Government of Canada

Foreign Affairs, Trade and Development Canada


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International development projects in Nepal

International development projects in Nepal

CIDA disbursements in Nepal: 2011-2012

CIDA disbursements in Nepal
Amount in $M
Long-term development assistance
Total 28.88
Portrait of a Nepalese girl carrying a bundle. © ACDI-CIDA/Pat Morrow


Nepal has seen modest development progress over the past 15 years: poverty rates have declined steadily; child mortality and tuberculosis infections have been reduced by half; and 90 percent of children are now initially enrolled in school.

But Nepal still ranks 157 out of 187 countries on the United Nations Development Programme's 2012 human development index, and just more than half of Nepal's population lives on less than US$1.25/day. Although remittances and a real estate boom have led to economic growth in the cities, the economic conditions in rural areas, home to about 90 percent of Nepalis, have not improved significantly in recent years. The 2009 economic downturn reduced both remittances and the vital tourism industry, threatening economic growth.

Challenges such as poor market access and limited transportation and energy-distribution systems contribute to low productivity, notably in agriculture. Food insecurity is rising, largely driven by inflation in food prices and uneven rainfall. In the longer term, glacial melting brought on by climate change threatens food and water supplies.

Nepal's civil war ended in 2006, opening new opportunities for economic and social development. The reconciliation process has been slow however, and ongoing ethnic tensions and political and social disparities pose a continual threat to peace. Nepal held a reasonably free and fair national election in 2008, producing an elected constituent assembly widely inclusive of gender, caste, and ethnicity. Nevertheless, Nepal's democratic processes and public institutions are in their formative stages and will need to be strengthened.

As part of the Government of Canada's Economic Action Plan 2012, Canada is restructuring and streamlining its operations. By March 2013, all funding for country-to-country (bilateral) programs in Nepal will end and all existing project and contract work will be completed. Nepal will continue to remain eligible for support through The Multilateral and global programs (including international humanitarian assistance when needed) and Partnerships with Canadians programs.

Thematic Focus

Canada's international development programming in Nepal is closely aligned with the country's development strategy (PDF, 1.11 MB, 235 pages), which aims to promote sustainable peace through rapid economic growth and improved social inclusion, decentralization and community-led development.

The goal of Canada's international development program in Nepal is to stimulate sustainable economic growth.

Economic growth

Canada supports efforts to strengthen community-led rural development, including the promotion of local entrepreneurs. In particular, Canada, through support to the Local Government and Community Development Program (LGCDP), will help Nepal build roads, develop irrigation systems, and support rural electrification to ensure communities have the necessary infrastructure for economic development and growth to take root.

Selected examples of expected results from LGCDP
  • Some 2,500 kilometres of roads will be built or repaired, increasing access to markets
  • Irrigation systems will be developed or rehabilitated in some 1,500 villages
  • Some 300 local government officials will be trained in how to support community-driven development planning

Progress on Aid Effectiveness

Nepal adheres to the Paris Declaration on Aid Effectiveness (PDF, 317 KB, 23 pages). The Government of Nepal's 2009 foreign aid policy (PDF, 219 KB, 23 pages) explicitly endorses the aid effectiveness principles of country ownership, alignment and harmonization.

Achievements 2010-2012

Economic growth

  • Over three years, contributed to 30,000 community infrastructure projects benefitting approximately two million people. This work included support for 12,000 new or upgraded rural roads to allow isolated villages to better access markets.
  • Helped increase average household incomes, for a cumulative total of more than 12,000 households, by approximately 150 percent, from $72 to $191.
  • Supported the creation of 1,796 new micro-entrepreneurs and production increases for 2,714 existing entrepreneurs.

Achievements 2009-2010

Economic growth

  • Helped build or repair 9 irrigation systems, 6 drinking water supply systems, 11 public schools or health posts, 7 community buildings and 3 agricultural roads identified by communities as priority needs
  • Helped increase average household income by 54 percent, from 42,199 rupees to 65,137 rupees, for more than 55,714 households
  • Helped improve average agricultural production by 118 percent for vegetables, 32 percent for spices, 23 percent for fruits and 23 percent for milk in these communities
  • Helped increase the proportion of participating community-based organizations operating with audited profits and cost recovery from 40 percent to 80 percent

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