Report No.7498-NEP Nepal Social Sector Strategy Review (in TwoVolumes) Volume I: Overviewand 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 beused byrecipients onlyin the performance of their official duties. Its contents may nototherwise be disclosed without WorldBank authorization. Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized
Transcript
Report No. 7498-NEP
NepalSocial Sector Strategy Review
(in Two Volumes) Volume I: Overview and SummaryApril 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 recipientsonly in the performance of their official duties. Its contents may not otherwisebe disclosed without World Bank authorization.
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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 ............. ...................................... iiEXECUTIVE SUMHARY ................................... . . ........... iv
I. CURRENT STATUS-THE STATE OF SOCIAL DEPRIVATION ......... .......... 1
A. Introduction ....... 0.......................................... 1B. Poverty and Incomes . ........................................ 2C. Health and Education . ....................................... 4D. Population ................................................. 6
II. THE OUTLOOK FOR THE FUTURE ....................................... 8
A. Population Projections ...................................... 8B. Labor Force. ............................................... 9C. Incomes . .................................................. 10D. Food Balances ............................................... 12E. Land Pressure and Migration . . . 14
III. GOVERNMENT STRATEGY ..... ..... ............. 17
A. Overview . ...................... . 17B. Education .. . ............... 18C. Health . ............. 22D. Population . ..... ................ . 24E. Nutrition .. . ............. 25F. Poverty Alleviation ... .............................26........ 26G. The Basic Needs Program ..................................... 26
IV. INSTITUTIONAL ISSUES AND COMMON THEMES .. 4 ..... 28
A. Service Delivery Problems .................................. . 28B. Resource Constraints ....................................... . 29C. The Role of Aid .. ........................................... 30D. The Planning and Budgeting System . . .. 30E. Decentralization .... . . ...................................... 31F. Non-Government Organizations ............................... . 31
V. INTERSECTORAL LINKAGES ........................................... 32
A. Health and Population .. ... 33B. Education . .... 34C. Poverty, Food Supply, and Agriculture .............. . 35D. Environment ..... 37E. Conclusions ..... 38
This document has a restricted distribution and may be used by recipients only in the performanceof their official duties. Its contents may not otherwise be disclosed without World Bank authorization.
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SOCIAL SECTOR STRATEGY REVIEW
Table of Contents (Cont.)
Page No.
VI. PRIORITY AREAS FOR ASSISTANCE ...... .. .................... . 39
A. The Framework for Assistance Strategy ....................... 39B. Priority Areas ................................ . ..... 40C. Proposed Assistance Program ............................... .. 43
ANNEXES
Annex 1 - The Implications of Population Growth 1990-2010Annex 1.1 - Population ProjectionsAnnex 1.2 - Income ProjectionsAnnex 1.3 - Projected Food Balance and Calorie AvailabilitiesAnnex 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 inMay, 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).
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NEPAL
SOCIAL SECTOR STRATEGY REVIEW
PREFACE
Objectives and Structure
1. The objective of this report is to provide a framework fordiscussion of assistance strategy in the social sectors in Nepal over thecoming five years. A combined sector analysis of education, population,health, and poverty and incomes issues was undertaken. The review soughtto reach an understanding of the current status and issues within each ofthe sectors, of the programs of His Majesty's Government of Nepal (HMG),and to recommend priority areas for support. A second objective was toexamine the dynamics at work within the social sectors, and their linkageswith the process of economic development in Nepal more generally.
2. The report is presented in two volumes:
Volume I - Overview and SummaryVolume II - Sector Reviews
Part I - EducationPart II - Population and HealthPart 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 growthover the next 30 years, and discusses common issues which arise across thevarious sectors. It also pulls together the individual sector analyses,and concludes with a discussion of priority areas for assistance. Theindividual sector reviews in Volume II present more detailed data, an in-depth critique of R4G's policies and programs, and more detailed discussionof specific proposals for Government and external assistance strategy.
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EXECUTIVE SUMMARY
1. Nepal is extremely poor, with only Ethiopia having a substantiallylower per capita GDP. Almost all indicators of social deprivation are alsoamong the very lowest in the world: between 40 and 602 of the populationlive at income levels below that estimated to be required for a minimumcaloric intake; life expectancy (52 years) and infant mortality (115 per1000) are similar to levels found in the worst parts of sub-Saharan Africa;and a majority of the population suffer from the effects of malnutritionand/or debilitating diseases. (Volume I, Chapter 1).
2. The country is afflicted with a serious poverty of humanresources. Only about 342 are literate (152 of females), and it isestimated that less than 82 of the post-school age population havecompleted secondary education. Lack of education on this scale severelylimits the capacity to develop the economic base, or to make progress inother areas (eg. hygiene or family planning behavior). At the same timeNepal is already seriously overcrowded relative to the existing resourcebase, and without a major population control effort, population will doubleby about 2015, and double again in the following 28 years. There is littleor no prospect of significant development taking place until these problemsare overcome. (Volume I, Chapter, 2).
3. The expected path of population growth critically affects thedevelopment prospects for Nepal. Projections indicate that by 2005 newentrants will be joining the labour force at a rate of about 10,000 perweek, 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 andthat agricultural land is already approaching saturation, this poses atremendous challenge to the economy to create off-farm employment andincome-earning opportunities.
4. If population growth continuer unabated, there is little prospectof per capita GDP rising above US$ 200 by 2010, even with moderatelyoptimistic assumptions regarding GDP growth. Similarly, in the absence ofa major transformation of the agricultural sector, food production will beunable to keep pace with population growth, and average per capita foodavailability will fall to about 302 below minimum daily requirements in thenext 25 years - implying the need for substantial food imports.
Government Programs
5. HMG has come a long way in tackling problems of social deprivationin the last 30 years. There has been a major expansion of educationcapacity - especially at the primary level. A substantial populr ioncontrol effort was launched in the early 1980's, mainly by sterilization;and a number of specialized health programs have been established - forexample, for malaria eradication and immunization.
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6. However, the Government was starting from a very low base, andprogress has inevitably been slow. About half of school age children arestill out of school, and the majority of the population never receive anyformal medical care. The population program, after a good start, has lostmomentum: only 17! of married women practice contraception - and the vastmajority of those are accounted for by sterilizations performed afterhaving already had 4 to 6 children.
7. Despite good intentions and reasonable policies, most operationsin 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 ofsupplies and staff; and (iii) the absence of overall strategies and aid co-ordination, resulting in duplication of effort and ineffective use ofresources. (Volume I, Chapter 4).
8. Recognizing the continuing poor status in the social sectors, HMGhas recently launched a Basic Needs Program intended to attain minimumAsian standards of health, education, and nutrition by the year 2000. Theaims of the program are laudable and appropriate. However the specificgoals are very ambitious, and the program does not as yet address thefundamental service delivery problems that need to be overcome if theprogram is to be effective. (Volume I, Chapter 3).
Specific Conclusions
Education
9. The priority at this stage needs to be on primary and non-formaleducation - for the contribution it can make to agricultural productivity,to the ability to take advantage of imployment opportunities, and to thesuccess of health and population effurts. Many potential students remainoutside the school system, and in designing the expansion of the schoolsystem there is a need to clearly understand the determinants of non-attendance. In addition to new classrooms, the quality of the curriculumand of teaching need to be upgraded, and large numbers of new teacherstrained. There are serious financial constraints in the education sector -for example, it is estimated that HMG would have to approximately doubleexpenditure on primary education (from its current level of about $28million 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 educationcapacity (currently less than 20X of the high-school aged population are inschool) and to redress the imbalance of effort and resources betweensecondary (13X of the education budget) and tertiary education (24! of theeducation budget, but only 3X of students). In addition there is a need tosort out serious management and institutional problems which affect theuniversity system, and to rationalize the system of exit and transitionpoints for secondary education.
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Population
11. A major national effort is required if Nepal is to succeed inaddressing the population problem. In particular there needs to be a shiftto the use of temporary methods of contraception. This requires much morecomplex sustained support to users on an outreach basis. This will involveinvigorating the family planning service delivery system with a majorinjection of funds, training, and personnel, strengthening programmanagement, and, above all else, the use of mostly female health and familyplanning workers (at the moment about 90S are male). (Volume II, Bealthand Population, Chapters 6 and 11).
12. This effort needs to be augmented by a number of supportingactivities, including improved maternal and child health care, increasedfemale 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 levelsof Government there needs to be strong recognition of, and commitment to,the central importance of population activities. Without this it isunlikely that the agencies and programs involved in the sector will receivethe necessary support.
Health
13. There is a need to resolve a constellation of institutionalproblems which hamper the health servicet particularly with respect tointegration of vertical programs and the degree of decentralization toregional and district levels. The same service delivery and staffingproblems apply to the health service in general as to the family planningprogram. Major increases in health manpower are also required (probably ofthe order of 4 or 5 times current levels), and training has to be linkedmore closely to service delivery. (Volume II, Part II, Chapters 9-11).Resource planning and aid co-ordination are particularly in need ofstrengthening in the health sector.
Nutrition
14. It is estimated that 702 of children suffer from some form ofmalnutrition, and about 602 of the population suffer from goitre (caused bya lack of iodine), with a correspondingly high incidence of disability andretardation. While the majority of malnutrition is due to insufficientfood availability, there are also serious deficiencies of such traceelements as iron, and Vitamin A.
Poverty
15. The problem of poverty in Nepal is largely one of an aggregateshortage of resources, rather than of distribution of wealth and income.Pervasive poverty thus needs to be tackled through a combination ofincreased agricultural productivity and off-farm employment creation. Thefact that the vast majority of the poor are subsistence farmers withlimited involvement in the cash economy suggests that poverty alleviationefforts will have to focus largely on agricultural productivity, at leastin the medium run.
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16. At the micro level there is evidence that there are structuralproblems which exacerbate the impoverishment of small farmers, especiallyin the hills. (Volume I, Chapter 5). There is scope for povertyalleviation through making use of intensive income-generating schemes insome areas, and improvements in the structure of credit, skills training,and agricultural extension. However, available evidence suggests thatcurrent agricultural extension and targeted credit programs often fail toreach the very poor. Further work is proposed to examine the dynamics ofpoverty, and to investigate the scope for targetted poverty alleviationmeasures. (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, Chapter5) to demonstrate the linkages between advances in the social sectors andeconomic development more broadly, as well the mutual interdependenciesamong the various social sectors. Increases in agricultural productivityand employment will contribute markedly to improvements in health,nutrition, and population control; and conversely advances in populationand health will materially affect the scope for economic growth. Above alleducation - especially of women - is a key determinant of progress infertility reduction, health and nutrition behavior, and the ability to takeadvantage of income-earning opportunities.
Priority Areas for Assistance
18. HMG is currently undertaking the following measures which wouldbenefit from greater supports
- a push to expand the coverage of primary education and a nationalliteracy campaign, for which HMG needs assistance in designing amodel for nationwide school system expansion, as well assubstantial financial support;
- a program to significantly improve health status by the year2000, which will require sorting out the pervasive institutionalproblems, prioritizing programs, and working out a coherentexpenditure program for the health sector;
- a drive to bring down the population growth rate substantially bythe end of the century, for which major assistance will berequired to improve the service delivery system for familyplanning, and to revitalize the commitment to population controlwithin HMG; and,
- steps to reduce poverty - for which HMG needs help in formulatingthe income-generating components of the Basic Needs program, andin working up cost-effective targetted poverty alleviationmeasures.
