigation, rural credit, and electrification).

• Higher agricultural productivity to rates nearer regional average. • Increase agricultural income and employment opportunities of rural people. • Increased commercialization of agriculture.

• Improved access to key inputs, outputs, and markets • Increased rural road density • Increased access to irrigation, especially shallow tubewells. • Increased rural electrification ratio. • Increased cash crop ratio and livestock production • Increased agricultural and rural credit availability

• Unimpeded access of projects to rural areas • APP targets supported by appropriate national budgetary allocations. • Presence of community and private sector organizations that can be empowered to deliver rural services

Pillar II: Inclusive Social Development • Improve livelihoods and human resource capacity.

• Improve the availability and quality of social

• Weak basic social services and infrastructure

• Improved quality of basic education. • Improved access to

• Increased proportion of trained teachers. • Increased participation in

• Insecurity in rural areas. • Institutional capability and accountability at

42 Appendix 4

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infrastructure and services: - Improve access to, and quality of basic education; - Increase sustainable access to safe drinking water and sanitation in urban and rural areas.

(education, safe drinking water, and sanitation).

vocational training. • Improved access to clean drinking water and sanitation. • Reduced water borne diseases. • Increased women's participation in income-generating activities.

vocational training. • Enhanced literacy of women • Increased scholarships to deprived groups and women. • Improved access to clean drinking water and sanitation • Reduced water-borne diseases.

local level.

• Promote social and economic inclusion of women and the disadvantaged by removing social, legal, economic, and other constraints.

• Social and ethnic- based exclusion. • Gender disparity.

• Mainstreamed participation by women and excluded groups in development and decision-making roles. • Increased economic and social benefits to women and excluded groups.

• Increased participation of women and excluded groups in all ADB-assisted projects. • Increased representation of women and disadvantaged groups in civil service and political positions. • Increased proportion of women teachers.

• Continued public consensus and government commitment.

Pillar III: Good Governance • Make governance efficient, accountable, and transparent.

• Promote people- centered and inclusive governance. • Enhance efficiency of public services. • Enhance government accountability and transparency.

• Overcentralization. • Low participation by women and excluded groups in public service and political positions. • Absence of elected local bodies. • Weak institutional capacity of local organizations. • Accelerate decentralization.

• Enhanced participation and empowerment of excluded groups in the governance process. • Increased decentralization. • Enhanced capacity of local organizations. • Improved resource management at local level. • Low resource mobilization at local level.

• Implementation of affirmative action measures in the Governance Reform Roadmap. • Increased proportion of women and disadvantaged groups in public and political positions. • Increased devolution of service delivery to local bodies and improved fiscal resource management: - Further progress on devolving responsibilities for key services in education and agriculture; - Increased development resources to local bodies

• Continued government commitment to the spirit of good governance and decentralization. • Improvement of need- responsive service delivery at local level. • No further deterioration of conflict or political instability.

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- Increased share of internal resources to total development budget of the districts.

• Control corruption.

• Weak institutional, legal, and judicial capacity. • Limited measures to prevent and control corruption.

• Improved budget implementation. • Improve access, quality, accountability and responsiveness of public service delivery. • Strengthened anticorruption institutions.

• Strengthened preventive/ punitive measures to combat corruption: - Anticorruption Strategy implemented; - Increased number of corruption cases prosecuted and convicted; - Technical audit agencies established and made operational.

• Political support. • Public consensus for, awareness of, and support for clean government.

Pillar IV: Mechanisms to Deliver Results • Improve development effectiveness.

• Enhance efficient utilization of resources.

• Weak institutional capacity to utilize resources.

• Improved management of public spending. • Enhanced efficiency of public investment. • Strengthened country ownership and commitment. • Enhanced effectiveness of ADB operations.

• Clear prioritization of government projects and programs. • Improved flexibility in project/program implementation modality. • Improved disbursement performance. • Reduced project delays. • Improved project performance rating.

• Improved project design and modality appropriate

to country conditions • Political commitment to prioritization and to boosting aid utilization. • Adequate budgetary allocation.

• Improve service delivery

• Political instability and conflict. • Absence of Parliament and local bodies. • Weak monitoring and evaluation systems, and use of available information.

• Enhanced institutional capacity of central and local bodies, users groups, NGOs, and CBOs. • Increased role of private sector in service delivery.

• Increased program focus at local level. • Increased number of quality district plans prepared. • Increased partnerships with private sector, NGOs, and CBOs in service delivery.

• Adequate implementation capacity of government agencies, CBOs, and private sector. • Emergence of local accountability mechanisms.

• Improved M&E capacity. • Strengthened public audit system at local level.

• Public audit reports at local level published.

44 Appendix 4

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ADB = Asian Development Bank, APP = Agricultural Perspective Plan, CBO = community-based organization, GDP = gross domestic product, ICT = information and communications technology, M&E = monitoring and evaluation, NGO = nongovernment organization, VDC = village development committee. a Selected components of national agenda that overlap with ADB's strategic priorities in Nepal. b Strategic goals of the Tenth Plan. c As identified in the Tenth Plan to achieve the strategic goals. d Achievement of these outcomes is the combined responsibility of the Government and its development partners, including ADB, the civil society, private sector, and other development aid agencies. e Indicators to track success of implementation toward expected outcomes. Baselines, targets, and indicators for monitoring progress have been identified and will be updated regularly. Source: Nepal Country Strategy and Program (2005-2009).

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45

COUNTRY PARTNERSHIP STRATEGY RESULTS FRAMEWORK (Changes to the country partnership strategy results framework contained in the

country partnership strategy [2005–2009] are highlighted in bold)

Pillar I: Broad-Based Economic Growth

CSP Strategic Focus Medium-term Goals

Intermediate Outcomesb

Intermediate Indicatorsc

Tracking Indicators

Baseline FY02/10th

Plan FY03 FY04 FY05 FY06 FY07

Milestones/Targets FY2007

Monitor-ing

Sources of

Informat-ion

• Length of additional SRN constructed (km)

1132 113 235 97 154 206 870 Yearly ES/ TYIP, 2007

• Expanded national road network

• Length of additional SRN paved/sealed (km)

215 30 60 40 137 179 1500 Yearly

ES, 2007

• Increased number of districts connected through road network

• Number of district HQs connected by roads

60 60 60 60 61 63 70 Yearly

ES/ TYIP, 2007

• Enhanced air transport services

• Number of additional domestic airports with year-round services (paved)

4 6 0 1 0 2 15 Yearly CAAN, 2007

• Improved access of communications services to VDCs

• Number of telecenters (e-service) in VDCs

0

6

4

18

16 15

1,275

Yearly

NITC and,

HLCIT, 2007

• Achieve annual average growth rate of 6.2% during 2002–2007

• Increase overall private invest-ment to 23.5% if GDP by 2007

• Improved connectivity of different parts of the country, particularly of the rural areas, to markets and livelihood opportunities

• Improved economic status of less-developed regions and rural areas

• Strengthened financial intermediaries

• Enhanced access of the rural poor to financial services

• Affirmative policies for regional development

• Implementat-ion of Regional Development Strategy

— — — — — Strategy incorporated in

TYIP

5 yearly NPC, 2007

46 Appendix 4

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CSP Strate ocus gic FMedium-term Goals


Baseline FY02/10th



Monitor-ing

Sources of

Informat-ion


Tracking Indicators

• Enactment of pieces of legislation

__ 9 key economic laws were developed and all of them

enacted by Jan 2008.

MOF

• Total Fixed investment of New Industries registered (Rs Million)

20609 10175 9497 16704 8018 4231 __ Yearly DOI, 2007

• Non-performing loan as of total loan commercial banks (%)

30.4 28.8 22.8 18.94 14.22 9.65 Yearly BFS-NRB, 2007

• Population per Bank Branches (000)

57.3 54.1 58.5 60.0 59.2 47.9 __ Yearly BFS-NRB, 2007

• Improved corporate and financial governance

• Per capita credit (Rs.)

4889 5379 6049 7072 6991 9166 __ Yearly BFS-NRB, 2007

• Length of additional local roads constructed (km)

2,361 905 840 934 987 957 Yearly ES, TYIP, 2007

• Improved access to key inputs, outputs, and markets.

• Expanded rural

road network • Total

marketable surplus of the agricultural produce

(‘000 mt cereal)

80 75.0 213.0 162.8 (21.6) __ FY2010 627

Yearly DOA, 2007

Achieve annual average agricultur-al growth of 4.1% by 2007

• Increased agricultural production

• Increased agricultural income and employment opportunities of rural people

• Increased commercialization of agriculture

• Strengthened rural financial services

• Increased access to year-round irrigation

• Additional area under year-round irrigation (ha)

2,705

4,506

4,509

8,764

10638

19266

65,000

Yearly

ES, 2007

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Appendix 4

47

CSP Strate ocus gic FMedium-term Goals


Baseline FY02/10th



Monitor-ing

Sources of

Informat-ion


Tracking Indicators

• Increased rural electrification ratio

• Proportion of households electrified (cumulative %)

40 42 44 46 48 48.5 53 Yearly NPC, 2007

• Cash crop/total agriculture GDP ratio

31.2 31.9 31.9 34 35.6 37.5 FY2010 40

Yearly CBS, MOAC 2007

• Livestock (total agriculture GDP ratio)

• Increased cash crop and livestock production

• Rural Microfinance Development Center Disbursements (NRs million)

25.2 25.1 25.6 25.0 25.5 25.7 FY2010 41.5

Yearly CBS, DLS, 2007

• ADBN Disbursements (NRs million)

108 245 364 684 983 1944 432 (additional per year)

Yearly ES, RMDC 2007

• ADBN NPL level

8858 10115 10149 11817 12857 13460 11962 Yearly ADBN, 2007

• Expansion of rural credit availability

— — 37 19.2 20.6 e 18.0 e 24 Yearly ADBN, 2007, Busi-ness Plan 2004

— = not available, ADBN = Agriculture Bank of Nepal, BFS = Banking and Financial Statistics, CAAN = Civil Aviation Authority of Nepal, CBS = Central Bureau of Statistics, CRO = Chief Registrar’s Office, CRP = Country Result Profile, CSP = country strategy and program, CFG = Corporate and Financial Governance, DOA = Department of Agriculture, DoLIDAR = Department of Local Infrastructure Development and Agricultural Roads, DOI = Department of Irrigation, DOR = Department of Roads, DLS = Department of Livestock Services, ES = Economic Survey, FY = fiscal year, GDP = gross domestic product, ha = hectare, HLCIT = High Level Commission on Information Technology, km = kilometer, mt = metric tones, MOAC = Ministry of Agriculture and Cooperatives, MOF = Ministry of Finance, MOIC = Ministry of Industry and Commerce, NEA = Nepal Electricity Authority, NERC = Nepal Electricity Regulatory Commission, NITC = Nepal Information Technology Centre, NPL = non-performing loans, NRB = Nepal Rastra Bank, NRs = Nepalese rupees, RMDC = Rural Microfinance Development Centre, SEBO = Securities Board, SRN = Strategic Road Network, SRP = Sector Result Profile, TYIP = Three-Year Interim Plan, VDCs = village development committees.

