Nepal - First rural development project

TRAINING MATERIAL CASE STUDY 15 NEPAL: THE RURAL DEVELOPMENT I PROJECT Agriculture and Rural Development Department The World Bank 1818 H Street, N.W. Washington, D.C. 20433 USA 1980 NEPAL THE RURAL DEVELOPMENT I PROJECT Peter Nottidge and Raymond Noronha, Projects Officer and Sociolo- gist respectively for the Nepal Rural Development Project since its iden- tification stage, arrived in Kathmandu in April 1979. They planned to meet with officials of His Majesty's Government (HMG), the Bank's Representative in Nepal (RRN) and David Mitchnik, Assistant to the Project Coordinator. RD I had become effective in July 1976, and had made good progress since then. Most project components were being implemented on schedule, and a high degree of coordination was being achieved among the various agencies involved. Parti- cipation of the village community, both formally through the district and village elected councils (Panchayats), as well as informally on a day-to-day basis was considerable, and district line officials were enthusiastically implementing the annual district plans approved by the Panchayats. This success seemed to have been largely due to the well-coordinated field work (involving extensive trekking in the hill areas and persistent fol- low up), of HMG officials, Panchayat members, villagers and project staff. A flexible approach to project organization had been adopted since the very beginning, with HMG and Bank officials openly discussing the pros and cons of each alternative. As a iesult, the initial proposal of establishing a high-level Project Board in the Ministry of Agriculture had gradually given way to a more complex system requiring extensive coordination between several administrative and developmental agencies at all levels. The original top- down approach to planning and implementation had been substantially supple- mented with a workable bottom-up process of local participation, utilizing tl District Administration Plan (DAP) implemented in July 1975. In recent months, however, government had proposed (and partially implemented) a process of further institutional reform. The delicate balance between the line agencies implementing the project and the Panchayat system of local involvement, seemed to be in danger of being upset, with financial and executive authority passing on to the elected bodies. Furthermore, the Project Coordinator and Project Coordinating Committee were shifted from the national to zonal levels and this was expected to require the establishment of new power and coordinative linkages between the various agencies. These changes could conceivably have far-reaching consequences for project success. The discussions to be held with 1MG to resolve these and other out- standing issues were therefore crucial. Consequently, Peter and his mission were anxious that they carefully review the various alternatives for organizing This case, prepared by Pammi Sachdeva, under the supervision of Ben Thoolen and Gus Schumacher, was developed for use in executive seminars for World Bank staff. Assistance provided by Peter Nottidge, Raymond Noronha and David Mitchnik is gratefully acknowledged. The case is designed to serve as the basis for seminar discussion, rather than to illustrate either ef- fective or ineffective handling of a project. Copyright: The World Bank, 1979 -2- rural development projects in Nepal, and propose the optimal package for review with government. It seemed to them that the stages-through which the project organi- zation had passed between 1972 and 1979 had important lessons for subsequent missions to Nepal, especially if the project was to be replicated on a larger scale and in different regions. Furthermore, even though Nepal's economic, social, cultural and administrative conditions were unique, it was likely that Nepali experiences with bottom-up planning and coordination could be of value to Bank projects in general, Background Nepal is one of the least developed countries in the world, and serious attempts at development have been under way only since the 1960s. Agriculture accounts for two-thirds of GDP and 94% of employment. Growth of agriculture has largely been through opening up lands in the lower plains (Terai); the hills and mountain areas have not shared in this growth due to a variety of reasons, including a lack of strategy for development, difficul- ties of access to these areas and inadequate resources (both financial and human). The population lives in villages along hillsides and in valleys, but its density varies considerably. The Panchayat is the smallest admini- strative unit, and cooperation and leadership within villages are functionally oriented. A sociological study of the village organization, attitudes to change and self-perception of the peasants' needs was conducted in the early 70's and shows a marked desire to share the benefits of development (see Annex 1 for details). The Rural Development - I Project was the first Bank operation for rural development undertaken in Nepal. Project identification was begun in mid-1972, appraisal was conducted in January-February 1975 and negotiations held in January 1976. The project became effective in July 1976, and had made good progress since then. Project Identification In mid-1972, Mr. McNamara visited Nepal, and discussed with officials of HMG and international agencies, "some thoughts on new directions the Bank might wish to follow in future." As a result, the Local Development Depart- ment of the Ministry of Home prepared an "unofficial" draft proposal for a US$7.0 million, 5 year program of village self-help, which would utilize the villagers' own interests and labor to build rural jeep tracks, roads, water systems, irrigation works, erosion dams, etc. The Ministry's interest was based on the fact that they had willing people, could mobilize the villagers and were the only ministry with officers in every district of the country and with the objective of nationwide development at the village level. As a follow-up, a FAO/IBRD cooperative mission visited Nepal in March 1973, and recommended that a proposal for an Integrated Rural Develop- ment Project be prepared jointly by FAO/HMG, who had the advantage of a more thorough cross-checking with Nepali policy makers than what was possible for a short IBRD mission. Accordingly, the FAO/HMG jointly prepared a discussion paper in June 1973, outlining a tentative US$10.4 million proposal which in- -3- cluded several project components--infrastructure (roads, storage) irrigation, river/erosion control, agriculture, livestock, fishery and forest:y. In addition, it was considered that some institution building would be involved since "the success of the project would ultimately dapend on the efficient participation