UN Conference on LDCs urges need for structural progress

Next year's global conference on the world's 49 poorest countries should reconsider current approaches to helping these nations and envision steps that can "generate faster and long-lasting development in LDCs (least developed countries)," UNCTAD's Deputy Secretary-General told the organization's Trade and Development Board this morning.
Deputy Secretary-General Petko Draganov and other UNCTAD officials said extreme poverty has continued to climb in LDCs. "Even in the period between 2002 and 2007, during the so-called 'boom of the LDCs,' the pattern of growth followed in most countries has been neither inclusive nor sustainable," Draganov said.
Citing the recently released UNCTAD Least Developed Countries Report 2010, he said UNCTAD research indicates that LDCs "must start to diversify their economic structure" and reduce their dependence on basic agricultural and natural resource products, or commodities. Otherwise, he and other UNCTAD experts said, these nations will continue to be subject to booms and busts based on the cyclical nature of commodities demand and commodities prices, and will not make substantial progress towards meeting the Millennium Development Goals (MDGs), which include halving extreme poverty by 2015.
The LDC report calls for a new international development architecture (NIDA) to support a transition to more broad-based economic growth with a greater emphasis on value added -- that is, greater application of domestic knowledge and more sophisticated manufacturing capability to goods LDC economies produce. Commodities exports themselves can benefit from an emphasis on non-traditional products and on greater sophistication, speakers said -- for example, exports of fresh flowers have been a promising development for several LDCs.
The two-day Trade and Development Board (TDB) executive session is focusing on the situation and prospects for LDCs in advance of the LDC IV conference, which is scheduled for next May in Istanbul.
Jo Elizabeth Butler, UNCTAD's Officer-in-Charge and Deputy Director of the Division for Africa , LDCs, and Special Programmes (ALDC) said "the recent triple economic crises" -- rising food and energy prices followed by the global recession -- "have significantly undermined the development and growth prospects" of LDCs. "Poverty remains massive and widespread," she said, and LDCs' vulnerabilities to shocks and shifts in the global economy remain.

Assessments carried out by UNCTAD reveal that "some LDCs have considerable potential" for increasing exports, Ms. Butler said. A case study of Uganda has shown that the country "has sustained relatively higher economic growth for a relatively longer period of time" than most LDCs. One reason is a growing emphasis on non-traditional exports such as fish and horticulture, which "have shown tremendous increases," Butler said. Similarly, Ethiopia has a fast-growing floriculture industry that now employs more than 16,000 workers. Floriculture is expected to overtake coffee within five years as Ethiopia 's primary export, she said.
Among lessons learned from case studies of LDCs are that "activist, but less interventionist government policies" help encourage sustainable growth, along with effective incentives for investors and other steps to set up favourable environments for businesses and job growth, Butler said.
Charles Gore, Head of UNCTAD's Research and Policy Analysis Branch of the Division for Africa and Least Developed Countries, provided the meeting with a detailed review of the Least Developed Countries Report 2010. The report was released November 25.
UNCTAD economist and LDC specialist Zeljka Kozul-Wright, one of the authors of the report, said "the international environment should aid, assist, and abet LDCs rather than hinder their development prospects." Currently, that doesn't always occur, she said. Research shows that links between the international community and its aid programmes and LDC governments are sometimes "fraught" with difficulties, and aid flows are often "inadequate and misguided," she said. "The interational community has not honoured its aid commitements to LDCs." She told the meeting that steps are needed to reduce LDC vulnerabilities to the economic boom-bust cycles that have long plagued them.

Representatives of regional groups of UNCTAD member States variously told the meeting that new approaches to LDC development are needed that reflect lessons learned from past efforts; that the growing power and breadth of economic relations between developing countries (often referred to as "South-South" cooperation) should be harnessed to help LDCs; that greater investment should be channeled to infrastructure improvements in LDCs; that more research and analysis is needed of LDC "human assets;" and that LDCs have yet to "reap the full benefits of globalisation" and further work is required to link their economies with global markets.
Several countries stressed the need for UNCTAD's substantive and technical work on LDCs to be strengthened following the LDC IV conference