48 Appendix 4

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a Strategic goals of the Tenth Plan. b Achievement of these outcomes is the combined responsibility of the Government and its development partners, including ADB, the civil society, private sector, and other

development agencies. c Indicators to track success of implementation towards expected outcomes. Baseline, targets, and indicators for monitoring progress have been identified and will be

updated regularly. d Projected based on nine months progress. e Followed central bank definition. Source: Relevant government agencies.

Pillar II: Inclusive Social Development

CSP Strategic Focus Medium-

term Goals Intermediate Outcomes

Intermediate Indicators

Tracking Indicators

Baseline FY02/10th


Milestones/ Targets FY2007

Monitor-ing

Sources of Information

• Net enrollment ratio in primary school (%)

81.1 82.4 84 87 87 87.4 90.0 Yearly MOES, 2007 • Increased enrollment and improved performance of students

• Survival rate to grade 5

60.0 67.7 76.2 79.1 80.3 81.1 __ Yearly MOES, 2007

• Increased proportion of trained teachers

• Proportion of trained teachers (%)

20.1 23.0 32.8 40.0 58.3 60.2 100.0 Yearly ASIP/DOE, 2007

• Improved access to vocational training

• Number of persons trained in vocational skills (‘000)

3.8 4.6 6.5 6.0 5.0 5.0 7.1 Yearly Annual Program

NPC, 2007

• Proportion of people served with clean drinking water (%)

71.6 72.8 73.5 74.8 76.9 76.6 83.0 Yearly

NPC PRSP 2006/

TYIP, 2007

• Improve the availabili-ty and quality of social infrastru-cture and services

• Improved access to and quality of basic education

• Increased access to vocational training

• Improved access to clean drinking water and sanitation

• Improved access to clean drinking water and sanitation

• Proportion of

households with sanitation facilities (%)

20.0 26.2 39 46.3 46.3 45.8 50.0 Yearly NPC PRSP 2006/

TYIP, 2007

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49

CSP Strategic Focus Medium-term Goals Intermediate

Outcomes Intermediate

Indicators

Tracking Indicators

Baseline FY02/10th


Milestones/ Targets FY2007

Monitor-ing

Sources of Information

• Increased participation of women in development projects

• Proportion of ADB-assisted projects having interventions with women (%)

— 25 25 28 41 41 __ Yearly ADB,2008

• Increased representation of women and disadvantaged groups in civil service

• Number of women in civil service

8,008.0 8,042 — — — 8722 10,000 Yearly Office of Civil Service

Record,2007; PRSP-

2006,NPC

• Promote social and economic inclusion of women and the disadvan-taged by removing social, legal, economic and other constrain-ts

• Mainstreamed participation by women and excluded groups in development and decision making

• Increased economic and social benefits to women and excluded groups

• Increased participation of women and disadvantaged groups in labor force

• Proportion of women teachers in primary school (%)

21.4 22.1 21.1 30 31.1 30.6 30 Yearly EFA-MOES, 2007

— = not available, ASIP = Annual Strategic Implementation Plan, CSP = country strategy and program, EFA = Education for All, FY = fiscal year, MOES = Ministry of Education and Sports, MOGA = Ministry of General Administration, MPPW = Ministry of Physical Planning and Works and NPC = National Planning Commission. Source: Relevant government agencies.

Pillar III: Good Governance



Indicators

Tracking Indicators

Baseline FY02/10th

Plan

FY03 FY04 FY05 FY06 FY07 Milestones/ Targets FY2007

Monitor-ing

Sources of

Information

• Implementation of affirmative action measures

• Measures to promote inclusion and decentralization

— — — — — Promul-gated

Local Service Act to be

promulgated in FY2006

MOGA, 2007

• Promote people-centered and inclusive governa-nce

• Enhanced local participation

• Enhanced participation and empowerment of excluded groups

• Enhanced capacity

• Progressive devolution of services delivery

• Number of DDCs with citizen charters

— 43 54 75 75 75 Completed (75 districts)

Yearly NPC, 2006

50 Appendix 4

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Indicators

TrackinIndicat

g ors

Baseline FY02/10th

Plan


Monitor-ing

Sources of

Information

responsibilities to local bodies

• Number of schools transferred to community

— 90 1,500 2,091 2,326 2304 2,000 in FY2006

Yearly NPC, 2006; DOA Flash report 2007

• Enhance quality and efficiency of public services

• Promote decentral-ization

of local organizations • Sound local

management and greater resource transfers

• Increased development resources to local bodies

• Grant allocation to DDC bodies on poverty based formula (NRs million)

810 842.5 810 1010 1054 1242 900 Yearly PRSP-2006,

Annual Program

2007 • Number of

complaints to CIAA

2,522 3,966 3,732 4759 4324 3564 5,000 Yearly CIAA Annual Report 2007

• Increased number of corruption cases prosecuted and convicted • Number of cases

prosecuted/ convicted

162 228 183 222 197 260 500 Yearly CIAA Annual Report 2007

• Anticorruption institutions strengthened

• Legislation on anti-money laundering promulgated

— — — — — Promul-gated Jan

2008

To be promulgated in FY2007

Yearly MOF

• National Vigilance Center established and technical audits conducted

— Estab-lished

8 13 33 44 35 in FY2006 Yearly National Vigilan-

ce Center, 2007

• Prevent corruption

• Enhance governm-ent account-ability and transpar-ency

• Strengthened anticorruption institutions

• Transparent allocation of budget

• Technical audit agencies established and made operational

• Project-based social audits conducted in districts

25 25 37 37 41 41

MLD to monitor public

hearing by local bodies from FY2006

Yearly MLD

— = not available, CIAA = Commission for Investigation of Abuse of Authority, CSP = country strategy and program, DDC = district development committee, FY = fiscal year, MOF = Ministry of Finance, MOGA = Ministry of General Administration, MLD = Ministry of Local Development, NPC = National Planning Commission, NVC = National Vigilance Centre, OPMCM = Office of the Prime Minister and Council of Ministers. Source: Relevant government agencies.

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51

Pillar IV: Mechanisms to Deliver Results



Indicators

Tracking Indicators Baseline FY02/10th

Plan


Monitor-ing

Sources of

Information

• Clear prioritization of government projects and programs

• Proportion of projects under P1, P2, and P3 (%)

NA P1-59 P2-33 P3-8

P1-69 P2-25 P3-6

P1-58 P2-32 P3-10

P1-68 P2-29 P3-3

P1-67 P2-27 P3-6

— Yearly NPC, 2006

• Improved procurement practices

• Promulgation of Procurement Law

— — — Draft law

prepa-red

Law enact-

ed

Regulat- ion

issued

— Yearly ADB, 2007

• Enhance efficient and effective utilization of resources

• Improved management of public spending

• Strengthened country ownership and commitment

• Enhanced development effectiveness of ADB operations

• Improved disbursement performance

• Nepal’s disbursement ratio (%)

— 7.1 4.4 7.7 20 20 20% Yearly ADB

• Increased partnerships with private sector, NGOs, and CBOs in service delivery

• Proportion of ADB supported projects being implemented in partnership with NGOs and CBOs

— — — — 43 52 — Yearly ADB

• Increased number of quality district plans prepared

• Number of districts completing and updating DPPs

—

52 52

52 52 52 75 Yearly

NPC, 2006

• Improve service delivery

• Enhanced institutional capacity of pubic bodies and civil society institutions

• Increased role of private sector and civil society in service delivery

• Strengthened public/social audit system at local level

• Improved M&E capacity

• Institutionalizatio-n of RBM practices in key line ministries

• Use of results framework in key line ministries

— — — — — Draft prepar-ed in three

Ministri-es

2 ministries Yearly ADB, 2007

— = not available, ADB = Asian Development Bank, CBO = community based organization, CSP = country strategy and program, DDC = district development committee, DPP = district periodic plan, FY = fiscal year, MOF= Ministry of Finance, MLD = Ministry of Local Development, NGO = nongovernment organization, NRs = Nepalese rupees, P1; P2; P3 = Priority, 1, 2, and 3, SBD = standard bidding document, RBM = results based monitoring. Source: Relevant government agencies.