of the population itself in the project area." . The Identification Mission visited Nepal in April-May 1974, and was informed that Government placed highest priority for the development of the region covered by the UNDP/FAO Trisuli Watershed Project. This area was preferred on account of relatively better access, availability of background data from the UNDP/FAO project, and proximity to the growing Kathmandu market. To assist in the collection of data and in project preparation generally, HMG set up an inter-departmental Working Group. Initially this had been composed of representatives of the departments/Ministries of Agri- culture, Irrigation, and Forests, but was now broadened to include the Agri- cultural Development Bank and the Agriculture Marketing Corporation. The Working Group made tentative recommendations on project organization since the HMG considered that the organizational set-up of ongoing projects in Nepal under which Government staff were seconded to project management had created administrative problems. No alternative solutions had been proposed by HMG so far. Review of Draft Identification Report The draft Identification Report (DIR) was prepared by July 1974, and comments were invited from interested Bank staff. While several persons reviewing the DIR largely agreed with its overall approach, some improveme,its were suggested. Four such comments, suggesting a critical reappraisal of the DIR proposals were the following: (i) The social infrastructure components should be examined in light of financial and manpower resources together with organizational problems which multi-disciplinary projects inevitably create. (ii) DIR shares HMG's views and rightly emphasizes the need to steer away from the semi-autonomous project authority con- cept of organization because of its claims on scarce Nepalese technical and administrative manpower. However, the organizational structure recommended (a project unit with nine divisions in the Ministry of Agriculture, Food and Irrigation) does not appear to lessen the demand for local expertise. No consideration is given to involving local government in project implementation to extend pro- ject outreach, for ensuring replicability of the project, and to assessing the back-up staff required in other Agencies for supporting the project. (iii) The project does not emphasize the need to get the farmers to participate, directly or institutionally, in the proposed de- velopment programs. There is no clear indication of the -4 - channels through which the proposed services, for example, extension and markeCing, will reach the farmers. In addi- tion, will a Project Unit within the Ministry of Agriculture be able to effect coordination and smooth operation of pro- ject components to be implemented by four other ministries? Why are Panchayats and the Chief District Officer left out in a regional development project? (iv) The report puts heavy emphasis on the role of cooperatives but does not elaborate. We believe cooperatives have a poor performance history. To what extent do cooperatives exist now and what are their roles both operationally and in the lives of the project area farmers? How would co- operatives be organized and restructured for project pur- poses? These comments reflected a desire that the project organization be designed in a more comprehensive manner. Several of the issues raised above were therefore proposed to be resolved with HMG during the preparation phase of the project. Project Preparation The Preparation Mission handcarried the draft Identification Report from FAO (Rome) to Kathmandu on September 30, 1974. Their work in Nepal up to October 20 was however hindered by inadequacy of counterpart and organizational assistance and by absence of an official reaction to the Identification Report distributed three weeks earlier. The mission became concerned over this ap-- parent lack of government involvement, and sought HMG's advice and guidance on various matters including project structure and scope, institutional and organizational arrangements and government participation. Outstanding issues were stated to be the following: "(i) Project Management: The Project Unit which is to implement the project will have to carry out functions which fall in the field of acti- vities of several ministries, namely, Agriculture, Forests, Public Works and Transport, Health and Education. Whether the Project Unit should be attached to the Ministry of Agriculture, and if so, how it could be vested with powers to coordinate the functions of the other ministries and matters on which HMG's views are sought. (ii) Inter-Ministerial Working Group: The Working Group set up to assist in project preparation has not been functioning. It is necessary to re-establish this Group so that they can be of assistance to the Appraisal Mission." In spite of considerable efforts during their three-week stay, the mission was unable to meet with the Nepal Planning Commission Vice-Chairman (who was busy with the Fifth Plan preparation) but "had a good meeting with the Secretary of Agriculture and his joint Secretary for Planning, at which most matters were satisfactorily clarified." It was felt that implementation would involve both the Local Development Department of the Panchayat Ministry -5- and the Forestry Ministry, but no unduly complicating organizational structure was envisaged. Whether these aspects would remain in the appraised project was to be the subject of later negotiation. Regarding project management, the mission stated that it had sup- port of the Ministry of Agriculture in recommending a Project Board under the 1956 Development Board Act on the lines of the Narayani Zone Irrigation Board, with the Secretary of Agriculture as Chairman. This aspect was also to be firmed up at appraisal and "possibly modified in the unlikely event that HMG objected." Firm assurances had been received that the Intermini- sterial Working Group led by the Regional Director of Agriculture would be reactivated well before appraisal. The Resid,-nt Representative was expected to pursue the institutional arrangements with the Planning Commission over the next few weeks with a view to achieving full endorsement. Further progress nTas expected to be made in follow-up discussions with HMG. A four week Pre-appraisal/Appraisal Mission was therefore mounted from January 3, 1975. Project Appraisal The Appraisal mission recommended that the project organization be closely tied to the District Administration Plan (DAP) which the Government wished to implement nationally from July 1. The DAP utilizes both the "Pan- chayat sector" and the line agenc.es for planning and implementing rural devel- opment. Details of the District Administration Plan In Nepal, the developmental and political organizations