Microfinance has less loan default

Microfinance institutions (MFIs) have proved that poor could also be credit worthy and they donot default loan, according to the experts.
"MFIs have proved that poor can also save," said Shankar Man Shrestha, chief executive officer of Rural Microfinance Development Centre (RMDC) addressing the pre-conference press meet of regional conference on 'Microfinance in SAARC Countries: Sharing Lessons & Way Forward' here in the Valley today.
Institute of Microfinance (InM), Bangladesh and RMDC in cooperation with the SAARC Secretariat are jointly organising the first ever regional conference on microfinance on November 30-December 1.
"The conference aims at disseminating the findings of InM governed study on 'State of Microfinance in SAARC Countries' among the stakeholders in microfinance sector throughout the region," informed Dr Amanullah (Mak) Khan, interntional team leader and advisor at the Promoting Financial Services for Poverty Reductio (PROSPER) Programme under DFID in Bangladesh.
"The conference is also expected to bring together the eminent persons from microfinance sector like policymakers, renowned academicians, practitioners, stakeholders and representatives from SAARC member countries to appraise the successes and challenges of the sector," he said, adding that around 220 participants from eight SAARC countries, including Nepal will take part in the two-day regional conference.
'State of Microfinance in SAARC Countries' report is a part of InM's long term study to publish reports on the state of microfinance in different regions of the world.
"The key issues like sustainability and regulations of the Microfinance Institutions (MFIs), knowledge sharing, lessons learning from inter-country experience will also be part of the conference," Khan added. "The outcome will help policymakers and practitioners create and implement significant policy guidelines for the sector."
"At the end of the conference, the SAARC Declaration on microfinance will be released," said InM interim executive director Dr Md Mosleh Uddin Sadeque.
hailing Nepal's progress on MDGs, InM chairman Prof Wahiduddin Mahmud said that microfinnace has taken banking to the doorstep of the poor helping the country achieve MDGs. "The poverty alleviation programme and innovative way of banking of Microfinance Institutions (MFIs) caters to poor," he said, addong that South Asain microfinance has a human face unlike in other regions.
"The idea of microfinance in its modern form is something for which South Asia can deservedly claim the intellectual property right," Mahmud added.
"The varied and rich experiences gathered from these programmes provide a unique opportunity for the countries of the region to share knowledge and revisit the idea of microfinance from various institutional and policy-making perspectives," Shrestha said, adding that Microfinance represents an evolving and dynamic system that has shown its capacity to adjust to various socio-cultural settings and respond to the changing and varied needs of the poor.

Know MicroFm
KATHMANDU: The RMDC and InM are planning to create a forum Know MicroFm for advance reserach, capacity building and advocacy for the microfinance sector. The forum will also be helpful in seeking colaboration with international agencies as well but it will take a little while on giving it a final shape

Google, Microsoft, Yahoo!, Nasa, World Bank team up

On December 4 and 5, in over twenty locations around the world, Google, Microsoft, Yahoo!, NASA and The World Bank will host the third Random Hacks of Kindness (RHoK), their progressive initiative that brings together volunteer software developers and experts in disaster risk management for a weekend-long “hackathon” to create software solutions that can help mitigate or respond to disasters around the world and help save lives.
This RHoK will see events being hosted in locations including Atlanta, Chicago, New York, San Francisco and Seattle, in the United States and internationally in Toronto, Canada; Aarhus, Denmark; Berlin, Germany; Bangalore, India; Birmingham, UK; Jakarta, Indonesia; Nairobi, Kenya; Lusaka, Zambia; Mexico City, Mexico; Bogota, Colombia; Buenos Aires, Argentina; Singapore; Tel Aviv, Israel and São Paolo, Brazil.
“Microsoft is honored to support this global community of developers committed to making a difference,” said Curt Kolcun, Vice President, Microsoft US Public Sector. “While Microsoft has a tenured global crisis management team focused on accelerating the impact technology can have, it’s fantastic to see a complimentary effort like Random Hacks of Kindness performing this kind of sustainable development work while at the same time connecting developer communities with disaster risk experts around the world.”
"Random Hacks of Kindness goes to the heart of what we believe at Google; that the creative and cooperative use of technology can help make the world a better place and that collective intelligence is strength,” said Vint Cerf, Google Chief Internet Evangelist and popularly known as the “Father of the Internet.”
The first RHoK event was held in Mountain View, California in November 2009 and resulted in applications that were later used on the ground during the devastating earthquakes in Haiti and Chile. The second RHoK hackathon was held simultaneously in six countries around the world in June 2010 and one of the winning applications from the Washington D.C. event - a tool that allows engineers to easily visualize landslide risk to help guide urban and rural development and building planning - is already being piloted by the World Bank in the Caribbean.
“We’re trying to use technology to make the world a better place,” said Todd Khozein from SecondMuse, RHoK’s operational lead. “The event gives hackers the opportunity to use their skills for a noble cause with the guidance of experts who understand the real world challenges.”
“Yahoo! is proud to be a part of the Random Hack of Kindness effort and draw upon our history and knowledge in fostering collaboration and technological innovation among developers,” said Raymie Stata Chief Technology Officer, Yahoo!. “We are looking forward to seeing how technology can give people and organizations the tools to improve disaster relief efforts and help save lives.”
"NASA is proud to be supporting Random Hacks of Kindness and promote wider usage of our open data to solve the world’s greatest challenges," said NASA CIO Linda Cureton.
"We are glad to support the growth of this dedicated community of volunteers using their skills to tackle disaster risk management challenges,” said Inger Andersen, World Bank vice-president of Sustainable Development. "That is why we are working closely with the hackers so they continue to develop practical applications such as the landslide risk reduction tool 'Chasm', one of the winners of the last event. We're excited to see how this volunteer community evolves and what software solutions it will come up with in the future."