ADB LENDING AND NON-LENDING ASSISTANCE PROGRAMS TO NEPAL (2004–2007)

Table A5.1: ADB's Sovereign Loans to Nepal by Sector (2004-2007) Loan No. Project Title Amount

($ M) Approval Date

A. Agriculture and Natural Resources 2092(SF) Decentralized Rural Infrastructure and Livelihood 40.00 24-Sep-2004 2102(SF) Community-Managed Irrigated Agriculture Sector 20.00 17-Nov-2004 2143(SF) Gender Equality and Empowerment of Women 10.00 16-Dec-2004

Subtotal (A) 70.00 B. Education 2111(SF) Skills for Employment 20.00 25-Nov-2004 2277(SF) Education Sector Program I 30.00 1-Dec-2006

Subtotal (B) 50.00 C. Finance 2268(SF) Rural Finance Sector Development Cluster Program (Subprogram I) 56.00 26-Oct-2006

Subtotal (C) 56.00 D. Transport and Communications 2097(SF) Subregional Transport Facilitation 20.00 4-Nov-2004 Subtotal (D) 20.00 Total 196.00 No. = number. Source: ADB Loans, Technical Assistance, Grants, and Equity Approvals database.

Table A5.2: Grants to Nepal by Sector (2004–2007) Grant No. Project name Amount

($ M) Approval Date

A. Agriculture and Natural Resources 0063 Commercial Agriculture Development 18.0 16-Nov-06 9101 Improving the Livelihoods of Poor Farmers and Disadvantaged Groups in

the Eastern Development Region 1.0 13-Dec-06

Subtotal (A) 19.0 B. Education

0065 Education Sector Program I-Capacity Development Project 2.0 01-Dec-06 Subtotal (B) 2.0

C. Finance 0059 Rural Finance Sector Development Cluster Program 8.7 26-Oct-06

Subtotal (C) 8.7 D. Health, Nutrition, and Social Protection

9110 Strengthening Decentralized Support for Vulnerable and Conflict-Affected Families and Children

2.0 10-Oct-07

Subtotal (D) 2.0 E. Transport and Communications

0051 Road Connectivity Sector I 55.2 10-Aug-06 0099 South Asia Subregional Economic Cooperation Information Highway 9.0 17-Dec-07

Subtotal (E) 64.2 F. Multisector

0093 Rural Reconstruction and Rehabilitation Sector Development Program (Project Grant)

50.0 12-Dec-07

0094 Rural Reconstruction and Rehabilitation Sector Development Program (Program Grant)

50.0 12-Dec-07

Subtotal (F) 100.0 Total 195.9 No. = number. Source: ADB Loans, Technical Assistance, Grants, and Equity Approvals database.


Table A5.3: Approved Technical Assistance to Nepal by Sector (2004–2007)

TA No. Project Title Amount ($) Approval Date A. Agriculture and Natural Resources

4353 Promoting Pro-Poor and Gender-Responsive Service Delivery 200,000 7-Jul-2004 4397 Capacity Building in Rural Infrastructure Institutions 400,000 24-Sep-2004 4774 Economic and Social Inclusion of the Disadvantaged Poor

Through Livelihood Enhancement with Micro-Irrigation 450,000 20-Mar-2006

4969 Strengthening Land Administration Services 350,000 26-Sep-2007 Subtotal (A) 1,400,000

B. Education 4326 Education Sector Development Policy and Strategy 150,000 14-Apr-2004 4326 Education Sector Development Policy and Strategy

(Supplementary) 50,000 15-Oct-2004

4326 Education Sector Development Policy and Strategy (Supplementary)

150,000 20-Dec-2004

4326 Preparation of Education Sector Development Policy and Strategy (Supplementary)

110,000 12-Apr-2005

4754 Education Sector Development Program I 600,000 21-Dec-2005 7025 Education Sector Program (Subprogram III) 600,000 12-Dec-2007

Subtotal (B) 1,660,000 C. Energy

4492 Restructuring of Nepal Electricity Authority 400,000 18-Dec-2004 4493 Rural Electrification and Renewable Energy 600,000 17-Dec-2004 4985 West Seti Hydroelectric 300,000 5-Nov-2007 4997 Promoting Private Sector Participation in the Power Sector 600,000 30-Dec-2007

Subtotal (C) 1,900,000 D. Finance

4857 Capacity Building in Rural Finance Institutions 500,000 26-Oct-2006 Subtotal (D) 500,000

E. Health, Nutrition, and Social Protection 4759 Reaching the Most Disadvantaged Groups in Mainstream Rural

Development 685,000 22-Dec-2005

Subtotal (E) 685,000 F. Law, Economic Management, and Public Policy

4422 Preparation of National Resettlement Policy Framework 150,000 28-Oct-2004 4460 Strengthening National Accounts System 350,000 3-Dec-2004 4752 Regional Development Strategy 760,000 21-Dec-2005 4834 Governance Reforms and Decentralization Cluster Program I 500,000 31-Aug-2006 4905 Supporting Preparation of the 3-Year Interim Development Plan 300,000 18-Dec-2006 4962 Support to Anticorruption Institutions 400,000 30-Aug-2007 7042 Economic Policy Network II 500,000 14-Dec-2007

Subtotal (F) 2,960,000 G. Transport and Communications

4347 Transport Connectivity Sector 600,000 4-Jun-2004 4760 Enhancing Poverty Reduction Impact of Road Projects 350,000 3-Jan-2006 4772 Preparation of Civil Aviation Sector Strategy 150,000 20-Mar-2006 4825 Capacity Building in Road Feasibility Study and Construction and

Contract Management 300,000 10-Aug-2006

4833 Information and Communications Technology Development 600,000 30-Aug-2006 4842 North-South Fast Track Road 850,000 15-Sep-2006 7031 Civil Aviation Airport 750,000 14-Dec-2007

Subtotal (G) 3,600,000 H. Water Supply, Sanitation, and Waste Management

4096 Kathmandu Valley Water Management Support (Supplementary) 100,000 12-Jan-2004 4776 Enabling the Private Sector to Undertake Poverty-Focused Water

Distribution and Strengthening of Institutional Reforms in Kathmandu Valley

720,000 28-Mar-2006

4893 Kathmandu Valley Water Distribution, Sewerage, and Urban Development

960,000 13-Dec-2006


TA No. Project Title Amount ($) Approval Date 4972 Improved Water Quality, Sanitation, and Service Delivery in

Emerging Towns Sector Development Program 720,000 28-Sep-2007

7007 Supporting Capacity Development for Water Services Operations and Public-Private Partnership in Kathmandu Valley

2,500,000 10-Dec-2007

Subtotal (H) 5,000,000 I. Multisector

3625 Second Rural Infrastructure Development (Supplementary) 34,000 23-Dec-2004 4765 Operationalization of Managing for Development Results 400,000 13-Feb-2006 4767 Capacity Building for Gender Equality and Empowerment of

Women 300,000 28-Feb-2006

4919 Rural Reconstruction and Rehabilitation Sector Development Program

500,000 2-Feb-2007

Subtotal (I) 1,234,000 Total 18,939,000 No. = number, TA = technical assistance. Source: ADB Loans, Technical Assistance, Grants, and Equity Approvals database.

Table A5.4: Regional Technical Assistance Including Nepal (2004–2007)

RETA No. Project Title Total Date Approved

1 6088 Strengthening and Collection of Purchasing Power Parity Data in Selected Developing Member Countries

400,000 17 Feb 2004

2 6168 Upscaling Successful Poverty Reduction Initiatives 90,000 25 Mar 2004 3 6172 High-Level Conference on Asia's Economic Cooperation and Integration 150,000 13 May 2004 4 6173 Strengthening the Response to HIV/AIDS in Asia and the Pacific 150,000 21 May 2004 5 6108 Emergency Regional Support to Severe Acute Respiratory Syndrome

(Supplementary) 500,000 14 Jun 2004

6 6109 NGO Partnerships for Poverty Reduction (Supplementary) 500,000 21 Jun 2004 7 6181 2004-2006 Orientation Program for Officials of the Asian Development

Bank's Developing Member Countries 725,000 23 Jul 2004

8 6088 Strengthening and Collection of Purchasing Power Parity Data in Selected DMCs (Supplementary)

450,000 30 Jul 2004

9 6183 Fourteenth Tax Conference 150,000 9 Aug 2004 10 6185 Regional Workshops in Preparation for the Second High-Level Forum on

Harmonization and Alignment for Aid Effectiveness 150,000 30 Aug 2004

11 6187 Promoting South Asian Regional Economic Cooperation 500,000 27 Sep 2004 12 6188 Establishing Legal Identity for Social Inclusion 575,000 30 Sep 2004 13 6189 Supporting Network of Research Institutes and Think Tanks in South Asia 150,000 30 Sep 2004 14 6088 Strengthening and Collection of Purchasing Power Parity Data in Selected

DMCs (Supplementary) 800,000 14 Oct 2004

15 6196 Implementation of the ADB-OECD Anti-Corruption Initiative for Asia-Pacific 250,000 2 Nov 2004 16 6197 Supporting the Achievement of the Millennium Development Goals in the

Asia-Pacific Region 350,000 4 Nov 2004

17 6200 Asian Development Outlook 2005 250,000 16 Nov 2004 18 6144 Better Air Quality Management in Asia (Supplementary) 245,000 19 Nov 2004 19 6208 Ninth Agriculture and Natural Resources Research at International

Agricultural Research Centers 3,000,000 16 Dec 2004

20 6211 Capacity Building for Project Implementation and Administration 2005-2006 800,000 17 Dec 2004 21 6215 Public-Private Infrastructure Advisory Facility 500,000 17 Dec 2004 22 6216 Asia-Pacific Justice Forum 92,000 17 Dec 2004 23 6217 Challenges in Implementing Access to Justice Reforms 75,000 17 Dec 2004 24 6219 Promoting Effective Water Management Policies and Practices - Phase 4 5,600,000 20 Dec 2004 25 6220 Capacity Building on Selected WTO and Doha Development Agenda Issues 400,000 21 Dec 2004 26 6221 Regional Assessment Study and Workshop for Strengthening the Judiciary

and the Prosecutorial System 110,000 22 Dec 2004

27 6225 South Asia Subregional Economic Cooperation Human Resource Development and Capacity Building in the Tourism Sector

