Poor connectivity is a key development constraint in Nepal, one of the world’s poorest countries. This was most glaring in 2004 in the hill and mountain districts where poverty was linked to poor road connectivity and corresponding high transport costs. At 56%, poverty incidence in these districts during the period was more than double the national average of 23% and significantly above the 44% average in the rural areas.
To help address the situation, the Asian Development Bank (ADB) approved a $40 million loan for the Decentralized Rural Infrastructure and Livelihood Project in September 2004. The project was designed to help reduce rural poverty in 18 very poor and remote hill and mountain districts, as impact; and widen access to social services and economic opportunities, as outcome. Formulated during a period of conflict, it also aimed to help address the root-causes of the conflict, which included lack of employment opportunities, limited access to the market and government services, poor community infrastructure, and low level of community awareness in the rural areas.
In October 2011, ADB approved an additional $18 million loan and $7 million grant to extend the project activities that were performing well. The additional financing scaled up the physical works to meet the infrastructure needs in the 18 project districts. The project’s intended outputs were subsequently enhanced to include (i) rural livelihood improved, (ii) capacity and decentralized local governance enhanced, and (iii) rural transport infrastructure extended and maintained, and (iv) project management improved.
Despite a few shortcomings in project formulation and due diligence, the project was implemented mostly as planned and without major changes to the design or scope. Activities associated with road maintenance, construction of community infrastructure, employment generation through work in building groups, raising awareness of savings and credit schemes and improving access to microfinance, and mandatory provisions for including women and excluded groups in project activities were innovative in Nepal’s rural development context.
By completion, the project had provided 11.9 million person-days of construction jobs and livelihood skills training to 7,575 persons. A total of 527 kilometers (km) new roads and 29,314 running meters of trail bridges were built while 249 km of other roads were rehabilitated, and 1,273 km were maintained under the additional financing stage. Classrooms, health posts, and community and market centers were likewise constructed. A microfinance access program was piloted in 9 districts and savings and credit groups were organized or strengthened. The foregoing activities helped improve rural incomes and livelihoods as well as enhanced the access to market and social services of 639,764 persons.
As a result, the average annual income per household in the road subprojects’ zone of influence rose by 36% between 2007 and 2016. Passenger transport costs dropped by 42.1%. Similarly, freight transport costs decreased by 80%. Freight volume grew by 29% from its 2007 level. These gains contributed to the decline in the project districts’ average poverty level to 38.7% in 2011 from 41% in 2004.
Women and the poor and excluded groups comprised a significant portion of the project beneficiaries ─ 42.91% and 60.82%, respectively, of the livelihood training participants. In addition, 67% of the building groups mobilized by the project were from excluded groups, 40% of whom were women and 27% were men. Significant capture by women and excluded groups of project benefits reflected the overall remarkable gender equality and social inclusion (GESI) performance of the project, which completed 89% of its planned GESI activities and achieved 100% of its GESI quantitative targets.
The project had the Department of Local Infrastructure Development and Agricultural Roads as executing agency and the 18 district development councils as implementing agencies.