19. It is pointed out (Volume I, Chapter 6) that at Nepal's currentstage of development investments in these areas can provide some of thehighest economic returns. At the same time financial requirements aresubstantial, commercial finance is not available in these sectors, and
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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 qualityimprovement of primary and non-formal education; at leastthrough the next decade;
(ii) further effort in support of improved service delivery forfamily planning and maternal and child health, concent--tingparticularly on outreach care at the periphery;
(iii) sector work on the determinants of poverty, the linkages ofincomes with broader development strategy, and on the successof various poverty alleviation efforts;
(iv) assistance to HMG in developing a resource use strategy forthe health sector, followed by an agreed program of donorsupport for the resulting investment plan; and,
Cv) assistance in addressing the joint problems of secondary andtertiary education through a comprehensive study, to supportan agreed program of reforms and investments.
The proposed assistance strategy is discussed in more detail in Chapter 6of the Overview report, and in the concluding chapters of each of thesector 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 socialdeprivation. The fact that such poverty in largely rural, and existsamidst spectacular mountain scenery, tends to mask it from the casualobserver, and for this reason the extent of deprivation in Nepal is oftenunderestimated. Nonetheless, the facts remain that average incomes (incash and kind) are only about 38 cents US per day and that a largeproportion of the population cannot feed themselves adequately; that nearlyone-fifth of all children die before the age of five, and that for thosewho live, malnutrition, chronic illness, and disability are continuingfacts of life.
1.02 In comparative as well as absolute terms, Nepal is one of theworld's poorest countries - with only four countries having a lowerreported per capita GDP. 1/ Other indicators of social welfare reflect asimilar relative position, often rivaling those of sub-Saharan Africa.Table 1.1 below illustrates Nepal's relative position with respect to somekey development indicators.
Table 1.1: Indicators of Relative Underdevelop.ent -Selected Countries 1
CalorieLife Per Capita Infant Under-6 Avallability
1/ According to the 1988 World Development Report (WDR). For consistencyof inter-country comparisons all data drawn from the 1988 WDR (exceptunder 5 mortality from the 1987 WDR); these may not be consistent withestimates cited elsewhere in the text, which were drawn from morerecent surveys and reports.
In only seven countries is life expectancy lower than in Nepal; and in onlytwelve are a child's chances of surviving the fist year of life worse thanin Nepal. Food availability - measured in terms of calories per capita -is worse only in Bangladesh, Haf.ti, and a handful of sub-Saharan Africancountries.
B. Poverty and Incomes
1.03 For the last 20 years the Nepali economy has been virtuallystagnant, with per capita GDP growing at less than one per cent per annum.The agricultural sector, which accounts for over 60% of GDP, has beenperforming even more poorly - with average production of food grainsincreasing at only about 1.4% p.a. over the last 15 years. Yields haveactually been declining, and what little growth there has been is accountedfor by expansion into more and more marginal areas. The situation is, ifanything, worsening as population growth puts continuing pressure on theresource base In general, and on food supplies in particular.
1.04 Perhaps as many as half of the population live in villages in thehills and mountains which are inaccessible by road, making developmentdifficult and expensive. The young topography, difficult terrain, andextensive 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 anaggregate shortage of resources. This manifests itself as extensivepersonal poverty, with about half of the population living at or just abovestarvation level. The average income (in cash and kind) is only 8 rupeesper day - equivalent to about 38 cents US - and for about 37% of thepopulation (some 6 million people) it is less than Rs. 6.5 per day (28cents) - or not much more than the minimum estimated to be required forsurvival.
1.06 Poverty is concentrated primarily among rural people (who make up97% of the absolute poor) - and the incidence of poverty is almost twice ashigh in the hills as in the terai; although a National Planning Commissionsurvey (1983) found that everywhere except in urban areas and rural partsof the Central region, average family income was insufficient to meetconsumption needs. If poverty is defined as the level of income needed toprovide a minimum caloric intake (estimated in Nepal at 2250 calories perday), then about 40Z of the population live in poverty. If this is raisedto US$200 per capita per year, a not unreasonable level, some 60% of thepopulation would fall below the poverty line. This last result serves toemphasize the fact that with a flat distribution of income around a verylow average, many who are not technically poor still have little more thanthe minimum income needed to survive.
1.07 Another aspect of poverty in Nepal is the absolute shortage offood - both for individuals and for the country as a whole. Food grain
production has amounted to about 4.4 million tons anuually - equivalent toabout 165 kg. of food per capita 2/ - or about 1550 calories per personper day. With the production of other foods (milk, vegetables, meat,etc.), this increases to an average output of about 1930 calories perperson per day - versus an estimated requirement of 2250 calories. Intheory this shortfall could be compensated for by imports - but the netflow of foodstuffs has tended to be in the other directior. - out across theIndian border. In any event most individuals do not have the resources topurcha6e additional food even if it were available.
1.08 The implication that individual familie3 are suffering severe fooddeficits is borne out by anecdoLal evidence at the village level. Atypical poor hill far-tng fmnily of seven owns not much more than half ahectare of land, which produces about enough to feed the family for threemonths of the year. Almost half of their crop will go in payment of rentto the landlord. During a substantial portion of the year they will eatonly one meal a day. The family must occasionally borrow from the landlordor moneylenders to meet catastrophic circumstances (eg. when crops fail, ormedical attention is reqiuired), and the debt service on such loans is oftenequal to their entire ar^.-al rice production. In such a family there iscontinuing oalnutrition and illness, and it is almost a certainty that atleast one child will die as a consequence of ill-health aggravated bymalnutrition.
Labor and Unemployment
1.09 Unemployment is low (below 5), although underemployment isestimated to be as high as 402. However it may not be particularlymeaningful 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 thelittle income that they do have. Due to the difficult conditions muchlabor is devoted to the carrying of water, fuelwood, and fodder. It isestimated, for example, that 162 of all human labor is devoted to fuel andfodder collection alone. In this labor-intensive environment childrenprovide an important source of labor from an early age - according to the1981 Census 572 of children between the ages of 10 and 14 are workers, witha relatively heavier work burden falling on the girls.
Women
1.10 Women in Nepal live and work under particularly difficultconditions. While women are largely poor due to shared, common poverty,tLere is also an unequal distribution of resources and workload within thesociety. In the terai, where more orthodox Hinduism prevails, women'sroles and opportunities tend to be tightly circumscribed. In the hills andmountains women participate more actively in productive and socialrelations, however they are more heavily burdened due to the greaterdifficulty in getting food, fuel, and water - which often involve walking
2/ Average annual production, last 4 years (1982-86), net foodavailability is 652 of production after milling, conversion, feed andwastage.
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long distances - in addition to their agricultural and child-careresponoibilities. In many cases the family food supply is insufficient tomeet the energy demands created by their labor - especially during the pre-harvest 'hungry' months. This situation is exacerbated by the fact thatmost 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 Nepalwhich prevents the vast majority from participating ir. even the limiteddevelopment that does take place. A corollary of this is that it isunlikely that substantial economic advances can be made until thefundamental constraint of an almost entirely uneducated and unhealthypopulation is overcome.
Health and Nutrition
1.12 Infant mortality is about 113 per 1000 while under-5 mortality isestimated at about 165 per 1000; although in some areas of the country thisis as high 300 per 1,000, that is, in such areas one child in tbnree isdying before the age of 5. Many of these deaths are accounted for bydiarrhoeal diseases, often complicated by malnutrition, and acuterespiratory infections. Life expectancy remains very low (about 52 years),and the generally abysmal state of health is underlined by the fact thatNepal is one of the few countries in the world where the life expectancy ofwomen (51) is less than that of men (54). The crude death rate has fallenfrom 27!1000 in the 1950's to about 15/1000 at the present, as a result inpart of the increase in literacy and ease of communications, the expansionof 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 sufferingillnesses as much as ever. The principal causes of morbidity arediarrhoeal diseases, parasite infestations, upper respiratory infections,and the complications of pregnancy and childbirth. Although the incidenceof malaria had decreased substantially by the 1970's, there has been aresurgence aggravated by insufficient spraying coverage, ecological change,and increased migration.
1.14 While the health system has expanded dramatically in the last 20years, most people still never receive any formal medical treatment -either because it is not accessible to them, because they do not haveadequate information about it, or because they do not believe that it canhelp them. The vast majority of pregnancies and births, for example, takeplace without any medical assistance - resulting in needless complicationsand infections - a breech birth, for example, almost certainly results indeath for both the infant and the mother. One study found that in thesurvey area 50Z of fatalities from respiratory infections and otherdiseases could have been prevented if detected and treated - yet peopleprefer to stay at home and wait out the course of a disease, rather thanwalk several hours or days to a health post which may have neither suppliesnor staff. Similarly, although an immunization program has recently beeninitiated, only 112 of children are fully immunized, SOZ have received noimmunization at all, and immunizable diseases still account for a largeproportion of morbidity and mortality among children.
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1.15 A national nutrition survey in 1975 found that 702 of childrenunder six were malnourished In some form - 502 to the extent that theirphysical development was notably impaired. High levels of malnutritionamong children are due to insufficient food availability, inadequatebreastfeeding due to work constraints and the poor nutrition of mothers,and to the high prevalence of diarrhoeal disease. In combination with theabsolute shortage of food, specific deficiencies of such nutrients as iron,iodine, and vitamin A result in a high prevalence of disability and mentaland physical retardation. Iron deficiency among mothers (one survey found78Z to be clinically anemic) perpetuates ill health among the children bornto them. A lack of iodine in the diet leads to a very high incidence ofgoitre throughout the population (about 60Z), and causes some children tobe born deaf, mute, or suffering the more severe signs of cretenism.Another significant cause of disability is vitamin A deficiency, which caneventually lead to blindness.
Education
1.16 Literacy has been increasing rapidly - from only 32 in the 1950'sto about 342 in 1986 3/ - however this means that two-thirds of thepopulation are still illiterate. This scale of illiteracy has majorramifications on the pace of development, and on health and populationbehavior. Of particular concern is the fact that literacy among females isonly 13x.
1.17 Despite substantial progress, a large proportion of childrenremain out of school. Enrollments are officially estimated at about 822for primary school, and 20? for secondary school. However enrollment datamaybe overstated due to (a) over-reporting, (b) the high rate of drop-outs,and (c) because many students enrolled do not actually attend. A recentsurvey suggests that about half of the boys and a third of girls (betweenthe ages of 6 and 10) are actually enrolled - and that of those initiallyenrolled, 35? drop out without completing the first grade, and over halfdrop out before completing primary school. While no accurate data isavailable on attendance it is clear that many students notionally enrolled- especially girls - do not actually attend - due to labor demands on theirtime, as well as social perceptions of the value of education. It isestimated that only 122 of 13 to 15 year olds have completed primaryeducation, and that only 32 of post school-age females have completedsecondary school, as opposed to 13Z of males.
1.18 While there are very few Nepalis with higher education, it isdifficult to evaluate the impact of trained manpower constraints in theabsence of any good data on employment and labor supply. Although there isclearly a shortage of trained personnel throughout the system, anecdotalevidence suggests that this is being overcome with the slow increase inthroughput of the education system, but that severe shortages continue to
3/ Possibly over-reported since estimates are based on questioning ratherthan testing.
