Report No. 7498-NEP Nepal Social Sector Strategy Review (in Two Volumes) Volume I: Overview and Summary April 19, 1989 Asia Country Department I FOR OFFICIAL USE ONLY Document of the World Bank This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. Exchange Rate Rs. 22.1 = US$1 May, 1988 Rs. 25.7 - US$1 February, 1989 Fiscal Year His Majesty's Government of Nepal July 16 - July 15 FOR OFFICIAL USE ONLY NEPAL - SOCIAL SECTOR STRATEGY REVIEW VOLUME I - OVERVIEW AND SUMMARY Table of Contents Page No. PREFACE ............. ...................................... ii EXECUTIVE SUMHARY ................................... . . ........... iv I. CURRENT STATUS-THE STATE OF SOCIAL DEPRIVATION ......... .......... 1 A. Introduction ....... 0.......................................... 1 B. Poverty and Incomes . ........................................ 2 C. Health and Education . ....................................... 4 D. Population ................................................. 6 II. THE OUTLOOK FOR THE FUTURE ....................................... 8 A. Population Projections ...................................... 8 B. Labor Force. ............................................... 9 C. Incomes . .................................................. 10 D. Food Balances ............................................... 12 E. Land Pressure and Migration . . . 14 III. GOVERNMENT STRATEGY ..... ..... ............. 17 A. Overview . ...................... . 17 B. Education .. . ............... 18 C. Health . ............. 22 D. Population . ..... ................ . 24 E. Nutrition .. . ............. 25 F. Poverty Alleviation ... .............................26........ 26 G. The Basic Needs Program ..................................... 26 IV. INSTITUTIONAL ISSUES AND COMMON THEMES .. 4 ..... 28 A. Service Delivery Problems .................................. . 28 B. Resource Constraints ....................................... . 29 C. The Role of Aid .. ........................................... 30 D. The Planning and Budgeting System . . .. 30 E. Decentralization .... . . ...................................... 31 F. Non-Government Organizations ............................... . 31 V. INTERSECTORAL LINKAGES ........................................... 32 A. Health and Population .. ... 33 B. Education . .... 34 C. Poverty, Food Supply, and Agriculture .............. . 35 D. Environment ..... 37 E. Conclusions ..... 38 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. - ii - SOCIAL SECTOR STRATEGY REVIEW Table of Contents (Cont.) Page No. VI. PRIORITY AREAS FOR ASSISTANCE ...... .. .................... . 39 A. The Framework for Assistance Strategy ....................... 39 B. Priority Areas ................................ . ..... 40 C. Proposed Assistance Program ............................... .. 43 ANNEXES Annex 1 - The Implications of Population Growth 1990-2010 Annex 1.1 - Population Projections Annex 1.2 - Income Projections Annex 1.3 - Projected Food Balance and Calorie Availabilities Annex 1.4 - Projected Population Distribution and Densities VOLUME II - SECTOR REVIEWS Part I - Education in Nepal Part II - Population and Health Part III - An Assessment of Poverty in Nepal Technical Annexes This report is based on the work of a World Bank/IDA mission to Nepal in May, 1988, which consisted of W. James Smith (Mission Leader), Frank Farner (Education), C. Ok Pannenborg (Health and Population), Howard Barnum (Population), Peter Nicholas (Poverty Alleviation Programs), John H. Duloy (Poverty and Incomes, Consultant), Ian P. Morris (Education, Consultant), and Ms. Patricia Daly (Health, Consultant). - iii - NEPAL SOCIAL SECTOR STRATEGY REVIEW PREFACE Objectives and Structure 1. The objective of this report is to provide a framework for discussion of assistance strategy in the social sectors in Nepal over the coming five years. A combined sector analysis of education, population, health, and poverty and incomes issues was undertaken. The review sought to reach an understanding of the current status and issues within each of the sectors, of the programs of His Majesty's Government of Nepal (HMG), and to recommend priority areas for support. A second objective was to examine the dynamics at work within the social sectors, and their linkages with the process of economic development in Nepal more generally. 2. The report is presented in two volumes: Volume I - Overview and Summary Volume II - Sector Reviews Part I - Education Part II - Population and Health Part III - An Assessment of Poverty in Nepal The overview volume summarizes the current status in each of the sectors, presents some projections of the consequences of expected population growth over the next 30 years, and discusses common issues which arise across the various sectors. It also pulls together the individual sector analyses, and concludes with a discussion of priority areas for assistance. The individual sector reviews in Volume II present more detailed data, an in- depth critique of R4G's policies and programs, and more detailed discussion of specific proposals for Government and external assistance strategy. - iv - EXECUTIVE SUMMARY 1. Nepal is extremely poor, with only Ethiopia having a substantially lower per capita GDP. Almost all indicators of social deprivation are also among the very lowest in the world: between 40 and 602 of the population live at income levels below that estimated to be required for a minimum caloric intake; life expectancy (52 years) and infant mortality (115 per 1000) are similar to levels found in the worst parts of sub-Saharan Africa; and a majority of the population suffer from the effects of malnutrition and/or debilitating diseases. (Volume I, Chapter 1). 2. The country is afflicted with a serious poverty of human resources. Only about 342 are literate (152 of females), and it is estimated that less than 82 of the post-school age population have completed secondary education. Lack of education on this scale severely limits the capacity to develop the economic base, or to make progress in other areas (eg. hygiene or family planning behavior). At the same time Nepal is already seriously overcrowded relative to the existing resource base, and without a major population control effort, population will double by about 2015, and double again in the following 28 years. There is little or no prospect of significant development taking place until these problems are overcome. (Volume I, Chapter, 2). 3. The expected path of population growth critically affects the development prospects for Nepal. Projections indicate that by 2005 new entrants will be joining the labour force at a rate of about 10,000 per week, resulting in net labour force growth of about 300,000 anually - roughly equal to half of total off-farm employment in the last census. Given the facts that 902 of the work force is engaged in agriculture and that agricultural land is already approaching saturation, this poses a tremendous challenge to the economy to create off-farm employment and income-earning opportunities. 4. If population growth continuer unabated, there is little prospect of per capita GDP rising above US$ 200 by 2010, even with moderately optimistic assumptions regarding GDP growth. Similarly, in the absence of a major transformation of the agricultural sector, food production will be unable to keep pace with population growth, and average per capita food availability will fall to about 302 below minimum daily requirements in the next 25 years - implying the need for substantial food imports. Government Programs 5. HMG has come a long way in tackling problems of social deprivation in the last 30 years. There has been a major expansion of education capacity - especially at the primary level. A substantial populr ion control effort was launched in the early 1980's, mainly by sterilization; and a number of specialized health programs have been established - for example, for malaria eradication and immunization. Pt Ab- - V - 6. However, the Government was starting from a very low base, and progress has inevitably been slow. About half of school age children are still out of school, and the majority of the population never receive any formal medical care. The population program, after a good start, has lost momentum: only 17! of married women practice contraception - and the vast majority of those are accounted for by sterilizations performed after having already had 4 to 6 children. 7. Despite good intentions and reasonable policies, most operations in the social sectors are hampered by pervasive service delivery problems - especially at the periphery. These include (i) weaknesses in management, supervision, and staffing practices; (ii) inadequate finance, shortages of supplies and staff; and (iii) the absence of overall strategies and aid co- ordination, resulting in duplication of effort and ineffective use of resources. (Volume I, Chapter 4). 8. Recognizing the continuing poor status in the social sectors, HMG has recently launched a Basic Needs Program intended to attain minimum Asian standards of health, education, and nutrition by the year 2000. The aims of the program are laudable and appropriate. However the specific goals are very ambitious, and the program does not as yet address the fundamental service delivery problems that need to be overcome if the program is to be effective. (Volume I, Chapter 3). Specific Conclusions Education 9. The priority at this stage needs to be on primary and non-formal education - for the contribution it can make to agricultural productivity, to the ability to take advantage of imployment opportunities, and to the success of health and population effurts. Many potential students remain outside the school system, and in designing the expansion of the school system there is a need to clearly understand the determinants of non- attendance. In addition to new classrooms, the quality of the curriculum and of teaching need to be upgraded, and large numbers of new teachers trained. There are serious financial constraints in the education sector - for example, it is estimated that HMG would have to approximately double expenditure on primary education (from its current level of about $28 million p.a.) to achieve universal enrollment by the year 2000. (Volume II, Education, Chapters 2 and 4). 10. Nepal also needs to substantially expand secondary education capacity (currently less than 20X of the high-school aged population are in school) and to redress the imbalance of effort and resources between secondary (13X of the education budget) and tertiary education (24! of the education budget, but only 3X of students). In addition there is a need to sort out serious management and institutional problems which affect the university system, and to rationalize the system of exit and transition points for secondary education. - vi - Population 11. A major national effort is required if Nepal is to succeed in addressing the population problem. In particular there needs to be a shift to the use of temporary methods of contraception. This requires much more complex sustained support to users on an outreach basis. This will involve invigorating the family planning service delivery system with a major injection of funds, training, and personnel, strengthening program management, and, above all else, the use of mostly female health and family planning workers (at the moment about 90S are male). (Volume II, Bealth and Population, Chapters 6 and 11). 12. This effort needs to be augmented by a number of supporting activities, including improved maternal and child health care, increased female education, and measures to enhance the economic status of women - all of which have been shown to contribute to lower fertility. (Volume I, Chapter 5, and Volume II, Part II). More generally, at the highest levels of Government there needs to be strong recognition of, and commitment to, the central importance of population activities. Without this it is unlikely that the agencies and programs involved in the sector will receive the necessary support. Health 13. There is a need to resolve a constellation of institutional problems which hamper the health servicet particularly with respect to integration of vertical programs and the degree of decentralization to regional and district levels. The same service delivery and staffing problems apply to the health service in general as to the family planning program. Major increases in health manpower are also required (probably of the order of 4 or 5 times current levels), and training has to be linked more closely to service delivery. (Volume II, Part II, Chapters 9-11). Resource planning and aid co-ordination are particularly in need of strengthening in the health sector. Nutrition 14. It is estimated that 702 of children suffer from some form of malnutrition, and about 602 of the population suffer from goitre (caused by a lack of iodine), with a correspondingly high incidence of disability and retardation. While the majority of malnutrition is due to insufficient food availability, there are also serious deficiencies of such trace elements as iron, and Vitamin A. Poverty 15. The problem of poverty in Nepal is largely one of an aggregate shortage of resources, rather than of distribution of wealth and income. Pervasive poverty thus needs to be tackled through a combination of increased agricultural productivity and off-farm employment creation. The fact that the vast majority of the poor are subsistence farmers with limited involvement in the cash economy suggests that poverty alleviation efforts will have to focus largely on agricultural productivity, at least in the medium run. - vii - 16. At the micro level there is evidence that there are structural problems which exacerbate the impoverishment of small farmers, especially in the hills. (Volume I, Chapter 5). There is scope for poverty alleviation through making use of intensive income-generating schemes in some areas, and improvements in the structure of credit, skills training, and agricultural extension. However, available evidence suggests that current agricultural extension and targeted credit programs often fail to reach the very poor. Further work is proposed to examine the dynamics of poverty, and to investigate the scope for targetted poverty alleviation measures. (Volume II, Part III). 17. A particular effort was made to take advantage of the inter- sectoral nature of this review. Analysis is presented (Volume I, Chapter 5) to demonstrate the linkages between advances in the social sectors and economic development more broadly, as well the mutual interdependencies among the various social sectors. Increases in agricultural productivity and employment will contribute markedly to improvements in health, nutrition, and population control; and conversely advances in population and health will materially affect the scope for economic growth. Above all education - especially of women - is a key determinant of progress in fertility reduction, health and nutrition behavior, and the ability to take advantage of income-earning opportunities. Priority Areas for Assistance 18. HMG is currently undertaking the following measures which would benefit from greater supports - a push to expand the coverage of primary education and a national literacy campaign, for which HMG needs assistance in designing a model for nationwide school system expansion, as well as substantial financial support; - a program to significantly improve health status by the year 2000, which will require sorting out the pervasive institutional problems, prioritizing programs, and working out a coherent expenditure program for the health sector; - a drive to bring down the population growth rate substantially by the end of the century, for which major assistance will be required to improve the service delivery system for family planning, and to revitalize the commitment to population control within HMG; and, - steps to reduce poverty - for which HMG needs help in formulating the income-generating components of the Basic Needs program, and in working up cost-effective targetted poverty alleviation measures. 19. It is pointed out (Volume I, Chapter 6) that at Nepal's current stage of development investments in these areas can provide some of the highest economic returns. At the same time financial requirements are substantial, commercial finance is not available in these sectors, and - viii - although there are many bilateral donors and specialized agencies active, additional institutional and financial support is required. 