600,000 23 Dec 2004

28 6229 Improving the Outreach of Formal Financial Institutions

150,000 28 Dec 2004



29 6185 Regional Workshops in Preparation for the Second High Level forum on Harmonization and Alignment for Aid Effectiveness

41,931 19 Jan 2005

30 6230 Regional Capacity Building Workshop on Performance-Based Allocation of ADF Resources

400,000 28 Jan 2005

31 6232 South Asia Subregional Economic Cooperation Information and Communication Technology Development Master Plan

450,000 25 Feb 2005

32 6250 Preparation of International Public Sector Financial Audit Guidelines 235,000 29 Jul 2005 33 6144 Better Air Quality Management in Asia (Supplementary) 390,000 17 Aug 2005 34 6253 Strengthening the Audit Capability of Members of the Asian Organization of

Supreme Audit Institutions 650,000 19 Aug 2005

35 6254 Joint Conference on Worker Remittances and Poverty Reduction with Inter-American Development Bank (IADB) and United Nations Development Programme

150,000 30 Aug 2005

36 6255 Fifteenth Tax Conference 150,000 6 Sep 2005 37 6256 Results-focused Project Design and Management 850,000 9 Sep 2005 38 6264 Portal for Statistics Resources 140,000 14 Oct 2005 39 6269 Preparation and Pilot of the Community of Practice on Managing for

Development Results 150,000 16 Nov 2005

40 6270 Facilitating Knowledge Management for Pro-Poor Policies and Projects 980,000 23 Nov 2005 41 6271 Improving the Key Indicators of Developing Asia and Pacific Countries 140,000 25 Nov 2005 42 6273 Asian Development Outlook 2006 340,000 25 Nov 2005 43 6274 Supporting the Achievement of the MDGs in the Asia and Pacific Region:

Phase II 325,000 30 Nov 2005

44 6276 Development and Dissemination of Water-Saving Rice Technologies in South Asia

1,000,000 2 Dec 2005

45 6278 Innovative Information and Communications Technology in Education, and Its Potential for

800,000 2 Dec 2005

46 6088 Strengthening and Collection of Purchasing Power Parity Data in Selected Developing Member Countries

670,000 7 Dec 2005

47 6282 A Study on Economic Cooperation Between East Asia and South Asia 500,000 9 Dec 2005 48 6284 Development of Catastrophe Risk Insurance Mechanisms 150,000 9 Dec 2005 49 6285 Strengthening Country Safeguard Systems 800,000 12 Dec 2005 50 6286 Capacity Building of Private Sector Financial Institutions in Meeting

Environmental and Social Challenges 150,000 13 Dec 2005

51 6320 Loan Products Workshops in DMCs in 2006 150,000 14 Dec 2005 52 6291 Rolling Out Air Quality Management in Asia 655,000 19 Dec 2005 53 6292 Promoting Environmental Investment in Asia and the Pacific 400,000 19 Dec 2005 54 6296 Developing Pro-Poor Governance Capability and Knowledge 875,000 21 Dec 2005 55 6303 Competition Law and Policy Roundtable 100,000 21 Dec 2005 56 6297 South Asia Subregional Economic Cooperation III 1,000,000 22 Dec 2005 57 6299 Subregional Economic Cooperation in South and Central Asia (Phase II) 950,000 3 Jan 2006 58 6302 Workshop on Proposed South Asian Association for Regional Cooperation

Development Fund 150,000 3 Jan 2006

59 6306 Mainstreaming Managing for Development Results in Support of Poverty Reduction in South Asia

1,800,000 27 Jan 2006

60 6185 Regional Workshops in Preparation for the Second High-Level Forum on Harmonization and Alignment for Aid Effectiveness

30,000 24 Mar 2006

61 6311 Regional Seminars on Anticorruption 2006-2007 300,000 28 Mar 2006 62 6314 The Asia Regional Information Center (ARIC) 780,000 20 Apr 2006 63 6322 Energy Sector Strategy and Development 1,000,000 16 Jun 2006 64 6325 Promoting Effective Water Management Policies and Practices - Phase 5 3,200,000 14 Jul 2006 65 6326 Third International Roundtable on Managing for Development Results 150,000 17 Jul 2006 66 6290 International Conference 'Asia 2015: Ending Poverty?' (Supplementary) 150,000 18 Jul 2006 67 6327 External Forums for Selected Sectors and Thematic Priorities at the ADB 400,000 18 Jul 2006 68 6333 Statistical Capacity Building in the Asia and Pacific Region 600,000 31 Jul 2006 69 6329 Sixteenth Tax Conference 150,000 9 Aug 2006 70 6335 BIMSTEC Transport Infrastructure and Logistics Study 960,000 14 Aug 2006 71 6337 Development Partnership Program for South Asia 8,500,000 18 Aug 2006 72 6350 Sustainable Urban Transport 1,000,000 26 Oct 2006 73 6354 Asian Development Outlook 2007 380,000 22 Nov 2006



74 6355 Capacity Development of Selected Developing Member Countries on the Implementation of the Trade Facilitation Agreement of the World Trade Organization

450,000 23 Nov 2006

75 6356 Improving Administrative Data Sources for the Monitoring of the Millennium Development Goal Indicators

500,000 24 Nov 2006

76 6358 South Asia Subregional Economic Cooperation (SASEC) Information Highway

500,000 1 Dec 2006

77 6291 Rolling Out Air Quality Management in Asia (Supplementary) 2,430,000 11 Dec 2006 78 6361 Managing Hazardous Wastes 400,000 12 Dec 2006 79 6362 South Asia Subregional Economic Cooperation Tourism Development 950,000 13 Dec 2006 80 6368 Energy Sector Dialogue and South Asian Association for Regional

Cooperation Energy Center 1,000,000 14 Dec 2006


500,000 15 Dec 2006

82 6378 Community of Practice on Managing for Development Results - Phase II 750,000 20 Dec 2006 83 6189 Supporting Network of Research Institutes and Think Tanks in South Asia

(Supplementary) 75,000 31 Jan 2007

84 6385 Governance and Capacity Development Initiative 1,600,000 31 Jan 2007 85 6285 Strengthening Country Safeguard Systems (Supplementary) 100,000 22 Feb 2007 86 6388 Supporting the Asia-Pacific Water Forum 1,000,000 16 Mar 2007 87 6394 Results-Focused Project Design and Management 2 850,000 3 Apr 2007 88 6325 Promoting Effective Water Management Policies and Practices - Phase 5

(Supplementary) 1,200,000 16 Apr 2007

89 6396 Supporting Water Operators' Partnership in Asia 2,000,000 16 Apr 2007 90 6189 Supporting Network of Research Institutes and Think Tanks in South Asia

(2nd Supplementar 50,000 22 Jun 2007

91 6402 Support the Aid-for-Trade Initiatives in Asia and the Pacific 2007 150,000 22 Jun 2007 92 6403 Seminars on Capacity Building for Project Implementation and

Administration for 2007-2009 800,000 27 Jun 2007

93 6187 Promoting South Asian Regional Economic Cooperation (Supplementary) 75,000 28 Jun 2007 94 6406 Seventeenth Tax Conference 150,000 13 Aug 2007 95 6144 Better Air Quality Management in Asia (Supplementary) 75,000 26 Aug 2007 96 6285 Strengthening Country Safeguard Systems (2nd Supplementary) 70,000 29 Aug 2007 97 6278 Innovative Information and Communications Technology in Education, and

Its Potential for 120,000 30 Aug 2007

98 6416 A Development Framework for Sustainable Urban Transport 500,000 6 Nov 2007 99 6417 Supporting Network of Research Institutes and Think Tanks in South Asia

Phase II 1,200,000 9 Nov 2007

100 6420 Promoting Climate Change Adaptation in Asia and the Pacific 3,600,000 21 Nov 2007 101 6421 Sustainable Urban Development in Asia 800,000 23 Nov 2007 102 6422 Mainstreaming Environment for Poverty Reduction 2,850,000 29 Nov 2007 103 6300 Promoting Best Practices in Private Sector Participation in Urban

Infrastructure in South Asia 300,000 4 Dec 2007

104 6432 Private Sector-Led Integration and Free Trade Agreements in South Asia 750,000 11 Dec 2007 105 6435 South Asia Subregional Economic Cooperation Transport Logistics and

Trade Facilitation Project 1,000,000 12 Dec 2007


300,000 13 Dec 2007

107 6433 South Asia Subregional Economic Cooperation Regional Information and Communication Technology

4,400,000 17 Dec 2007

108 6439 Twelfth Agriculture and Natural Resources Research at International Agricultural Research

2,000,000 18 Dec 2007

Total 84,348,931 ADB = Asian Developmet Bank, ADB-OECD = Asian Development Bank - Organisation for Economic Cooperation and Development, ADF = Asian Development Fund, ARIC = Asia Regionall Information Center, BIMSTEC = Bay of Bengal Initiative for MultiSectoral Technical and Economic Cooperation, DMC = developing member country, HIV/AIDS = human immunodeficiency/acquired immunodeficiency syndrome, IADB = Inter-American Development Bank, MDG = Millennium Development goals, NGO = nongovernment organization, No. = number, SASEC = South Asia subregional Economic Cooperation, TA = technical assistance, WTO = Trade Organization World. Source: ADB Loans, Technical Assistance, Grants, and Equity Approvals database.