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exist of low-level, semi-skilled, labor. The most serious effect of thevery low level of eduication however, is the general inability to contributeto development and modernization - whether through the inability of mostpeople to understand basic agricultural innovations, to take advantage ofoff-farm employment opportunities, or failure to grasp the basics ofhealth, 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 forthe current economic base - as is evidenced by the extent of land pressureand the very low per capita food balances and national income. The averagedensity is about 6 persons per hectare of cultivable land in the hills, and4.5 in the terai - although it ranges up to 11 persons per hectare ofcropped land in many parts of the hills. Similar densities are found inthe delta areas of China and Bangladesh - but these have rich soils andproduce two or three crops per year. Population pressure is also resultingin severe environmental degradation, and this in turn is aggravating landshortages, as productive land is increasingly lost to erosion anddeforestation. The magnitude of these problems is getting worse (seeChapter 2) as limits to saturation are approached, and because thepopulation is bound to keep growing for at least the next 20 years due tothe 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 eitherpregnant 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 notpermitted under 16, 402 of girls are married below the age of 14, as manyas 7? by the time they are 10. It is also estimated that 401 of girls bearat least one child between the ages of 15 and 19. Although many recognizethe desirability of limiting family size, they are unwilling or unable todo 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 offamily planning methods, and use of some form of contraception has risenfrom about 7 percent of the population in 1980 to almost 15 percent today- a substantial improvement, but still far below what would be required foreffective population control. However, most of the increase has been dueto sterilization rather than temporary methods, and since most aresterilized after having had more than four children, there is 'rery littleimpact on population growth. The idea of spacing births is not yet widelyunderstood, and is practiced by very few. However, Nepal does not have thecultural and religious barriers to birth control that one finds inBangladesh or Pakistan, and if incomes would rise, if families could expecta greater proportion of their children to survive, and if the Governmentcould put into place an effective program to promote and support temporarymethods - then there is the possibility that population growth could beeffectively curbed. However, given the unlikelihood of real incomes rising
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substantially enough to have a major impact on family planning decisions inthe near future, efforts must concentrate on improving the service deliverysystems. (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 halfmillion each in the mountains and in urban areas. Although fertility ishighest in the hills, population has been growing fastest in the terai dueto in-migration. There has always been substantial seasonal migration fromthe hills to the terai and to India for employment and trade during the dryseason. However, with increasing land pressure, more and more families aremigrating permanently as they find they can no longer support themselvesfarming subsistence holdings in the hills. Traditionally the dispossessedfrom the hills have moved to the terai, but with increasing land scarcityand resistance from earlier settlers, the terai is becoming saturated.The net result is that new emigrants must go to the towns - either in thehills or the terai.
1.23 Nepal is currently one of the least urbanized countries in theworld, but urban growth - at over 8 percent per annum - is the highest inSouth Asia; and the largest terai towns are growing as fast as 20? perannum. Although this is admittedly on a low base, the future will clearlysee a continuing and rapid shift towards urbanization, with consequentimplications 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 morereliable picture will not emerge until after the next census. Althoughconcern is often expressed about the number of Indians farming in the teraiand working in Kathmandu, these appear to be offset by the large number ofmigrants from the hills who leave the country, going mainly to India.
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Chapter II - THE OUTLOOK FOR THE FUTURE
2.01 The previous chapter documents the current pervasiveness of socialdeprivation in Nepal. Unfortunately, the situation is deteriorating withcontinuing population growth. Quantitative analysis is presented in thischapter to demonstrate the implications of expected population growth fordevelopment prospects and living standards. This is done by drawing onpopulation projections to forecast:
(a) the growth in labor force and unemployment;
(b) expected per capita incomes based on a range of assumptionsregarding growth in GDP and income distribution;
(c) food balances and per capita food availability based onvarious scenarios for growth in agricultural productivityand output; and,
(d) settlement patterns and the availability of arable land.
These are not refined forecasts but rather plausible scenarios - based onreasonable assumptions - which reflect the magnitude of the emergingproblem, and place some reasonable bounds on what may be expected to happenin Nepal over the next twenty years. (see Annex 1 for details ofprojections 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 withrespect to the rate of change in such variables as fertility, infantmortality, and life expectancy. These are described in detail in theaccompanying paper on population (Volume II, Part II). The underlyingassumptions, which are summarized in Table 2.1, involve the Total FertilityRate (TFR) declining from a current level of 5.8 to betweern 2.9 (veryoptimistic) and 5.3 (pessimistic) - with the corresponding populationgrowth rate ranging between 1.5Z and 2.7Z per annum by 2010. The expectedcase assumptions are somewhat conservative, and it is just possible thatwith an all-out national effort on population control, the more rapiddecreases in fertility could be achieved. However the medium projectionsaccurately reflect the mission's judgement of what may reasonably beexpected given current family planning behavior, the state of HMG'sprograms, and the evidence of observed rates of change in other countries.The lower growth rates are only attainable if a major political andfinancial effort is put into population control over the next ten years.
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2.03 Table 2.1 shows the results of these projections:
Table 2.1: Population Forecasts Through 2030
Fertility PopulationScenario Rate Growth Rate Projected Population
Under the expected scenario the population increases to 31.2 million by2010 (from 16.5 million in 1985), and even under the optimistic scenario itrises to 28.6 million. The fact that there is not much variation betweenthe projections over the medium term reflects partially the mission'sconclusion that rapid improvement in population control is unlikely, andmore importantly, the "momentum effect' of past population growth. Thisphenomenon is illustrated by the fact that under all scenarios the growthrate rises to over 2.5Z p.a. at least during the period 1990-2000. This isalmost inevitable, since even if effective birth control were institutedtoday, due to past growth there are 4.1 million girls already born who areapproaching fertile age, - that is, 50? more than all women currently offertile age - in addition, more of these girls are living to maturity, andmore of their children will live to maturity. The net effect is that underall 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 inthe numbers of people who will be seeking employment. Under the expectedprojections, 4/ the labor force will double over the forecast period, asillustrated below:
Labor Force 5/(millions)
1985 6.71990 7.92000 10.32010 13.6
That is, by 2000 the labor force will be growing at a rate of about 300,000per annum. To put this in perspective, in 1981 total non-agriculturalemployment amounted to only 606,000 persons.
4/ Labor force growth over the next 20 years is almost identical under allscenarios, since new entrants have mostly already been born.
5/ Labor force is defined here as 1OO? of males and 60Z of females betweenthe ages of 15 and 59. Most studies in Nepal take all males and abouthalf of females aged 10 and above.
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2.05 In the past the economy has to some extent been able to absorbmarginal population growth though a combination of smaller farms, theopening of the terai, and labor market expansion. With the saturation ofarable land (paras. 2.17-2.18), almost all of these new entrants will haveto be absorbed in off-farm employment activities - a prospect of staggeringproportions. By the year 2005 such new entrants will be joining the workforce at the rate of 10,000 per week, posing a tremendous challenge to theGovernment 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-formalemployment;
(ii) for education and training to prepare people to takeadvantage of off-farm income-earning opportunities; and,
(iii) to prepare for the possibility of having to cater to alarge pool of urban unemployed.
2.06 Quite apart from the problem of insufficient income-earningopportunities for additional population, further growth will increase thedependency burden (from 7.5 million under-15 year olds currently to over 15million by 2020) in terms of the number of children to be fed, clothed,educated, and otherwise cared for - thus substantially reducing theresources available to make the investments needed for longer run economicgrowth. At the same time, given that Nepal is almost certainly beyond thepoint of increasing returns to scale in the labor force, unrestrainedpopulation growth will only serve to reduce the capital-labor ratio andproductivity in the longer run.
C. Incomes
2.07 With extensive poverty already prevalent, with continuingpopulation growth, and with lacklustre historical economic performance,there is reasor to be concerned with the prospect of increasing poverty inNepal. In order to assess the likely range of outcomes, per capita incomeshave 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, incombination with various assumed rates of population growth. The mostlikely GDP growth estimate corresponds to the average achieved over thelast ten years; while the high and low estimates correspond respectively tothe 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 4years.
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2.08 Table 2.2 shows the evolution of per capita GDP under variousassumptions, and details are given in Annex 1.2.
Table 2.2: Proiected Per Capita GDP - 1995-2010(Constant 1987 Rs per capita)
Under the expected conditions GDP per capita inches up at about 3/4Z peryear 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 lowpopulation growth) there is a 57Z increase to about US$270 per capita by2010: and under the worst conditions forecast, high population growthoffsets relatively low GDP growth, and per capita income remains move orless stagnant around US$170 per capita.
2.09 The current flat distribution of income may not obtain in thelonger run, firstly due to increasing urbanization and unemployment;secondly, due to increasing dispossession and impoverishment - especiallyin the hills - as population pressure and indebtedness push more smallfarmers off the land, with a potential transfer of assets to landlords; andthirdly, due to the process of increasing monetarization, trade, andindustrialization, all of which increase the opportunities for accumulationof surpluses, and are often accompanied by a deterioration in thedistribution of income.
2.10 In order to gauge the potential impact of such changes, averageper capita incomes within each quintile have been forecast on the basis ofboth constant and deteriorating distributions of income. 71 Under expectedconditions of growth (medium population, medium GDP growth) the poorest 402remain below the poverty line by 2010 - even if the current distribution ofincome can be preserved. If the distribution of income were to deteriorate
7/ The distributions used assume the following proportion of income goingto each 20? of population.
Lowest Second Middle Fourth Top 20XConstant 10? 14Z 18I 23? 35ZDeteriorating (by 2010) 52 82 172 25Z 452
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to a level more typical of developing countries, then even with moderatelystrong (3.3Z) GDP growth the lowest 402 of the population drops well belowlevels necessary for survival (e.g. US$40 per capita annually for thelowest quintile, US$65 for the second lowest). Although such a situationis obviously untenable, it serves to illustrate the importance of guardingagainst further deterioration in the distribution of income.
Table 2.3: Estimated Annual Per Capita Incomes(Constant 1987 Rupees)
Lowest Second Middle20Z Lowest 20Z
Estimated Current (1987) Incomes 1515 2120 2730
Expected Case - Constant Income(2010) Distribution 1785 2500 3210
- Deteriorating IncomeDistribution 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 noerosion in the distribution of income, the poorest 20? still remain belowthe absolute poverty line for at least the next 20 years. These resultsemphasize the fact that in Nepal there will be a need to provide relief tothe poorest on a continuing basis for the foreseeable future.
D. Food Balances
2.12 Food balances have been projected by combining the populationgrowth scenarios with assumptions regarding changes in the yields and areasplanted to each of the major crops. From these, net national foodsurpluses/deficits have been calculated, as well as daily per capitacalorie availabilities. Balances based on domestic production are notnecessarily indicative of the food supply situation, as the country couldpotentially shift production effort to areas of greater comparativeadvantage, and then trade for food. For Nepal, however, domestic foodbalances are probably a good rough indicator of food availability for many,given the preponderance of subsistence farming, absence of distribution andmarketing networks, and relative underdevelopment of the cash economy.
2.13 The ranges of growth in yield and area used in the projectionshave been based on the best and worst reasonable (e.g. 4-5 year) averages
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observed over the last 18 years. 8/ Detailed assumptions are described inAnnex 1.3, but in summary they result in the following average annualgrowth rates in total food grain supply over the 20 years 1990-2010:
To put this in context, during the 10 years 1977-87 growth of food grainproduction averaged only 1.3Z p.a, although recent performance gives somegrounds for hoping that more rapid growth can be achieved.
2.14 These projections show that only under the most favorablecircumstances (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 GrowthCalorie \a Food \b Calorie \a Food \5 Calorie Foodsupply Balance Supply Balance Supply Balance(cal/capita) (000 mTj (cal/capita) (000 mT) (cal/capita) (000 mT)
a/ Average daily calories per capita. Minimum requirement estimated at 2250.
b/ Thousand MT annuaily of food grains plus potatoes - demand based on minimumcalorie intake of 2250 per day, with 80 to be provided by grains and12 p.a. growth for income effect.
8/ A middle 'expected' scenario is based on a combination of very long runaverages (at least 15 years), or, in the absence of consistent data, onthe mean of the best and worst scenarios for a particular crop. Anupper limit is placed on growth in area planted consistent withapproximate total agricultural land availability, this allows for a 102expansion in area planted in the hills and mountains, and a 302expansion in the terai.
9/ Annual growth rate higher until land constraints limit growth beyondabout 2005.