largely coincide. The Panchayat system which encompasses the political organization has four tiers: (i) At the lowest level is the village panchayat or for areas with a population of 10,000 and more, a town panchayat. These are composed of elected representatives of constitu- ent ward committees and headed by a chairman and vice- chairman. (ii) The next level i6 the district panchayat. This body is elected by representatives of each village/town panchayat, who form the district assembly. There are 75 district panchayats. (iii) All district panchayat chairmen, vice-chairmen, and members within a zone, form a zonal panchayat of which there are 14 in Nepal. Responsibilities include election of members to the National Panchayat and inter-district coordination and cooperation. (iv) At the highest level is the national panchayat of whose 125 members, 90 are elected by members of zonal panchayats. -6- The "panchayat sector," as local development is called, is under the super- vision of the Ministry of Rome Panchayats (MOHP). Administratively, Nepal is divided, into four Development Regions, running from north to south and each comprising Mountain, Hill and Terai areas. These regions were created primarily to stress the linkage between different ecological zones, the possibility of planning economic development in relation to the potential of each zone, and to move away from excessive emphasis on development of the Terai to the neglect of othet areas. Each region is sub-divided into Development Zones, varying from 3 to 5 in number, which are further divided into Districts. Although the basic structures (political or panchayat and admini- strative) were defined prior to 1975, there were no institutionalized links between the two and, therefore, no realistic basis for the formulation of plans reflecting felt local needs. This linkage has now been provided by the District Administration Plan (DAP), which focuses attention on the district as the fundamental unit in establishing local developmental goals. Under DAP, the Chief District Officer (CDO) is the administrative head of all government functionaries of line ministries operating at the district level. District officers of these line ministries are merged into a District Secretariat, which also functions as the Secretariat to the District Panchayat. DAP defines two areas of responsibility of the CDO as maintenance of law and order and district development. Execution of the latter function is entrusted to a Panchayat Development Officer (PDO) under the CDO's super- vision. Initially, CDO and PDO were responsible to different ministries - to the Ministry of Home Affairs and the Ministry of Panchayats, respectively, but this anomaly has now been done away with through the merger of the two Ministries into MOHP. Line ministries retain technical supervision of staff at district level whilst delegating administrative and financial responsibility to the CDO for the preparation and implementation of district development plans. Popular participation in development is established through coordination committees at district level, chaired by the District Panchayat Chairman and comprising the CDO, representatives of line ministries and District Panchayat. Thereafter, the plan is submitted to HMG. If approved, projects which are to be financed out of local resources, (i.e. from local voluntary labor and retained taxes) require the further approval of the district assem- bly; those to be financed from the Central budget are tabled with the district assembly for information only. The major responsibility for local development lies with village and district Panchayats. Village Panchayat programs are initiated at village meetings and submitted to the district Panchayat for technical clearance and financial assistance from grants which the LDD places at the disposal of district Panchayats for this purpose. Village Panchayat projects are imple- mented through local implementation committees composed of village Panchayat chairmen, district assembly members and voluntary workers. Technical super- vision is provided by district Panchayat staff. The MOHP undertakes training of officials and elected members and provides staff and development funds. -7- The responsibility for planning and implementation of district Panchayat development programs lies with the Secretariat of District Pan- chayats. After approval by the district assembly, development programs are submitted to the concerned departments for technical approval and provision of funds. During implementation, projects are supervised by technical staff of the appropriate departments. The MOHP provides a multipurpose development worker to each village Panchayat, who also acts as secretary of the Panchayat. Such workers not only serve as a liaison between the district administration and village Panchayats, but also provide administrative support, especially in respect of record keeping and accounting. Organizational Arrangements Recommended by Appraisal Mission The mission recommended that while responsibility for implementation of specific components of the pro'ect would rest w th designated Project Of- ficers from the ministries and agencies involved,- overall responsibility for the coordination of project planning and implementation would be vested in the Ministry of Panchayat and would be exercised by a Project Coordinating Committee (PCC), chaired by the Secretary, Ministy of Panchayat. The PCC would be comprised of the designated Project Officers, and the Chief District Officers (see Chart 1). There would be a Project Coordinator (PC) appointed from the Mini- stry of Panchayat who would be a member of and secretary to the Project Co- ordinating Committee. He would advise and assist the Districts, coordin- ate with the various ministries in developing detailed plans and implementation schedules, and monitor the use of project funds by the various ministries. Execution of individual project components in the field would be undertaken by local staff of participating ministries in coordination with the village and district elected bodies (Panchayats) and under the guidance of district administrative officers. Annual district planning would begin with each concerned ministry or agency providing the CDO of each district with appropriate technical guidance and the amount of funds available for development within the project guidelines. The District Secretariat, with assistance from the Project Coordinator, would prepare a district development plan in consultation with the district Panchayat. Individual components of the plan would then be implemented under the direct supervision of the technical 1/ The ministries participating in the project would be the Ministry of Finance, Ministry of Food and Agriculture and Irrigation (agricultural