20. The following specific program of support is proposed: (i) a continuing program of support for expansion and quality improvement of primary and non-formal education; at least through the next decade; (ii) further effort in support of improved service delivery for family planning and maternal and child health, concent--ting particularly on outreach care at the periphery; (iii) sector work on the determinants of poverty, the linkages of incomes with broader development strategy, and on the success of various poverty alleviation efforts; (iv) assistance to HMG in developing a resource use strategy for the health sector, followed by an agreed program of donor support for the resulting investment plan; and, Cv) assistance in addressing the joint problems of secondary and tertiary education through a comprehensive study, to support an agreed program of reforms and investments. The proposed assistance strategy is discussed in more detail in Chapter 6 of the Overview report, and in the concluding chapters of each of the sector reviews in Volume II. NEPAL - SOCIAL SECTOR STRATEGY REVIEW Chapter I - CURRENT STATUS-THE STATE OF SOCIAL DEPRIVATION A. Introduction 1.01 Most Nepalis live in conditions of extreme poverty and social deprivation. The fact that such poverty in largely rural, and exists amidst spectacular mountain scenery, tends to mask it from the casual observer, and for this reason the extent of deprivation in Nepal is often underestimated. Nonetheless, the facts remain that average incomes (in cash and kind) are only about 38 cents US per day and that a large proportion of the population cannot feed themselves adequately; that nearly one-fifth of all children die before the age of five, and that for those who live, malnutrition, chronic illness, and disability are continuing facts of life. 1.02 In comparative as well as absolute terms, Nepal is one of the world's poorest countries - with only four countries having a lower reported per capita GDP. 1/ Other indicators of social welfare reflect a similar relative position, often rivaling those of sub-Saharan Africa. Table 1.1 below illustrates Nepal's relative position with respect to some key development indicators. Table 1.1: Indicators of Relative Underdevelop.ent - Selected Countries 1 Calorie Life Per Capita Infant Under-6 Avallability Expectancy oNP Mortality Mortality (Calories per (Years) (USY) (per 000) (X) capita per day) Ethiopia 46 120 155 88X 1704 Nepal 47 150 I80 20% 1997 Central African Republic 60 290 184 27X 2059 Zaire 62 160 100 20% 2161 Bangladesh s0 160 121 18X 1804 India 67 290 88 11% 2126 Thailand 64 810 41 Ss 2899 Sri Lanka 70 400 29 2X 2486 1/ According to the 1988 World Development Report (WDR). For consistency of inter-country comparisons all data drawn from the 1988 WDR (except under 5 mortality from the 1987 WDR); these may not be consistent with estimates cited elsewhere in the text, which were drawn from more recent surveys and reports. In only seven countries is life expectancy lower than in Nepal; and in only twelve are a child's chances of surviving the fist year of life worse than in Nepal. Food availability - measured in terms of calories per capita - is worse only in Bangladesh, Haf.ti, and a handful of sub-Saharan African countries. B. Poverty and Incomes 1.03 For the last 20 years the Nepali economy has been virtually stagnant, with per capita GDP growing at less than one per cent per annum. The agricultural sector, which accounts for over 60% of GDP, has been performing even more poorly - with average production of food grains increasing at only about 1.4% p.a. over the last 15 years. Yields have actually been declining, and what little growth there has been is accounted for by expansion into more and more marginal areas. The situation is, if anything, worsening as population growth puts continuing pressure on the resource base In general, and on food supplies in particular. 1.04 Perhaps as many as half of the population live in villages in the hills and mountains which are inaccessible by road, making development difficult and expensive. The young topography, difficult terrain, and extensive erosion place some natural limits on productive capacity. This, coupled with the underdeveloped state of modern agriculture and industry, severely limits the ability of the country to support itself. 1.05 The problem of poverty in Nepal is thus principally one of an aggregate shortage of resources. This manifests itself as extensive personal poverty, with about half of the population living at or just above starvation level. The average income (in cash and kind) is only 8 rupees per day - equivalent to about 38 cents US - and for about 37% of the population (some 6 million people) it is less than Rs. 6.5 per day (28 cents) - or not much more than the minimum estimated to be required for survival. 1.06 Poverty is concentrated primarily among rural people (who make up 97% of the absolute poor) - and the incidence of poverty is almost twice as high in the hills as in the terai; although a National Planning Commission survey (1983) found that everywhere except in urban areas and rural parts of the Central region, average family income was insufficient to meet consumption needs. If poverty is defined as the level of income needed to provide a minimum caloric intake (estimated in Nepal at 2250 calories per day), then about 40Z of the population live in poverty. If this is raised to US$200 per capita per year, a not unreasonable level, some 60% of the population would fall below the poverty line. This last result serves to emphasize the fact that with a flat distribution of income around a very low average, many who are not technically poor still have little more than the minimum income needed to survive. 1.07 Another aspect of poverty in Nepal is the absolute shortage of food - both for individuals and for the country as a whole. Food grain production has amounted to about 4.4 million tons anuually - equivalent to about 165 kg. of food per capita 2/ - or about 1550 calories per person per day. With the production of other foods (milk, vegetables, meat, etc.), this increases to an average output of about 1930 calories per person per day - versus an estimated requirement of 2250 calories. In theory this shortfall could be compensated for by imports - but the net flow of foodstuffs has tended to be in the other directior. - out across the Indian border. In any event most individuals do not have the resources to purcha6e additional food even if it were available. 1.08 The implication that individual familie3 are suffering severe food deficits is borne out by anecdoLal evidence at the village level. A typical poor hill far-tng fmnily of seven owns not much more than half a hectare of land, which produces about enough to feed the family for three months of the year. Almost half of their crop will go in payment of rent to the landlord. During a substantial portion of the year they will eat only one meal a day. The family must occasionally borrow from the landlord or moneylenders to meet catastrophic circumstances (eg. when crops fail, or medical attention is reqiuired), and the debt service on such loans is often equal to their entire ar^.-al rice production. In such a family there is continuing oalnutrition and illness, and it is almost a certainty that at least one child will die as a consequence of ill-health aggravated by malnutrition. Labor and Unemployment 1.09 Unemployment is low (below 5), although underemployment is estimated to be as high as 402. However it may not be particularly meaningful to talk of labor markets in the conventional sense in Nepal, where about 702 of production does not go through the cash etonomy. Although productivity is low, people are still working very hard for the little income that they do have. Due to the difficult conditions much labor is devoted to the carrying of water, fuelwood, and fodder. It is estimated, for example, that 162 of all human labor is devoted to fuel and fodder collection alone. In this labor-intensive environment children provide an important source of labor from an early age - according to the 1981 Census 572 of children between the ages of 10 and 14 are workers, with a relatively heavier work burden falling on the girls. Women 1.10 Women in Nepal live and work under particularly difficult conditions. While women are largely poor due to shared, common poverty, tLere is also an unequal distribution of resources and workload within the society. In the terai, where more orthodox Hinduism prevails, women's roles and opportunities tend to be tightly circumscribed. In the hills and mountains women participate more actively in productive and social relations, however they are more heavily burdened due to the greater difficulty in getting food, fuel, and water - which often involve walking 2/ Average annual production, last 4 years (1982-86), net food availability is 652 of production after milling, conversion, feed and wastage. - 4 - long distances - in addition to their agricultural and child-care responoibilities. In many cases the family food supply is insufficient to meet the energy demands created by their labor - especially during the pre- harvest 'hungry' months. This situation is exacerbated by the fact that most women in Nepal are either nursing or pregnant for much of their lives. C. Health and Education 1.11 There exists a fundamental poverty of human resources in Nepal which prevents the vast majority from participating ir. even the limited development that does take place. A corollary of this is that it is unlikely that substantial economic advances can be made until the fundamental constraint of an almost entirely uneducated and unhealthy population is overcome. Health and Nutrition 1.12 Infant mortality is about 113 per 1000 while under-5 mortality is estimated at about 165 per 1000; although in some areas of the country this is as high 300 per 1,000, that is, in such areas one child in tbnree is dying before the age of 5. Many of these deaths are accounted for by diarrhoeal diseases, often complicated by malnutrition, and acute respiratory infections. Life expectancy remains very low (about 52 years), and the generally abysmal state of health is underlined by the fact that Nepal is one of the few countries in the world where the life expectancy of women (51) is less than that of men (54). The crude death rate has fallen from 27!1000 in the 1950's to about 15/1000 at the present, as a result in part of the increase in literacy and ease of communications, the expansion of health infrastructure, and the initial success of dedicated programs, such as those for malaria eradication, immunization, and oral rehydration. 1.13 Although many more people are living, they are probably suffering illnesses as much as ever. The principal causes of morbidity are diarrhoeal diseases, parasite infestations, upper respiratory infections, and the complications of pregnancy and childbirth. Although the incidence of malaria had decreased substantially by the 1970's, there has been a resurgence aggravated by insufficient spraying coverage, ecological change, and increased migration. 1.14 While the health system has expanded dramatically in the last 20 years, most people still never receive any formal medical treatment - either because it is not accessible to them, because they do not have adequate information about it, or because they do not believe that it can help them. The vast majority of pregnancies and births, for example, take place without any medical assistance - resulting in needless complications and infections - a breech birth, for example, almost certainly results in death for both the infant and the mother. One study found that in the survey area 50Z of fatalities from respiratory infections and other diseases could have been prevented if detected and treated - yet people prefer to stay at home and wait out the course of a disease, rather than walk several hours or days to a health post which may have neither supplies nor staff. Similarly, although an immunization program has recently been initiated, only 112 of children are fully immunized, SOZ have received no immunization at all, and immunizable diseases still account for a large proportion of morbidity and mortality among children. - 5 - 1.15 A national nutrition survey in 1975 found that 702 of children under six were malnourished In some form - 502 to the extent that their physical development was notably impaired. High levels of malnutrition among children are due to insufficient food availability, inadequate breastfeeding due to work constraints and the poor nutrition of mothers, and to the high prevalence of diarrhoeal disease. In combination with the absolute shortage of food, specific deficiencies of such nutrients as iron, iodine, and vitamin A result in a high prevalence of disability and mental and physical retardation. Iron deficiency among mothers (one survey found 78Z to be clinically anemic) perpetuates ill health among the children born to them. A lack of iodine in the diet leads to a very high incidence of goitre throughout the population (about 60Z), and causes some children to be born deaf, mute, or suffering the more severe signs of cretenism. Another significant cause of disability is vitamin A deficiency, which can eventually lead to blindness. Education 1.16 Literacy has been increasing rapidly - from only 32 in the 1950's to about 342 in 1986 3/ - however this means that two-thirds of the population are still illiterate. This scale of illiteracy has major ramifications on the pace of development, and on health and population behavior. Of particular concern is the fact that literacy among females is only 13x. 1.17 Despite substantial progress, a large proportion of children remain out of school. Enrollments are officially estimated at about 822 for primary school, and 20? for secondary school. However enrollment data maybe overstated due to (a) over-reporting, (b) the high rate of drop-outs, and (c) because many students enrolled do not actually attend. A recent survey suggests that about half of the boys and a third of girls (between the ages of 6 and 10) are actually enrolled - and that of those initially enrolled, 35? drop out without completing the first grade, and over half drop out before completing primary school. While no accurate data is available on attendance it is clear that many students notionally enrolled - especially girls - do not actually attend - due to labor demands on their time, as well as social perceptions of the value of education. It is estimated that only 122 of 13 to 15 year olds have completed primary education, and that only 32 of post school-age females have completed secondary school, as opposed to 13Z of males. 1.18 While there are very few Nepalis with higher education, it is difficult to evaluate the impact of trained manpower constraints in the absence of any good data on employment and labor supply. Although there is clearly a shortage of trained personnel throughout the system, anecdotal evidence suggests that this is being overcome with the slow increase in throughput of the education system, but that severe shortages continue to 3/ Possibly over-reported since estimates are based on questioning rather than testing. - 6 - exist of low-level, semi-skilled, labor. The most serious effect of the very low level of eduication however, is the general inability to contribute to development and modernization - whether through the inability of most people to understand basic agricultural innovations, to take advantage of off-farm employment opportunities, or failure to grasp the basics of health, hygiene, and family planning. D. Population 1.19 Nepal's population is currently estimated at about 18 million, growing at about 2.7 percent per annum. The population is too large for the current economic base - as is evidenced by the extent of land pressure and the very low per capita food balances and national income. The average density is about 6 persons per hectare of cultivable land in the hills, and 4.5 in the terai - although it ranges up to 11 persons per hectare of cropped land in many parts of the hills. Similar densities are found in the delta areas of China and Bangladesh - but these have rich soils and produce two or three crops per year. Population pressure is also resulting in severe environmental degradation, and this in turn is aggravating land shortages, as productive land is increasingly lost to erosion and deforestation. The magnitude of these problems is getting worse (see Chapter 2) as limits to saturation are approached, and because the population is bound to keep growing for at least the next 20 years due to the large number of girls already born who are now approaching fertility. Fertility and Family Planning 1.20 Starting at the age of about 15, most women in Nepal are either pregnant or lactating through the majority of their child-bearing years. The total fertility rate (the average number of children born to a woman) is about 6.0 - the highest in South Asia. Although by law marriage is not permitted under 16, 402 of girls are married below the age of 14, as many as 7? by the time they are 10. It is also estimated that 401 of girls bear at least one child between the ages of 15 and 19. Although many recognize the desirability of limiting family size, they are unwilling or unable to do so due to economic need, failure to understand family planning options, or the unavailability of family planning services. 