SECTOR BRIEFS

1. Agriculture and Natural Resources. The agriculture and natural resources (ANR) sector contributes close to 40% to Nepal’s gross domestic product (GDP). The sector remains the main driver of the country’s economy and about 80% of the population depends on agriculture for their income and employment. The Government’s preliminary estimates1 of Nepal’s total food production (paddy, wheat, maize, millet, and barley) for the fiscal year (FY) 2006/2007 indicate a 2.5% decline over the previous period while the total area covered by food crops is likewise estimated to decline by 1.7%. The share of food crops and cash crops to total agricultural production in FY 2006/07 was estimated to be 47.8% and 52.3% respectively compared to 49.4% and 50.5% in the previous period. The total area covered by the production of food crops and cash crops remained unchanged at 76% and 24% respectively. Irrigated areas increased to 1.2 million hectares (ha) in 2007 compared with an average of about 90,000 ha from 2002 to 2006. It should be noted, however, that only about 60% of the total agricultural land is irrigated. A total of 22,000 km of rural roads have been constructed in the country as of 2007 indicating a need for additional farm-to-market roads that would enhance the link between farmers and their markets. Livestock also figures prominently in Nepalese farming systems, household income, and nutrition as it contributed 32% to the agricultural GDP in 2007 or an increase of 2% compared with the 2006 level. 2. In order to enhance the productivity of the sector, boost food security and, consequently, address poverty (particularly in the rural areas) the Government drafted the 20-year Agriculture Perspective Plan (APP) in 1996 and updated in 2004. The APP seeks to modernize and commercialize the sector by (i) increasing food production and productivity; (ii) maintaining food sovereignty by ensuring food productivity; (iii) making agriculture and livestock sector competitive by transforming subsistence agriculture into commercial agriculture; (iv) improving employment opportunities for rural youth, women, madhesis, muslims, and other disadvantaged communities; and (v) conserving, promoting, and utilizing agricultural biodiversities through the development and dissemination of environment-friendly technologies. Moreover, the Biodiversity Policy (2007), which was announced for the purpose of food security and poverty reduction, has the following objectives: (i) promote the development of agriculture and consolidate food and nutrition security by conserving, promoting and utilizing agro-bio-diversity; (ii) promote and protect the farmers’ rights to traditional knowledge, skills, innovations, technology uses and practices; (iii) secure equitable and fair distribution system of opportunities and benefits created through the access and uses of agro- genetic sources and substances; and (iv) contribute to the promotion of eco-balance through conservation. The Irrigation Policy (2003) and Regulations (2004) aim to (i) develop water resources based on integrated water resources management with users participation, social inclusion, gender and representation of stakeholders in decision making and management; and (ii) promotion of groundwater irrigation, and large, medium, small, and micro-irrigation schemes ensuring benefits to all segments of rural population. To address deficiencies in rural roads, the Local Infrastructure Development Policy (2004) aim to develop rural roads by devolving planning, design, construction, monitoring, and maintenance of local infrastructure to district development committees, municipalities and village development committees with the involvement of beneficiaries and local communities for improvement in service delivery, cost effective operations and maintenance, and sustainability of the roads. 3. ADB’s assistance to Nepal’s agriculture sector from 2004 to 2007 consist of projects that aim to reduce poverty and enhance rural productivity through $89.0 million worth of loans and grants covering projects that are intended to improve rural infrastructure and livelihoods, 1 Ministry of Finance. 2007. Economic Survey 2007. Kathmandu.


promote gender equality, and develop commercial agriculture. On the other hand, about $1.4 million worth of technical assistance (TA) approved over the same period cover projects that aim to improve the capacity of agricultural institutions, provide market-oriented agriculture support, and promote pro-poor and gender sensitive service delivery. 4. Education. It is acknowledged that education is one of the key elements that would help Nepalis to break out from the poverty trap and is considered a pre-requisite for development. Education allows them to acquire the necessary skills and technical competence to secure employment. Education attainment is reportedly one of the key factors behind income inequalities in the country. The education system of Nepal consists of 5 years of primary education, 3 years of lower secondary education, 2 years of secondary education, and 2 years of higher secondary education. A school-leaving certificate is awarded at the end of the two-year secondary education which entitles the recipient to enter higher secondary or tertiary education (providing certificate-level, diploma level or university-level qualifications). Non-formal education is provided though community-level adult education and programs for out-of school children. Higher education is provided mainly by five universities as well as other public and private institutions. The technical education and vocational training comprises a range of training providers (either from government or private sector). With a view to uplifting the living standards of people belonging to unprivileged classes, especially women, the Government initiated a 10-month pre-service primary teacher training in 2007 to 700 people belonging to dalits, unprivileged classes and women who have passed school leaving certificate examination. 5. The Government faces significant challenges in providing access to and in delivering quality education at all levels. Many schools have inadequate facilities and learning materials due to resource constraints. But despite these, about 91% of the households have access to a primary school and the net enrollment rate in primary schools improved from 64% in 1990 to 87% in 2006. Yet, about 13% of eligible children are not enrolled in primary school, majority of which live in rural areas. There is a wide disparity in education participation between regions and social groups. The adult literacy rate is at 52% in 2006 or a slight improvement over the 49% 11-year average from 1995 to 2005. Moreover, most people (particularly those who would like to enter the labor force but were poor and disadvantaged) do not have access to technical and vocational training. 6. In order to address the challenges in the sector, the Government’s Tenth Plan seeks to (i) expand and develop quality education, (ii) produce internationally competitive human resources to support the national economy, (iii) enhance social development, and (iv) contribute to poverty reduction. Decentralization will be the primary strategy for improving education planning and management. Teacher training and development will likewise be strengthened including the recruitment and capacity development of female teachers and those from disadvantaged groups. The “Education for All”2 program envisions that 3.7% of GDP will be allocated to the education sector. Reiterating the objectives of the Tenth Plan, the Government’s Three-Year Interim Plan (2008–2010) aims to make education equitable and inclusive at all levels. It intends to implement, among others, basic level, grades 1–8 program, and secondary level, grades 9–12 program, on an experimental basis under School Sector Reform (SSR) program. It is expected that lessons learned and experiences gained from the implementation of grades 1–8 basic education in selected districts and schools will result in better preparedness of the Government to implement SSR on a country-wide scale from 2010 onwards. The SSR transition process is supported by the pooling of development partners, including ADB. ADB

2 The Education For All program is jointly supported by seven funding agencies (ADB, Danida, DFID, Finland,

Norway, UNICEF, and the World Bank) under a sector wide approach.


provides assistance to the SSR transition process through the Education Sector Program subprogram II (approved in January 2008). 7. ADB’s support for the sector from 2004 to 2007 consisted of $52.0 million worth of loans and grants and $2.0 million worth of TAs. Assistance mainly covers projects that aim to support the “Education For All” program, skills enhancement for employment, and capacity development initiatives. . ADB’s assistance has evolved from a project approach to a program approach. ADB is supporting the government to prepare and implement SSR in a phased manner. 8. The education sector, which is implementing SWAP aligning donor assistance with reformed government systems and procedures under joint financing arrangement (JFA), and SWAP is fairly a unique concept for Nepal. ADB is providing technical assistance support for the sector to develop a modality of school sector reform (SSR) to expand the SWAP initiative to the entire school system. This sector needs to be evaluated to learn how relevant are ADB’s support and how ADB should move forward. 9. There are different kinds of SWAPs. The central idea behind SWAP is to align donor assistance to government systems, which are normally country-specific. Viewed in this perspective, Nepal is implementing Nepal SWAP in the education sector making it compatible with Nepal’s context. Local Development, which handles community-based projects, is another sector targeted next for the introduction of SWAP. The relevant question is how effective is the implementation of SWAP in the education sector, and how replicable is the approach to other sectors. 10. Finance. Nepal’s financial sector is mainly characterized by a strong government presence particularly in the operations of financial institutions i.e. through major ownership interests in almost all commercial banks. As of 2007, Nepal has 74 finance companies, 47 financial NGOs, 38 development banks, 20 commercial banks, and 12 micro-credit companies. However, despite the presence financial institutions, only about 30% of Nepali households have a bank account. 11. A number of issues were noted in Nepal’s finance sector. For instance, the country’s central bank – Nepal Rastra Bank (NRB) holds a dual function as the government’s representative to the financial institutions’ Boards of Directors and as the regulator of the same institutions. This dual role has weakened the sector’s good governance and affected the proper supervision of the financial institutions. The prolonged conflict situation has also affected the banking system as the Government borrowed heavily from domestic sources to finance defense spending. A poor credit culture has also led to the accumulation of nonperforming loans. 12. The Government’s Financial Sector Reform Strategy Paper (2000) aim to initiate reforms in Nepal’s finance sector by (i) strengthening the NRB; (ii) building and maintaining a strong banking and non-banking sector; (iii) improving the existing legal and judicial aspects of the financial system; (iv) promoting financial discipline through adequate disclosure and competition; (v) initiating focused interventions towards programs to uplift the poor; and (vi) re-orient the activities of the Government and NRB from being an active participant of the financial institutions to a regulatory body. The policies under the Government’s Three-year Interim Plan (2008–2010) targeting the finance sector underscores (i) the need to maintain financial discipline in the banking system; (ii) reduce Government borrowing from the financial system for making finance available to the private sector; (iii) expand access to credit for deprived sections of the population; (iv) continue the policy of making it mandatory for commercial banks, development banks, and finance companies to undertake deprived sector lending; (v)