extension, research, training, irrigation and livestock development), Ministry of Forests (reafforestation, regeneration and erosion control), Ministry of Panchayat (project implementation, village water supplies, trails, small footbridges, fuel and fodder plantations), Ministry of Health (health posts), Ministry of Works and Transport (tracks, sus- pension bridges), Ministry of Land Reform (guided cooperatives), and the Ministry of Industry (cottage industries). In addition, the Agri- cultural Development Bank of Nepal (ADBN) (farm credit), the Dairy De- velopment Corporation (butter and cheese plant), and the Agricultural Input Corporation (farm inputs) will be represented on the Project Coordination Committee. -8- functionaries of the concerned ministries, but under the overall guidance of the CDO and with the support and cooperation of the District Panchayat. Execution of a number of components of the Project, such as small irrigation schemes, drinking water and track and trail development, would be performed by the villages themselves with technical advice and support from the district staff. Ministries, in providing budget and planning guidelines to the CDO for their respective components of the pro- ject, would delineate the roles of the district administration and village Panchayats. Monitoring of project implementation would be conducted on a day- to-day basis by the PDO, under the guidance of CDO. The Project Officers from HMG ministries would ensure that the various project components under their purview were being satisfactorily implemented. Quarterly and annual evaluation reports submitted by the CDO to the District Panchayats and the Project Coordinator would provide the basic monitoring documents. The Pro- ject Coordinator would, in addition to the CDO's reports, obtain and compile information from all concerned ministries and agencies into quarterly reports for submission to the PCC and IDA. An internationally recruited assistant to the Project Coordinator would be provided under the technical assistance component to heip to dev,elop procedures and expertise at district level in planning, budgeting and project implementation. He would also assist in setting up systems for project moni- toring, disbursement and accounting. Comments on the Appraisal Work The Resident Representative commented in a letter to Washington in early February 1975 that: "The Appraisal Mission had structured a practical project capable of implementation without straining local resources unduly. The emphasis on local participation and replication is right, and pivoting the projec- on an annual district development plan as a part of the new nation-wide District Administration Plan is the most likely route to successful implementation. The emphasis is on the transfer of techniques rather than resources and an inten- sification of inputs and reinforcement of line department district staff rather than radical departures from existing practices." Commenting on the project management the RRN stated as under: "I was originally of the opinion that we should push for a Devel- opment Board but I had under-estimated the growing disfavor with which HMG now views these institutions. They dislike the pro- liferation of these Boards outside the normal Government structure, the autonomy of their management and the salary inducements the Boards offer to attract staff; they also recall the complete failure of the Giri Multipurpose Development Board some years ago. I am converted by these arguments as were the mission. In any case, if the project is to be repeated eventually in numerous districts, the Board concept becomes quite impractical. -9- The solution eventually proposed by HMG was thet the co- ordinating/managing function should be vested in the Ministry of Panchayats. Details of the procedures to be adopted have yet to be worked out vis-a-vis the level and rank of the co- ordinator, monitoring, budgeting, disbursements and reimburse- ments, etc., but we have been promised a detailed paper within a month." The Issues Paper, dated February 25, 1975, elaborated further on this matter. It stated the following: "Government asked that particular attention be paid to the repli- cability of any management proposals. Consequently, it was agreed that the project be administered through HMG line departments operating at district level by District Secretariats within the framework of the new district administration plan. A District Development Officer under a Chief District Officer will be re- sponsible for the project in each of the two districts included in the project. The basis of project implementation will be an Annual District Development Plan, prepared within th- broad guide- lines of project proposals. A project coordinator and a Project Coordinating Committee at Federal level were also proposed." Project Post-Appraisal A Decision Meeting was held on March 6, 1975, and accepted the Appraisal Mission's recommendations with regard to the organization and man- agement of the project. The Yellow Cover draft was circulated for comments on June 6, 1975. Comments from officers in the Projects and Programs Divi- sions indicated a general apprehension as regards organization for project implementation and HMG's full understanding of and commitment to the project. One person commented that "the project was still a Bank proposal more than an HMG proposal"; others questioned the absorptive capacity of the several ministries involved in the project, the complexity of the organizational arrangements and the administrative feasibility at the local level. Doubts regarding the availability of a suitable Project Coordinator were also voiced. In view of these and other similar reservations, it was decided to have detailed discussions again with HMG rather than going ahead to the Loan Committee with a project which did not seem ripe. Meanwhile, the Resident Representative in Kathmandu vas asked to follow up on project organization with HEG. Project Approval The revised draft of the Yellow Cover was completed on July 1, 1975, and the draft statement of the project organization (including responsibili- ties of the Project Coordinating Committee, and the Project Coordinator) was received from Kathmandu on July 10. A Follow-up Appraisal Mission visited Nepal in September, and discussed all outstanding issues. It reported that in general, the project content met fully with the approval of government, and the proposed organizational arrangements would be effective and workable. The Coordinating Committee had already been officially constituted and had met effectively on a number of occasions prior to and during the mission's visit. - 10 - The Yellow Cover report was therefore updated and issued in draft Green Cover, negotiations were held in January 1976, the