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The total food deficit increases under all but the most optimisticscenario. Under the moderate growth projections it more than doubles froma current level of 520,000 tons to 1.2 million tons annually by 2010. Forillustrative purposes, at current prices the cost of imports to meet thisshortfall would be in the neighborhood of US$0.2 billion annually.
2.15 Perhaps of greater concern are the projected per capitanutritional availabilities. On the basis of the expected populationprojections, Nepal would be unable to supply basic minimum calorie needsexcept under the most optimistic production assumptions. This is becausethe assumed upper bounds on land availability are such that total outputcannot keep pace with population growth. If these constraints wererelaxed, by for instance much more intensive cropping, then Nepal couldjust supply basic minimum calorie needs by the year 2010; however, thiswould require a sustained effort to maintain recent encouraging trends inagricultural growth. Under the most likely scenario, average calorieavailability (1700) lies far below the minimum level (2250) even by 2010;and under pessimistic yield and area assumptions per capita daily calorieintake would fall below starvation levels (to about 1210 cal/day by 2010)without massive food grain imports - i.e. imports about equal to about 60Zof total current production.
2.16 Adjusting for differences in population growth doesn't materiallyalter these conclusions. However, it should be stressed that these areonly very rough estimates of food crop production, used here to illustratethe likely range of outcomes. These projections are based on historicalperformance in the sector (albeit over a long period), and it is possiblethat the picture could be significantly different within 20 years - if, forexample, irrigation is effectively implemented on a large scale, ortechnical innovations are widely adopted.
E. Land Pressure and Migration
2.17 Regional projections of population clearly illustrate the emergingproblem of where excess population is to be absorbed. It has been pointedout (para. 1.22) that the hills and mountains are already saturated - withaverage densities of about 6.0 persons per ha. of cultivated land. Thehistorical solution has been migration to the terai, but projections usinghistorical (1971-81) migration rates show that the hills could not sustainthe implied increase in population. The implication is that at expectedpopulation growth rates, out-migration must accelerate; however if oneapplies more rapid migration rates, then the terai rapidly approachessaturation as well, even if one assumes a moderate increase in arable landavailable. 10/ The solution is thus a pool of drifting landless, who, byprocess of elimination, must end up either in urban areas or emigrating.
10/ The projections assume average increases in cultivated land of 0.5sp.a. in the terai, and of 0.25? p.a. in the hills.
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2.18 After several iterations, migration rates have been adjusted toreach 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 of4.6 to 8.0 persons/ha. - about the highest observedelsewhere (e.g. China 7.9, Bangladesh 8.5).
The final projections thus represent a balancing strategy, which avoidsexcessive 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)
The two most notable facts to emerge from Table 2.5 are that even with aconservative limit on population density the population of the teraidoubles from 7 million to 14 million by 2010, equivalent to almost theentire populatLon of the country at present; and that the urban populationincreases more than five-fold - to almost 8 million people. This meansamong other things that cultivated land availability in the terai declinesfrom a average farm size of 1.35 ha. per household of six to just under0.75 of a hectare per household - implying the need for a doubling inagricultural productivity if current household incomes are to bemaintained.
2.19 Urbanization in this context includes all off-farm settlements,and in Nepal much of this growth may consist of the expansion of bazaarsand road-head trading centers. In addition, the Kathmandu valley willcertainly continue to grow rapidly (one study projects that allagricultural land will have disappeared from the valley by the year 2000).However, the most rapid growth will probably continue to be in the teraitowns - which are expected to grow at rates of 10-15? p.a..
2.20 Some such urbanization is inevitable and desirable. as it is anatural adjunct of the growth in trade and monetarization; however theconcera is that with no sign of industrialization, the agricultural base
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may not expand rapidly enough to create sufficient secondary off-farmemployment opportunities for this new landless population. Another areaof growing concern is the shortage of urban services and infrastructure -already in an abysmal condition - without which the exponential populationgrowth will result in a corres,onding worsening of urban squalor.
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Chapter III - GOVERNMENT STRATEGY
A. Overview
3.01 The overall thrust of Government development strategy has been toconcentrate on the expansion of agriculture and on provision of the basicinfrastructure needed to sustain longer term development. Within thiscontext, the social sectors have been accorded a relatively lower priority,although the importance of developing human capital has been recognizedwith continuing expansion of a universal education system. A substantialeffort was put into population control in the early 1980's, but thisappears to have lost momentum. In addition, HMG has been working on a slowcontinuing expansion of health services, along with the installation ofwater supplies. More recently attempts have been made to extend creditprograms to reach the poor.
3.02 Expenditure on social programs has averaged between 15 and 202 ofHMG's budget over the last 10 years, and currently represents about 32 ofGDP. Table 3.1 summarizes public expenditure on social services.
Table 3.1: Public Expenditure on Social Services, Selected Years
a/ Recurrent and capital. In addition, HMG finances some credit andother targeted programs, but these represent an insignificantproportion of public expenditure.
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The share of the budget going to health (5 to 6Z) and to education (11Z) isconsistent with other poor developing countries; although the shares of GDP(12 and 2X respectively) are relatively low. Per capita expenditure onboth has been growing consistently in real terms over the last 10 years (atabout 4Z p.a.) but is still very low in absolute terms. In 1986/87 percapita expenditure was equivalent to about '3.20 on education, and $1.60 onhealth 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 manyinstances are not only financial. Thus, while additional finance iscertainly necessary, it is unlikely that a major infusion of funds alonewould go far towards improving health or educational status. There areserious implementation problems across all of the social services involvingissues of management, staffing, motivation, and service delivery (discussedin 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. Evenwhen strategies are adopted, operational constraints often prevent theirimplementation; or execution focuses too much on quantitative targets (e.g.enrollments), rather than achieving the desired result (e.g. childreneducated) - with correspondingly insufficient attention to the operationalproblems which need to be resolved.
3.05 The following sections very briefly describe and analyse theGovernment's programs in the social sectors. A fuller critique of HMG'sstrategies is provided in the accompanying papers on education, health,population, and poverty.
B. Education
3.06 Historically development of the education system has concentratedon the expansion of facilities rather than quality of education. Theschool system was established through the 1950's and 60's, largely withforeign assistance, and primary schools now cover most of the country. ANational Education System Plan (1971) introduced new curriculum, increasedaccess, and the beginning of a secondary school system. A nationaluniversity, which includes all post-secondary training, now consumes abouta third of the education budget. Secondary schools on the other hand aresupported largely through community contributions and fees. There is agood, but small, program of non-formal education which teaches basicliteracy to adults.
Primary Education
3.07 The challenge now is to expand the coverage and improve thequality of general education. In many instances there is a lack ofteaching material, the curriculum is uninspiring or irrelevant, teacherslack enthusiasm for their work, teaching methods rely heavily on repetitionand rote learning, and there is an absence of management and supervision.
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Enrollments are constrained by other factors - but the low attendance andhigh drop out rates are also due in large part to the poor quality and lackof relevance of the education currently offered. HMG recognizes theseproblems, and is addressing most of them, however it is building from a lowbase, and progress is inevitably slow.
3.08 With only 652 of students in school, and class sizes alreadylarge, there is clearly insufficient capacity in the primary system.Expansion of the system, however, faces a number of constraints, andalthough the absorbitive capacity of the education sector has beendemonstrated, there are questions as to how rapidly the system can, andshould, expand.
3.09 HMG has set universal primary education as a target under theBasic Needs Program - and although this is an appropriate objective, theyear 2000 is probably too early to expect to achieve it. The BNP proposalsare centered on: (i) increasing the number of schools to get universalcoverage; and (ii) a crash program of teacher training. The proposals callfor an increase of 4,000 schools, although this may be excessive - sincemost of the new students will necessarily be the sisters of boys already inschool (and thus within range of a school), substantial savings could thusbe made by concentrating on increasing the number of classrooms at existingschools (and hence reducing the overheads of new locations, principals,etc.).
3.10 The teacher training proposals call for a crash program of 4 weekstraining for new teachers - who must hold a School Leaving Certificate(SLC). There are currently insufficient primary school teachers - and lessthan 10X are female. However current policy results in a danger ofteachers being over-qualified (academically) and under-trained(pedagogically). HMG requires teachers to have an SLC certificate - thisrequirement both limits the number of candidates unnecessarily, and acutelyrestricts the potential supply of female teachers. A more useful strategymay be to delay introduction of the SLC requirement, and to increase theduration of pedagogical training.
3.11 The effectiveness of the primary education system could beimproved at lower cost by (a) getting more students into school; and (b)improving the internal efficiency of the school system. In expandingcoverage cognizance needs to be taken of the reasons children are notcurrently in school. These include a combination of labor demands on theirtime; cultural constraints (especially in the case of girls); the perceivedlack of quality and irrelevance of education provided; and, in some areas,the inadequate number of schools. It is proposed that an analysis of therelative importance oZ these factors be undertaken - drawing from theexperience under the Seti and Primary Education Project (PEP) - in order todesign a least-cost solution for expanding the primary system.
3.12 The internal efficiency of the primary system is estimated at only302 to 40? - partially because schools are not open, teachers are notpresent or not teaching the full time, and because there are highrepetition rates. School and teacher performance can be addressed throughimproved supervision, training, and service conditions for teachers. Onepotential solution to the repetition problem is to pursue a more liberal
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promotion policy - especially in the early grades. This would reduce thecost of repetitions (estimated at 342 of system resource wastage), andcould also have the effect of keeping more children in school - as there isevidence that if students can be kept in the system for the first threeyears they are more likely to complete primary school.
3.13 Although the above improvements could reduce the marginal cost ofsystem expansion, one should not underestimate the absolute magnitude ofthe costs involved. On the one hand, the demographic profile is such thatthe school age population will increase by about 35? in the next 12 years.If current real enrollments are only about 65X of the potential studentbody, then this would imply the need for approximately doubling the primaryeducation 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 toillustrate the order of magnitude involved. To finance such an expansion,for example, the education budget would have to increase from llZ to 14? ofHMG's budget (which is unlikely) and even this would leave nothing forinvestments in other forms of education. The primary school system willthus continue to require substantial external assistance for theforeseeable future.
Non-Formal Education
3.14 MOEC operates a very successful adult literacy program which hasdeveloped first-rate instructional materials. The program currentlyreaches about 70,000 persons per year. However with over 10 millionilliterates, this has little impact on the scale of the problem. It isestimated that the program could be expanded at relatively low marginalcost (since materials have been developed, and the pool of potentialfacilitators is larg) to reach substantially more adults, as well as out-of-school youths. First steps are now underway to expand this program to afull-scale national literacy campaign. There is also a need to developsimple post-literacy materials in order to maintain proficiency.
Secondary and Tertiary Education
3.15 The most striking feature of the secondary school system is thelack of capacity. Only about 20? of high-school aged children are inschool, yet the system is already over-crowded. This is due in large partto the inadequate financial allocations to secondary education (only 13? ofthe education budget). HMG pays only about half of the costs of secondaryschool operations, with the balance being mobilized from the community. Inmost cases the ability of the community to mobilize additional resourcesappears to have reached its limits. In addition, anecdotal evidencesuggests that inability to pay fees is a major disincentive from pursuingschooling opportunities.
3.16 At the moment students may only either drop-out or continue allthe way through to grade 10. Excessive emphasis on the final SchoolLeaving Certificate (SLC) after grade 10 results in rote learning (andteaching), and in many cases is inefficient, in that children who canafford it remain in school longer than they may need to in order to passthe SLC, or to repeat attempts at it. Consideration should be given toformalizing earlier exit points (eg. after grade 8), which would provide
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academic training adequate for the many who will not go on to formalemployment or higher education.