Nepal pays the cost of conflict, could not graduate from LDCs group

By now Nepal should have been close to graduating to Developing Countries (DC) from Least Developing Countries (LDCs) group, had there not been a decade long conflict, said Dr Jagdish Chandra Pokharel, vice chair of National Planning Commission (NPC).
Launching UNCTAD Least Developed Countries Report 2010: Towards a new international development architecture for LDCs' here today in the Valley he said that Nepal has paid the price of Maoists insurency.
Nepal 's national income (GNI) per capita is only the half at $568 than it needs to graduate from LDCs.
According to the UN, LDC is a country that has low-income (three-year average GNI per capita of less than $905, which must exceed $1,086 to graduate to the DCs; human resource weakness -- based on indicators of nutrition, health, education and adult literacy -- and economic vulnerability -- based on instability of agricultural production, instability of exports of goods and services, economic importance of non-traditional activities, merchandise export concentration, handicap of economic smallness, and the percentage of population displaced by natural disasters.
"Though, Nepal has done fairly better in social front, it could not do much in the economic front," he added.
UN Resident and Humaniterian coordinator of the UN Systems in Nepal Robert Piper said that Nepal has made the fatest growth amont the LDCs, though sustainability is under question due to high dependency on external resources. "Dependency on external resources should gone down for sustainable development," he said, adding that except energy crisis, lack of infrastructure, there are a host of governance issues creating hurdles to the sustainable development.
Presenting the UNCTAD's annual report on LDCs Prof Bishwanath Tiwari said that only two LDCs graduated to DCs in last three decades.
In 1994 Botswana and in 2007 Cape Verde graduated from the category of LDC to the DCs. Out of the total 49 LDCs, 33 are in Africa, 10 are in Asia, one is in Americas and five are in Oceania. Nepal is the current chair of LDCs group in the UN.
The annual report said that the 49 least-developed countries (LDCs) had, however, weathered the global downturn better than had been anticipated. But they remained trapped in 'boom-bust cycles' that hit their resource-dependent economies.
"The number of people living in extreme poverty has increased by three million per year during the boom years of 2002-2007, reaching an estimated 421 million in 2007 - twice as many as in 1980," the report said, adding that during the boom years, the LDC group as a whole averaged annual growth rates of seven per cent. "But their dependence on exports of primary commodities increased overall and in over half of the 49 LDCs, the manufacturing share of the countries' total value added actually declined."
The subsequent financial crisis and recession of 2008-2009 led to a significant growth slowdown in the large majority of poorer countries, UNCTAD said.
Export revenues for LDCs were down by 26 per cent in 2009, while foreign direct investment (FDI) contracted by 13 per cent compared with the previous year. But the good news was that average GDP growth in LDCs, which reached 4.3 per cent in 2009, was higher than in other developing countries and developed countries.
The report also recommended that the poorest nations broaden their economies so that they benefited from, but became less dependent on, commodities such as raw natural resources.

Himal Power celebrates a decade of operations

Himal Power Ltd (HPL) celebrated its tenth year of successful operation of the Khimti I Hydropower Project.

"Khimti 1 is the first private sector project under a Build, Own, Operate and Transfer (BOOT) scheme after Nepal adopted a market economy in 1990 and opened the electricity sector for private investments.

"Khimti 1 plant started commercial operation on July 11, 2000 and has so far generated around four billion units of electricity," HPL said, adding that it has been operated with close to 100 per cent availability and reliability for 10 years now.

In accordance with the Power Purchase Agreement (PPA) with Nepal Electricity Authority (NEA), by July 2020 half of the Khimti I project will be handed over to NEA for a symbolic 1 Rupee.

Although production of electricity is the core business, HPL has also focused strongly on addressing community development needs through its Corporate Social Responsibility (CSR) programmes, it added.

Electricity has been provided to over 4,600 rural households through a 635 kW mini-hydropower plant. Presently 3,800 more households are being added and another 400 kW power plant is planned. Infrastructure created during the implementation of these Rural Electrification programmes has been handed over to the Khimti Rural Electric Cooperative (KREC), a member-owned and democratically managed cooperative.

The cooperative, the first of its kind and a model cooperative in Nepal, was based on highly successful cooperative models from USA and Bangladesh.

HPL has supported several schools in the districts of Dolakha and Ramechhap; with the Khimti Project School showing excellent results in the SLC exams, said the hydropower company that has aided numerous drinking water systems, toilets including bio-gas, agricultural and forestry projects, income generation training, women’s empowerment and irrigation systems have been implemented through the CSR efforts in the local communities.

