Building a Peaceful, Just, and Prosperous New Country

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Nepal is a country at a crossroads, emerging from a decade-long conflict that formally ended in November 2006 and now transitioning from conflict to peace and from a monarchy to a republic. Growth rebounded to 4.7 percent in fiscal year (FY) 2008 but the next few years are critical if Nepal is to build on this success, managing its transition while confronting long-standing development challenges at a time of global economic downturn. multimedia


During a post-conflict phase, in which rapid delivery of a "peace dividend" is critical to establish or maintain the credibility of the new government, the challenge is to:

  • Generate employment and rehabilitate infrastructure in rural areas devastated by severe drought and over two decades of conflict; and

  • Strengthen local governance to foster rule of law.


The International Development Association (IDA) has made poverty reduction its main objective for its activities in Nepal. As of January 2011, Nepal’s portfolio consisted of 23 active IDA operations and trust funds with net commitments of US$ 1,085 million. IDA’s program during June 2009–June 2011 builds on the areas that have shown to be the most robust during conflict and that are well suited to Nepalese conditions. The overarching goal is to promote the complementary processes of peace and development.


  • Net primary enrollment in schools has increased from 83 percent in 2003 to 94 percent in 2010. The share of girls increased from 46.5 percent to 49.5 percent during the same period.

  • The maternal mortality rate was halved from 538 in 1996 to 281 in 2006 per 100,000. The infant mortality rate dropped from 110 per 1,000 live births in the early 1990s to 48 in 2006. Full immunization coverage rose from 43 percent to 83 percent of the total population during the same period.

  • The Rural Water Supply and Sanitation Project increased the coverage of potable water from 71 percent in 2002 to 77 percent in 2006 while access to sanitation has risen from 46 percent to 53 percent between 2002 and 2010. Clean water and better hygiene have helped reduce diarrheal disease morbidity among young children by at least 10 percent.

  • Motorized and non-motorized trips by beneficiaries have increased by more than 20 percent and travel times have dropped from an average of 2.6 hours to 32 minutes—a 79 percent saving in time after implementation of projects.

  • The Poverty Alleviation Fund (PAF) has demonstrated that even modest amounts of resources provided to community-led development initiatives can help many poor families get on a sustainable path out of poverty. Results indicate that incomes rose at least 15 percent in two-thirds of households served by PAF. Average income grew 82.5 percent in real terms and 182 percent in nominal terms. An independent impact evaluation also attributes a 31 percent growth in consumption over a two-year period to PAF.

  • Since 2003, the World Bank has also been supporting the expansion of Nepal’s rural micro-hydro electrification program, helping increase rural access to electricity. Approximately 40,000 households already benefit from these community schemes, built and operated in partnership with local communities.


A large number of donors are active in Nepal. Currently IDA, the UK’s Department for International Development, and AusAID of Australia are pooling funds to support the health sector program, and intend to expand access to, and increase the use of, essential health care services.

Toward the Future

The broader governance and anti-corruption agenda is part of the focus on building the new state. IDA will support efforts to enhance transparency and accountability and strengthen citizens’ voice and engagement. This support will include “demand” side approaches to building good governance from bottom-up and “supply” side capacity building of public agencies to respond effectively to the emerging demands. Social accountability tools and other non-lending technical assistance will be the core program in this area and will be largely supported by the IDA-managed Governance Partnership Facility and other donor trust funds.