1.21 Surveys estimate that as many as 80? of women may have heard of family planning methods, and use of some form of contraception has risen from about 7 percent of the population in 1980 to almost 15 percent today - a substantial improvement, but still far below what would be required for effective population control. However, most of the increase has been due to sterilization rather than temporary methods, and since most are sterilized after having had more than four children, there is 'rery little impact on population growth. The idea of spacing births is not yet widely understood, and is practiced by very few. However, Nepal does not have the cultural and religious barriers to birth control that one finds in Bangladesh or Pakistan, and if incomes would rise, if families could expect a greater proportion of their children to survive, and if the Government could put into place an effective program to promote and support temporary methods - then there is the possibility that population growth could be effectively curbed. However, given the unlikelihood of real incomes rising - 7 - substantially enough to have a major impact on family planning decisions in the near future, efforts must concentrate on improving the service delivery systems. (see Volume IIM Population and Health). Settlement Patterns, Migration and Urbanization 1.22 The rural population is split evenly between the hills and terai, (about seven and a half million people each), with another one and a half million each in the mountains and in urban areas. Although fertility is highest in the hills, population has been growing fastest in the terai due to in-migration. There has always been substantial seasonal migration from the hills to the terai and to India for employment and trade during the dry season. However, with increasing land pressure, more and more families are migrating permanently as they find they can no longer support themselves farming subsistence holdings in the hills. Traditionally the dispossessed from the hills have moved to the terai, but with increasing land scarcity and resistance from earlier settlers, the terai is becoming saturated. The net result is that new emigrants must go to the towns - either in the hills or the terai. 1.23 Nepal is currently one of the least urbanized countries in the world, but urban growth - at over 8 percent per annum - is the highest in South Asia; and the largest terai towns are growing as fast as 20? per annum. Although this is admittedly on a low base, the future will clearly see a continuing and rapid shift towards urbanization, with consequent implications for urban poverty and unemployment (see following chapter). Evidence suggests that net external migration is approximately zero. However, data on migration are incomplete and imprecise, and a more reliable picture will not emerge until after the next census. Although concern is often expressed about the number of Indians farming in the terai and working in Kathmandu, these appear to be offset by the large number of migrants from the hills who leave the country, going mainly to India. -8- Chapter II - THE OUTLOOK FOR THE FUTURE 2.01 The previous chapter documents the current pervasiveness of social deprivation in Nepal. Unfortunately, the situation is deteriorating with continuing population growth. Quantitative analysis is presented in this chapter to demonstrate the implications of expected population growth for development prospects and living standards. This is done by drawing on population projections to forecast: (a) the growth in labor force and unemployment; (b) expected per capita incomes based on a range of assumptions regarding growth in GDP and income distribution; (c) food balances and per capita food availability based on various scenarios for growth in agricultural productivity and output; and, (d) settlement patterns and the availability of arable land. These are not refined forecasts but rather plausible scenarios - based on reasonable assumptions - which reflect the magnitude of the emerging problem, and place some reasonable bounds on what may be expected to happen in Nepal over the next twenty years. (see Annex 1 for details of projections discussed in this chapter). A. Population Projections 2.02 Three sets of population projections have been prepared, corresponding to pessimistic, optimistic, and most likely assumptions with respect to the rate of change in such variables as fertility, infant mortality, and life expectancy. These are described in detail in the accompanying paper on population (Volume II, Part II). The underlying assumptions, which are summarized in Table 2.1, involve the Total Fertility Rate (TFR) declining from a current level of 5.8 to betweern 2.9 (very optimistic) and 5.3 (pessimistic) - with the corresponding population growth rate ranging between 1.5Z and 2.7Z per annum by 2010. The expected case assumptions are somewhat conservative, and it is just possible that with an all-out national effort on population control, the more rapid decreases in fertility could be achieved. However the medium projections accurately reflect the mission's judgement of what may reasonably be expected given current family planning behavior, the state of HMG's programs, and the evidence of observed rates of change in other countries. The lower growth rates are only attainable if a major political and financial effort is put into population control over the next ten years. - 9 - 2.03 Table 2.1 shows the results of these projections: Table 2.1: Population Forecasts Through 2030 Fertility Population Scenario Rate Growth Rate Projected Population (milli.ns) 2010 2010 1985 2000 2010 2020 2030 Low Growth 2.9 1.5Z 16.5 23.7 28.6 32.5 36.4 Expected Case 4.4 2.42 16.5 24.4 31.2 39.7 47.6 High Growth 5.2 2.72 16.5 24.6 32.3 41.9 51.2 Under the expected scenario the population increases to 31.2 million by 2010 (from 16.5 million in 1985), and even under the optimistic scenario it rises to 28.6 million. The fact that there is not much variation between the projections over the medium term reflects partially the mission's conclusion that rapid improvement in population control is unlikely, and more importantly, the "momentum effect' of past population growth. This phenomenon is illustrated by the fact that under all scenarios the growth rate rises to over 2.5Z p.a. at least during the period 1990-2000. This is almost inevitable, since even if effective birth control were instituted today, due to past growth there are 4.1 million girls already born who are approaching fertile age, - that is, 50? more than all women currently of fertile age - in addition, more of these girls are living to maturity, and more of their children will live to maturity. The net effect is that under all scenarios there is at least a doubling of Nepal's population by 2020. B. Labor Force 2.04 This momentum effect has profound implications for the growth in the numbers of people who will be seeking employment. Under the expected projections, 4/ the labor force will double over the forecast period, as illustrated below: Labor Force 5/ (millions) 1985 6.7 1990 7.9 2000 10.3 2010 13.6 That is, by 2000 the labor force will be growing at a rate of about 300,000 per annum. To put this in perspective, in 1981 total non-agricultural employment amounted to only 606,000 persons. 4/ Labor force growth over the next 20 years is almost identical under all scenarios, since new entrants have mostly already been born. 5/ Labor force is defined here as 1OO? of males and 60Z of females between the ages of 15 and 59. Most studies in Nepal take all males and about half of females aged 10 and above. - 10 - 2.05 In the past the economy has to some extent been able to absorb marginal population growth though a combination of smaller farms, the opening of the terai, and labor market expansion. With the saturation of arable land (paras. 2.17-2.18), almost all of these new entrants will have to be absorbed in off-farm employment activities - a prospect of staggering proportions. By the year 2005 such new entrants will be joining the work force at the rate of 10,000 per week, posing a tremendous challenge to the Government and the economy. Given the limited scope for industrialization (and expansion of the public sector) this implies the need: ti) to start now designing means of expanding non-formal employment; (ii) for education and training to prepare people to take advantage of off-farm income-earning opportunities; and, (iii) to prepare for the possibility of having to cater to a large pool of urban unemployed. 2.06 Quite apart from the problem of insufficient income-earning opportunities for additional population, further growth will increase the dependency burden (from 7.5 million under-15 year olds currently to over 15 million by 2020) in terms of the number of children to be fed, clothed, educated, and otherwise cared for - thus substantially reducing the resources available to make the investments needed for longer run economic growth. At the same time, given that Nepal is almost certainly beyond the point of increasing returns to scale in the labor force, unrestrained population growth will only serve to reduce the capital-labor ratio and productivity in the longer run. C. Incomes 2.07 With extensive poverty already prevalent, with continuing population growth, and with lacklustre historical economic performance, there is reasor to be concerned with the prospect of increasing poverty in Nepal. In order to assess the likely range of outcomes, per capita incomes have been forecast on the basis of reasonable high (4.3? per annum), moderate (3.3Z p.a.) and low (2.7Z p.a.) estimates of GDP growth, in combination with various assumed rates of population growth. The most likely GDP growth estimate corresponds to the average achieved over the last ten years; while the high and low estimates correspond respectively to the best and worst sustained performance 6/ in the recent past. 6/ 2.7Z p.a. average over the 5 years to 1986/87, 4.3? over the last 4 years. - 11 - 2.08 Table 2.2 shows the evolution of per capita GDP under various assumptions, and details are given in Annex 1.2. Table 2.2: Proiected Per Capita GDP - 1995-2010 (Constant 1987 Rs per capita) Best Worst Conditions Expected Conditions 1988 - 3785 - 1995 4280 3990 3820 2000 4720 4130 3820 2010 5960 4460 3800 Under the expected conditions GDP per capita inches up at about 3/4Z per year in real terms, and is still only Rs. 4460 (US$200/capita) by 2010. Under the 'best' scenario (i.e. sustained high GDP growth and low population growth) there is a 57Z increase to about US$270 per capita by 2010: and under the worst conditions forecast, high population growth offsets relatively low GDP growth, and per capita income remains move or less stagnant around US$170 per capita. 2.09 The current flat distribution of income may not obtain in the longer run, firstly due to increasing urbanization and unemployment; secondly, due to increasing dispossession and impoverishment - especially in the hills - as population pressure and indebtedness push more small farmers off the land, with a potential transfer of assets to landlords; and thirdly, due to the process of increasing monetarization, trade, and industrialization, all of which increase the opportunities for accumulation of surpluses, and are often accompanied by a deterioration in the distribution of income. 2.10 In order to gauge the potential impact of such changes, average per capita incomes within each quintile have been forecast on the basis of both constant and deteriorating distributions of income. 71 Under expected conditions of growth (medium population, medium GDP growth) the poorest 402 remain below the poverty line by 2010 - even if the current distribution of income can be preserved. If the distribution of income were to deteriorate 7/ The distributions used assume the following proportion of income going to each 20? of population. Lowest Second Middle Fourth Top 20X Constant 10? 14Z 18I 23? 35Z Deteriorating (by 2010) 52 82 172 25Z 452 - 12 - to a level more typical of developing countries, then even with moderately strong (3.3Z) GDP growth the lowest 402 of the population drops well below levels necessary for survival (e.g. US$40 per capita annually for the lowest quintile, US$65 for the second lowest). Although such a situation is obviously untenable, it serves to illustrate the importance of guarding against further deterioration in the distribution of income. Table 2.3: Estimated Annual Per Capita Incomes (Constant 1987 Rupees) Lowest Second Middle 20Z Lowest 20Z Estimated Current (1987) Incomes 1515 2120 2730 Expected Case - Constant Income (2010) Distribution 1785 2500 3210 - Deteriorating Income Distribution 890 1430 3035 Note: Poverty line estimated at Rs 2215 per capita. Projections based on medium population and GDP growth scenarios. 2.11 Even under a scenario of rapidly rising per capita GDP, and no erosion in the distribution of income, the poorest 20? still remain below the absolute poverty line for at least the next 20 years. These results emphasize the fact that in Nepal there will be a need to provide relief to the poorest on a continuing basis for the foreseeable future. D. Food Balances 2.12 Food balances have been projected by combining the population growth scenarios with assumptions regarding changes in the yields and areas planted to each of the major crops. From these, net national food surpluses/deficits have been calculated, as well as daily per capita calorie availabilities. Balances based on domestic production are not necessarily indicative of the food supply situation, as the country could potentially shift production effort to areas of greater comparative advantage, and then trade for food. For Nepal, however, domestic food balances are probably a good rough indicator of food availability for many, given the preponderance of subsistence farming, absence of distribution and marketing networks, and relative underdevelopment of the cash economy. 2.13 The ranges of growth in yield and area used in the projections have been based on the best and worst reasonable (e.g. 4-5 year) averages - 13 - observed over the last 18 years. 8/ Detailed assumptions are described in Annex 1.3, but in summary they result in the following average annual growth rates in total food grain supply over the 20 years 1990-2010: Low Growth 1.02 p.a. Expected 2.3Z p.a. High Growth 2.72 p.a. 9/ To put this in context, during the 10 years 1977-87 growth of food grain production averaged only 1.3Z p.a, although recent performance gives some grounds for hoping that more rapid growth can be achieved. 2.14 These projections show that only under the most favorable circumstances (high growth in yields and area, and low population growth) does food production keep pace with the demands of a growing population. Table 2.4 illustrates the results for the medium population projection: Table 2.4: Projected Food Balances 1990-2010 (Based on medium population growth projection) Low Production Growth Moderate High Production Growth Calorie \a Food \b Calorie \a Food \5 Calorie Food supply Balance Supply Balance Supply Balance (cal/capita) (000 mTj (cal/capita) (000 mT) (cal/capita) (000 mT) 1986 - - 1830 -520 - - 1990 1650 -690 1800 -430 1910 -240 2000 1470 -1530 1855 -630 2110 -53 2010 1210 -2690. 1700 -1210 2200 +260 a/ Average daily calories per capita. Minimum requirement estimated at 2250. b/ Thousand MT annuaily of food grains plus potatoes - demand based on minimum calorie intake of 2250 per day, with 80 to be provided by grains and 12 p.a. growth for income effect. 8/ A middle 'expected' scenario is based on a combination of very long run averages (at least 15 years), or, in the absence of consistent data, on the mean of the best and worst scenarios for a particular crop. An upper limit is placed on growth in area planted consistent with approximate total agricultural land availability, this allows for a 102 expansion in area planted in the hills and mountains, and a 302 expansion in the terai. 9/ Annual growth rate higher until land constraints limit growth beyond about 2005. - 14 - The total food deficit increases under all but the most optimistic scenario. Under the moderate growth projections it more than doubles from a current level of 520,000 tons to 1.2 million tons annually by 2010. For illustrative purposes, at current prices the cost of imports to meet this shortfall would be in the neighborhood of US$0.2 billion annually. 