A good example is the Halua Khola Irrigation System which has been in operation for eight years. The system supplies the village of Gogantar, consisting of approximately 100 households, with water for agriculture and has enabled the annual crops to be increased many fold.

"HPL supports local industry and the strengthening of competence within the Hydro Power field through the utilisation of expertise from such institutions as Hydro Lab and by supporting the establishment of a Turbine Lab in Kathmandu University," according to the hydropower company.

Buddha Air to fly to Lucknow from January 7

Buddha Air is starting its flight to the Indian city of Lucknow from January 7.
It will be the second international flight of Buddha Air after Paro, Bhutan.
"Buddha Air is flying every Sunday, Wednesday and Friday in a week to Lucknow," the Airlines said, adding that the three scheduled flights every week on the Kathmandu-Lucknow-Kathmandu will help ease the pressure of the air travellers as Lucknow has a very good connectivity to other Indian cities.
"Currently it is flying with 47-seater ATR-42 aircraft," Marketing Chief of the airlines Rupesh Joshi said, adding that the depending on passenger flow, it could start 70-seater ATR -72-500 aircraft. "One can fly to Lucknow for Rs 5,600 excluding tax."
One of the biggest private airlines in the country is also planning to add flights to other different cities in India like Guwahati, Kolkata, Patna, Banaras, Gorakhpur and Deharadun soon, said the airlines.
After the revised Air Service Agreement (ASA) with India, Nepali private airlines and Indian Airlines, both can start cross border flights trying to make cross border air travel more cheaper between the two South Asian neighbours.
Earlier, Necon Air, Cosmic Air and Air Nepal used to fly to Indian cities and abroad. Currently, after the national flag carrier Nepal Airlines that flies to New Delhi, Buddha Air is the only airlines that is flying cross border.
After its 13 years of domestic services, Buddha Air has started its first international flight from Kathmandu to Paro, Bhutan on August 23. The airlines has been operating four scheduled flights every week with its Beech 1900D aircraft that has a capacity of carrying 16 passengers.
During tourist season, Buddha Air is planning to operate one flight daily and can also add charter flights as per requirement, said the airline that is the fourth private airline flying across the border.
Buddha Air currently has 4 Beech 1900D aircrafts and can operate up to 12 flights to Paro daily. “It means Buddha Air has capacity to carry up to 192 passengers daily,” said the airlines, which added a new 70-seater aircraft ATR -72-500 recently. Buddha Air has a fleet of eight aircraft at present.

Indian Railways to construct rail line in Nepal

Indian Railways will execute a 70-km rail line project at an estimated cost of IRs 4700 million in Nepal as part of the move to strengthen ties between the two neighbouring countries, according to the reports.

The project -- to be implement by the Indian Railways -- includes guage conversation between Jai Nagar, India and Janakpur, Nepal spanning a distance of 30-km and laying a new Janakpur-Bardivas line covering a distance of 40-km, Indian Railway East-Central general manager KK Srivastava is quoted as saying.

The parliamentary Public Accounts Committee (PAC) in July had re-directed the Ministry of Labour and Transport Management (MoLTM) and the Nepal Railway Company Ltd to upgrade the quality of the nation’s only railway—Janakpur Jayanagar railway — at the earliest.

Terming the inability to manage the single railway track ‘shameful’, PAC member Rabindra Adhikari has said the ministry and the railway company should be held responsible for their inability to operate the railway in a better manner.

The committee had in 2009 also directed the government to upgrade the narrow gage track to broad gage one.

The government's 10-year strategic plan has also proposed a Janakpur-Bardibas track also. The strategy focuses on strengthening and better managing the 51-km long railway line -- now only 29-km operational -- to upgrade its service standard to provide better services.

The Indian railway ministry has given its nod for the project and released Rs100 milliobn as first installment for the purpose, Srivastava has been quoted by the reports

Central bank caps CEO's remuneration

The Central Bank has fixed the salaries of the chief executives of the banks and financial institutions (BFIs). However, the new directives will not attract the pay and perks of the existing chief executives.
"The bank's chief executives renumeration cannot exceed the last three fiscal years' average pay and perks of the total employees of the financial institution or maximum of 0.025 per cent of the last fiscal year's total assets, which ever is less," said the Nepal Rastra Bank (NRB) directives issued here today.
The central bank -- under fixed annual compensation -- said that in case of the banks and financial institutions that are into operation for less than three years, the chief executives' remuneration should not exceed the industry average.
However, the chief executives under current assignment will come under the directives.
Similarly, the central bank has also directed the banks and financial institutions to follow the NRB directives on performance-based pay and other pre-requesitives.

