Announcement of IDA Assists Rural Development Project in Nepal with Eleven Million Dollars Credit on June 25, 1979

FOR IMMEDIATE RELEASE •World Bank 1818 H St_reet, N.W., Washington, D.C. 20433, U.S.A.• Telephone: (202) 477-1234 IDA NEWS RELEASE NO. 79/103 June 25, 1979 IDA ASSISTS RURAL DEVELOPMENT PROJECT IN NEPAL WITH $11 MILLION CREDIT The International Development Association (IOA), the World Bank's soft-loan affiliate, has approved a credit of $11 million to Nepal for a comprehensive rural development project that will raise agricultural produc- tion levels to a point whereby farmers will be able to meet family subsistence needs. The $13.5 million project will be carried out in the Mahakali Hills districts of Dandeldhura, Baitadi, and Darchula. The project calls for up- grading minor irrigation works, strengthening of agricultural and livestock services, and expanding credit and farm input programs for agriculture and cottage industries. Fruit trees and vegetable seed will be supplied to aid horticultural development, and programs will be instituted for animal health and buffalo breeding • • Irrigation schemes will be developed for about 700 hectares (ha) of hill terrace land, and for another 700 ha of gravity-fed irrigation schemes on river valley and lower terrace land. Some 225 shallow drinking water wells will be' upgraded. Three small hospitals and 25 health posts will be built or improved, and some 110 lower and 15 upper secondary schools will be upgraded. About 22 community centers, 19 sub-post offices, and 50 postal relay stations will be constructed. About 250 kilometers (km) of main trails and 340 km of secondary trails will be upgraded. and 128 timber and 19 suspension bridges will be constructed. The project also provides for establishing a divisional erosion control office and a project headquarters. A study will be conducted on the potential and prospects for local cottage industries. Staff of the Depart- ment of Cottage and Village Industries as well as artisans engaged in wool weaving will receive training. At full project development by 1990, crop production is expected to increase by between 25-30% and non-farm incomes will improve by between 50-130%. Livestock increases should result in more milk, meat, wool, hair, and dung. Most products will be consumed on the farms so that family sub- • sistence levels will be raised from the current 300 days at minimum subsis- tence and 260 days at average subsistence to 410 and 330 days, respectively. NOTE: Money figures are expressed in U.S. dollar equivalents. . .. I  - 2 - Increased production wi 11 help reduce under-employment on farms. • Over the project life, about four million days of employment will be created, mainly in construction. It is expected that the project will also help slow permanent migration from the area, thus reducing population pressure on limited resources elsewhere in Nepal. At full development, the average in- come of the poorest group is expected to increase from about 17% of the national level to 25%. The United Nations Development Programme is providing $1. 1 million in co-financing. The Government of Nepal is supplying an additional $1 .4 mill ion. The IDA credit is for 50 years, including 10 years of grace. The credit carries no interest, but bears a service charge of 3/4 of 1% per annum to cover administrative costs. - 0 - • • FOAM NO. 1121 (5-76) T E C HN I CA L D A T A • PROJECT: COUNTRY: TOTAL COST: IDA FINANCING: Second Rural Development--Mahakali Hills Kingdom of Nepal $ J 3 . 5 mi l l ion $11 million, standard IDA terms OTHER FINANCING: United Nations Development Programme, $1. 1 mill ion Government of Nepal, $1 .4 mill ion JMPLEMENTING ORGANIZATION: Central Coordination Committee Ministry of Home Panchayat Rastriya Panchayat Bhawan Singha Du rba r Putal i Sodok, Kathmandu, Nepal. PROJECT DESCRIPTION: It consists of: (a) upgrading agricultural and livestock extension services; (b) expanding agriculture and cottage industry credit programs, and strengthening Sajha cooperatives; (c) expanding horticul- ture by providing fruit trees and vegetable seed; (d) establishing animal health and buffalo breeding programs; (e) developing and improving about 700 hectares (ha) of hill • and terrace irrigation schemes, and about 700 ha of river valley and lower terrace irri- gation schemes; (f) upgrading about 225 shallow drinking water wells; (g) constructing and improving three small hospitals and about 25 health posts, and providing increased staff, drug supplies, and medical equipment; (h) upgrading about 110 lower and 15 upper secondary schools; (i) constructing about 22 community centers, improving district accounting staff, and training local officials and staff; (j) providing furniture and fittings for post offices, and constructing about 19 additional sub-post offices and about 50 relay stations; (k) upgrading about 250 km of main trails and about 340 km of secondary trails, and constructing about 128 timber and 19 suspension bridges; (1) es- tablishing a divisional erosion control office and undertaking protective measures for roads and trails, and other infrastructure; (m) improving cottage industries through a study to determine the potential and prospects in the area, and through training staff and those engaged in wool weaving; and (n) establishing a project headquarters and providing staff, equipment, and technical assistance. PROCUREMENT: Procurement of equipment, furniture, and vehicles ($908,000) in contracts of over $100,000, will be through international competitive bidding in accordance with IDA guidelines. Orders of under $100,000 will be purchased under satisfactory government local tender procedures. Civil works ($5.8 million) will be undertaken by the ministry concerned, using local labor, with the exception of works on major irrigation schemes ($659,000), which wil 1 be subject to local competitive bidding. CONSULTANTS: Consu,tant services will be provided for project • implementation . ECONOMIC RATE OF RETURN: ESTIMATED COMPLETION DATE: 1984 - 0 -