2.15 Perhaps of greater concern are the projected per capita nutritional availabilities. On the basis of the expected population projections, Nepal would be unable to supply basic minimum calorie needs except under the most optimistic production assumptions. This is because the assumed upper bounds on land availability are such that total output cannot keep pace with population growth. If these constraints were relaxed, by for instance much more intensive cropping, then Nepal could just supply basic minimum calorie needs by the year 2010; however, this would require a sustained effort to maintain recent encouraging trends in agricultural growth. Under the most likely scenario, average calorie availability (1700) lies far below the minimum level (2250) even by 2010; and under pessimistic yield and area assumptions per capita daily calorie intake would fall below starvation levels (to about 1210 cal/day by 2010) without massive food grain imports - i.e. imports about equal to about 60Z of total current production. 2.16 Adjusting for differences in population growth doesn't materially alter these conclusions. However, it should be stressed that these are only very rough estimates of food crop production, used here to illustrate the likely range of outcomes. These projections are based on historical performance in the sector (albeit over a long period), and it is possible that the picture could be significantly different within 20 years - if, for example, irrigation is effectively implemented on a large scale, or technical innovations are widely adopted. E. Land Pressure and Migration 2.17 Regional projections of population clearly illustrate the emerging problem of where excess population is to be absorbed. It has been pointed out (para. 1.22) that the hills and mountains are already saturated - with average densities of about 6.0 persons per ha. of cultivated land. The historical solution has been migration to the terai, but projections using historical (1971-81) migration rates show that the hills could not sustain the implied increase in population. The implication is that at expected population growth rates, out-migration must accelerate; however if one applies more rapid migration rates, then the terai rapidly approaches saturation as well, even if one assumes a moderate increase in arable land available. 10/ The solution is thus a pool of drifting landless, who, by process of elimination, must end up either in urban areas or emigrating. 10/ The projections assume average increases in cultivated land of 0.5s p.a. in the terai, and of 0.25? p.a. in the hills. - 15 - 2.18 After several iterations, migration rates have been adjusted to reach an equilibrium based on the following assumptions: (a) that the mountains can sustain no new growth; (b) that the hills can sustain only a very moderate increase (i.e. constraining average rural density to 6.5 person/ha. of cultivated land); and, (c) that densities in the terai can rise from a current level of 4.6 to 8.0 persons/ha. - about the highest observed elsewhere (e.g. China 7.9, Bangladesh 8.5). The final projections thus represent a balancing strategy, which avoids excessive land pressure by treating urban areas as an immigration sink. The results are presented in Annex 1.4, and are summarized below: Table 2.5: Projected Population and Density by Area Rural Population Rural Population Density (millions) (Person/ha. of cultivated land) Urban Mountains Hills Terai Population Hills Terai Current (1985) 1.4 7.0 7.0 1.3 6.0 4.5 1990 1.5 7.1 8.2 2.2 6.0 5.1 2000 1.5 7.4 11.0 4.5 6.1 6.5 2010 1.6 7.6 14.2 7.8 6.1 8.0 The two most notable facts to emerge from Table 2.5 are that even with a conservative limit on population density the population of the terai doubles from 7 million to 14 million by 2010, equivalent to almost the entire populatLon of the country at present; and that the urban population increases more than five-fold - to almost 8 million people. This means among other things that cultivated land availability in the terai declines from a average farm size of 1.35 ha. per household of six to just under 0.75 of a hectare per household - implying the need for a doubling in agricultural productivity if current household incomes are to be maintained. 2.19 Urbanization in this context includes all off-farm settlements, and in Nepal much of this growth may consist of the expansion of bazaars and road-head trading centers. In addition, the Kathmandu valley will certainly continue to grow rapidly (one study projects that all agricultural land will have disappeared from the valley by the year 2000). However, the most rapid growth will probably continue to be in the terai towns - which are expected to grow at rates of 10-15? p.a.. 2.20 Some such urbanization is inevitable and desirable. as it is a natural adjunct of the growth in trade and monetarization; however the concera is that with no sign of industrialization, the agricultural base - 16 - may not expand rapidly enough to create sufficient secondary off-farm employment opportunities for this new landless population. Another area of growing concern is the shortage of urban services and infrastructure - already in an abysmal condition - without which the exponential population growth will result in a corres,onding worsening of urban squalor. - 17 - Chapter III - GOVERNMENT STRATEGY A. Overview 3.01 The overall thrust of Government development strategy has been to concentrate on the expansion of agriculture and on provision of the basic infrastructure needed to sustain longer term development. Within this context, the social sectors have been accorded a relatively lower priority, although the importance of developing human capital has been recognized with continuing expansion of a universal education system. A substantial effort was put into population control in the early 1980's, but this appears to have lost momentum. In addition, HMG has been working on a slow continuing expansion of health services, along with the installation of water supplies. More recently attempts have been made to extend credit programs to reach the poor. 3.02 Expenditure on social programs has averaged between 15 and 202 of HMG's budget over the last 10 years, and currently represents about 32 of GDP. Table 3.1 summarizes public expenditure on social services. Table 3.1: Public Expenditure on Social Services, Selected Years 1975/76 1980/81 1984/85 1985/86 1986187 Expenditure (Current Rs Millions) \a Education 229 385 806 1087 1168 Health 121 232 485 593 569 Total 350 617 1291 1680 1737 Share of Public Expenditure Education 12.0 9.3Z 9.6Z 11.1? 11.02 Health 6.32 5.72 5.8Z 6.OZ 5.42 Share of GDP Education 1.32 1.42 1.9Z 2.2X 2.12 Health 0.72 0.92 1.2Z 1.22 1.02 Real Per Capita Expenditure (Constant 1987/88 Rs.) Education 44.7 46.6 64.1 73.7 71.2 Health 23.5 28.2 38.6 40.2 34.7 a/ Recurrent and capital. In addition, HMG finances some credit and other targeted programs, but these represent an insignificant proportion of public expenditure. - 18 - The share of the budget going to health (5 to 6Z) and to education (11Z) is consistent with other poor developing countries; although the shares of GDP (12 and 2X respectively) are relatively low. Per capita expenditure on both has been growing consistently in real terms over the last 10 years (at about 4Z p.a.) but is still very low in absolute terms. In 1986/87 per capita expenditure was equivalent to about '3.20 on education, and $1.60 on health and population services - very low relative to Asian averages. 3.03 UNG's operations in the social sectors are plagued with problems, and despite low budget allocations, the binding constraints in many instances are not only financial. Thus, while additional finance is certainly necessary, it is unlikely that a major infusion of funds alone would go far towards improving health or educational status. There are serious implementation problems across all of the social services involving issues of management, staffing, motivation, and service delivery (discussed in the following chapter). 3.04 As in other sectors, good broad statements of policy are made (e.g. with respect to population control, or primary health care), however, these do not always translate adequately into strategies or programs. Even when strategies are adopted, operational constraints often prevent their implementation; or execution focuses too much on quantitative targets (e.g. enrollments), rather than achieving the desired result (e.g. children educated) - with correspondingly insufficient attention to the operational problems which need to be resolved. 3.05 The following sections very briefly describe and analyse the Government's programs in the social sectors. A fuller critique of HMG's strategies is provided in the accompanying papers on education, health, population, and poverty. B. Education 3.06 Historically development of the education system has concentrated on the expansion of facilities rather than quality of education. The school system was established through the 1950's and 60's, largely with foreign assistance, and primary schools now cover most of the country. A National Education System Plan (1971) introduced new curriculum, increased access, and the beginning of a secondary school system. A national university, which includes all post-secondary training, now consumes about a third of the education budget. Secondary schools on the other hand are supported largely through community contributions and fees. There is a good, but small, program of non-formal education which teaches basic literacy to adults. Primary Education 3.07 The challenge now is to expand the coverage and improve the quality of general education. In many instances there is a lack of teaching material, the curriculum is uninspiring or irrelevant, teachers lack enthusiasm for their work, teaching methods rely heavily on repetition and rote learning, and there is an absence of management and supervision. - 19 - Enrollments are constrained by other factors - but the low attendance and high drop out rates are also due in large part to the poor quality and lack of relevance of the education currently offered. HMG recognizes these problems, and is addressing most of them, however it is building from a low base, and progress is inevitably slow. 3.08 With only 652 of students in school, and class sizes already large, there is clearly insufficient capacity in the primary system. Expansion of the system, however, faces a number of constraints, and although the absorbitive capacity of the education sector has been demonstrated, there are questions as to how rapidly the system can, and should, expand. 3.09 HMG has set universal primary education as a target under the Basic Needs Program - and although this is an appropriate objective, the year 2000 is probably too early to expect to achieve it. The BNP proposals are centered on: (i) increasing the number of schools to get universal coverage; and (ii) a crash program of teacher training. The proposals call for an increase of 4,000 schools, although this may be excessive - since most of the new students will necessarily be the sisters of boys already in school (and thus within range of a school), substantial savings could thus be made by concentrating on increasing the number of classrooms at existing schools (and hence reducing the overheads of new locations, principals, etc.). 3.10 The teacher training proposals call for a crash program of 4 weeks training for new teachers - who must hold a School Leaving Certificate (SLC). There are currently insufficient primary school teachers - and less than 10X are female. However current policy results in a danger of teachers being over-qualified (academically) and under-trained (pedagogically). HMG requires teachers to have an SLC certificate - this requirement both limits the number of candidates unnecessarily, and acutely restricts the potential supply of female teachers. A more useful strategy may be to delay introduction of the SLC requirement, and to increase the duration of pedagogical training. 3.11 The effectiveness of the primary education system could be improved at lower cost by (a) getting more students into school; and (b) improving the internal efficiency of the school system. In expanding coverage cognizance needs to be taken of the reasons children are not currently in school. These include a combination of labor demands on their time; cultural constraints (especially in the case of girls); the perceived lack of quality and irrelevance of education provided; and, in some areas, the inadequate number of schools. It is proposed that an analysis of the relative importance oZ these factors be undertaken - drawing from the experience under the Seti and Primary Education Project (PEP) - in order to design a least-cost solution for expanding the primary system. 3.12 The internal efficiency of the primary system is estimated at only 302 to 40? - partially because schools are not open, teachers are not present or not teaching the full time, and because there are high repetition rates. School and teacher performance can be addressed through improved supervision, training, and service conditions for teachers. One potential solution to the repetition problem is to pursue a more liberal - 20 - promotion policy - especially in the early grades. This would reduce the cost of repetitions (estimated at 342 of system resource wastage), and could also have the effect of keeping more children in school - as there is evidence that if students can be kept in the system for the first three years they are more likely to complete primary school. 3.13 Although the above improvements could reduce the marginal cost of system expansion, one should not underestimate the absolute magnitude of the costs involved. On the one hand, the demographic profile is such that the school age population will increase by about 35? in the next 12 years. If current real enrollments are only about 65X of the potential student body, then this would imply the need for approximately doubling the primary education budget to achieve universal primary education by the year 2000. With cost effectiveness improvements outlined in the previous paragraphs, the actual financial requirements could be less - but this does serve to illustrate the order of magnitude involved. To finance such an expansion, for example, the education budget would have to increase from llZ to 14? of HMG's budget (which is unlikely) and even this would leave nothing for investments in other forms of education. The primary school system will thus continue to require substantial external assistance for the foreseeable future. Non-Formal Education 3.14 MOEC operates a very successful adult literacy program which has developed first-rate instructional materials. The program currently reaches about 70,000 persons per year. However with over 10 million illiterates, this has little impact on the scale of the problem. It is estimated that the program could be expanded at relatively low marginal cost (since materials have been developed, and the pool of potential facilitators is larg) to reach substantially more adults, as well as out- of-school youths. First steps are now underway to expand this program to a full-scale national literacy campaign. There is also a need to develop simple post-literacy materials in order to maintain proficiency. Secondary and Tertiary Education 3.15 The most striking feature of the secondary school system is the lack of capacity. Only about 20? of high-school aged children are in school, yet the system is already over-crowded. This is due in large part to the inadequate financial allocations to secondary education (only 13? of the education budget). HMG pays only about half of the costs of secondary school operations, with the balance being mobilized from the community. In most cases the ability of the community to mobilize additional resources appears to have reached its limits. In addition, anecdotal evidence suggests that inability to pay fees is a major disincentive from pursuing schooling opportunities. 3.16 At the moment students may only either drop-out or continue all the way through to grade 10. Excessive emphasis on the final School Leaving Certificate (SLC) after grade 10 results in rote learning (and teaching), and in many cases is inefficient, in that children who can afford it remain in school longer than they may need to in order to pass the SLC, or to repeat attempts at it. Consideration should be given to formalizing earlier exit points (eg. after grade 8), which would provide - 21 - academic training adequate for the many who will not go on to formal employment or higher education. 3.17 At the moment almost all students passing the SLC are guaranteed entry into Tribhuvan University. This contributes to a number of problems: the university is over-crowded; many students start university too early (straight out of grade 10), and require a preparatory year or two; there are too many students in arts and too few in science-based streams; there are over 120 campuses (some excessively small); the university puts a disproportionate strain on the budget, receiving almost twice as much as the entire secondary school system; and university students are excessively subsidized (they pay lower fees than secondary students). 