3.17 At the moment almost all students passing the SLC are guaranteedentry 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; thereare too many students in arts and too few in science-based streams; thereare over 120 campuses (some excessively small); the university puts adisproportionate strain on the budget, receiving almost twice as much asthe entire secondary school system; and university students are excessivelysubsidized (they pay lower fees than secondary students).
3.18 In part as a result of overcrowding, the university suffers frommanagement and quality problems. One potential solt.tion is theintroduction of the 10 + 2 system, which would add two more grades (11 and12) to the secondary system. This proposal is being adopted by HMG, but itmust ensure that for many students the additional two years are instead of,not in addition to university. It is also recommended thats (i) HMGundertake an in-depth management and academic quality review of theuniversity system, to design a blueprint for upgrading; and (ii) universityfees be increased, with scholarships as necessary for those with inadequatemeans.
3.19 At a broader level, there is an issue of the appropriate balancebetween various strata of education. HMG is currently putting substantialresources into primary education and into the university, and probably notenough into secondary education. The need for secondary education capacityis growing - both because of the demands for skilled manpower, and due tothe increased number of students coming out of primary school. There isroom to consider a shift in relative allocations from tertiary tosecondary, as well as the rationalization of the university system, whichincludes many non-university functions, and is beset with managementproblems.
3.20 The requirements in the education sector are thust
(i) to expand the primary system, especially the participation ofgirls - this will include assessing analytically the reasons forschool non-attendance, and digesting the lessons of currentprojects (PEP and Seti) - in order to design a model for effectiveexpansion of the system;
(ii) to determine how to handle the need for increased secondaryschooling, including its financing; and,
(iii) to improve the cost-effectiveness and management of the tertiarysystem.
Proposed assistance strategies for contributing to these goals arediscussed in Chapter 6.
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C. Health
3.21 HMG's response in the health sector has been to develop a numberof dedicated vertical programs to attack specific health problems (e.g.malaria, TB, and immunization), which have only recently grown togetherinto a national health service. These have been accompanied by a programof slow expansion of medical personnel, health posts and hospitals, to thepoint where about two-thirds of the country is now covered by rudimentaryservices. The emphasis in HMG's strategy is (appropriately) on primaryhealth care, delivering basic preventative services with paramedical staffat the village level - however in practice the allocation of resources isskewed in favor of curative, hospital-based services; and the majority ofpersonnel and financial resources are consumed in the Kathmandu valley.
3.22 Health infrastructure is still underdeveloped and generallyunderfunded. The proportion of doctors is very low, health posts often donot 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, involvingthe management of service delivery at the periphery. Management andpersonnel operations are weak throughout the sector (see discussion infollowing chapter), with the result that many positions are unstaffed, andrural 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 ofmedical 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 thevertical programs remains unresolved, and the Ministry is in a state ofalmost continuous reorganization - resulting in uncertainty with respect tothe future of the vertical program staff, and insufficient retraining ormanagement structures for true integration. There is a danger that theeffectiveness of the established vertical programs will be diluted byintegration, and the dedicated program staff will be unprepared to deliverthe mix of services expected of them. If the process of integration is towork HMG needs to:
(i) proceed slowly - taking care that the interests of existingfield staff and the quality of services are protected;
(ii) plan carefully - by undertaking a detailed analysis offunctions, responsibilities, positions and staffing levels,along with a clearly defined set of organizationalrelationships, for the new integrated organization; and,
(iii) design and mount a major retraining exercise beforeproceeding with re-assignment of staff and duties.
3.24 Health Manpower. There are about 850 physicians (of which lessthan 300 are outside the central region) and 6,600 paramedical staff in the
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health service. This is grossly inadequate in total, at all levels ofcare, and especially in rural areas, where the coverage is not infrequentlyone doctor per 100,000 population (relative to a desirable minimum level of1 per 20,000), as it is difficult or impossible to staff positions. HMG isplanning a major expansion of health manpower under the Basic NeedsProgram, but even the planned levels are probably insufficient to provideadequate coverage, and the expansion relies heavily on the role ofcommunity health volunteers, who cannot be expected to play a particularlyactive role in health care delivery. Of particular concern is the factthat less than lOZ of medical workers are female - making it difficult, ifnot iw.possible, to effectively deliver primary and maternal and childhealth (MCH) care at the village level.
3.25 Medical staff are trained at the Institute of Medicine (IOM) whichturns out good quality and well motivated staff. However, the numbersbeing trained are inadequate (eg. 30 doctors per year) and their trainingcentrally does not adequately prepare them for conditions at the periphery.It is recommended that serious consideration be given to integratingmedical training with service delivery in outlying areas (eg. training atdistrict hospitals and rural health posts) as is done in many othercountries. This would have the dual effect to improving service andfacilities at the periphery, and of better preparing medical staff for theconditions they will face on completion of training. It needs to berecognized that a major infusion of funds will be required to train therequired number of health workers, and to integrate training with servicedelivery. Even if this is done, the effect on health status will beminimal if steps are not taken to ensure that these staff are actuallyposted, 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 onthe 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 inhealth status), for all the reasons discussed above. What is needed inorder 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, forexample, the increased use of female workers and theintegration of medical training with service delivery atthe periphery (para. 3.25)).
The general health and population policies of the government are sensibleand sufficient to serve as a basis for strategic action. What is needed,both to ensure the most effective use of resources, and to av 4dduplication of effort, is an expenditure plan for the health sector. HMG's
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health program today consists of a conglomeration of weakly relatedprograms, often supported independently by individual aid cionors. There islittle overview which ensures that resources are being directed inproportion to the impact they could have on health problems. The problemis that HMG does not have a comprehensive strategy itself for the healthsector, nor a corresponding medium term plan for its health serviceactivities. The Basic Needs Program is a start in this direction, but itlacks the necessary analytical background, and needs further refinement.
3.27 There is a need to assess the cost-effectiveness of the varioushealth 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 ofrelative priorities, and then to draw up a blueprint resource plan whichHMG could move towards over a number of years. In addition to providing aframework for the use of aid resources, this blueprint would serve as thebasis for manpower assignments and training targets; and for guidingreorganization of the health service. Such an exercise would need to takeaccount of the likely health effect of various interventions (includinge.g. water supplies, nutrition, in addition to direct health care programs)relative to the distribution of Nepal's health problems; should takeaccount of the cost-effectiveness of interventions - for example currentimmunization and diarrhoeal disease programs may be amendable to expansionat very little cost; it should recognize the institutional and staffingconstraints which affect expansion of the program; and it must take accountof the combined capital and recurrent costs of operations.
D. Population
3.28 A National Commission on Population (NCP) was established in 1978to take charge of an inter-sectoral populatidn control effort, and currentpopulation strategy was enunciated in a policy document in 1983. At thesame time a major sterilization program was launched through the FamilyPlanning/Maternal Child Health (FP/MCH) project of the Ministry of Health.This consisted of a campaign of travelling sterilization camps, with aprogram of incentive payments to acceptors.
3.29 Following the early bold statements of 1983, Nepal has not beenable to develop the sort of broad-based national population program whichhas been successful in reducing population growth in other countries.Following early successes the intensity of the sterilization campaign hasslackened appreciably over the last two years and, while important, thepotential impact of sterilization is limited, given that most people aresterilized after having had 4-6 children. To have a significant impact onpopulation (and maternal and child health) Nepal has to move to large scaleuse of temporary methods of contraception. The move to temporary methodsrequires a much more subtle, sustained program of education and support tousers - such as only can be delivered by a trained cadre of (mostly female)outreach workers who actually get out to villages and households on aregular basis. Although the framework for such a program exists (under theFP/MCH project), in fact very little takes place - due to institutional andcivil service constraints, and the absence of female workers.
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3.30 This is unfortunate, since several indicators (e.g. desired familysize) and informed opinion in Nepal suggest that there may be substantialunmet demand for family planning services. In policy statements HMGrecognizes the need to shift the emphasis to temporary methods - but itappears that population issues may receive a lower priority than might bedesirable among senior decision-makers - and the absence of female workersin the health service seriously limits the potential effectiveness ofefforts to promote temporary methods. HMG is currently considering aprogram of female volunteers to provide FP/MCH support at the villagelevel, but the mechanics of the program are not yet clear.
3.31 For the population program, it is not so much necessary to developnew policies as it is to effectively implement the strategy HMG has alreadyenunciated. What is now required (in both health and population services),is:
(a) to strengthen service delivery at the periphery - especially fortemporary methods of contraception - through improved management,supervision, staffing, and training;
(b) provision of sufficient funds for travel, salaries, supplies, andinfrastructure, especially at outstations; and,
(c) training of additional staff - both medical and para-medical -especially in the delivery of primary health care and familyplanning services.
Perhaps most importantly, it is strongly recommended that HMG undertake amajor program of hiring and training large numbers of female health andfamily planning workers.
E. Nutrition
3.32 There exist a number of nutrition programs - the most significantof which are the Joint-Nutrition Support Program (JNSP) and the saltiodization program. The scope of JNSP is limited, but it shows promise andefforts should be made to expand it. However the institutional capacity toundertake nutrition interventions within HMG is weak, and needs to bestrengthened before the Government can sustain a major nutritionsupplementation program.
3.33 The iodization program is designed to reduce the incidence ofgoitre through making available iodized salt. This is appropriately a highpriority given the alarming levels of goitre and cretenism in Nepal. Aseries of salt iodization plants are being set up with assistance fromIndia, however there have been serious delays in getting the plantsoperational, and in the interim a program of iodized oil injections hasbeen mounted. This is a relatively costly way of providing iodine, andsteps should be taken to get the iodization plants working as quickly aspossible.
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F. Poverty Alleviation
3.34 Directed poverty alleviation efforts are limited, as is probablyappropriate in a country where nearly everyone is poor - and HMG's effortshave been concentrated on agricultural development and expansion of incomeearning opportunities more generally. It is recognized, however, thatcurrent extension programs do not adequately reach poor farmers. Morerecently the Government has instituted targeted credit and group formationprograms (the Small Farmers Development Program and Production Credit forRural Women) which are having some success in reaching the moderately poor.Although they appear not to reach the very poor, they have externalbenefits from group formation, such as improved literacy, and familyplanning behavior. However, these programs need intensive inputs fromskilled staff to work effectively, and their capacity to expand rapidly isthus limited.
3.35 There have been a number of projects designed to alleviate povertyin specific areas by intensive income-generating activities - some of whichhave been very successful in, for instance, greatly increasing incomes bycash-cropping in selected pockets in the hills. As with the targetedcredit programs, it is not clear how amenable these are to expansion, andit is recommended that more work be done to identify the replicablefeatures of these pilots. The World Food Program runs food-for-work andnutrition supplementation programs, and appears to be limited in the amountof food it can transfer to Nepal by local financing and distributionconstraints.ll/ In addition to these programs, a number of NGO's run small-scale poverty relief programs. Given that there will be a continuing poolof very poor in Nepal for the foreseeable future (para. 2.11) it issuggested that work be undertaken to identify the best of theseinitiatives, in order to work up a cost-effective program of targetedpoverty alleviation measures.
G. The Basic Needs ProRram
3.36 Part of HMG's response to conditions in the social sectors hasbeen to develop the Basic Needs Strategy - a program intended to achievebasic minimum Asian standards for the population by the year 2000.Documents describing the outline of the program have been issued, andindividual departments are now working up more specific programs inagriculture, textiles, education, health, and population. The priorityaccorded to the basic needs sectors is starting to be reflected inallocations under the budget.
11/ In addition, food distribution by the National Food Corporationprovides transport subsidies for food to remote areas, but at themoment serves only public servants.