encourage commercial banks to prioritize lending to infrastructure sectors; (vi) maintain financial indicators that are on par with global financial standards; (vii) enhance the capacity of NRB’s supervisory and regulatory functions; and (viii) re-establish state-owned bank branches that were closed during the conflict. Moreover, the ongoing restructuring of government-owned banks aim to reduce state presence, recover nonperforming loans, and enhance the role of private commercial banks. 13. ADB’s support for Nepal’s finance sector from 2004 to 2007 includes loans and grants totaling $65 million and TAs amounting to $0.5 million. Areas of support include the provision of credit lines for micro-, agricultural and rural enterprises; strengthening the basic foundations of Nepal’s corporate and financial sector; developing a sustainable rural finance system for the provision of affordable services to the rural poor; and capacity building in rural finance institutions. 14. Transport and Communications. Nepal’s Country Strategy and Program (2005–2009) noted that isolation and a general lack of connectivity to domestic and global markets are the key impediments to growth and poverty reduction in Nepal. The country’s difficult terrain makes connectivity a challenge. A key part of the road system is the strategic roads network (SRN) consisting of national highways and feeder roads. This constitutes about 36% of the country’s total road network. As of 2007, there are about 7,400 kilometers of SRN in Nepal serving close to 80% of the population. Road access between Kathmandu and many district capitals remains a problem as 20% do not have access to the SRN. Buses (operated by public and private companies) are the leading form of public transport in the country and supports about 90% of all passenger traffic. The road freight transport industry carries over 90% of freight traffic. On the other hand, for remote towns and villages, air transport is the only practical means of access. Thus, civil aviation provides vital support to the country’s trade, commerce and tourism. Currently, there are 47 domestic airports and one international airport in the country. However, constraints such as weak institutional capacity in operations, lack of access to aviation facilities, capacity constraints in the airports as well as regulatory restrictions continue to hamper the growth of civil aviation in the country. 15. The Government’s Three-Year Interim Plan (2008–2010) aims to address the issues facing the roads subsector by (i) connecting all the remaining district headquarters by road; (ii) developing North-South trade and transit corriders; (iii) constructing 780 km of new roads; (iv) improvement and rehabilitation of 2,500 km of roads; and (v) periodic maintenance of 1,450 km of roads. On the other hand, the Plan also aims to connect all village development committees by telephone (extending telephone services to 1,007 villages yet to be served) within the Plan period. In civil aviation, the Government’s National Civil Aviation Policy (1997) aims to (i) contribute to the promotion of tourism; (ii) develop and promote the national flag carrier for international air services; (iii) encourage competition in the private sector; (iv) develop and expand airports in remote areas; (v) foster reliable and safe air transport through modern equipment and facilities; and (vi) encourage recreational and adventurous air service activities. The Three-Year Interim Plan will reconstruct and rehabilitate physical structures of airports damaged during the insurgency in the rural and remote areas; strengthen airports and aviation safety to make air service of Nepal more safe and reliable; and expand domestic and international air service by involving the private sector in the development and operation of infrastructures and facilities related the air transport sector. 16. ADB’s involvement in Nepal’s transport and communications sector is mainly focused on roads followed by civil aviation. From 2004 to 2007, ADB funded a total of $84.2 million in loans and grants and provided TAs amounting to $3.6 million covering projects ranging from road


construction, the development of information and communications technology, and the preparation of the civil aviation strategy. 17. Governance. Since 2000, ADB has approved three loans totaling $72.3 million from Asian Development Funds. Nine TA projects totaling $8.85 million have been approved to support reforms to corporate and financial governance public sector governance. The corporate and financial governance project loan3 included a piggybacked TA cluster project to help in preparing further sector interventions, assist in addressing key sector issues on an urgent basis, and support the establishment of a conducive framework in a more strategic and comprehensive way than would a single-TA approach. The governance reform program loan aimed to assist the civil service to become more results- and people-oriented and gender responsive.4 It included a piggybacked TA to support (i) core program management reforms, (ii) civil society support for reform measures, and (iii) independent program monitoring and reporting. In addition, a standalone TA was approved to support loan implementation.5 A stand alone TA was approved in 2003 to strengthen performance based management.6 In 2006 a project preparatory TA was approved to design a loan to support the Government’s decentralization plans.7 In 2007, a TA was approved to build on the anticorruption legislation passed and institutions created under the program loan.8 The public sector management program loan9 included a piggybacked TA to help the Government (i) develop and implement an effective privatization/liquidation process, (ii) build capacity within the Government for undertaking divestment, (iii) manage and supervise the transactions, (iv) implement an effective and fair policy for labor retrenchment, and (v) support overall management of the Program. In addition, a standalone TA was approved to reduce government involvement in public enterprises.10 18. The Government has adopted result-based approaches in the Three-Year Interim Development Plan with ADB’s MfDR support. ADB is currently assisting the government to adopt and internalize MfDR approaches in selected ministries and four major district development committees. Capacity for preparing logical framework varies across sectors; while education, local development, and water resources ministries have been able to come up with results-based framework with baseline and target data, other ministries do not have such capacity. The capacity building support needs to be extended to cover all ministries, as the government intends to implement and institutionalize MfDR nationwide. The Government has now realized that with the results frameworks in place, it can monitor and backstop projects,

3 ADB. 2000. Report and Recommendation of the President to the Board of Directors for the Proposed Loan and

Technical Assistance Grant Corporate and Financial Governance (Nepal). Manila. (Loan 2002-NEP, for $35 million, approved 8 July.)

4 ADB. 2001. Report and Recommendation of the President to the Board of Directors for the Proposed Loan and Technical Assistance Grant Governance Reform Program (Nepal). Manila. (Loan 1861-NEP, for $30 million, approved 27 November.)

5 ADB. 2001. Technical Assistance to Nepal for Capacity Building for Institutional Support for Governance Reforms. Manila. (TA 3622-NEP, for $1,525,000, approved 18 January).

6 ADB. 2003. Technical Assistance to Nepal for Strengthening Performance Based Management. Manila. (TA 4249-NEP, for $275,000, approved 12 December).

7 ADB. 2006. Technical Assistance to Nepal for Capacity Building for Governance Reforms and Decentralization Cluster Program I. Manila. (TA 4834-NEP, for $500,000, approved 31 August).

8 ADB. 2007. Technical Assistance to Nepal for Support to Anticorruption Institutions. Manila. (TA 4962-NEP, for $400,000, approved 30 August).

9 ADB. 2003. Report and Recommendation of the President to the Board of Directors for the Proposed Loan and Technical Assistance Grant Public Sector Management Program (Nepal). Manila. (Loan 1811-NEP, for $7.3 million, approved 14 December.)

10 ADB. 2003. Technical Assistance to Nepal for Supporting Government Disengagement from Public Enterprises. Manila. (TA 4141-NEP, for $425,000, approved 8 July).


sectors and country performance more effectively. The framework will also enable the government to monitor sustainability of project impact into the future after physical completion. This calls for making MfDR as part and parcel of government’s planning and monitoring process. 19. Capacity building of state is generally an issue in post-conflict countries. As Nepal’s state structure was weakened, disrupted and even destroyed, particularly at the district level and below during insurgency, rebuilding state capacity has become a priority for enabling the government to deliver essential public services to its people. For all practical purpose, this essentially means state building. In Nepal’s case, the task of state building has been further exacerbated by the impending restructuring of state into a federal system. The issue is how good ADB is at supporting state building. Unlike the World Bank which tends to operate outside the government structure (e.g. Poverty Reduction Fund, Power Fund), ADB works with and within government. This gives it an edge. However, the requirements of state building should be assessed and understood in relation to ADB’s competence. 20. Donor-assisted projects are usually implemented using a separate project implementation unit, and the unit is closed down after physical completion of a project. The outcome and impact of the projects are not monitored. In certain sectors, outcomes are measured at the sector level (for example, using GIS in roads) but are not attributed to specific projects. ADB conducts project performance audit of completed projects after a lapse of certain time from completion to assess their sustainability but it is one-off activity done only for a sample of projects. It is, therefore, imperative to explore feasible ways to support institutions for “sustainability monitoring” of completed projects (possibly, integrating this aspect in MfDR framework). 21. Difficulty in complying with ADB’s safeguard policy is a persistent problem faced by the government. The government considers the ADB guidelines on resettlement is too rigid and not that suitable to Nepal’s rural settings. However, it has recognized the need to upgrade its systems and processes to be compliant, and is going in the right direction in this respect. While supporting the government in its upgrading efforts, the scope of flexibility in the relevant ADB guidelines needs to be explored.


CAPE NEPAL EVALUATION QUESTIONS

Evaluation Criteria Questions A. Overall Strategic and Institutional Positioning

1. Relevance of ADB’s Assistance Program and Strategy Assess the positioning of ADB’s assistance program and strategy using the following criteria: a. Relevance (i) What were the priority development issues, trends, conditions, and

needs in Nepal? (ii) What are the resulting external assistance requirements? (iii) Did ADB country strategies and programs address relevant and

priority development needs and were they consistent with Government development strategies?

b. Selectivity (i) Have ADB operations focused on relevant and priority sectors, geographic areas, and counterpart organizations, considering potential development impact, Government priorities and reform initiatives, and ADB corporate objectives?

(ii) Do activities focus on ADB’s core competencies, and how do they complement the activities of other development partners?

c. Sequencing and continuity (i) Were ADB operations within and between sectors properly sequenced keeping in mind national development strategies, the Government’s reform agenda and process, and capacity constraints?

(ii) Was there sufficient continuity in ADB’s country assistance to maximize development effectiveness of operations?

2. Responsiveness and ADB’s Performance Assess ADB’s performance and related expectations by addressing the following: a. Responsiveness (i) Given expectations, has ADB responded adequately, flexibly, and in

a timely way to changing and emerging country needs and Government demand for ADB assistance?

(ii) How have contentious issues been handled and problems resolved?

(iii) Did ADB properly assess and consider the implementation capacity of executing and implementing agencies during project processing and implementation?

b. Suitability of ADB policies, systems, and lending instruments

(i) Were ADB policies, systems, and lending instruments, and assistance modalities appropriate for country conditions?

(ii) Is ADB responding to the requirements of the Paris Declaration on Aid Effectiveness?1

c. Capacity and core competencies

(i) Has the level of applied ADB’s financial and human resources been adequate for the design and implementation of the Nepal country strategies and programs?

(ii) In what area/s has ADB been perceived to have a comparative advantage vis-à-vis other development partners in Nepal?

(iii) Was the management of procurement and consultant recruitment processes efficient?

(iv) How do the Government, civil society, and private sector perceive ADB’s role and performance and areas for service improvement?