US$8.0 million IDA credit was approved in February, and the project became effective on July 15. Project Implementation The Home Ministry and Ministry of Panchayats were merged in early March 1976 so that the CDO and ?DO would now report to the same Ministry of Home Panchayat (MOHP). The November Supervision Mission reported good pro- gress and interministerial coordination, with almost all project actions implemented ahead of schedule. Adequate financing to carry out project pro- posals had been made available in the budget by HMG. The March 1977 Super- vision Mission reported that two internationally recruited staff had been appointed to assist with project implementation, one as administrative and planning assistant to the Project Coordinator and the second for training district staff in identification, preparation and implementation of small- scale irrigation schemes. An adviser for project evaluation had also been appointed to conduct the baseline socio-economic and other studies. How- ever, the availability of intermediate level staff in the project area (particularly works supervisors and agricultural instructor levels) was causing concern, as did the frequent transfers that had occurred. This was in part due to lack of education and other fac lities in remote hill districts and the absence of financial and other incentives needed to attract staff to these areas. The matter was discussed at length with the Minister (MOHP) who undertook to seek authority for payment of a special project allowance from the Ministry of Finance. The project continued to make good progress and attract high level political support in subsequent months. The new Minister of Home Panchayat, the Member of the Planning Commission for Regional Development, and the Secretary for Home Panchayats visited the project area, and had long meetings with the local Panchayats and government officers. The King also visited the area and was reported to "be impressed by both project concept and progress." Local level progress was assessed in January-February 1978 through a series of formally organized meetings between village Panchayats and dis- trict line officials. These meetings, held at five villages (five more were planned) helped in obtaining direct feedback from the target beneficiaries and elicited an enthusiastic response (see Annex 3 for major issues discussed and feedback obtained). At the federal level also, the Project Coordinating Committee had been meeting regularly. In its June 1978 meeting it approved an incentive scheme for field personnel allowing a 50% salary increase for non-gazetted and 30% for gazetted staff. In January 1979, disbursements of US$0.86 million were close to the estimated US$1.05 million. The Supervision Mission reported that district staff were "now well acquainted with the project and displayed considerable keenness. Popular participation was assured through preparation of the annual district development plan and there was a marked change in attitude of the people towards the ability of government to implement development programs," All this progress had required a tremendous amount of leg work and a close follow up by the Socio-Economic Unit set up under the project for on-going monitoring and evaluation, - 11 - Developments in Early 1979 A January 1979 telex from the Resident Representative in Kathmandu stated the following: "An Additional Secretary has been appointed in charge of Integrated Panchayat Development, and a Joint Secretary made in charge of co- ordination for all Rural Development Projects so that the Project Coordinator for Rasuwa and Nuwakot project now works for him. It is their intention that all project coordinators be moved to the field. The PCC created for RDI is no longer functioning. There is now a high level ministerial committee expected to meet once or twice a year chaired by the Prime Minister. An Implementa- tion Committee chaired by Minister MOHP and made up of Secretaries of concerned ministries has now been meeting regularly to consider the means of implementing the new institutional arrangements, especially the strengthening of the role of Panchayats in planning, programming and budgeting. The Panchayats are expected to dis- burse funds and have greater project execution responsibilities. I believe that if the funding responsibility issue is resolved reasonably they have a framework for a workable national institu- tion for Rural Development. Practical details for implementation need to be worked out, but at this juncture HMG appears ready to sit down and work out solutions with donors." Major Concerns In reply, the Project Officer noted that the important issue now 'appeared to be arrangements at district level particularly in respect of responsibilities for implementation and financial control." He was especially concerned with the definition of specific respon- sibilities and procedures at district level for (a) determining scope and size of annual district development (b) how these plans would be financed and accounted for, given that there were now two sources of finance, and (c) responsibilities for implementation of district and village level products. The development of the annual district plan had been a crucial step in the process of project programming and implementation. A recent report by the Socio-Economic Unit had emphasized the considerable progress made in this respect, but had also drawn attention to the problems being faced at local levels (see Annex 4). It was clear that a well-organized SEU/Project Co- ordinator's office could play a very useful role in project management (see Annex 5 for details). The impact of shifting the Project Coordinator and Project Coordinating Committee to the zonal level (even though executive authority was expected to remain at the Central level), the channelling of funds directly through the district Panchayats and the provision of executive responsibilities to elected representatives, were therefore proposals that needed to be given careful thought. The details of the new proposals for organizing rural development projects in Nepal are given in Annex 6. - 12 - Peter Nottidge felt that a thorough review of the various alter- natives open to HMG/IBRD was necessary, so that the most suitable arrange- ments for rural development in Nepal could be selected. The recommendations of the April 1979 mission were therefore likely to play a crucial role in ensuring the success of future rural development projects in the country. Chart 1 PROJECT ORGANIZATION HMG MINISTRIES AND AGENCIES MOP 1? z PROJECT COORDINATING COMMITTEE Ministry and Agency Project Offices > and District CDO's z PROJECT COORDINATOR w DISTRICT SECRETARIAT AGENCIES DISTRICT PANCHAYAT CDO, PDO, Local Officials HMG Ministries ADBN, DDC, AIC PROJECT COMPONENT