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3.37 While the goals of the Basic Needs Program (BNP) are laudable(universal primary education, reduced population growth, and primary healthcare), there has been relatively little detailed discussion of how they areto be implemented - or of what needs to be done to overcome the pervasiveservice delivery problems which have prevented achievement of theseobjectives in the past. The health program, for example, concentratesmostly on providing more of the same services, without addressing thequestions of staffing, supervision, and civil service arrangements whichcurrently hinder effective PHC delivery in rural areas. As alreadydiscussed, the education program involves a major expansion of schools andteachers, but does not delve sufficiently into the determinants of non-attendance or non-performance of children in the current system. Thepopulation program correctly focuses on the need to shift to temporrrymethods of contraception, without the requisite emphasis on the role offemale outreach workers.
3.38 The BNP targets themselves are extremely ambitious, involvingagricultural growth rates of 52 per annum, population growth down to below2Z (currently 2.7Z), primary enrollment of 90Z (currently about 60X) andinfant mortality down to 45 from 115 per thousand - all within 12 years.There may not be too much wrong with setting ambitious targets, providedthey do not distort the planning process or implementation efforts (theymay) - and at any rate the scope of these plans will probably be modifiedby 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 andto address the question of how they are to be balanced with competingclaims on the budget. So far there has been a tendency to treat the BNP asa list of uniformly important initiatives; more selectivity is nowrequired. 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 andimmunization programs, for example, may well be amenable to expansion atrelatively low marginal cost.)
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Chapter IV - INSTITUTIONAL ISSUES AND COMMON THEMES
4.01 In the process of analyzing the individual sectors, a number ofcommon themes and problems have emerged. They are summarized in thefollowing sections.
A. Service Delivery Problems
Staffing and Organization
4.02 Although many civil servants are doing an admirable job indifficult circumstances, there are a number of systemic weaknesses whichlimit their effectiveness. Absenteeism is common; stories abound ofunstaffed health posts, and of teachers who do not show up at school. Theproblem is largely one of lack of supervision and monitoring. Staff atoutposts receive little attention, and therefore there is little incentiveto perform, and their status in the eyes of the local population isundermined by the lack of visible support from the center. This iscompounded by the fact that promotions and postings are often influenced byconsiderations other than performance - further eroding morale andmotivation. This is caused in part by a culture of non-accountability, butalso by the fact that in an environment where most places must be visitedon foot - and it may take several weeks to cover a district - supervisorsare often unwilling or unable to adequately cover the territory for whichthey are responsible. The low internal efficiency of primary education,for example, is due in part to schools being closed or teachers beingabsent - problems which could be alleviated by more intensive supervision.Similarly the failure of rural health workers to leave their posts todeliver ambulatory care is attributable to insufficient training,motivation, and supervision.
4.03 The absence of developed management and personnel systems, withclear job descriptions and evaluation criteria, further erode theperformance of public services. At the same time, the existing systemlacks the rewards and renumeration necessary to attract and retain staff inoutlying areas. In the health sector, for example, a major problem is theabsence of medical manpower in rural areas. In many cases staff have beenassigned 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 functionsother than law enforcement and tax-collection is a fairly recent phenomenonin Nepal. The rapid expansion to deliver social and development serviceshas led to strains on the system, both in terms of the availability oftrained personnel, and the under-development of public service systems.The sense of national purpose at times does not filter down through thecivil service, and the traditional system of employment relations is ofteninconsistent with modern personnel and administrative practices. This isexacerbated by low expectations - people do not historically expect muchfrom public services, and demands for better performance are constrained bylong acceptance of the traditional system.
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Communications
4.05 Poor communications between civil servants and the people they aresupposed to serve are another barrier to development efforts. The successof temporary family planning methods - which is essential for populationcontrol - and of changes in household hygiene - which are essential toimproved health - both involve long-term changes in behavior. Suchbehavioral change depends critically on sustained personal communication.Yet extension workers have difficulty in communicating with illiteratevillage people, and may at times assume condescending attitudes towardsthem. The messages being communicated are often too complex; the reasonsto. doing things are not explained; and excessive reliance is placed on asingle contact or message, when repeated re-enforcement is required.
4.06 Teachers, agricultural extension workers, health post staff andfamily planning workers all receive substantial training in the technicalaspects of their jobs, but often inadequate training as to how to transmitthis knowledge to others. The failure to explain medical treatment, forexample, is a principal cause of people's lack of faith in formal medicine,and often results in not completing courses of treatment, or failure tobring a child to the health post the next time she is sick. Similarly, amajor reason for non-immunization appears to be that people do not know thetime and place of vaccination clinics. Workers need to be trained incommunicating their knowledge effectively, and more effort put intoexplaining how to make the best use of services.
B. Resource Constraints
4.07 The lack of sufficient domestic resources is a major emergingproblem in the social sectors. Although implementation capacity isundeniably the binding constraint, major improvements in health andeducation will not be possible without substantial increases in funds.Lack of school supplies discourages teaching and learning; health posts runout of supplies six months into the year; vaccination teams cannot operatefor want of kerosene for refrigeration; and insufficient travel and dailyallowances discourage staff from essential extension and supervision work.Even when sufficient funds are available in aggregate, they often do notfind 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 forlocal taxation - however in poor regions the potential tax base is verynarrow, and there is a danger that regional inequities will be exacerbated.The scope for user charges is also limited in an environment of pervasiveabsolute poverty. People are already paying a very large share of thecosts of education, as well as the private costs of health care. With verylow average cash incomes (about 70 Rs/month per capita), the effect offurther user charges would be to increase the likelihood that only therelatively wealthy benefit from health and education services. Forexample, private sector medical care, while important, will only coverthose disease categories that 'pay', and will not cover the most prevalentdiseases which tend to strike the poor disproportionately; nor will itprovide the preventative or maternal health care which could have thegreatest impact on health status.
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C. The Role of Aid
4.09 One consequence of this resource gap is a heavy reliance onforeign aid in the social sectors. Aid donors play a major role in shapingprojects and policies, often dealing directly with line ministries. As aresult, the HMG program in some instances resembles more a collection ofaid interventions than a cohesive sector strategy. This can potentiallydistort expenditure patterns and development efforts.
4.10 There is a tendency, especially in line departments - to regardaid as a free resource - and thus not to adequately measure its opportuLitycost. In extreme cases it does not even go through the central budget. Itis clear that donors are willing to transfer resources to Nepal - and aidnot used in one sector would thus be available for initiatives in another.Aid in the social sectors should therefore be treated as a public resourcelike any others its uses carefully weighed, and channeled to the highestpriority areas. To do this EMG needs to be firmer with donors - designingan overall sector strategy and investment program (using donor assistanceif needed), and then insisting that donors fit in with support forparticular segments of it. This sort of sector planning exercise isproposed for health (para. 3.27), and in designing a model for expansion ofthe 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 departmentalstructure. There is thus almost no impact in terms of strengthening theinstitutions which will eventually have to deliver these services; whilerecurrent cost burdens are built up which they will have to assume when thedonor eventually withdraws (e.g. the malaria program, which still reliesexclusively on donated insecticides). Furthermore, the benefit ofsuccessful experiments and lessons learned are not replicated across thesystem as a whole (e.g. the successful Seti and Primary Education Projectsstand independent of the general primary education system, which they aremeant to improve).
D. The Planning and Budgeting System
4.12 The weak central planning and budgetary system results in atendency to consider projects in isolation and failure to take account ofopportunity costs, or to make hard choices with respect to inter-sectoralallocations. One result of this is that budget allocations (e.g. betweenhealth programs, or levels of education) are often not consistent withneeds. This system is encouraged by the active role of aid agencies inpromoting individual projects, and excessive size of the developmentbudget, under which all expenditures are treated on a project-by-projectrather than a program basis. The immunization budget is thus considered atone time and the health education (or malaria) budget is evaluatedindependently, with no assessment of the trade-offs between the two interms of the cost-effectiveness of a rupee spent on improving healthstatus. Furthermore, the development budget in no way corresponds to atrue 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
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whole has a clear idea what its true recurrent commitments are. In thesocial sectors in particular - where recurrent costs account for the vastmajority of expenditure - this makes rational planning almost impossible.
E. Decentralization
4.13 Decentralization of health and education services to the Regionaland District levels has been going on for some years now. Decentralizationis intended to promote local participation and allow flexibility in theexecution of development programs. However, local level capacity is stillweak, and to date HHG has been unwilling to give up the central controlover funds and staffing, which is essential to successful decentralization.
4.14 To the extent decentralization does take place, care must be takento avoid transferring responsibility for social services, without acorresponding share of resources - placing the burden of financing onDistrict governments. With a very limited local resource base, there is adanger that poor services will deteriorate even further in the lessdeveloped rejions. Substantial effort will also need to be put intodeveloping the capacity to plan and administer systems at the Districtlevel 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 doplay an important part in health, population, and poverty alleviationefforts in Nepal, and are responsible for some of the most notable successstories. They work on a small scale with intensive use of manpower andresources. This is the reason for their success, but it is also the factorwhich most limits their potential impact. The reliance on skilledpersonnel limits their ability to expand while maintaining quality, andtheir high unit costs cannot be replicated across the system as a whole.Their principal contribution will thus remain as a source of experimentsand useful lessons to be adapted for wider use. The exception to this isprobably in the family planning sphere (and to a lesser extent in health),where NGO's - particularly the Family Planning Association of Nepal - playa substantial role in the delivery of services at the periphery. Given theunlikelihood of a rapid increase in HHG's capacity to provide theseservices in the near future, these agencies will probably have an importantcontinuing contribution to make.
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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, andconversely the effect of population growth and poverty on health andeducational status. It then goes on to examine in more detail how thebroad country framework and conditions in the agricultural sector affectpoverty. The chapter concludes with some implications for interventions inthe social sectors.
5.02 The social sectors are characterized by a constellation oflinkages 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 oflinkages in schematic form.
FIGURE 1
P gulation |<
== C r ~~rwth LMaternal Incom es&Child HeStrong L e _ W Poverty
Gener. 01-nm Lng i t S o riculturalsHealtn "Olol 0 Pfoductivity
Nutrition |
Strong Linkages o o o Weaker Linkages
Fig. I - Dynamic Linkages in the Social Sectors
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A. Health and Population
5.03 Poor health, particularly of infants and children, can be animportant contributing factor to high population growth. There is atendency to replace a child who dies in infancy by producing another, andanalysis of child-women ratios in Nepal confirms this, with a strongcorrelation between high infant mortality and high fertility. Since theyare not sure if their children will live, parents are unwilling to havesterilizations until the desired family size is reached, and sterilizationsthus have little impact on population growth, since they are performedafter 4 to 6 children have already been born. On the other hand, onceparents are reasonably confident that children will survive they becomemore willing to plan and to limit family size, thus temporary contraceptionis much more likely to be successful if infant and child health areimproved.
5.04 Conversely, population growth also affects health through a numberof mechanisms:
- close spacing of births results in higher infant mortality,
- frequent pregnancies debilitate mothers, kill some, and leavemost in a condition in which they will bear less healthychildren,
- infants are weaned prematurely when the mother becomespregnant again, and as a consequence their nutritional statusdeclines rapidly.
Studies show that infant mortality in Nepal is 50Z higher among childrenborn less than two years apart. Also there is a much higher risk thatpregnancies 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 improvedmaternal and child health, while conversely improved child health wouldspeed the adoption of temporary methods.