3.18 In part as a result of overcrowding, the university suffers from management and quality problems. One potential solt.tion is the introduction of the 10 + 2 system, which would add two more grades (11 and 12) to the secondary system. This proposal is being adopted by HMG, but it must ensure that for many students the additional two years are instead of, not in addition to university. It is also recommended thats (i) HMG undertake an in-depth management and academic quality review of the university system, to design a blueprint for upgrading; and (ii) university fees be increased, with scholarships as necessary for those with inadequate means. 3.19 At a broader level, there is an issue of the appropriate balance between various strata of education. HMG is currently putting substantial resources into primary education and into the university, and probably not enough into secondary education. The need for secondary education capacity is growing - both because of the demands for skilled manpower, and due to the increased number of students coming out of primary school. There is room to consider a shift in relative allocations from tertiary to secondary, as well as the rationalization of the university system, which includes many non-university functions, and is beset with management problems. 3.20 The requirements in the education sector are thust (i) to expand the primary system, especially the participation of girls - this will include assessing analytically the reasons for school non-attendance, and digesting the lessons of current projects (PEP and Seti) - in order to design a model for effective expansion of the system; (ii) to determine how to handle the need for increased secondary schooling, including its financing; and, (iii) to improve the cost-effectiveness and management of the tertiary system. Proposed assistance strategies for contributing to these goals are discussed in Chapter 6. - 22 - C. Health 3.21 HMG's response in the health sector has been to develop a number of dedicated vertical programs to attack specific health problems (e.g. malaria, TB, and immunization), which have only recently grown together into a national health service. These have been accompanied by a program of slow expansion of medical personnel, health posts and hospitals, to the point where about two-thirds of the country is now covered by rudimentary services. The emphasis in HMG's strategy is (appropriately) on primary health care, delivering basic preventative services with paramedical staff at the village level - however in practice the allocation of resources is skewed in favor of curative, hospital-based services; and the majority of personnel and financial resources are consumed in the Kathmandu valley. 3.22 Health infrastructure is still underdeveloped and generally underfunded. The proportion of doctors is very low, health posts often do not operate, or lack drugs and supplies, and the conditions in hospitals (which are often little more than larger health posts) are often appalling. But the greatest problems in the health sector are institutional, involving the management of service delivery at the periphery. Management and personnel operations are weak throughout the sector (see discussion in following chapter), with the result that many positions are unstaffed, and rural paramedics seldom leave their posts to deliver health services. These problems are compounded by difficult terrain and communications, uncertainty regarding the integration of vertical programs, a shortage of medical personnel, and the virtual absence of female health workers. 3.23 Although integration of services has supposedly been completed, the vertical programs remain largely independent, with their own budgets, staffs and bureaucratic imperatives. The process of integration of the vertical programs remains unresolved, and the Ministry is in a state of almost continuous reorganization - resulting in uncertainty with respect to the future of the vertical program staff, and insufficient retraining or management structures for true integration. There is a danger that the effectiveness of the established vertical programs will be diluted by integration, and the dedicated program staff will be unprepared to deliver the mix of services expected of them. If the process of integration is to work HMG needs to: (i) proceed slowly - taking care that the interests of existing field staff and the quality of services are protected; (ii) plan carefully - by undertaking a detailed analysis of functions, responsibilities, positions and staffing levels, along with a clearly defined set of organizational relationships, for the new integrated organization; and, (iii) design and mount a major retraining exercise before proceeding with re-assignment of staff and duties. 3.24 Health Manpower. There are about 850 physicians (of which less than 300 are outside the central region) and 6,600 paramedical staff in the - 23 - health service. This is grossly inadequate in total, at all levels of care, and especially in rural areas, where the coverage is not infrequently one doctor per 100,000 population (relative to a desirable minimum level of 1 per 20,000), as it is difficult or impossible to staff positions. HMG is planning a major expansion of health manpower under the Basic Needs Program, but even the planned levels are probably insufficient to provide adequate coverage, and the expansion relies heavily on the role of community health volunteers, who cannot be expected to play a particularly active role in health care delivery. Of particular concern is the fact that less than lOZ of medical workers are female - making it difficult, if not iw.possible, to effectively deliver primary and maternal and child health (MCH) care at the village level. 3.25 Medical staff are trained at the Institute of Medicine (IOM) which turns out good quality and well motivated staff. However, the numbers being trained are inadequate (eg. 30 doctors per year) and their training centrally does not adequately prepare them for conditions at the periphery. It is recommended that serious consideration be given to integrating medical training with service delivery in outlying areas (eg. training at district hospitals and rural health posts) as is done in many other countries. This would have the dual effect to improving service and facilities at the periphery, and of better preparing medical staff for the conditions they will face on completion of training. It needs to be recognized that a major infusion of funds will be required to train the required number of health workers, and to integrate training with service delivery. Even if this is done, the effect on health status will be minimal if steps are not taken to ensure that these staff are actually posted, and sent, to the rural areas where they are needed. 3.26 The key at this juncture of health sector development is 'effectiveness', in terms of health outcomes on the one hand, and costs on the other. Providing more of the same, better, will improve output (e.g. number of injections given, health manpower posted, patients admitted, etc.), but will fail to yield the desired health outcomes (improvement in health status), for all the reasons discussed above. What is needed in order to enhance the effectiveness on health status is to: (i) re-direct the distribution of effort and expenditure (towards, for example, temporary methods of contraception, and outreach primary health care); (ii) improve the efficiency of some specific programs (eg. malaria and salt iodization (para. 3.33)); and, (iii) improve the effectiveness of service delivery (through, for example, the increased use of female workers and the integration of medical training with service delivery at the periphery (para. 3.25)). The general health and population policies of the government are sensible and sufficient to serve as a basis for strategic action. What is needed, both to ensure the most effective use of resources, and to av 4d duplication of effort, is an expenditure plan for the health sector. HMG's - 24 - health program today consists of a conglomeration of weakly related programs, often supported independently by individual aid cionors. There is little overview which ensures that resources are being directed in proportion to the impact they could have on health problems. The problem is that HMG does not have a comprehensive strategy itself for the health sector, nor a corresponding medium term plan for its health service activities. The Basic Needs Program is a start in this direction, but it lacks the necessary analytical background, and needs further refinement. 3.27 There is a need to assess the cost-effectiveness of the various health interventions into which Nepal could put its resources (eg. immunization, malaria control, hospital construction, health education, medical training, management improvements, etc.) and determine a set of relative priorities, and then to draw up a blueprint resource plan which HMG could move towards over a number of years. In addition to providing a framework for the use of aid resources, this blueprint would serve as the basis for manpower assignments and training targets; and for guiding reorganization of the health service. Such an exercise would need to take account of the likely health effect of various interventions (including e.g. water supplies, nutrition, in addition to direct health care programs) relative to the distribution of Nepal's health problems; should take account of the cost-effectiveness of interventions - for example current immunization and diarrhoeal disease programs may be amendable to expansion at very little cost; it should recognize the institutional and staffing constraints which affect expansion of the program; and it must take account of the combined capital and recurrent costs of operations. D. Population 3.28 A National Commission on Population (NCP) was established in 1978 to take charge of an inter-sectoral populatidn control effort, and current population strategy was enunciated in a policy document in 1983. At the same time a major sterilization program was launched through the Family Planning/Maternal Child Health (FP/MCH) project of the Ministry of Health. This consisted of a campaign of travelling sterilization camps, with a program of incentive payments to acceptors. 3.29 Following the early bold statements of 1983, Nepal has not been able to develop the sort of broad-based national population program which has been successful in reducing population growth in other countries. Following early successes the intensity of the sterilization campaign has slackened appreciably over the last two years and, while important, the potential impact of sterilization is limited, given that most people are sterilized after having had 4-6 children. To have a significant impact on population (and maternal and child health) Nepal has to move to large scale use of temporary methods of contraception. The move to temporary methods requires a much more subtle, sustained program of education and support to users - such as only can be delivered by a trained cadre of (mostly female) outreach workers who actually get out to villages and households on a regular basis. Although the framework for such a program exists (under the FP/MCH project), in fact very little takes place - due to institutional and civil service constraints, and the absence of female workers. - 25 - 3.30 This is unfortunate, since several indicators (e.g. desired family size) and informed opinion in Nepal suggest that there may be substantial unmet demand for family planning services. In policy statements HMG recognizes the need to shift the emphasis to temporary methods - but it appears that population issues may receive a lower priority than might be desirable among senior decision-makers - and the absence of female workers in the health service seriously limits the potential effectiveness of efforts to promote temporary methods. HMG is currently considering a program of female volunteers to provide FP/MCH support at the village level, but the mechanics of the program are not yet clear. 3.31 For the population program, it is not so much necessary to develop new policies as it is to effectively implement the strategy HMG has already enunciated. What is now required (in both health and population services), is: (a) to strengthen service delivery at the periphery - especially for temporary methods of contraception - through improved management, supervision, staffing, and training; (b) provision of sufficient funds for travel, salaries, supplies, and infrastructure, especially at outstations; and, (c) training of additional staff - both medical and para-medical - especially in the delivery of primary health care and family planning services. Perhaps most importantly, it is strongly recommended that HMG undertake a major program of hiring and training large numbers of female health and family planning workers. E. Nutrition 3.32 There exist a number of nutrition programs - the most significant of which are the Joint-Nutrition Support Program (JNSP) and the salt iodization program. The scope of JNSP is limited, but it shows promise and efforts should be made to expand it. However the institutional capacity to undertake nutrition interventions within HMG is weak, and needs to be strengthened before the Government can sustain a major nutrition supplementation program. 3.33 The iodization program is designed to reduce the incidence of goitre through making available iodized salt. This is appropriately a high priority given the alarming levels of goitre and cretenism in Nepal. A series of salt iodization plants are being set up with assistance from India, however there have been serious delays in getting the plants operational, and in the interim a program of iodized oil injections has been mounted. This is a relatively costly way of providing iodine, and steps should be taken to get the iodization plants working as quickly as possible. - 26 - F. Poverty Alleviation 3.34 Directed poverty alleviation efforts are limited, as is probably appropriate in a country where nearly everyone is poor - and HMG's efforts have been concentrated on agricultural development and expansion of income earning opportunities more generally. It is recognized, however, that current extension programs do not adequately reach poor farmers. More recently the Government has instituted targeted credit and group formation programs (the Small Farmers Development Program and Production Credit for Rural Women) which are having some success in reaching the moderately poor. Although they appear not to reach the very poor, they have external benefits from group formation, such as improved literacy, and family planning behavior. However, these programs need intensive inputs from skilled staff to work effectively, and their capacity to expand rapidly is thus limited. 3.35 There have been a number of projects designed to alleviate poverty in specific areas by intensive income-generating activities - some of which have been very successful in, for instance, greatly increasing incomes by cash-cropping in selected pockets in the hills. As with the targeted credit programs, it is not clear how amenable these are to expansion, and it is recommended that more work be done to identify the replicable features of these pilots. The World Food Program runs food-for-work and nutrition supplementation programs, and appears to be limited in the amount of food it can transfer to Nepal by local financing and distribution constraints.ll/ In addition to these programs, a number of NGO's run small- scale poverty relief programs. Given that there will be a continuing pool of very poor in Nepal for the foreseeable future (para. 2.11) it is suggested that work be undertaken to identify the best of these initiatives, in order to work up a cost-effective program of targeted poverty alleviation measures. G. The Basic Needs ProRram 3.36 Part of HMG's response to conditions in the social sectors has been to develop the Basic Needs Strategy - a program intended to achieve basic minimum Asian standards for the population by the year 2000. Documents describing the outline of the program have been issued, and individual departments are now working up more specific programs in agriculture, textiles, education, health, and population. The priority accorded to the basic needs sectors is starting to be reflected in allocations under the budget. 11/ In addition, food distribution by the National Food Corporation provides transport subsidies for food to remote areas, but at the moment serves only public servants. - 27 - 3.37 While the goals of the Basic Needs Program (BNP) are laudable (universal primary education, reduced population growth, and primary health care), there has been relatively little detailed discussion of how they are to be implemented - or of what needs to be done to overcome the pervasive service delivery problems which have prevented achievement of these objectives in the past. The health program, for example, concentrates mostly on providing more of the same services, without addressing the questions of staffing, supervision, and civil service arrangements which currently hinder effective PHC delivery in rural areas. As already discussed, the education program involves a major expansion of schools and teachers, but does not delve sufficiently into the determinants of non- attendance or non-performance of children in the current system. The population program correctly focuses on the need to shift to temporrry methods of contraception, without the requisite emphasis on the role of female outreach workers. 