PROJECT COMPONENT PROJECT COMPONENT ew VILLAGE PANCHAYAT -J PROJECT COMPONENT World Bank -15340 ANNEX 1 Page 1 BACKGROUND DETAILS ON NEPAL AND VILLAGE ORGANIZATION * General Nepal's per capita income in 1974 was estimated at $90-100 per year and the literacy rate about 14%. Development expenditures increased rapidly from NRs 232 million in 1964/65 to NRs 926 million in 1974/75. Agriculture accounts for about two-thirds of GDP, 80% of export earnings and 94% of employment. Growth of agricultural GDP has been largely through opening up new lands in the Terai (plains). Foodgrain production is the most important agricultural activity, but over the past decade, yields and per capita production have declined. Livestock accounts for 22% of the agricultural output, but productivity is low because of disease, poor genetic stock and inadequate feeding resulting from pressure of livestock on existing fodder resources. Nevertheless, livestock products contribute an important part of the subsistence diet in the form of milk, ghee, eggs and meat, and in many Hill areas provide the only source of cash income. The Villages The population lives in villages along hillsides and in valleys. Population density is greatest in the valleys and lower hills. Nuwakot district--which ranges from about 339 m to 2,400 m as1--has an average popu- lation of about 3,500 people (range 1,400-7,200) in each of its 48 village Panchayats (a Panchayat is the smallest administrative unit); with from 560- 750 households in each. Rasuwa district--which has an elevation from about 1,000 m to over 3,660 m asl--has an average population of 937 persons (range 350-1,290) and about 190 households, in each of its 12 village Panchayats. Panchayats are loosely organized, with cooperation and leadership within the village being functionally oriented--the cooperation of neighbors to construct crude irrigation canals, traditional labor sharing in heavy agricultural work (parma), services rendered by the debtor (cultivation, road construction) at the behest of a creditor. Wherever one ethnic group pre- dominates, contact between different groups is rare and further limited by geography and language differences. Village Organization and Attitudes to Change Socially, villages are unorganized. Leadership and cooperation are related to communal work, or to offices under the governmental admini- strative structure, which reach down into the village through elected Pan- chayats. Despite their isolation, villagers are quick to accept agricultural and other innovations. In general, however, there is skepticism about govern- mental programs due to lack of continuity; absence of trained personnel; un- suitability of some innovations; irregularity of supplies; and lack of awareness and communication of programs. The most important weakness has been poor com- munication. * Source: Appraisal Report, February 1976 ANNEX 1 Page 2 Peasant Attitudes and Perception Despite isolation and life at subsistence levels, villagers cannot be called "conservative." They generally understand the importance of in- novations--improved seed types, use of fertilizers and acceptance of new crops (wheat). Furthermore, there are no dietary or custo:ary obstacles to innovation. There is recognition of the need for formal education of both sexes. Villagers are keenly aware of their needs and have their own prior- ities. In a brief and limited survey of villages the expressed needs, in order of priority, were: (i) drinking water supplies; (ii) better irrigation/ "more water"; (iii) improved seed and better supply of seeds; (iv) improved trails and more bridges; (v) potatoes; and (vi) sheep. The last two needs were particular to northern Nuwakot and Rasuwa districts. These priorities were further expressed in a memorandum "Requirements for Development of Nuwakot District", prepared by village Panchayats and presented to the District Panchayat. ANNEX 2 Page 1 DETAILS OF RURAL DEVELOPMENT I PROJECT * Project Description The project proposes to support a comprehensive development of the rural Hill districts of Nuwakot and Rasuwa located north of Kathmandu. It would support the development strategy of HMG which seeks to balance economic growth with improved income distribution, provide for more equitable regional development and ensure productive benefits from previous road developments. Some 29,000 families reside in the project area, 96% of whom farm less than 1.0 ha with holdings averaging about 0.3 ha (among the smallest in the world). A major goal of the project is to increase farm productivity for approximately 85% of the families in the area to the point where they are able to meet their full yearly family subsistence 'requirements instead of the eight to nine months as at present; attainment of this objective would assist in controlling the spontaneous settlement in lowland forests by large numbers of marginal farmers from the Hills. In addition, imple- mentation of the project will provide or improve health services, water supplies, tracks and trails and erosion control affecting all families li7ing in the project area. Productivity of cottage industries and the administra- tive infrastructure would also be improved and strengthened within the districts. Technical assistance would be provided under the project to develop programs for monitoring and evaluating the effects of this project and to prepare a further rural development project. An irrigation engineer and ad- ministrative support for overall project management would also be provided. With the exception of cottage industry outputs, almost all in- creased production from the project area would be consumed on the farm to meet subsistence needs, or sold or bartered in nearby villages for other essential ingredients of family diet. However, some grain surpluses, winter vegetables and dairy products would be available for marketing. Approximately 48% of the total project cost would be addressed to components directly or indirectly affecting the increased farm and cottage industry production and 40% to social and infrastructure components. The remaining 12% would be applied to project administration, evaluation and technical assistance. * Source: President's Report to Executive Directors, February 1976 ANNEX 3 Page 1 SUMMARY OF VILLAGE PANCHAYAT MEETINGS HELD AT RASUWA/NUWAKOT DISTRICTS JAINUARY/FEBRUARY 1978 * General The Rasuwa/Nuwakot District Panchayats organized a series of meetings with the village Panchayats to improve the level of participation among the farmers and promote a greater understanding of the District Development Plans (DDP). Over 100 people attended the meetings at each of the five villages; participants included the village Panchayat Chairmen, ward leaders, village secretaries and farmers from the area. The District