5.05 Poverty and Population. In the subsistence economy children havea clear economic value - both for the contribution they make to householdproduction, and as a source of security in old age. Surveys indicate thatabout two-thirds of families do not use contraception because they areunwilling to limit family size, largely for economic reasons. This isreflected in the preference for sterilization after achieving a desiredfamily size, and reluctance to use temporary methods. Similarly women aremuch more willing to consider contraception after giving birth to 2 or 3sons - while the births of daughters (whose economic value to the family islost at marriage) does not have much impact on family planning decisions.There is some evidence that enhancing the economic role of women reducesfertility - a survey of credit program participants, for instance, foundthem more likely to use family planning then were non-participants.Conversely, as discussed previously population growth directly affectspoverty via land pressure, deterioration of the environment and thesustainability of agriculture, and increased competition for income-earningopportunities.
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5.06 Poverty and Health. The health effects of poverty are feltlargely through the shortage of food - for instance, one localized studyfound malnutrition among 12-35 month olds to be 10 times greater infamilies with less than one hectare of land. These children have lowerresistance to infection, and continuing malnutrition through childhoodundermines their resistance to disease. Insufficient food intakes andheavy work loads have a debilitating effect on both male and female adults- leaving them more susceptible to disease, and resulting in mothers givingbirth to sickly children, who in turn receive insufficient care andbreastfeeding because of the labor demands on the mother. Consequently,infant mortality is estimated to be five times as high among the very pooras 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 withmedical care - either in the formal sector or from traditional healers.The converse of this is that extremely poor health or disability limits thecapacity of many to engage in effective production or employment - or toproduce efficiently when they are working - thereby perpetuating theirpoverty.
5.07 There is thus a vicious cycle - poverty and lack of education leadto earlier and more frequent births, which lead to higher infant mortality,which in turn causes higher fertility overall - and consequently greaterpoverty; to break this cycle requires higher incomes, and more education,especially of females, augmented by improved health and family planningservices.
B. Education
5.08 Although it is generally accepted that literacy and femaleeducation substantially reduce population growth, little analytical workhas been done on the strength of this relationship in Nepal. Certainlyeducation beyond the primary level has been shown to significantly affectfertility, as does employment of women outside the home; which is in turndependent on education. Similarly fertility is closely related to infantmortality, which is in turn strongly correlated with education of themother.
5.09 Recent analysis shows that of all the expected determinants ofinfant mortality in Nepal, the strongest correlation is with the level offemale literacy. A 1985 study found that infant and child mortality weretwice as high among mothers with no formal education as among those withsome education. Education is important for appreciation of the connectionbetween hygiene and health which is essential to reduce the high incidenceof diarrhoeal diseases, and for understanding the importance of vaccinationand other health care programs. The health benefits of many of the watersupplies installed are entirely lost, for instance, in the absence ofcorresponding education of the hygienic use of water.
5.10 Poverty and Education. A major reason for non-attendance atschool is the need for childrens' labor for subsistence production in thehousehold. The amount of time that girls in particular must spend ingathering fuelwood and water, and in traditional child care roles, detractsfrom their ability to attend school. Similarly children of the urban poorare unlikely to go to school regularly, as they can alternately make money
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performing menial tasks. Some partial solutions are being found in thecheli-beti system, under which girls go to special classes in the earlymorning or evening; and in triple-shift experiments in urban schools, whichallow working children to choose the most suitable shift. Beyond primaryschool, however, the direct cost of schooling is such that a largeproportion cannot afford further education.
C. Poverty, Food Supply, and Agriculture
5.11 Nepal is still a subsistence agricultural economy, with two-thirdsof the people relying almost exclusively on their own production of riceand grains, and about 70X of transactions taking place outside the casheconomy. An important adjunct to this is that there exist fewopportunities 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 betempered with a recognition that (a) such growth is taking place on a verysmall 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 workforce is engaged in agriculture, however at the same time, the agrarianeconomy has failed to transform itself in the way that it has done in manyother developing countries.
5.12 Between 1974 and 1984 food production increased by 141 whilepopulation expanded by 342. Most of the limited increase in output hasbeen due to cropping intensification on traditional farm land and theexpansion of area planted rather than yields, which have declined with theextension of cultivation into progressively more marginal areas. The poorperformance 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 betaking place at the expense of the long-run productivity of agriculture -at least in the hills - where the increased frequency and density ofcropping, without adequate replenishment of nutrients, are accelerating theprocess 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 landunder cultivation is irrigated - and of that only about one-third isoperational at any given time. Similarly fertilizer use, while growing, isstill the lowest in Asia. These problems are part of a more generalinadequate use of new technologies in agriculture, which seems to be due topoor communications, inadequate availability of key inputs, the scarcity of
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appropriate location-specific technologies - especially for the hills, andthe low level of technical skills and education of extension staff.
5.14 The limited cash economy and absence of marketing networks affectsthe poor by both constraining the capacity to distribute food from surplusto deficit areas, and by limiting the opportunities for sale of cash crops.Only about 301 of foodgrain production finds its way into the distributionchain, and after substantial losses in storage and processing, most of thisgoes to export or urban areas, leaving very little traded surplus availablefor rural consumption. Expansion in output has occurred largely in theterai and in the Kathmandu valley, and the necessary transport andmarketing linkages do not exist to get this out to food deficit areas inthe hills and mountains. Furthermore, most expansion has been in wheat,which is not grown by subsistence producers, but as a cash crop by largerfarmers for urban consumption or export.
Small Farmers and the Dynamics of Poverty
5.15 The efforts put into developing the agricultural sector by HMG anddonors, in the form of credit, irrigation investments, and extensionservices, have been aimed primarily at the terai with disproportionatebenefits flowing to larger farmers who tend to have better access to theseservices. Average farm size is extremely small throughout the country.The Demographic Sample Survey (1986) estimates that 752 of families in thehills possesu less than 1 ha., and 502 less than half a hectare. In theterai holdings are bigger (502 owning more than 1 ha.) but many more arelandless (about 351), or tenant farmers. Anecdotal evidence suggests thatagricultural programs have little impact on these small farmers, who makeup the largest proportion of the population, and nearly all of the poor.The technological messages disseminated by the extension service tend toassume optimal use of modern inputs. These messages have little relevanceto most small farmers who have insufficient surplus to affordexperimentation with different crops, cropping practices and croppingpatterns, and whose cash income, if any, is too small to purchase inputssuch as fertilizers, pesticides and improved seeds.
5.16 Most families in the hills remain landowners, althoughincreasingly the size of their holdings are insufficient to meet theirneeds. In the terai a larger proportion are tenants or bonded laborers.There have been several attempts at land reform, and in theory at least theworst aspects of feudal tenancy arrangements are controlled. Howeveranecdotal evidence suggests that in practice high fixed rents andunregulated sharecropping are common, and that many tenants must turn overmore than half of their production to landlords. These arrangements bothperpetuate their impoverishment, and reduce the incentive to increaseproduction.
5.17 A corollary of this failure of agricultural expansion is theprocess of increasing impoverishment of small farmers, who are unable togenerate sufficient surplus, on their own land or on that of others, toprovide for basic subsistence. Many are living on the brink of survival,where a bad harvest or illness can push them over the edge intoindebtedness. Once in debt, interests rates are so high, and the outputfrom small plots so low, that they end up in a descending spiral of
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indebtedness, which culminates in the loss of their land, and theirtransformation 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 isinsufficient, and most official credit (available at interest rates ofabout 162) goes to agro-businesses. It is estimated that only 102 goes tosmall farmers, while the poor must generally borrow at rates of between45-752 from landlords or money lenders. Not surprisingly, theinstitutional credit that is available to small farmers tends to go to therelatively wealthy ones, as the poor do not have the flexibility to affordgreater debt or the knowledge and ability to pursue borrowingopportunities. Several new credit programs hold out some promise ofeffectively reaching the poor, but their ability to expand is limited (seePart III of Volume II, on Targeted Poverty Programs).
5.19 Credit is at any rate only symptomatic of the broader problems ofexcess land pressure, failure to transform the agricultural sector, andpersistence of the feudal system. The solutions to these problems lieoutside the scope of this paper, but include the need to: (i) developmarkets; (ii) expand irrigation systems and make them operational; and,(iii) to develop more appropriate extension and credit services which takeaccount of the constraints facing the poor.
5.20 In the longer run, improved education will play a crucial role inupgrading agricultural productivity, and control of population growth willbe essential if land pressure is to be held at sustainable levels.Building a better understanding of the mechanisms of impoverishment, andthe linkages between agricultural. developments and incomes in Nepal isessential to designing workable poverty alleviation strategies. Althoughsubstantial individual micro-level studies have been done, the findings ofthese need to be integrated into a broader analysis of poverty andagriculture and incomes. Such a study is proposed as a follow-on from thecurrent 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 quantitiesof dung and compost available to maintain soil fertility and, in someareas, in dung being used for fuel rather than fertilizer. At the sametime the depletion of grazing land leads to poorer quality animals whichyield less in products and labor value. The response to this has been tohave a larger number of lower quality animals, which in turn aggravates theover-grazing problem. In addition, environmental decline means that moretime must be spent gathering fuel and water, thus detracting from the laboravailable for more productive economic activities.
5.22 Having to walk further for fuel or water, women have less time forbreastfeeding and child care, and daughters are less likely to be able toattend school. Fuelwood shortages cause families to limit their use ofcooking fires, adversely affecting nutrition. Also, as water sources dryup, health problems compound.
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5.23 The use of water is low to start with - between 8 and 30 litersper capita per day, depending on distance (which is often an hours' walk),- relative to a WHO recommended minimum of 45 liters. Rather than walklong distances, communities may use closer, polluted, supplies - or fail touse clean water effectively in the absence of education. For example, themission came across a woman washing plates in open street sewage inKathmandu, less than 5 meters from a public stand-pipe.
5.24 The immediate environment of most Nepalis is thus highlycontaminated (951 have no access to latrines) with consequent health andnutrition effects. It is estimated, for example, that 402 of hospitalcases and 322 of deaths among under 5 year olds are due to water andhygiene related diseases. The unhygienic environment and consumption ofcontaminated water lead to parasite infestations and diarrhoeal diseases,which inhibit the retention of nutrients and are in turn a major cause ofmalnutrition.
E. Conclusions
5.25 The foregoing analysis illustrates the central importance ofeducation and of population control in alleviating social deprivation inNepal. Education for the role it can play in preparing people foremployment, and improving health and family planning behavior; andpopulation because it is critical if advances are to be made in health,incomes. and nutrition. Health, on the other hand, emerges more as aneffect - of low incomes, poor education and hygiene, and large family size- although poor health is also a contributing cause of low productivity andhigh population growth. Poverty is in the first instance a problem ofinadequate resources; however, the solutions to poverty cut across thesocial sectors, requiring a coordinated effort of food production,education, literacy, and income generation, coupled with measures to curbpopulation growth. The discussion has also pointed out a numberinterventions which could have an impact across more than one sector, forexamples
- both increased primary education and adult literacy would havebeneficial effects on income earning potential, health,nutrition and population efforts;
- greater female participation in school and in non-formaleducation would significantly affect family planning behavior,and is also important since women are the key to improvedhealth and hygiene in the family; and,
- the acceptance of temporary methods of contraception needs tobe expanded in order to obtain the health benefits of reducedfertility, and to have a real impact on population growth.
5.26 There are a number of promising approaches: the incorporation ofnon-formal schooling for girls (cheli-beti) and teacher training in healthand child care under the Seti project; as well as the on-going adultliteracy program, which UNICEF estimates could be expanded to reach onemillion illiterates a year using existing resources and teachers. Inaddition, evidence suggests that interventions which combine severalapproaches are particularly successful, for instance, members of creditgroups are more amenable to family planning and literacy initiatives, andliteracy classes can be used for hygiene and health training.
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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 younggeology which results in difficult communications and erosion, and a land-locked location; (ii) overpopulation; and, (iii) the early stage ofdevelopment, which is evidenced by a paucity of skilled personnel, andweaknesses in management and administrative systems. These factors make itdifficult to construct a simple development strategy for Nepal.