3. Results and Contributions to Development Assess ADB’s contributions to development results by addressing the following: a. Sector work and policy dialogue

(i) What was the quality of ADB’s economic and sector work in Nepal and how were resulting findings fed into the design of country

1 ADB. 2005. Paris Declaration on Aid Effectiveness. Manila.


strategies and programs? (ii) How well was ADB equipped to handle policy dialogue on pertinent

development issues? (iii) What have been the contributions of the Nepal Resident Mission to

strategy and program design and implementation, and how well has it fulfilled its mandate?

b. Outputs and outcomes and their likely sustainability

(i) What have been the key outputs and outcomes of ADB’s operations in Nepal and how do they compare to results envisaged under the country strategies?

(ii) What is the likelihood that these outputs and outcomes can be sustained considering fiscal, political, social, and environmental conditions?

(iii) Are there any common factors that have affected program performance in the country?

c. Focus Have ADB interventions achieved a level of critical mass? d. Value addition (i) What was ADB’s share of total Government development

expenditure and overseas development assistance? (ii) Did ADB spearhead any new discussions on or approaches to

development challenges in Nepal? (iii) Did ADB’s assistance make any difference in Nepal’s

development? (iv) What has been ADB’s role compared to that of other development

partners? e. Dissemination and replication

(i) To what extent and how has ADB’s experience with successful projects in Nepal been disseminated and replicated?

(ii) Have causes of poor performance been analyzed and the findings been taken on board?

B. Development Effectiveness of ADB’s Sector Assistance Assess ADB’s overall value added and development effectiveness at the sector level in Nepal using the following: a. Relevance Have ADB’s sector operations:

(i) been based on ADB country and sector strategies; (ii) been aligned with Government sector priorities; (iii) supported essential sector policy and institutional reforms of the

Government; (iv) adequately considered sector conditions in the city country and

scope for sector development; (v) actively considered the potential for private sector involvement in

the sector; (vi) been aligned with international best practices and standards; and (vii) been effectively coordinated with other key development partners? b. Effectiveness (i) Has ADB’s sector assistance achieved meaningful outputs and

outcomes? (ii) What has been the level of effectiveness and what were its

determinants (including appropriateness of program design, quality of policy dialogue and advisory services, implementation assistance, etc.)?

c. Efficiency Have ADB sector operations maximized the ratio of outputs and outcomes to resource levels, and have these sector operations been formulated and implemented in a cost-effective and efficient manner?

d. Sustainability (i) What is the likelihood of sustaining achieved outputs and outcomes?

(ii) Are conducive fiscal, political, and environmental conditions in place?

(iii) To what extent has ADB assistance helped strengthen national


institutional capacity for formulation of sector policies and the management of sector programs and investments?

e. Impact How have ADB sector operations contributed to long-term sector development in Nepal (both in the past and likely impact)?

C. Lessons, Good Practices, and Future Strategy Based on the evaluation of the ADB’s assistance program and strategy positioning, its contribution to development results in Nepal, and ADB’s response and performance , and overall results and development effectiveness, assess the implications of ADB’s future assistance strategy to Nepal using the following: a. Programming lessons learned and better practice

(i) What lessons and better practice can be identified from the past experience for the next CPS in terms of ADB’s strategy?

(ii) Should ADB maintain its strategic focus or widen assistance to other sectors, regions, and agencies?

(iii) Should any areas of assistance be discontinued or phased out? (iv) In what areas could ADB provide more assistance and better

practice? (v) Is the current trend toward program lending in support of improving

public resource management to address the Millennium Development Goals and the private sector enabling environment?

(vi) Is ADB equipped for this task? b. Operations lessons learned and better practice

(i) How can the development effectiveness of ADB’s assistance in Nepal be improved?

(ii) What lessons can be derived for ADB’s project preparation and implementation in Nepal?

(iii) How can capacity building efforts be strengthened? What existing and new products and best practices can be used to address identified problems?

(iv) How can ADB’s public and private sector operations be enhanced? c. Strengths, weaknesses, opportunities, and threats

A range of good practices will be identified based on the CAPE, summarized by strengths to build into designs, weaknesses to avoid, opportunities to capitalize upon, and threats to manage.

d. Future strategic consideration

How should future partnership between Nepal and ADB be promoted given that Nepal is in a socio-economy transition situation and eligible for ADF assistance?

D. Overall Performance Rating Combine assessments of development effectiveness for sector operations with assessments of ADB country positioning and strategy, the contributions of ADB programs to development results, and ADB performance. Sector ratings will be based on the standard five evaluation criteria of relevance,2 effectiveness,3 efficiency,4 sustainability,5 and sector impact6 recommended by ADB’s Guidelines for the Preparation of

2 Relevance refers to (i) whether or not the focus of ADB’s sector strategy and sector program was consistent with

the mission of ADB and with key evolving economic circumstances, priorities, and absorptive capacity of the DMC; (ii) the extent to which ADB sector support was aligned with sector policies and strategies; (iii) the degree to which ADB support was in line with ADB’s comparative advantage; (iv) the extent to which ADB’s sector interventions achieved a level of critical mass; and (v) the degree to which ADB sector assistance was harmonized with that of other development partners.

3 Effectiveness refers to how successful the sector strategy and assistance program has been in contributing to the achievement of outputs and outcomes in support of the DMC’s sector development goals and objectives. It also refers to the extent to which the results defined under the country assistance program were actually achieved. Effectiveness also refers to the achievement of outcome (the extent to which the outputs defined for the various types of lending and nonlending interventions supported under the CAP for the sector were actually achieved).


Country Assistance Program Evaluation Reports. Given the emphasis on both broad based and sector specific program lending in recent years, as well as a range of ongoing sector and area projects, no additional sector weights are assigned at this stage of the evaluation. Sector ratings will be derived from an analysis of available PPERs, PCRs, TCRs, rapid sector assessments and studies conducted under CAPE.

4 Efficiency compares the achievement of the sector assistance program goals and objectives with the use of ADB

assistance resources. It is measured by the extent to which ADB’s resources provided for each sector have been optimally utilized, in terms of (i) the net contribution of ADB assistance to broad-based socioeconomic progress through support for essential sector policy and institutional reforms; (ii) the direct, net economic benefits of ADB’s sector assistance; (iii) the degree to which the benefits of ADB’s sector assistance have reached the poor; and (iv) the degree of cost assistance in delivering the sector assistance program and coordinating sector operations with other development partners compared with the costs of providing such assistance to other DMCs.

5 Sustainability focuses on the likelihood that the achievement of sector results and benefits will be sustained into the future. It is assessed as the extent to which sector interventions review have contributed to durable development gains that are likely to prove resilient to identified risks.

6 Impact refers to ADB’s plausible contribution to long-term changes in development conditions through its program in a particular sector. This includes how successful the sector program has been in contributing to the attainment of specified development goals. It is also evaluated with respect to the extent to which the sector program has contributed to building the sector’s institutional capacity to manage for poverty reduction.


TERMS OF REFERENCE OF CONSULTANTS FOR THE NEPAL CAPE 1. The consultants will be recruited to assist the ADB Country Assistance Program Evaluation (CAPE) team in evaluating and analyzing the performance of ADB’s Nepal country assistance program. Led by the team leader (Principal Evaluation Specialist), the consultants will assist in preparing the CAPE for Nepal by contributing relevant sections following the OED’s guidelines for CAPE preparation, other evaluation guidelines referred to by OED, and recent examples of OED’s country evaluations. I. International Consultants

A. Senior Macroeconomist and Program Strategy Specialist (2 person-months)

2. The Consultant should be a highly experienced macro-economist. He/she should be familiar with the operations of ADB and/or similar organizations. He/she should have experience on working on strategic development issues and have knowledge of the macroeconomic situation in Nepal or at least in South Asia and/or conflict-driven countries. This experience should include addressing key issues relating to macroeconomic performance, public resource management and enabling environment for private sector development. He/she will undertake the following tasks: (i) Review the CSP and other related documents to familiarize with ADB operations in Nepal over the last 10 years. He/she will also review the evaluation approach paper to understand the key issues to be addressed in the CAPE, and should be familiar with OED’s 2006 guidelines for the preparation of CAPE reports. (ii) Assist the team leader in undertaking the consultation process on the Nepal economic and program strategic issues as well as ADB’s role in it. Consultations will include key stakeholders such as government ministries, academic institutions, key private sector representatives, other development partners and civil society organizations (including NGOs). (iii) Prepare a semi-structured brief list of key strategic and policy related questionnaires that address the questions raised in the CAPE guidelines and the EAP. Prepare notes on the feedback from key stakeholders mentioned above. (iv) Assess recent trends and performance of Nepal economy at the macroeconomic level including macroeconomic management policies, issues and indicators and key implications for the relevance, responsiveness and results of the country assistance program. (v) Analyze ADB’s economic and thematic work and assess whether these provided a comprehensive and accurate assessment of the situation in the country and was taken to a logical and practical conclusion that could be used for strategic planning. (vi) Assess ADB’s contributions to development results in Nepal including economic growth, social development (including, but not limited to MDGs), and improvements in governance. Identify value-addition provided by ADB. (vii) Review the alignment of ADB country strategies with Government development strategies and assess the level of Government ownership of ADB country strategies. Assess whether country strategies were translated into effective operational (lending and non-lending)


programs, and if so, how and if not, identify reasons. (viii) Based on a structured feedback from key Government and other development partners, provide evidence on the relevance of ADB’s assistance program and strategy, including selectivity, sequencing and continuity. (ix) Review the work of the other consultants and identify gaps in terms of information needs and discuss with task manager how to obtain the necessary information. Use evaluative evidence to collect and provide sound analytical basis for the key messages and recommendations of the CAPE. Prepare key findings, lessons and recommendations in draft form to be discussed with the stakeholders prior to report consolidation. (x) Assess how recent program and investments loans have contributed to public resource management, and recommend ways to improve their relevance, response and results. (xi) Review ADB's economic and thematic work and assess whether these provided a sufficient assessment of the situation in the country and was taken to a logical and practical conclusion that could be used for strategic planning. (xii) Identify socio-economic factors that have influenced ADB’s support for public and private sector reform processes and assess how ADB has handled and resolved different stakeholder interests. (xiii) Provide evidence on the responsiveness and performance of ADB including the suitability of ADB policies, systems and lending instruments as well as capacity and core competencies in relation to expectations of the country strategy and program design and implementation. (xiv) Consolidate the material from all relevant documents and formulate lessons and implications for future strategies, and options for how the future partnership between Nepal and ADB can be promoted, taking into account the feedback from the Government of Nepal, key stakeholders and ADB management. (xv) Prepare a report on prescribed format and present findings in Nepal and at HQ in Manila. (xvi) Assist in preparing the draft CAPE report and in responding to relevant questions and comments received during the draft CAPE report reviews. (xvii) Undertake, within reason, other appropriate work/emerging areas as requested by the team leader.

