5: DFID Policy and Approach to Development Assistance in Nepal

In line with international development targets, the UK DFID believes that with the right policies and interventions, the incidence of poverty can be significantly reduced in Nepal within 10-20 years. In order to support this process, DFID aims to create a context in which pro-poor policies and effective sector programmes are implemented effectively by key stakeholders (government, donors, non-governmental actors…) in a coordinated way.

Addressing what it sees to be the root causes of poverty, DFID seeks in particular:

• support for broad-based economic growth through better infrastructure and more effective management of natural resources;
• improved governance and accountability of government (institutional pluralism and the rule of law) and more empowered communities;
• more co-ordinated donor effort in health and education, focusing on the rural poor;
• improved opportunities for rural livelihood and enterprise development through effective implementation of the Agriculture Perspective Plan (APP), and better exploitation of off-farm income and revenue opportunities in key areas of growth potential;
• to mainstream gender concerns throughout the programme, aiming at enhancing women's status.

Rural Livelihoods
DFID, in collaboration with Government and donors, seeks:

• to reduce institutional, technical and social blockages in agriculture, in collaboration with the Asian Development Bank and the World Bank, through effective implementation of the APP, and of the Hill Agriculture Research Project (HARP) and Seed Sector Support Project. It is trying to raise understanding of social constraints in agriculture (e.g. land holdings and labour practices) and is working on a draft rural livelihoods strategy for Nepal;
• through the Nepal UK Community Forestry Project (NUKCFP), to enhance the contribution of community forestry management to sustainable rural livelihoods, building on lessons from the existing community forestry project: encouraging government to adopt a more co-ordinated approach; exploring communal management of other assets;
• to improve Nepalese capacity to carry out integrated social development work and tackle deep seated social problems such as bonded labour;
• to improve access to off-farm income through small-medium scale enterprise development;
• to improve access to services and markets in remote areas incorporating selected feeder roads and local infrastructure, and in co-ordination with other donors (e.g. through the Rural Access Project).

UK support to natural resources research in Nepal through the bilateral programme is long-standing. Traditionally, support has been focused on the hills, partly for historical reasons and partly because farmers in the hills tend to be poorer than those in the terai, or low-lying plains. Of special significance, these regions were recruitment areas for Gurkha soldiers and areas where the British army supported Gurkha reintegration programmes after service. However, given national priorities to increase food production in high potential areas in the context of a chronic national food production deficit, a careful balance must be struck between support for poor hill farmers in less productive areas and support for increased overall production in areas of high potential, across income groups.

Nepal is a country that depends on the national production of rice (the key staple food consumed in the terai) and maize (the staple in the hills). However, the balance between import and export of food, and specifically rice, has shifted with Nepal's failure to produce enough food for its own needs. In this context, agricultural research and extension are vital to improving productivity through the development of appropriate technologies, and through this reducing poverty and improving livelihoods and rural development in Nepal. HARP, a key plank of DFID support to the agriculture and natural resources sector in Nepal, responds to this priority in the poorest areas with low and variable productivity (the hills) by providing incentives to encourage the increased development orientation of research and extension. HARP aims to establish new arrangements for long-term support to hill research, and create an effective and sustainable research system that can meet demand.