Arfican oil, gas, mine meet plans task force

UNCTAD's Least Developed Countries Report 2010 was unveiled on Friday at the conclusion of the organisation's 14th conference on African natural resources. UNCTAD deputy secretary-general Petko Draganov told the gathering that the report -- matching the theme of the conference -- urges the world's 49 poorest nations to broaden their economies so that they benefit from, but are less dependent on, commodities such as raw natural resources. Most LDCs, as these countries are called, are in Africa.
The focus of this year's 14th UNCTAD Oil, Gas and Mines, Trade and Finance Conference and Exhibition was on how to harvest greater value from natural resources development, and how to retain it on the African continent. Patrice Trovoada, Prime Minister of Sao Tomé & Principe, opened the annual session by citing the so-called "resource-curse syndrome," in which the harvesting of a country's natural resources often leads to increases in poverty. He called for policy coordination in the development ofnatural resources in Africa to improve the contribution of extractive industries to the continent's development.
This year's LDC report, released today, is subtitled 'Towards a New International Development Architecture'. It stresses, as Draganov said, that LDCs, with the support of re-oriented international aid programmes, must escape the boom-bust cycles that plague their resource-dependent economies, and must improve their 'productive capacities'.
Productive capacity is a country's ability to produce a wide variety of goods, both for domestic consumption and export, and goods that contain greater 'value added' -- that is, products which domestic intellectual and manufacturing work have upgraded so that they command higher profits and pay higher wages to those who make them.
Demand for such goods is often more steady, and prices are more stable, than for commodities. The 14th conference was held for the first time in Sao Tomé, Sao Tomé & Principe. It ran from November 21-25.
The Republic of Guinea will host the next conference in November 2011. A major outcome was a resolution recommending that a task force to be set up by African governments 'to work on the methods and evaluation criteria of the local content in the area of natural resources in genera'. The references to be used by the task force fall within the framework of the Africa Mining Vision already established by the African Union.
"The criteria," the resolution says, "should serve as benchmarks for those in charge of the articulation and the follow-up to national development plans." Discussions during the meeting stressed that steps should be taken to lessen the 'enclave' nature of natural-resource extraction in African countries. Instead, participants said, links should be established between national economies and the operations -- often foreign-designed and run -- that harvest these resources.
Some speakers said there would be merit in using extractive industry revenues to finance diversification into other economic activities. And strategies suggested included using petroleum revenues to build economic capacity and 'enable and empower' local companies.
In his concluding remarks, Kwabena Baah-Duodu, senior advisor to the UNCTAD secretary general and officer in charge of the UNCTAD's Special Unit on Commodities stressed the importance of comprehensive natural resources management policies that will boost local content and create wealth in host countries for the benefit of the majority of their populations. The conference also reviewed progress to date on an African Natural Resources Exchange (NRIE), a project begun following a recommendation of the 13th conference held last year in Bamako, Mali.

OFID extends loan for infrastructure

OPEC Fund for International Development (OFID) has agreed to provide a loan assistance of $17 million to Nepal for the implementation of urban infrastructure improvement project.
Lal Shanker Ghimire, joint secretary, Finance Ministry and Suleiman J Al-Herbis, director general, OFID, signed the loan agreement to this connection in Vienna, Austria today.
The loan assistance will be used to improve and make municipal services affordable in key regional urban centers of Nepal, according to a press release by the Finance Ministry.
Under the project, civil works like drainage and sewerage systems, roads and lanes, solid waste management systems and community development, water supply system, and other infrastructure facilities will be improved. It will also implement land acquisition and resettlement, the release said.
The project is also co-financed by the Asian Development Bank (ADB), and the global environment facility. Nepal had signed the agreement with ADB in Kathmandu on October 26.

Gurans Life ordinary shares oversubscribed by four times

Guras Life Insurance's primary issue has been oversubscribed by four times to Rs 427.49 million.
The insurance company had floated Rs 108 million worth 10,80,000-unit of ordinary shares at the face value of Rs 100 per unit for the public from November 19 to 23. The issue manager NMB Capital closed the issue on Tuesday after it was oversubscribed.
"Some 49,534 people -- excluding the staff -- applied for 4.27 million-unit of shares," said Sunil Devkota, chief executive office of the life insurance company that is promoted by 17 promoters including Sunrise Bank, T M Dugar Group and a group of diverse businessmen, industrialist and legal professionals.
Despite the poor performance of the secondary market at present, the four fold subscription of the ordinary shares makes it clear that the public still hs faith in the primary issue.
With this primary issue worth Rs 108 million, Guras Life Insurance has now paid up capital of Rs 360 million.
However, life insurance companies have to raise their paid up capital to Rs 500 million by July 15, 2013, according to the Beema Samiti (Insurance Board) directive.
"We are going to increase our paid up capital to Rs 500 in next two year by issuing rights and bonus shares," he said.
There are nine life insurance companies and 16 non-life insurance companies making it to a total of 25 insurance companies in the domestic insurance sector. However, Rastriya Beema Sansthan is life-and non-life both facility.
The 34,092,725-unit shares of 20 insurance companies with a paid up value of Rs 3,409,272,500 are listed in the Nepse under the insurance sub-group that is one of the key players in the secondary market.
Though the insurance market is huge, there is a shortage of technical manpower, besides lack of awareness and education about the insurance in the domestic market.