6.02 Of the factors which can be controlled, overcoming socialdeprivation in Nepal is critically dependent on:
Ci) reducing population growth;
(ii) upgrading the human resource base; and,
(iii) increasing agricultural productivity and creating off-farmemployment opportunities.
6.03 While the population situation is bad even under the best ofscenarios (para. 2.03), without effective control the population willincrease to almost three times its current level (51 million) by 2030 -totally eroding the value of any other development initiatives. Given theabysmally low levels of education (eg. with more than two-thirds of thepopulation illiterate), education is also critically important - not justbecause it is a prerequisite for commercial and industrial development, butalso for the major contribution it can make to reduced fertility, improvedhealth, and agricultural productivity (paras. 5.08-5.09).
6.04 Increased agricultural productivity will remain the key toimproving living standards of most Nepalis for the foreseeable future -both because agriculture contributes 60X of GDP and the scope forindustrialization is limited, and because the majority of the populationare subsistence farmers - dependent exclusively on their own production,with little or no involvement in the cash economy. However, projected landavailability (para. 2.18) shows that increasingly people will have to findoff-farm income earning opportunities. The magnitude of this emergingproblem is potentially catastrophic (paras. 2.04-2.05) - again the solutionlies in curbing population growth and increased education and skillstraining.
6.05 The extreme personal deprivation in terms of poverty,malnutrition, and health status (Chapter 1) can in the long run only beovercome by effective improvements in education, employment generation, andupgrading agricultural productivity. However more immediate alleviation ofsome of the worst aspects is also possible by improved health care deliveryand targeted poverty alleviation measures.
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6.06 Assistance strategy in Nepal in the social sectors shouldtherefore follow a three-pronged approach of support for:
(i) population control;
(ii) education; and,
(iii) increased agricultural productivity and employmentgeneration.
The effects of improvements in these areas will only be felt over a fairlylong run. In the meantime, the current state of deprivation issufficiently extreme - and the prospects for improvement so far in thefuture - that Nepal is one of the countries in which there also existsclear a role for major donors in supporting measures for immediate reliefof poverty and poor health status.
B. Priority Areas
6.07 The Government is currently undertaking a number of majorinitiatives in the social sectors which would benefit from additionalassistance. These include in particular:
Mi) A push to expand the coverage ard quality of primaryeducation, for which HMG could utilize assistance ininstitutionalizing the approaches developed under the PEPand Seti projects, and in designing a nationwide model forschool system expansion; in understanding the determinantsof school attendancelnon-attendance; and, given the scopeof the needs in the sector - substantial financialresources, as well.
(ii) A program to significantly improve health status by 2000,with particular emphasis on maternal and child health; thiswill require sorting out the pervasive institutionalproblems affecting the health services; prioritizing theprograms to be delivered - so as to concentrate on the mostcost-effective; and working out a more coherent program forthe health sector, to provide a framework for thecoordination of aid and domestic resources.
(iii) A drive to bring down the population growth ratesubstantially by the end of the century, for which majorassistance will be required to improve the service deliverysystem for family planning, and to revitalize thecommitment to population control within HKG.
(iv) Steps to reduce poverty - as outlined in general terms inthe Basic Needs Program - for which HMG can benefit fromhelp in formulating the income-generating components of theprogram and in working up cost-effective povertyalleviation measures.
In these areas, and in others outlined below, external assistance canpotentially make a substantial contribution.
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6.08 A large number of donors are already active in the social sectors- many of them providing assistance on highly concessional terms. Giventhe limited absorptive capacity, this means that additional involvementshould be focussed on those areas where the donor has a comparativeadvantage 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 thesocial sectors are largely ones of service delivery - involving microinterventions and subtle management improvements - which require intensiveuse of personnel and resources to strengthen institutional capacity andreform personnel and management systems. Given the magnitude of therequirements in the education sector, there is in addition a strongfinancial role to play in supporting expansion of the primary schoolsystem.
6.09 As an investment, expenditure on the social sectors will yieldvery high returns. Despite being generally conceived of as "unproductive"sectors, given Nepal's current situation, these may in fact be the mostproductive sectors in which to invest. The return on primary education isestimated by a recent sector analysis (USAID) at over 1002 12/ While thismay be a high estimate, it is indicative of the magnitude of the return tobasic education - which for developing countries as a whole is estimated atabout 301. Given the potentially catastrophic population situation, thelosses to be avoided by averting births through expenditure on familyplanning are also extremely high. 13/ Furthe.iore, health status is sopoor in Nepal that it seriously affects productivity and drains resourcesin caring for the infirm - so that investments in hygiene, nutrition, andpreventative health services can also yield very high returns.
6.10 At the same time the financial requirements of these sectors aresubstantial. In the education sector absorptive capacity has beendemonstrated, and a doubling of funds is required to meet the target ofuniversal primary education (see Education section in Volume II). While
12/ Nepal Education and Human Resources Sector Assessment, 1988, Section2.7.
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 $50million. The dilution of GPD for the existing populace by the additionof an extra million people would be $225 million annually (assuming,quite reasonably, that Nepal's economy is beyond the point ofincreasing marginal returns to additional population).
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capital funding may not currently be the binding constraint in the healthand population sectors, there is no doubt that additional finance has aneffect on attracting competent staff, and that substantial funds are neededif an effective cadre of population and MCH workers is to be trained andemployed. The degree of reliance on external finance (para. 4.09) and theunavailability of commercial funds for these sectors means that 1MG willrequire substantial concessional resources if it is to successfully expandthe education network or mount a major effort to curb population growth.While there are many bilateral donors and specialized agencies active inthese sectors, they cannot by themselves provide the aggregate amount orfinance required. There are thus compelling reasons for greaterinvolvement by the larger lenders in the social sectors, providedsufficient absorptive capacity can be demonstrated, and the sectoralframework and investment strategy into which support will be channeled hasbeen well defined.
6.11 The priority areas for assistance within the education sector areprimary, non-formal, and to a lesser extent lower secondary education - asthese are the areas which potentially have the greatest impact on farmers'responsiveness to new initiatives, on equipping the landless for off-farmemployment, and on health status and population growth. Within this, theeducation of women is particularly important for the direct effect it canhave on family hygiene and health, and on family planning behavior. Thedual objectives should be to get a greater proportion of children intoschool, and simultaneously to improve the quality of education.
6.12 A second priority is in resolving the imbalanced mix of effort andresources between secondary and tertiary education (paras. 3.17-3.19), andrationalization of the system of exit points, examinations, and transitionbetween the two levels of education; in conjunction with management andquality improvements within the university system to improve cost-effectiveness.
6.13 In dealing with population growth, the priorities are improvingthe delivery of family planning services - particularly temporary methods,the increased use of which is essential to have any meaningful impact onfertility; and increasing women's awareness of and receptiveness to birthcontrol measures - through increased female education and promotion offamily planning. Service delivery improvements will depend on increasingthe proportion of female field workers, substantially strengthening theinstitutional framework and management of family planning outreachservices, and ensuring that sufficient resources are available for traveland subsistence. A second priority - which also affects health services -is to better integrate training with the delivery of primary health careservices in rural areas.
6.14 In the health sector the priority is on improving maternal andchild health, and thus child survival, as a means of reducing the number ofchildren 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 inthe health sector in order to reduce the duplication of effort. To achievethis HMG will need to take the lead in developing an overall sectorstrategy, using external assistance as necessary. As with population,
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there is a need to improve service delivery and strengthen the institutionsinvolved in the sector. This will involve clearly defining functions andpositions 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. Externalassistance will be helpful in undertaking the necessary functionalanalysis, in developing training systems, and financial assistance will berequired to support the necessary training effort.
6.15 In the field of poverty alleviation the first priority is inimproving food security for the 40-58X of the population which live inabsolute poverty. This will involve easuring that agriculturalenhancements reach small farmeTe, improving access to food - through fooddistribution, market development, and food aid; and ultimately on raisingincomes through employment r. :dtion. In the medium run there is scope forhelping HMG design cost-effe tive interventions aimed at the poor - bysurveying existini rograms for cash-cropping, informal emplo-,-nent, skillsacquisition, credit - identifying which are most successful, and whichare amenable to expansion.
C. Proposed Assistance Program
6.16 The following program is proposed in support of the strategyoutlined above, and in the accompanying sector papers. This is notintended to be an exhaustive list of areas for assistance, but rather anindication of the highest priorities.
6.17 Education. Given the magnitude of Nepal'u requirements, and theneed for sustained support in implementation, a continuing program ofassistance for primary education is called for - at least through the nextdecade. The objective of the first project(s) in this program should be toexpand coverage of the system. This would likely involve extension of thePEP model to other districts, measures designed to increase schoolattendance, and possibly some non-formal education. Preparation wouldinclude an evaluation of the lessons learned under the PEP and Setiprojects, as well as an analysis of the determinants of school attendanceand non-attendance. The following project(s) in the cycle couldconcentrate more on support for upgrading the quality of primary and lowersecondary education.
6.18 In addition, it is recommended that HMG and/or one or moreexternal donors should undertake a study of secondary and tertiaryeducation - including university quality, management, and finances, and therelations and mix between secondary and tertiary education (see paras.3.18-3.19 and Part I of Volume II, on the education sector). Followingfrom this, a phased investment program in support of secondary and tertiaryreform should be developed for support by all donors. It is recognizedthat there is a substantial ongoing program of donor support for highereducation - the intention would not be to delay further assistance, butrather to help develop an agreed framework, which all assistance could bechanneled in support of over a period of time.
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6.19 Population. The first step in designing expanded support to thepopulation sector should be to review and analyse the experience of servicedelivery mechanisms and institutional issues gained under programs to date.In parallel consideration could be given to formulating additional projectassistance aimed at upgrading service delivery and strengtheninginstitutional capacity in the family planning/MCH program. The project(s)should concentrate on the delivery of services to the user at the fieldlevel, 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 atformulating a more cohesive expenditure program for the health sector,which would provide the framework for better coordinating foreignassistance to the sector. This would include identifying priority programswhich provide the most cost-effective health care interventions, and thusserve to work up an implementable version of the health Basic Needsprogram. A modified version of WHO's County Resource Utilization (CRU)Studies could form the basis of this exercise. This would be followed byredirection of resources over a period of time toward an agreed program ofaid to support implementation of the results of the investment planningexercise. Such project support would possibly incl.ude managementetrengthening, medical training, supplies and infrastructure, in additionto ongoing programs.
6.21 Poverty Alleviation. It is proposed that further work beundertaken to: (a) examine the dynamics of poverty in Nepal - pullingtogether the results of existing studies, and building on the work startedunder this review (see paras. 3.34-3.35 and Part III of Volume II); (b)determine how support for agriculture and economic activities can bestcontribute to equitable income generation and poverty alleviation; and (c)identify possible poverty alleviation measures which additional externalassistance might support. This could be followed by a project or projectswhich would support the expansic- of activities identified under the sectoranalysis. Such project assistance could consist of any or all of thefollowings 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 Needscomponents dealing with income generation.
NOTE: Adjusted Production assumes upper limit on planted land (3.3 m.ha.)Adjusted production is not quite accurate - since if greater than arealimit, assumes production LIMIT*YIELD, but YIELD in this case is basedon average projected production unconstrained by area limits - this isnot a significant distortion except under extreme conditions.
Demand Assumptions
NOTE: An income effect in growth of demand is assumed due to GDP growth.Starts only after 1990 - since 1985 consumption only 170 kg/capita.with income effect set to zero, demand equals minimum caloric requirementof 185 kg./capita (assuming 3430 cal/kg. and 80% of calories suppliedfrom foodgrains.) In base case income effect is assumed to be 1% p.a.