B. Social Sector, Capacity Building and Governance Specialist (2 person-months)

3. The Consultant should be familiar with ADB’s operations and development issues as well as sector and thematic evaluations. He/she should have in-depth knowledge of and work experience in the social sector, such as education. Working knowledge of evaluation approaches and methods is required, together with an excellent grasp of crosscutting themes


including poverty reduction, capacity building, governance, and partnering and alignment of development partners in the context of the Paris Declaration on Aid Effectiveness. 4. He/she will assist the Team Leader and the CAPE team in the following tasks. (i) Prepare a detailed schedule and framework for the CAPE. (ii) Prepare questionnaires specific for each sector based on the evaluation questionnaires prepared by the team leader. (iii) Obtain structured feedback from key informants, such as the executing agencies, implementing agencies, beneficiaries NGOs and other development partners and provide evidence on the results from consultations and interviews. (iv) Carry out rapid assessments of ADB’s support (Loans, TAs and grants) for the education sector. (v) Assess ADB’s support for capacity building and governance in Nepal in the last five years and beyond if considered necessary. (vi) Conduct an assessment of the approaches to partnering and harmonization between development partners and aligning with the country’s systems in the context of ADB’s program in Nepal. Among other examples could be ADB’s support for the program based approach (PBA) or sector wide approach (SWAp) on education. (vii) Review the selected programs of other development partners and assess the extent to which they complement and integrate with ADB’s program, in particular policy reform initiatives. (viii) With the assistance of the local consultants, assess the actual and potential role of ADB’s support for the social sector in relation to poverty reduction efforts in Nepal. (ix) Work closely with the local consultants in assessing ADB’s results-based Nepal CSP against its Managing for Development Results (MfDR) approach, which was the first pilot in ADB. (x) Prepare a report on the sector and topics covered in this assignment, including lessons and implications for future strategies, and options for how the future partnership between Nepal and ADB can be promoted. (xi) Assist in preparing and presenting the draft CAPE report in collaboration with other members of the CAPE team. (xii) Assist in responding to relevant questions and comments received during the draft CAPE report reviews. (xiii) Undertake, within reason, other appropriate work/emerging areas as requested by the team leader.


II. Local Consultants

A. Senior Strategy and Program Advisor (1 person-month) 5. The Consultant should be familiar with the Government structure in Nepal including key issues relating to macroeconomic performance, public resource management and enabling environment for private sector development, as well as the current political changes and what they entail in shaping Nepal’s future. He/she should also be familiar with ADB’s operations and development issues. 6. He/she will undertake the following tasks and advise the CAPE team, particularly the Senior Macroeconomist and Program Strategy Specialist accordingly. (i) Recommend key contacts within the Government and development partners for in-depth interviews and stakeholder consultations. (ii) Assist/advise the CAPE team on recent trends and performance of key structural policies, policies intended to enhance the public and private sectors, and related reforms being implemented by the Government. (iii) Assist and advise in reviewing the alignment of ADB country strategies with Government development strategies and assess level of Government ownership of ADB country strategies. Assess whether country strategies were translated into effective operational (lending and non-lending) programs, and if so, how and if not, identify reasons. (iv) Provide a write-up on Nepal’s development context and government priorities, such as: (a) the evolving political, economic, and social setting for development; and (b) the Government’s development priorities and strategies. (v) Assess recent trends and performance of Nepal economy at the macroeconomic level including macroeconomic management policies, issues and indicators and key implications for the relevance, responsiveness and results of the country assistance program. Together with the other consultants, assess key recent trends and performance of public institutions in facilitating service provision in Nepal, including the Government’s fiscal position as well as trends and indicators for contributing to the Millennium Development Goals (MDG). (vi) Advise and assist the CAPE team in analyzing ADB’s country assistance program context in Nepal as well as in evaluating and discussing its performance with stakeholders in Nepal. (vii) Assist in reviewing the alignment of ADB country strategies with Government development strategies and assess the level of Government ownership of ADB country strategies through consultations and interviews with relevant officials. (viii) Together with the other consultants, assess how recent program and investments loans have contributed to public resource management, and recommend ways to improve their relevance, response and results. (ix) Assist and advise in the review of ADB's economic and thematic work and assess whether these provided a sufficient assessment of the situation in the country and was taken to a logical and practical conclusion that could be used for strategic planning.


(x) Together with the international consultant (Social Sector, Capacity Building and Governance Specialist) assess ADB’s support for governance in Nepal.

B. Macroeconomic and Public Policy Specialist (3 person-months) 7. The Consultant is required to have substantial in-country knowledge and experience of Nepal’s policies, programs, and their reforms. He/she should be familiar with ADB’s operations and development issues and the Government structure in Nepal, particularly key issues relating to macroeconomic performance, public resource management, the political economy landscape and the current political changes. Working knowledge of evaluation approaches and methods is required. Below are his/her detailed tasks. (i) Collect and collate secondary and primary data on economic, social, and sector developments for the country overall and selected regions. Data collection and collation includes MDG achievements, poverty levels, economic growth, and relevant sector development achievements and outputs. (ii) Assist in identifying and arranging interviews/consultations with key contacts for strategic/policy and social sector issues. (iii) Assist the CAPE team in reviewing recent trends and performance of Nepal economy over the past 5 years. Assist in the sourcing and reviewing relevant documents on the economic and social situation in the country, government strategies and programs, and other reports and documents that are relevant to ADB's operations in the country. (iv) Analyze and interpret collated data and information, and prepare statistical tables, graphs and other forms of illustration as necessary for the CAPE report. (v) Review available literature on linkages between economic growth and poverty reduction at the national and regional levels. Assist in assessing the actual and potential role of various sectors in poverty reduction efforts. (vi) In the context of the macro-level assessments and top-down evaluation process assist in identifying key development constraints and challenges. Draw on continuing analysis by ADB’s Economics and Research Department of economic development and binding constraints in the Nepal economy both for the public and private sectors. (vii) Identify significant macro and sector reforms at the central Government and regional levels over the last 5 years and assist in identifying ADB’s role and contribution in supporting reforms. (viii) Assist the CAPE team in reviewing the selected programs of other development partners and asses the extent to which they complement and integrate with ADB’s program, in particular policy reform initiatives. (ix) Assist the OEM in developing and carrying out semi-structured interviews with relevant public agencies and development partners in Manila. (x) Prepare a report on findings to an outline agreed with the team leader and in a prescribed format.


C. Infrastructure Evaluation Specialist (2.5 person months) 8. This position requires in-depth country experience and familiarity with Nepal’s infrastructure sector, including rural and urban development as well as water and sanitation. Substantial knowledge of the issues, policies, programs, and sector reforms is another requirement. Working knowledge of evaluation approaches and methods is needed, together with an excellent grasp of crosscutting themes including poverty reduction. The detailed tasks are given below: (i) Review the evolution and key development milestones of Nepal’s infrastructure sector from 2003 to present and other relevant years as required, particularly in relation to the changing social, political, and economic context, and analyze key sector challenges and issues. (ii) Assess Nepal’s infrastructure sector, particularly the performance of ADB’s sector strategies and programs, key issues/challenges, and opportunities and constraints. (iii) Assess the strategies, priorities, and programs of the Government and analyze the positioning of ADB’s infrastructure sector strategies and assistance with respect to the country contexts and other criteria, including their linkage and results in poverty reduction.. (iv) Conduct rapid assessments of selected ADB loans, technical assistance and grants in the sector as indicated in the evaluation approach paper. (v) Assess the actual and potential role of ADB’s support for the infrastructure sector in relation to poverty reduction efforts in Nepal. (vi) Prepare questionnaires for the related topics based on the questions prepared by the team leader, and conduct interviews and focus group discussions in the assessment of the performance of ADB’s sector strategies and assistance. (vii) Identify key lessons, challenges, and opportunities in the transport, communication, urban and rural development sectors, and provide recommendations for consideration by ADB in its future country strategy for the infrastructure sector in Nepal. (viii) Prepare a report on the assessment of the performance of ADB’s sector strategies and assistance in the infrastructure sector in a format to be agreed upon with the team leader. (ix) Perform other tasks that may be assigned by the team leader in the context of the assessment of the infrastructure sector for the CAPE. D. Research Associate (3 person months) 9. The research assistant should have experience in applied research, an understanding of aid agency operations, good analytical and writing skills, excellent computer skills with sound knowledge of electronic databases and statistical analysis He/she should also have good interpersonal skills and the ability to work independently and accurately. Below are his/her responsibilities. (i) Provide analytical support and assist the team leader and international consultants in the preparation of the Country Assistance Program Evaluation (CAPE) for Nepal.


(ii) Collect and assist in the review of relevant ADB documents produced by OED and other departments and offices in ADB, including current procedures, strategies, policies, guidelines, and economic and sector work related to Nepal. (iii) Assist the team leader and international consultants in identifying, gathering, and reviewing alternative sources of information relevant to the CAPE. (iv) Gather and process data relevant to the CAPE; prepare statistical tables, charts and other forms of illustration as may be needed. (v) Assist in analyzing the findings and synthesizing qualitative information relevant to the CAPE. (vi) Assist in the preparation of the sector assessments. (vii) Assist in other study related activities as may be required by the team leader.