ADB to help poorest Nepali farmers diversify crops, boost incomes

The Asian Development Bank (ADB) will help some of Nepal's poorest farmers shift production from traditional low-earning crops into high-value commodities, resulting in improved quality of life and incomes for nearly 19,000 households.

ADB's Board of Directors approved a grant of $20.1 million for the Raising Incomes of Small and Medium Farmers Project, which will support nearly 900 farmer groups in 10 districts in underdeveloped western Nepal.

"This initiative will sharply increase the production of high-value commodities in target areas, resulting in greater profitability for farmers, including many women," said Ahsan Tayyab, head, Project Administration Unit in ADB's South Asia Department.

Agriculture's contribution to Nepal's economy has dropped in recent years but nearly three-quarters of the rural population are still reliant on the sector for a living. Small farmers struggle to make ends meet with incomes limited by low returns from traditional crops such as rice and wheat, small land plots, low levels of technology, a lack of access to credit, and weak supply chains. Men often migrate from the countryside in search of better paid work, leaving women to run farms, and surveys of small farmers show that more than 65 per cent of households are living below the poverty line.

"There is rising demand for higher value commodities such as fruits, vegetables and spices as urban incomes increase, the tourism sector grows, and as export opportunities open up to India and regional markets," said Tayyab.

The project will help farmers move into higher income earning crops and build up supply chain links to buyers and markets. It will include a grant facility so farmers can invest in new postharvest facilities such as processing, storage and packaging. It will also provide farmers with agribusiness training and assistance for business plans to allow them to produce and add-value to new commodities. Support for new farm technologies, including climate change adaptation measures, will be of key benefit to disadvantaged groups, including indigenous peoples and households headed by women.

"The project design will help catalyse private sector investment and establish strategic market linkages, and by 2017 the 7,500 hectares of land contracted to produce high value commodities will have estimated annual output of 64,500 tonnes with a projected retail value of $31 million," said Tayyab.
The grant from ADB's concessional Asian Development Fund will cover 60 per cent of the total investment cost of almost $34 million. Beneficiary groups will extend $7.6 million equivalent, with the government providing $5.3 million and the Netherlands Development Organisation, SNV, supplying $490,000 to cover the project's agribusiness and value-chain backstopping package.

The Ministry of Agriculture and Cooperatives will be the executing agency for the project, which is due for completion in June 2018.

Civil Bank to come into operation from Friday

Civil Bank Ltd is starting its operations from Friday.

"We are soft-launching on Friday," said Kishore Maharjan, chief executive officer (CEO) of the 30th commercial bank of the country. "We got the operational licence last Friday," he added.

The youngest commercial bank has 147 promoters — mostly from the housing business with Rs 2 billion authorised capital.

The bank has Ichchha Raj tamang, as the chairma in board.

Civil Bank is the 12th company of Civil Group — a renowned name in the housing business -- that also has Civil Merchant Bittiya Sanstha and Civil Savings and Credit Cooperative.

The promoters have 60 per cent of the paid up capital, whereas the bank is planning to float 40 per cent to the public making it the largest ever initial public offering (IPO). "The bank will float Rs 800 million worth share to the public," he said, adding the the promoters have already paid Rs 1.20 billion.

According to the regulation, a commercial bank must have Rs 2 billion paid up capital and have to float 30 per cent share -- of the paid up capital -- to the public.

Though the central bank has temporarily halted the licencing of the new commercial banks, there are a couple of commercial banks -- Century Commercial Bank and Business Bank -- still in pipeline apart from some of the national development banks planning to upgrade to the Class A commercial bank.

The central bank has temporarily stopped the registration of new financial institutions — including commercial banks, development banks and finance companies — in August 2009 saying that the existing number of commercial banks in a small economy like Nepal was already more than enough.

According to the central bank’s data, 30 commercial banks -- inlcuding Civil Bank, 80 development banks, 79 finance companies, 18 microfinance institutions, 16 NRB-licenced cooperative, and 45 NRB-licenced NGOs.

Commerz and Trust Bank Nepal is the 29th commercial bank.

"Besides the establishment of new banks and financial institutions, the branch expansion of commercial banks also took place significantly in the fiscal year 2009-10," according to the central bank's annual report. "Commercial bank branches increased by 214 to 966 in mid-July 2010 from 752 in mid-July 2009," it said, adding that branches of development banks and finance companies stands at 358 and 265, respectively by the end of the last fiscal year.