3.38 The BNP targets themselves are extremely ambitious, involving agricultural growth rates of 52 per annum, population growth down to below 2Z (currently 2.7Z), primary enrollment of 90Z (currently about 60X) and infant mortality down to 45 from 115 per thousand - all within 12 years. There may not be too much wrong with setting ambitious targets, provided they do not distort the planning process or implementation efforts (they may) - and at any rate the scope of these plans will probably be modified by the realities of the budget process. 3.39 However, it is not clear how these initiatives are to be financed; 11MG needs to quantify more accurately the long run costs of the program and to address the question of how they are to be balanced with competing claims on the budget. So far there has been a tendency to treat the BNP as a list of uniformly important initiatives; more selectivity is now required. Priorities need to be assigned within the Basic Needs program, to ensure that those efforts are funded which would have the most impact, could be readily implemented, and/or would represent the most cost- effective expansion of existing programs. (Existing adult literacy and immunization programs, for example, may well be amenable to expansion at relatively low marginal cost.) - 28 - Chapter IV - INSTITUTIONAL ISSUES AND COMMON THEMES 4.01 In the process of analyzing the individual sectors, a number of common themes and problems have emerged. They are summarized in the following sections. A. Service Delivery Problems Staffing and Organization 4.02 Although many civil servants are doing an admirable job in difficult circumstances, there are a number of systemic weaknesses which limit their effectiveness. Absenteeism is common; stories abound of unstaffed health posts, and of teachers who do not show up at school. The problem is largely one of lack of supervision and monitoring. Staff at outposts receive little attention, and therefore there is little incentive to perform, and their status in the eyes of the local population is undermined by the lack of visible support from the center. This is compounded by the fact that promotions and postings are often influenced by considerations other than performance - further eroding morale and motivation. This is caused in part by a culture of non-accountability, but also by the fact that in an environment where most places must be visited on foot - and it may take several weeks to cover a district - supervisors are often unwilling or unable to adequately cover the territory for which they are responsible. The low internal efficiency of primary education, for example, is due in part to schools being closed or teachers being absent - problems which could be alleviated by more intensive supervision. Similarly the failure of rural health workers to leave their posts to deliver ambulatory care is attributable to insufficient training, motivation, and supervision. 4.03 The absence of developed management and personnel systems, with clear job descriptions and evaluation criteria, further erode the performance of public services. At the same time, the existing system lacks the rewards and renumeration necessary to attract and retain staff in outlying areas. In the health sector, for example, a major problem is the absence of medical manpower in rural areas. In many cases staff have been assigned to posts, but are in fact on 'deputation' to another position, often in Kathmandu or a regional center. 4.04 More generally, the existence of a public service for functions other than law enforcement and tax-collection is a fairly recent phenomenon in Nepal. The rapid expansion to deliver social and development services has led to strains on the system, both in terms of the availability of trained personnel, and the under-development of public service systems. The sense of national purpose at times does not filter down through the civil service, and the traditional system of employment relations is often inconsistent with modern personnel and administrative practices. This is exacerbated by low expectations - people do not historically expect much from public services, and demands for better performance are constrained by long acceptance of the traditional system. - 29 - Communications 4.05 Poor communications between civil servants and the people they are supposed to serve are another barrier to development efforts. The success of temporary family planning methods - which is essential for population control - and of changes in household hygiene - which are essential to improved health - both involve long-term changes in behavior. Such behavioral change depends critically on sustained personal communication. Yet extension workers have difficulty in communicating with illiterate village people, and may at times assume condescending attitudes towards them. The messages being communicated are often too complex; the reasons to. doing things are not explained; and excessive reliance is placed on a single contact or message, when repeated re-enforcement is required. 4.06 Teachers, agricultural extension workers, health post staff and family planning workers all receive substantial training in the technical aspects of their jobs, but often inadequate training as to how to transmit this knowledge to others. The failure to explain medical treatment, for example, is a principal cause of people's lack of faith in formal medicine, and often results in not completing courses of treatment, or failure to bring a child to the health post the next time she is sick. Similarly, a major reason for non-immunization appears to be that people do not know the time and place of vaccination clinics. Workers need to be trained in communicating their knowledge effectively, and more effort put into explaining how to make the best use of services. B. Resource Constraints 4.07 The lack of sufficient domestic resources is a major emerging problem in the social sectors. Although implementation capacity is undeniably the binding constraint, major improvements in health and education will not be possible without substantial increases in funds. Lack of school supplies discourages teaching and learning; health posts run out of supplies six months into the year; vaccination teams cannot operate for want of kerosene for refrigeration; and insufficient travel and daily allowances discourage staff from essential extension and supervision work. Even when sufficient funds are available in aggregate, they often do not find their way to the periphery where they are most needed. 4.08 One possibility lies in greater domestic resource mobilization - either through local taxes or user charges. There may be some scope for local taxation - however in poor regions the potential tax base is very narrow, and there is a danger that regional inequities will be exacerbated. The scope for user charges is also limited in an environment of pervasive absolute poverty. People are already paying a very large share of the costs of education, as well as the private costs of health care. With very low average cash incomes (about 70 Rs/month per capita), the effect of further user charges would be to increase the likelihood that only the relatively wealthy benefit from health and education services. For example, private sector medical care, while important, will only cover those disease categories that 'pay', and will not cover the most prevalent diseases which tend to strike the poor disproportionately; nor will it provide the preventative or maternal health care which could have the greatest impact on health status. - 30 - C. The Role of Aid 4.09 One consequence of this resource gap is a heavy reliance on foreign aid in the social sectors. Aid donors play a major role in shaping projects and policies, often dealing directly with line ministries. As a result, the HMG program in some instances resembles more a collection of aid interventions than a cohesive sector strategy. This can potentially distort expenditure patterns and development efforts. 4.10 There is a tendency, especially in line departments - to regard aid as a free resource - and thus not to adequately measure its opportuLity cost. In extreme cases it does not even go through the central budget. It is clear that donors are willing to transfer resources to Nepal - and aid not used in one sector would thus be available for initiatives in another. Aid in the social sectors should therefore be treated as a public resource like any others its uses carefully weighed, and channeled to the highest priority areas. To do this EMG needs to be firmer with donors - designing an overall sector strategy and investment program (using donor assistance if needed), and then insisting that donors fit in with support for particular segments of it. This sort of sector planning exercise is proposed for health (para. 3.27), and in designing a model for expansion of the primary school system (para. 3.11). 4.11 In the absence of such a strategy donors tend to support stand- alone vertical projects, often wholly outside the established departmental structure. There is thus almost no impact in terms of strengthening the institutions which will eventually have to deliver these services; while recurrent cost burdens are built up which they will have to assume when the donor eventually withdraws (e.g. the malaria program, which still relies exclusively on donated insecticides). Furthermore, the benefit of successful experiments and lessons learned are not replicated across the system as a whole (e.g. the successful Seti and Primary Education Projects stand independent of the general primary education system, which they are meant to improve). D. The Planning and Budgeting System 4.12 The weak central planning and budgetary system results in a tendency to consider projects in isolation and failure to take account of opportunity costs, or to make hard choices with respect to inter-sectoral allocations. One result of this is that budget allocations (e.g. between health programs, or levels of education) are often not consistent with needs. This system is encouraged by the active role of aid agencies in promoting individual projects, and excessive size of the development budget, under which all expenditures are treated on a project-by-project rather than a program basis. The immunization budget is thus considered at one time and the health education (or malaria) budget is evaluated independently, with no assessment of the trade-offs between the two in terms of the cost-effectiveness of a rupee spent on improving health status. Furthermore, the development budget in no way corresponds to a true capital budget, and incorporates many expenditures (e.g. teachers' salaries, and insecticide procurement) which are of a recurrent nature. One consequence of this is that neither departments nor the government as a - 31 - whole has a clear idea what its true recurrent commitments are. In the social sectors in particular - where recurrent costs account for the vast majority of expenditure - this makes rational planning almost impossible. E. Decentralization 4.13 Decentralization of health and education services to the Regional and District levels has been going on for some years now. Decentralization is intended to promote local participation and allow flexibility in the execution of development programs. However, local level capacity is still weak, and to date HHG has been unwilling to give up the central control over funds and staffing, which is essential to successful decentralization. 4.14 To the extent decentralization does take place, care must be taken to avoid transferring responsibility for social services, without a corresponding share of resources - placing the burden of financing on District governments. With a very limited local resource base, there is a danger that poor services will deteriorate even further in the less developed rejions. Substantial effort will also need to be put into developing the capacity to plan and administer systems at the District level if decentralization is to be effective. F. Non-Government OrRanizations 4.15 A lot has been made recently of the potential role of Non- Governmental Organizations (NGO's) in the development process. NGO's do play an important part in health, population, and poverty alleviation efforts in Nepal, and are responsible for some of the most notable success stories. They work on a small scale with intensive use of manpower and resources. This is the reason for their success, but it is also the factor which most limits their potential impact. The reliance on skilled personnel limits their ability to expand while maintaining quality, and their high unit costs cannot be replicated across the system as a whole. Their principal contribution will thus remain as a source of experiments and useful lessons to be adapted for wider use. The exception to this is probably in the family planning sphere (and to a lesser extent in health), where NGO's - particularly the Family Planning Association of Nepal - play a substantial role in the delivery of services at the periphery. Given the unlikelihood of a rapid increase in HHG's capacity to provide these services in the near future, these agencies will probably have an important continuing contribution to make. - 32 - Chapter V - INTERSECTORAL LINKAGES 5.01 This chapter explores the relationships among the social sectors. It starts out by describing the linkages between the various social sectors - e.g. the impacts of health and education on poverty and population, and conversely the effect of population growth and poverty on health and educational status. It then goes on to examine in more detail how the broad country framework and conditions in the agricultural sector affect poverty. The chapter concludes with some implications for interventions in the social sectors. 5.02 The social sectors are characterized by a constellation of linkages and mutual interdependencies, whereby the status within one (e.g. education) materially affects conditions in each of the others (e.g. fertility, health, and poverty). Figure 1 illustrate this network of linkages in schematic form. FIGURE 1 P gulation |< == C r ~~rwth L Maternal Incom es& Child HeStrong L e _ W Poverty Gener. 01-nm Lng i t S o riculturals Healtn "Olol 0 Pfoductivity Nutrition | Strong Linkages o o o Weaker Linkages Fig. I - Dynamic Linkages in the Social Sectors - 33 - A. Health and Population 5.03 Poor health, particularly of infants and children, can be an important contributing factor to high population growth. There is a tendency to replace a child who dies in infancy by producing another, and analysis of child-women ratios in Nepal confirms this, with a strong correlation between high infant mortality and high fertility. Since they are not sure if their children will live, parents are unwilling to have sterilizations until the desired family size is reached, and sterilizations thus have little impact on population growth, since they are performed after 4 to 6 children have already been born. On the other hand, once parents are reasonably confident that children will survive they become more willing to plan and to limit family size, thus temporary contraception is much more likely to be successful if infant and child health are improved. 5.04 Conversely, population growth also affects health through a number of mechanisms: - close spacing of births results in higher infant mortality, - frequent pregnancies debilitate mothers, kill some, and leave most in a condition in which they will bear less healthy children, - infants are weaned prematurely when the mother becomes pregnant again, and as a consequence their nutritional status declines rapidly. Studies show that infant mortality in Nepal is 50Z higher among children born less than two years apart. Also there is a much higher risk that pregnancies below the age of 20 (of which most women have at least one) will result in infant and/or maternal mortality. The use of birth spacing (temporary) methods could thus contribute substantially to improved maternal and child health, while conversely improved child health would speed the adoption of temporary methods. 