Chairmen, members of the district Panchayat, the CDO's, all the department line officers (DLOs), representatives of the Bank to the village campaign and staff of the coordinator's office also participated in the discussions. Each meeting lasted two days. Content of Discussion There was neither an earth-shattering revelation on any issue, nor any 'basic need' which was brought to SEU's attention and which they were not already familiar with prior to these meetings. Indeed, the Co- ordinator's staff had already trekked in over 20 village Panchayats (out of a total of 61) in Rasuwa and Nuwakot Districts and had held informal discus- sions with farmers, AA's, ward leaders, village secretaries and JTA's. Nor indeed was there any disagreement or objection to the DDP. On the contrary, if more funds and personnel could be made available there was an expressed wish that the project should expand all its activities in both districts. However, the meetings revealed a number of shortcomings in the project, some of them serious enough to impede the progress of certain acti- vities. Most of the comments related to lack/shortage of supplies and per- sonnel, lack of information, delays in provision of facilities and ineffective- ness of village level staff. Participants also complained about the lack of communication between the line departments and the village Panchayats, and about lack of coordination between the line departments. The DLO's reacted quite strongly to these complaints. They com- plained of the villagers' unwillingness to cooperate or participate in pro- ject implementation, indifference of village Panchayat Chairmen and ward leaders to the project and their inability to mobilize the local population, a general lack of self-reliance and community spirit, and a generally passive response to certain project activities. These complaints and counter-complaints cleared the air between the farmers and officials for the first time, and opened a direct channel for uninhibited communication. Past mistakes were readily admitted and commit- ments for a more positive approach made. *Extracted from report by Socio-Economic Unit for RD I. ANNEX 3 Page 2 The major conclusions and recommendations were the following two: (a) Participation of village Panchayats in programming and implementation Recent experience had shown that in so far as tracks, trails, drinking water supplies and irrigation schemes were concerned a considerable amount of participation and cooperation did take place between the village Panchayats and the relevant Departments. However, the other activities were programmed and implemented in an arbitrary fashion without consulting or discussing them with the village Panchayats and the rural population. It was therefore recommended that each DLO, and this included all the Officers from the following Departments: Agriculture and Livestock; AIC; ADBN; DDC, LDD; Irrigation, Works and Transport; Soil and Water; Forestry; Health; Co-operatives and Cottage Industry, should hold one or more meetings with the village Panchayats and leading farmers to discuss their Plan of activities for the fiscal year. Discussions were to include the following: (a) the general Plan for each component; (b) method of implementation; (c) calendar of operations; (d) method of participation by the rural population; and (e) re- sponsibility and commitment to the program and its activities by the village Panchayat and the rural population, especially during and after a particular activity had been implemented. The main purpose of these meetings and discussions would be to establish a permanent line of communication and a dialogue with the elected and leading members of the rural population. It was found that information could best be obtained by organizing periodic meetings and discussions with village Panchayat mem- bers and community leaders, rather than having a Department send a representative from Kathmandu who tried to assess various needs of both districts in three weeks. (b) The informal training of village Panchayat members The responsibilities assigned to the village Panchayat members and farmer/leaders made it all the more necessary for them to receive informal training in concepts of community development and leadership. Tney were responsible for communicating the program and its activities to the rural population and, above all, ensuring that the farmers understood and appreciated the need to cooperate and participate in the social and economic development of their communities. Both these recommendations were accepted by the various agencies and village groups participating in the meetings. The SEU and Coordinator's Office were expec,ed to continue to monitor progress and arrange follow-up meetings whenever necessary. ANNEX 4 Page 1 PREPARATION OF DISTRICT DEVELOPMENT PLANS - SOME OBSERVATIONS * General Since DAP was introduced less than 2 years ago, it is too early to make a detailed evaluation of this program. One major weakness, however, which has already become apparent, is a general lack of expertise at district level in development plan preparation. Problems Encountered Our experience has shown that responsibility for preparing the DDP cannot be given exclusively to the District Panchayats since the plans pre- pared by them are akin to 'shopping lists' and often bear little relevance to what is technically and economically feasible. There are a number of reasons why the District Panchayats are unable to formulate realistic and equitable DDP; these can be summarized as follows: (i) Socio-Political pressures often .dictate the type of village plans approved by the District Assembly. Moreover, poli- tical and influential leaders of both districts often with the strong backing of politicians at the capital city are able to ensure that their interests are reflected in the DDP. This has led to acrimonious bickering among the District Panchayats and District Assembly members, and has resulted into a hotch potch DDP. (ii) The majority of Village and District Panchayat leaders lack the basic technical, statistical and economic information for drawing up a viable DDP. (iii) Whereas final sanction or approval of the DDP rests with the Central Department or Ministries (since they alone can judge. the amount of qualified manpower and resources which will be available during the fiscal year), most plans emanating from .he Ministries or from the District Panchayats often ignore or do not make provisions for the very poor village Panchayats which cover nearly 50% of the population in the project area. An informal survey had however indicated that inspite of these difficulties, the implementation of the District Administration Plan and the preparation of the district development plans are done much more efficiently in the Project districts of Rasuwa and Nuwakot than in any of the other districts in the country.1/ * Paper prepared ly David Mitchnik, head of Socio-Economic Unit (SEU) and Assistant to the Project Coordinator. 