WB provides additional help to expand roads to remote districts

The World Bank today approved $ 75 million in additional financing to help scale up Nepal’s efforts at improving all weather road access in remote districts of the western regions and carrying out periodic maintenance of the national strategic roads network.
The western districts of Nepal are among the most deprived in terms of income and food security. The Road Sector Development Project (RSDP) began in early 2008 with an original grant of $ 42.6 million. With the additional financing, Nepal will extend and complete the upgrading of 405-km of dry season roads to all weather standard and connect the district headquarters of Darchula, Bajhang, Kalikot, Jumla Jajarkot and Rukum to country's strategic road network.
These roads are in addition to the 297-km being upgraded in the ongoing phase of the project. The new funds will also finance the rehabilitation of sections of roads in Dailekh, Darchula, Baitadi, Bajhang and Kalikot, which were damaged by the monsoon floods last year.
"The Roads Sector Development Project has exceeded its original targets despite often difficult conditions,” said Susan Goldmark, World Bank Country Director for Nepal. "This remarkable progress speaks to the fact that roads are a high priority for people living in remote areas and that they find ways to overcome differences to achieve their collective interests. This additional financing will help over 1.4 million more Nepalis benefit from all weather roads."
The project will also support the periodic maintenance of 2,100-km of blacktop strategic roads, selected on the basis of the government’s maintenance priorities and its annual road condition surveys.
In addition, the project will continue to support institutional strengthening of the Department of Roads and the Roads Board of Nepal, as well as support the National Vigilance Centre in carrying out technical audits of the roads.
"Nepal has the second lowest road network density in South Asia,” said Surendra Govinda Joshi, transport specialist at the World Bank. "Only about 40 per cent of the population has access to paved roads within 20 minutes walking distance. Out of 75 districts in Nepal, 17 are still deprived of all weather access to the main transport network,” he said.
The RSDP additional financing is a blend of credit ($ 41.26 million) and grant ($ 33.74 million) from the International Development Association (IDA), the World Bank’s concessionary lending arm.

Food insecurity increases

Some 163 village development committees (VDCs) in a dozen districts are identified as highly food insecure.

"Forty-four per cent of the population in Humla and Bajura are reportedly facing a high level of food insecurity," according to a report by the UN Word Food Programme (WFP).

"Other districts with households that are facing a high level of food insecurity are Mugu, Kalikot, Rukum, Surkhet, Achham, Doti, Bajhang, Baitadi, Dadeldhura and Darchula," it said, adding that these households have both very limited food stocks and limited financial resources to purchase food.

"Most households are coping by reducing consumption, borrowing money or food and selling assets," the report added.

In total, 49,300 people are estimated to be highly food insecure in the Karnali region, this represents a reduction of 58 per cent compared to the same period last year. The year-on-year improvement is largely the result of income from cash crops including walnuts and apples and sale of Yarchagumba (medicinal herb), WFP backlog payment and opening of the Tibetan border in Mugu, Humla and Dolpa districts.

"The overall national food security situation began to improve in September due to the harvest of maize and an improvement in road access in hill and mountain areas following the end of the monsoon," according to the report.

Maize is one of the major summer crops and the first to be harvested. At a national level, maize production is reported to be normal to moderately impaired. The national outlook for paddy and millet which will be harvested in most areas by the end of November is also expected to be normal to moderately impaired.

"Despite the relatively normal national harvest, significant localised crop losses are expected in some areas," it said, "Decreases in summer crop production of between 30-50 per cent are expected across multiple VDCs in Mid and Far Western Hill and Mountain region due to localised natural disasters, poor climatic conditions and pest infestation.

Insufficient rainfall significantly reduced the area available for paddy plantation in Siraha and Saptari. In the southern belt of Siraha and the western belt of Saptari production is expected to decrease by 40-60 per cent.

July – August is an agricultural lean period in Nepal and typically a season of increased food insecurity. In addition, flooding and landslides caused by monsoon regularly routes and result in localised crop losses. Udayapur. Humla and Dolpa districts. also expected to be normal to moderately impaired.

Power producers slam budget

The much-awaited budget for the fiscal year 2010-11 has encouraged large industries by promising them road access, water and power supply.

However, the power producers think that without generating more power, the government cannot provide electricity to the industries.

"The private power producers have contributed 25 per cent of the total electricity generated in the country," said Dr Subarna Das Shrestha, president of Independent Power Producers' Association, Nepal (IPPAN) here in the Valley today. "But the budget has completely ignored us."

The country is reeling under four hours of load-shedding everyday at present and the power outage is going to increase to 14 hours a day in dry season (April-may), he said, adding that the government has promised to generate 25,000 megawatt (MW) of power in 20 years in the budget for 2009-10. "However, it has forgotten its promise and have not brought any programmes to encourage the power producers in this budget."

According to Gyanendra Lal Shrestha, coordinator of Hydropower Development Forum at the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), the hydropower projects not only create employment but also generates economic activities in the rural areas. "Hydropower generation can accelarate the economic growth."