5.05 Poverty and Population. In the subsistence economy children have a clear economic value - both for the contribution they make to household production, and as a source of security in old age. Surveys indicate that about two-thirds of families do not use contraception because they are unwilling to limit family size, largely for economic reasons. This is reflected in the preference for sterilization after achieving a desired family size, and reluctance to use temporary methods. Similarly women are much more willing to consider contraception after giving birth to 2 or 3 sons - while the births of daughters (whose economic value to the family is lost at marriage) does not have much impact on family planning decisions. There is some evidence that enhancing the economic role of women reduces fertility - a survey of credit program participants, for instance, found them more likely to use family planning then were non-participants. Conversely, as discussed previously population growth directly affects poverty via land pressure, deterioration of the environment and the sustainability of agriculture, and increased competition for income-earning opportunities. - 34 - 5.06 Poverty and Health. The health effects of poverty are felt largely through the shortage of food - for instance, one localized study found malnutrition among 12-35 month olds to be 10 times greater in families with less than one hectare of land. These children have lower resistance to infection, and continuing malnutrition through childhood undermines their resistance to disease. Insufficient food intakes and heavy work loads have a debilitating effect on both male and female adults - leaving them more susceptible to disease, and resulting in mothers giving birth to sickly children, who in turn receive insufficient care and breastfeeding because of the labor demands on the mother. Consequently, infant mortality is estimated to be five times as high among the very poor as among the wealthy. The poor - who often have little or no cash income - are also unable to pay the private costs or user charges associated with medical care - either in the formal sector or from traditional healers. The converse of this is that extremely poor health or disability limits the capacity of many to engage in effective production or employment - or to produce efficiently when they are working - thereby perpetuating their poverty. 5.07 There is thus a vicious cycle - poverty and lack of education lead to earlier and more frequent births, which lead to higher infant mortality, which in turn causes higher fertility overall - and consequently greater poverty; to break this cycle requires higher incomes, and more education, especially of females, augmented by improved health and family planning services. B. Education 5.08 Although it is generally accepted that literacy and female education substantially reduce population growth, little analytical work has been done on the strength of this relationship in Nepal. Certainly education beyond the primary level has been shown to significantly affect fertility, as does employment of women outside the home; which is in turn dependent on education. Similarly fertility is closely related to infant mortality, which is in turn strongly correlated with education of the mother. 5.09 Recent analysis shows that of all the expected determinants of infant mortality in Nepal, the strongest correlation is with the level of female literacy. A 1985 study found that infant and child mortality were twice as high among mothers with no formal education as among those with some education. Education is important for appreciation of the connection between hygiene and health which is essential to reduce the high incidence of diarrhoeal diseases, and for understanding the importance of vaccination and other health care programs. The health benefits of many of the water supplies installed are entirely lost, for instance, in the absence of corresponding education of the hygienic use of water. 5.10 Poverty and Education. A major reason for non-attendance at school is the need for childrens' labor for subsistence production in the household. The amount of time that girls in particular must spend in gathering fuelwood and water, and in traditional child care roles, detracts from their ability to attend school. Similarly children of the urban poor are unlikely to go to school regularly, as they can alternately make money - 35 - performing menial tasks. Some partial solutions are being found in the cheli-beti system, under which girls go to special classes in the early morning or evening; and in triple-shift experiments in urban schools, which allow working children to choose the most suitable shift. Beyond primary school, however, the direct cost of schooling is such that a large proportion cannot afford further education. C. Poverty, Food Supply, and Agriculture 5.11 Nepal is still a subsistence agricultural economy, with two-thirds of the people relying almost exclusively on their own production of rice and grains, and about 70X of transactions taking place outside the cash economy. An important adjunct to this is that there exist few opportunities for off-farm income generation, due to: - poor communications infrastructure, - lack of markets and of marketing systems, and - the absence of a cash economy. While there has been a trend towards industrial growth, this has to be tempered with a recognition that (a) such growth is taking place on a very small base; and (b) it is concentrated in a very few basic activities (e.g. textiles, mud-brick making, cigarettes, jute). Thus over 90? of the work force is engaged in agriculture, however at the same time, the agrarian economy has failed to transform itself in the way that it has done in many other developing countries. 5.12 Between 1974 and 1984 food production increased by 141 while population expanded by 342. Most of the limited increase in output has been due to cropping intensification on traditional farm land and the expansion of area planted rather than yields, which have declined with the extension of cultivation into progressively more marginal areas. The poor performance of agriculture is due to many reasons, among which are: - limited land availability, - a shortage of inputs, and, - the absence of marketing networks. The expansion of agriculture into forests and marginal lands may in fact be taking place at the expense of the long-run productivity of agriculture - at least in the hills - where the increased frequency and density of cropping, without adequate replenishment of nutrients, are accelerating the process of soil depletion and erosion. 5.13 Reliance on the monsoons also severely limits agricultural growth. Although irrigation could make a substantial difference, only 20? of land under cultivation is irrigated - and of that only about one-third is operational at any given time. Similarly fertilizer use, while growing, is still the lowest in Asia. These problems are part of a more general inadequate use of new technologies in agriculture, which seems to be due to poor communications, inadequate availability of key inputs, the scarcity of - 36 - appropriate location-specific technologies - especially for the hills, and the low level of technical skills and education of extension staff. 5.14 The limited cash economy and absence of marketing networks affects the poor by both constraining the capacity to distribute food from surplus to deficit areas, and by limiting the opportunities for sale of cash crops. Only about 301 of foodgrain production finds its way into the distribution chain, and after substantial losses in storage and processing, most of this goes to export or urban areas, leaving very little traded surplus available for rural consumption. Expansion in output has occurred largely in the terai and in the Kathmandu valley, and the necessary transport and marketing linkages do not exist to get this out to food deficit areas in the hills and mountains. Furthermore, most expansion has been in wheat, which is not grown by subsistence producers, but as a cash crop by larger farmers for urban consumption or export. Small Farmers and the Dynamics of Poverty 5.15 The efforts put into developing the agricultural sector by HMG and donors, in the form of credit, irrigation investments, and extension services, have been aimed primarily at the terai with disproportionate benefits flowing to larger farmers who tend to have better access to these services. Average farm size is extremely small throughout the country. The Demographic Sample Survey (1986) estimates that 752 of families in the hills possesu less than 1 ha., and 502 less than half a hectare. In the terai holdings are bigger (502 owning more than 1 ha.) but many more are landless (about 351), or tenant farmers. Anecdotal evidence suggests that agricultural programs have little impact on these small farmers, who make up the largest proportion of the population, and nearly all of the poor. The technological messages disseminated by the extension service tend to assume optimal use of modern inputs. These messages have little relevance to most small farmers who have insufficient surplus to afford experimentation with different crops, cropping practices and cropping patterns, and whose cash income, if any, is too small to purchase inputs such as fertilizers, pesticides and improved seeds. 5.16 Most families in the hills remain landowners, although increasingly the size of their holdings are insufficient to meet their needs. In the terai a larger proportion are tenants or bonded laborers. There have been several attempts at land reform, and in theory at least the worst aspects of feudal tenancy arrangements are controlled. However anecdotal evidence suggests that in practice high fixed rents and unregulated sharecropping are common, and that many tenants must turn over more than half of their production to landlords. These arrangements both perpetuate their impoverishment, and reduce the incentive to increase production. 5.17 A corollary of this failure of agricultural expansion is the process of increasing impoverishment of small farmers, who are unable to generate sufficient surplus, on their own land or on that of others, to provide for basic subsistence. Many are living on the brink of survival, where a bad harvest or illness can push them over the edge into indebtedness. Once in debt, interests rates are so high, and the output from small plots so low, that they end up in a descending spiral of - 37 - indebtedness, which culminates in the loss of their land, and their transformation into landless peasants or unemployed laborers. 5.18 Credit schemes are one potential solution to this problem. However the aggregate amount of agricultural credit available is insufficient, and most official credit (available at interest rates of about 162) goes to agro-businesses. It is estimated that only 102 goes to small farmers, while the poor must generally borrow at rates of between 45-752 from landlords or money lenders. Not surprisingly, the institutional credit that is available to small farmers tends to go to the relatively wealthy ones, as the poor do not have the flexibility to afford greater debt or the knowledge and ability to pursue borrowing opportunities. Several new credit programs hold out some promise of effectively reaching the poor, but their ability to expand is limited (see Part III of Volume II, on Targeted Poverty Programs). 5.19 Credit is at any rate only symptomatic of the broader problems of excess land pressure, failure to transform the agricultural sector, and persistence of the feudal system. The solutions to these problems lie outside the scope of this paper, but include the need to: (i) develop markets; (ii) expand irrigation systems and make them operational; and, (iii) to develop more appropriate extension and credit services which take account of the constraints facing the poor. 5.20 In the longer run, improved education will play a crucial role in upgrading agricultural productivity, and control of population growth will be essential if land pressure is to be held at sustainable levels. Building a better understanding of the mechanisms of impoverishment, and the linkages between agricultural. developments and incomes in Nepal is essential to designing workable poverty alleviation strategies. Although substantial individual micro-level studies have been done, the findings of these need to be integrated into a broader analysis of poverty and agriculture and incomes. Such a study is proposed as a follow-on from the current review (para. 6.21). D. Environment 5.21 Environmental degradation is both a contributing cause of poverty, and is aggravated by it. Reduced forest cover results in lesser quantities of dung and compost available to maintain soil fertility and, in some areas, in dung being used for fuel rather than fertilizer. At the same time the depletion of grazing land leads to poorer quality animals which yield less in products and labor value. The response to this has been to have a larger number of lower quality animals, which in turn aggravates the over-grazing problem. In addition, environmental decline means that more time must be spent gathering fuel and water, thus detracting from the labor available for more productive economic activities. 5.22 Having to walk further for fuel or water, women have less time for breastfeeding and child care, and daughters are less likely to be able to attend school. Fuelwood shortages cause families to limit their use of cooking fires, adversely affecting nutrition. Also, as water sources dry up, health problems compound. - 38 - 5.23 The use of water is low to start with - between 8 and 30 liters per capita per day, depending on distance (which is often an hours' walk), - relative to a WHO recommended minimum of 45 liters. Rather than walk long distances, communities may use closer, polluted, supplies - or fail to use clean water effectively in the absence of education. For example, the mission came across a woman washing plates in open street sewage in Kathmandu, less than 5 meters from a public stand-pipe. 5.24 The immediate environment of most Nepalis is thus highly contaminated (951 have no access to latrines) with consequent health and nutrition effects. It is estimated, for example, that 402 of hospital cases and 322 of deaths among under 5 year olds are due to water and hygiene related diseases. The unhygienic environment and consumption of contaminated water lead to parasite infestations and diarrhoeal diseases, which inhibit the retention of nutrients and are in turn a major cause of malnutrition. E. Conclusions 5.25 The foregoing analysis illustrates the central importance of education and of population control in alleviating social deprivation in Nepal. Education for the role it can play in preparing people for employment, and improving health and family planning behavior; and population because it is critical if advances are to be made in health, incomes. and nutrition. Health, on the other hand, emerges more as an effect - of low incomes, poor education and hygiene, and large family size - although poor health is also a contributing cause of low productivity and high population growth. Poverty is in the first instance a problem of inadequate resources; however, the solutions to poverty cut across the social sectors, requiring a coordinated effort of food production, education, literacy, and income generation, coupled with measures to curb population growth. The discussion has also pointed out a number interventions which could have an impact across more than one sector, for examples - both increased primary education and adult literacy would have beneficial effects on income earning potential, health, nutrition and population efforts; - greater female participation in school and in non-formal education would significantly affect family planning behavior, and is also important since women are the key to improved health and hygiene in the family; and, - the acceptance of temporary methods of contraception needs to be expanded in order to obtain the health benefits of reduced fertility, and to have a real impact on population growth. 5.26 There are a number of promising approaches: the incorporation of non-formal schooling for girls (cheli-beti) and teacher training in health and child care under the Seti project; as well as the on-going adult literacy program, which UNICEF estimates could be expanded to reach one million illiterates a year using existing resources and teachers. In addition, evidence suggests that interventions which combine several approaches are particularly successful, for instance, members of credit groups are more amenable to family planning and literacy initiatives, and literacy classes can be used for hygiene and health training. - 39 - Chapter VI - PRIORITY AREAS FOR ASSISTANCE A. The Framework for Assistance Strategy 6.01 Nepal's situation is governed by three fundamental realitiess (i) a poor resource base, which includes a shortage of arable land, a young geology which results in difficult communications and erosion, and a land- locked location; (ii) overpopulation; and, (iii) the early stage of development, which is evidenced by a paucity of skilled personnel, and weaknesses in management and administrative systems. These factors make it difficult to construct a simple development strategy for Nepal. 