1/ Comment by Raymond Noronha ANNEX 5 Page 1 FUNCTIONING OF THE SOCIO-ECONOMIC UNIT * The task given to the Coordinator's Office to coordinate at the Central level and assist the District Panchayats in planning, programming and implementation cannot be undertaken with any degree of effectiveness unless ongoing progress monitoring and evaluation is carried out. The Socio-Economic Unit (SEU) which was set up to undertake progress monitor- ing and evaluation is an integral part of the Coordinator's Office and assists the latter to carry out its functions at the Central and District level. The work of the SEU can be summarized as follows: (a) The Quarterly Progress Report (QPR) The report gives an account of all the project's activities specifying the number of staff and vacant field posts in each component; a description of each program and targets achieved or to be achieved. The information for the QPR is obtained from the District line officers and Central Departments. Copies of the QPR are circulated to all concerned Ministries, Panchayat members (National and District) and line officials. (b) Project Impact Analysis This involves ongoing monitoring and evaluation to measure the pro- ject inputs and determine the impact of various programs and activities on the local population. This is undertaken on a yearly basis. Four components were chosen because they have an immediate and direct impact on people's level of subsistence. These are: Crop Production; Cottage Industry; Agri- cultural Credit; Dairy Development. (c) Analysis of Problems Experienced in Different Components A number of Departments require the assistance of the SEU to carry out studies where additional data or information is required for plan- ning and programming certain activities. The following surveys having been carried out: (a) milk production surveys, (b) agriculture credit and dairy development, (c) marketing of farm produce, livestock and cloth. In all this work, an effort is made to ensure that the reports are presented in as simplified a form as possible, so that they can be easily understood and used by those who receive them. The SEU is therefore an im- portant tool and support for the management of the Project.1/ *Source: Paper prepared by David Mitchnik, Assistant to the Project Coordin- ator and head of the Socio-Economic Unit. 1/ Comment by David Mitchnik ANNEX 6 Page 1 PROPOSED ARRANGEMENTS FOR RURAL DEVELOPMENT PROJECTS (1979) Central Level The proposed rearrangement (see Annex 6, Chart A) would entail, first- ly, the establishment of a new committee at Cabinet level, chaired by the Prime Minister and responsible for setting overall policy on matters of Panchayat development and secondly, a series of administrative changes within MOHP to cater to an increasing number of international agencies involved in inte- grated rural development projects and to improve project coordination, particularly at the Zonal level. At the Central Government level, these changes involve the setting up of a Central Coordinating Committee (re- placing the previously established Project Coordinating Committee), chaired by the Minister of Home Panchayat and including representatives of the National Panchayat, Back-to-the-Village National Campaign Committee (BVNCC), Secretaries of involved Line Ministries (designated as Project Officers) and a Central Project Coordinator (CPC), holding the rank of Additional Secretary as Member/Secretary of the Committee. Zonal Level A Zonal Coordinating Committee (ZCC) would be established for re- viewing rural development projects within each zone and recommending action to be taken by CCC. It would be chaired by the Zonal Commissioner and com- prise Chief District Officers, Regional Directors of line departments, BVNCC District Chairmen, District Panchayat Chairmen and have the Project Coordina- tor (PC) as member/secretary. The PC would be assisted by an expatriate assistant appointed under the technical assistance component of the project and would be located within the project area. Project Level The PC would play an important role in preparation of financial estimates and district development and would assist CDOs and District Secre- tariats in the preparation of the development plans and detailed implementa- tion schedales. Although PC's role would be advisory, he would have the responsibility of drawing disputes and conflicting priorities irreconciliable at the district level to the attention of the relevant ministries and central agencies and, if necessary, to the ZCC for resolution. PC would also monitor the process whereby each concerned ministry and agency makes identifiable budgetary requests for financial provision to implement the planned project components and would collate such requests for the ZCC and the Finance Mini- stry. The District Secretariat, with assi3tance from the PC, would prepare a District Development Plan in consultation with the District Panchayat. Par- ticipating ministries/agencies would then provide technical clearance of their components through their designated project officers. Individual components of the plan would then be implemented under the direct supervision of the technical functionaries of the concerned ministries, but under the overall guidance of the CDO and with the support and cooperation of the District Panchayat. The role of the Panchayat in programming, disbursement of funds and implementation of the project would be strengthened. NEPAL PROPOSED ORGANIZATIONAL ARRANGEMENTS FOR RURAL DEVELOPMENT - 1979 Commiltees Memhers Cabinet Level Committett n All Cabinet Members Panchayat P.M - Chaiiman z 2 atm National Panchavat ftipttesentatives. 0 IMG Ministries and Agencies BVNCC Chiirmant, Socre!tarits of tMOIP Lt Depatwtnents, Central Prmjct 4 Coorimalt. Mmstet o 110tme Panchayat - Cliatiaim Centrel Prolect Coordfiator Zonal' Disttact Panchavat Chlat#Tmali . Ziegional l ine Department lieagts. z Zotal Coinissioner Coordinating - BVNCC Chatrman Provect Coormator Zoial Commiissione - ChanitIIa ProjecIt Coordinator Chitt District OcChief District Chitel District Village Patchayat Chaman, CDO, Olficel Oficer District Pachayat P D.0. L ina Depat Itletit fiestiisenstallv. DtiBasttrli District Darchula District District Panchayam Cliimisnana Chaliian 0 Distct Panchay District Paechayat District Panchayat Dist,i Pinchaat District Secretariat District Secretalaat District Sertiat Sub-Commutee Sub Coniitee St t b CommitteeStll ctat P DO. Lina Departnts P D.O. Line Dep&artnents P1) 0. Line Departments tlPamhy 1leD0.h/Edcanin eprAg att a Public Wöj ks Devetpet Villa Panr.hayat rt Wosti tarismk 1939 J6