6.02 Of the factors which can be controlled, overcoming social deprivation in Nepal is critically dependent on: Ci) reducing population growth; (ii) upgrading the human resource base; and, (iii) increasing agricultural productivity and creating off-farm employment opportunities. 6.03 While the population situation is bad even under the best of scenarios (para. 2.03), without effective control the population will increase to almost three times its current level (51 million) by 2030 - totally eroding the value of any other development initiatives. Given the abysmally low levels of education (eg. with more than two-thirds of the population illiterate), education is also critically important - not just because it is a prerequisite for commercial and industrial development, but also for the major contribution it can make to reduced fertility, improved health, and agricultural productivity (paras. 5.08-5.09). 6.04 Increased agricultural productivity will remain the key to improving living standards of most Nepalis for the foreseeable future - both because agriculture contributes 60X of GDP and the scope for industrialization is limited, and because the majority of the population are subsistence farmers - dependent exclusively on their own production, with little or no involvement in the cash economy. However, projected land availability (para. 2.18) shows that increasingly people will have to find off-farm income earning opportunities. The magnitude of this emerging problem is potentially catastrophic (paras. 2.04-2.05) - again the solution lies in curbing population growth and increased education and skills training. 6.05 The extreme personal deprivation in terms of poverty, malnutrition, and health status (Chapter 1) can in the long run only be overcome by effective improvements in education, employment generation, and upgrading agricultural productivity. However more immediate alleviation of some of the worst aspects is also possible by improved health care delivery and targeted poverty alleviation measures. - 40 - 6.06 Assistance strategy in Nepal in the social sectors should therefore follow a three-pronged approach of support for: (i) population control; (ii) education; and, (iii) increased agricultural productivity and employment generation. The effects of improvements in these areas will only be felt over a fairly long run. In the meantime, the current state of deprivation is sufficiently extreme - and the prospects for improvement so far in the future - that Nepal is one of the countries in which there also exists clear a role for major donors in supporting measures for immediate relief of poverty and poor health status. B. Priority Areas 6.07 The Government is currently undertaking a number of major initiatives in the social sectors which would benefit from additional assistance. These include in particular: Mi) A push to expand the coverage ard quality of primary education, for which HMG could utilize assistance in institutionalizing the approaches developed under the PEP and Seti projects, and in designing a nationwide model for school system expansion; in understanding the determinants of school attendancelnon-attendance; and, given the scope of the needs in the sector - substantial financial resources, as well. (ii) A program to significantly improve health status by 2000, with particular emphasis on maternal and child health; this will require sorting out the pervasive institutional problems affecting the health services; prioritizing the programs to be delivered - so as to concentrate on the most cost-effective; and working out a more coherent program for the health sector, to provide a framework for the coordination of aid and domestic resources. (iii) A drive to bring down the population growth rate substantially by the end of the century, for which major assistance will be required to improve the service delivery system for family planning, and to revitalize the commitment to population control within HKG. (iv) Steps to reduce poverty - as outlined in general terms in the Basic Needs Program - for which HMG can benefit from help in formulating the income-generating components of the program and in working up cost-effective poverty alleviation measures. In these areas, and in others outlined below, external assistance can potentially make a substantial contribution. - 41 - 6.08 A large number of donors are already active in the social sectors - many of them providing assistance on highly concessional terms. Given the limited absorptive capacity, this means that additional involvement should be focussed on those areas where the donor has a comparative advantage or in which there is a clear gap. These include, among others, the development of sector strategies and investment programs; analysis of, and developing linkages between the social sectors and the macro framework, and with the productive sectors; and aid coordination. Problems in the social sectors are largely ones of service delivery - involving micro interventions and subtle management improvements - which require intensive use of personnel and resources to strengthen institutional capacity and reform personnel and management systems. Given the magnitude of the requirements in the education sector, there is in addition a strong financial role to play in supporting expansion of the primary school system. 6.09 As an investment, expenditure on the social sectors will yield very high returns. Despite being generally conceived of as "unproductive" sectors, given Nepal's current situation, these may in fact be the most productive sectors in which to invest. The return on primary education is estimated by a recent sector analysis (USAID) at over 1002 12/ While this may be a high estimate, it is indicative of the magnitude of the return to basic education - which for developing countries as a whole is estimated at about 301. Given the potentially catastrophic population situation, the losses to be avoided by averting births through expenditure on family planning are also extremely high. 13/ Furthe.iore, health status is so poor in Nepal that it seriously affects productivity and drains resources in caring for the infirm - so that investments in hygiene, nutrition, and preventative health services can also yield very high returns. 6.10 At the same time the financial requirements of these sectors are substantial. In the education sector absorptive capacity has been demonstrated, and a doubling of funds is required to meet the target of universal primary education (see Education section in Volume II). While 12/ Nepal Education and Human Resources Sector Assessment, 1988, Section 2.7. 13/ Based on a rough estimate of $50 per birth averted (1983 sector study), the cost of reducing population growth by 1 million would be about $50 million. The dilution of GPD for the existing populace by the addition of an extra million people would be $225 million annually (assuming, quite reasonably, that Nepal's economy is beyond the point of increasing marginal returns to additional population). _ 42 - capital funding may not currently be the binding constraint in the health and population sectors, there is no doubt that additional finance has an effect on attracting competent staff, and that substantial funds are needed if an effective cadre of population and MCH workers is to be trained and employed. The degree of reliance on external finance (para. 4.09) and the unavailability of commercial funds for these sectors means that 1MG will require substantial concessional resources if it is to successfully expand the education network or mount a major effort to curb population growth. While there are many bilateral donors and specialized agencies active in these sectors, they cannot by themselves provide the aggregate amount or finance required. There are thus compelling reasons for greater involvement by the larger lenders in the social sectors, provided sufficient absorptive capacity can be demonstrated, and the sectoral framework and investment strategy into which support will be channeled has been well defined. 6.11 The priority areas for assistance within the education sector are primary, non-formal, and to a lesser extent lower secondary education - as these are the areas which potentially have the greatest impact on farmers' responsiveness to new initiatives, on equipping the landless for off-farm employment, and on health status and population growth. Within this, the education of women is particularly important for the direct effect it can have on family hygiene and health, and on family planning behavior. The dual objectives should be to get a greater proportion of children into school, and simultaneously to improve the quality of education. 6.12 A second priority is in resolving the imbalanced mix of effort and resources between secondary and tertiary education (paras. 3.17-3.19), and rationalization of the system of exit points, examinations, and transition between the two levels of education; in conjunction with management and quality improvements within the university system to improve cost- effectiveness. 6.13 In dealing with population growth, the priorities are improving the delivery of family planning services - particularly temporary methods, the increased use of which is essential to have any meaningful impact on fertility; and increasing women's awareness of and receptiveness to birth control measures - through increased female education and promotion of family planning. Service delivery improvements will depend on increasing the proportion of female field workers, substantially strengthening the institutional framework and management of family planning outreach services, and ensuring that sufficient resources are available for travel and subsistence. A second priority - which also affects health services - is to better integrate training with the delivery of primary health care services in rural areas. 6.14 In the health sector the priority is on improving maternal and child health, and thus child survival, as a means of reducing the number of children born through better spacing of births (para. 5.03). In addition, there is a need to rationalize the use of aid and of domestic resources in the health sector in order to reduce the duplication of effort. To achieve this HMG will need to take the lead in developing an overall sector strategy, using external assistance as necessary. As with population, - 43 - there is a need to improve service delivery and strengthen the institutions involved in the sector. This will involve clearly defining functions and positions within the framework of the integrated health services, strengthening decentralized management of the health care services, training and staffing very large numbers of medical and paramedical staff - ultimately in the neighborhood of 4 or 5 times current levels. External assistance will be helpful in undertaking the necessary functional analysis, in developing training systems, and financial assistance will be required to support the necessary training effort. 6.15 In the field of poverty alleviation the first priority is in improving food security for the 40-58X of the population which live in absolute poverty. This will involve easuring that agricultural enhancements reach small farmeTe, improving access to food - through food distribution, market development, and food aid; and ultimately on raising incomes through employment r. :dtion. In the medium run there is scope for helping HMG design cost-effe tive interventions aimed at the poor - by surveying existini rograms for cash-cropping, informal emplo-,-nent, skills acquisition, credit - identifying which are most successful, and which are amenable to expansion. C. Proposed Assistance Program 6.16 The following program is proposed in support of the strategy outlined above, and in the accompanying sector papers. This is not intended to be an exhaustive list of areas for assistance, but rather an indication of the highest priorities. 6.17 Education. Given the magnitude of Nepal'u requirements, and the need for sustained support in implementation, a continuing program of assistance for primary education is called for - at least through the next decade. The objective of the first project(s) in this program should be to expand coverage of the system. This would likely involve extension of the PEP model to other districts, measures designed to increase school attendance, and possibly some non-formal education. Preparation would include an evaluation of the lessons learned under the PEP and Seti projects, as well as an analysis of the determinants of school attendance and non-attendance. The following project(s) in the cycle could concentrate more on support for upgrading the quality of primary and lower secondary education. 6.18 In addition, it is recommended that HMG and/or one or more external donors should undertake a study of secondary and tertiary education - including university quality, management, and finances, and the relations and mix between secondary and tertiary education (see paras. 3.18-3.19 and Part I of Volume II, on the education sector). Following from this, a phased investment program in support of secondary and tertiary reform should be developed for support by all donors. It is recognized that there is a substantial ongoing program of donor support for higher education - the intention would not be to delay further assistance, but rather to help develop an agreed framework, which all assistance could be channeled in support of over a period of time. - 44 - 6.19 Population. The first step in designing expanded support to the population sector should be to review and analyse the experience of service delivery mechanisms and institutional issues gained under programs to date. In parallel consideration could be given to formulating additional project assistance aimed at upgrading service delivery and strengthening institutional capacity in the family planning/MCH program. The project(s) should concentrate on the delivery of services to the user at the field level, and would likely involve the recruitment of female workers, training, management improvements, and possibly some infrastructure. 6.20 Health. It is recommended that HMG mount an exercise aimed at formulating a more cohesive expenditure program for the health sector, which would provide the framework for better coordinating foreign assistance to the sector. This would include identifying priority programs which provide the most cost-effective health care interventions, and thus serve to work up an implementable version of the health Basic Needs program. A modified version of WHO's County Resource Utilization (CRU) Studies could form the basis of this exercise. This would be followed by redirection of resources over a period of time toward an agreed program of aid to support implementation of the results of the investment planning exercise. Such project support would possibly incl.ude management etrengthening, medical training, supplies and infrastructure, in addition to ongoing programs. 6.21 Poverty Alleviation. It is proposed that further work be undertaken to: (a) examine the dynamics of poverty in Nepal - pulling together the results of existing studies, and building on the work started under this review (see paras. 3.34-3.35 and Part III of Volume II); (b) determine how support for agriculture and economic activities can best contribute to equitable income generation and poverty alleviation; and (c) identify possible poverty alleviation measures which additional external assistance might support. This could be followed by a project or projects which would support the expansic- of activities identified under the sector analysis. Such project assistance could consist of any or all of the followings medium-term poverty alleviation measures (e.g. credit, skills- training, group formation); combined with elements of immediate relief (e.g. food distribution); and support for development of the Basic Needs components dealing with income generation. - 45 - Annex 1.1 Page 1 of 2 ........... NEPAL Social Sector Strategy Review Population Proj ections Assumed Growth Rates Low Medium High 1985-87 2.66% 2.66% 2.66% 1988-90 2.44% 2.44% 2.44% 1990-95 2.44% 2.59% 2.63% 1995-00 2.25% 2.59% 2.72% 2000-05 1.99% 2.53% 2.75% 2005-10 1.70% 2.46% 2.75% Projected Population (millions) Low Medium High 1990 18.9 18.9 18.9 1995 21.3 21.5 21.5 2000 23.8 24.4 24.6 2005 26.3 27.6 28.1 2010 28.6 31.2 32.2 NOTE: For assumptions underlying population growth rates, see Population - Part II.A, Volume II - 46 - Annex 1.1 Page 2 of 2 NEPAL Social Sector Strategy Review
Groupe de la Banque mondiale · Pre-2003 Economic or Sector Report
Nepal - Social sector strategy review (Vol. 1 of 2) : Overview and summary
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