"The country imported Rs 10 billion worth fossile fuel and Rs 5 billion worth batteries and invertors to meet the increasing power need in the last fiscal year," he said, "Had the government taken some measures to substitute these imports by encouraging the power producers, the country could have saved Rs 15 billion," he added.

The number of electricity consumers in the country is estimated to have increased by 12 per cent to 1,879,000 by the end of the fiscal year 2009-10. The electricity consumers grew by 10 per cent in fiscal year 2008-09 to 1,677,000, according to Economic Survey of fiscal year 2009-10. "Total electricity generation in the country has reached 714 MW including electricity generated from rivers, thermal power and solar plants."

The electricity demand is also increasing by 10 per cent annually. "But in the last fiscal year, only two to three MW has been added due to government's apathy towards the private power producers," said Shrestha.

Hydropower projects have 90 per cent value addition, whereas the cement industries have 60 per cent, but the government has prioritised cement industries and ignored the hydropower producers, according to Pradhan. "How can the cement industries operate without power?"

The survey has forecast energy consumption for household purpose at 41.70 per cent and industrial and commercial purpose at 38.1 per cent and at 6.70 per cent respectively in 2009-10. "Similarly, out of the total 130.77 Gega Watt Hours (GWH) of electricity supplied in 2008-09, private sector generated 925.74 GWH."

Of the total of 661 MW hydropower generated from different projects, 655 MW of the total power is connected to national grid, while the rest general by small hydropower stations are distributed at local level.

Though the construction of Chamelia (30 MW), Kulekhani III (14 MW) and Upper Trishuli 'A' (60 MW) are underway, they too can't be expected to fulfil the demand by the time they start generating power.

Nepal Electricity Authority entered into power purchase agreement (PPA) with the private sector for 121 MW from 21 projects in 2009-10. "If the PPA is increased, according to the market price hike, more private power producers will come forward to develop hydropower projects," said Pradhan.

Currently the PPA fixed by the NEA is Rs 4.55 in an average. "But it is too less as the government is paying more to buy electricity," he said, adding that the government could encourage the private power producers by increasing the PPA.

FNCCI, PAF join hands to promote agriculture

Federation of Nepalese Chambers of Commerce and Industry (FNCCI) and Poverty Alleviation Fund (PAF-Nepal) signed an agreement today to promote agriculture related business including livestock and Non Timber Forests Products (NTFPs) aimed at alleviating poverty and economic development.

Vice chairperson of PAF Vidyadhar Mallik and president of FNCCI Kush Kumar Joshi signed the Memorandum of Understanding (MoU) on behalf of the respective institutions here today to work together on promoting opportunities for both the poor and the local entrepreneurs in 40 districts of Nepal.

"The agreement is a strategic alliance between the two institutions, and it reinforces the crucial role of the private sector on alleviating poverty," Mallik said, adding that it is a win-win partnership as it ensures mutual benefit for both the poor and the local entrepreneurs.

"The business and industrial communities are pleased to join hands with the largest anti-poverty programme of Nepal," Joshi said, adding that they are hopeful that the partnership will contribute in the improving livelihoods of the poor and development of rural economy.

The understanding entails both the institutions engagement on capacitating the Community Organisations (COs) to carry out agriculture and livestock related business and establishing small processing enterprises that produce high value products, they said.

The umbrella organisation of domestic private sector and the largest poverty targeted programme have joined hands also to pave ways for involving COs in profitable and market oriented production and improved access to market through the provision of technology and information service as well as critical public infrastructure for promoting agribusiness, according to them.

The agreement -- to be implemented in PAF's 40 PAF programme districts -- is also expected to create and strengthen industry-wide partnerships along the value chain and thus forging linkage between producers, traders, processors and other stakeholders.

According to the agreement, both the institutions will work jointly on establishing backward and forward linkages, provide business development support and training to the local communities and ensure easy access to farmers and entrepreneurs with market information system through the application of ICT, among others.

The FNCCI -- through its Agro Enterprise Centre (AEC) -- will provide Agri Price information System and MIS network for the local COs and conduct training on enterprise related business plan for the them.

The FNCCI will extend help to the PAF COs in reducing existing obstacles to agriculture and food trade to increase the ability of farmers and agribusiness to respond to Sanitary and Phyto-sanitary (SPS) measures and food-quality standards to meet domestic and international market requirements, reads the joint statement, according to the agreement. "The district based Camber of Commerce and Industries will also coordinate for the use of Youth Self Employment Fund data and the trainees in PAF programme districts.

Apple delays Sim card plans

Apple has decided to delay its planned launch of its own Sim card until 2012 at the earliest, reports Les Echos without naming its sources.

The company has been working with Gemalto for three months on the project but major US and European operators have blocked the move, it said, adding that some even threatened to stop selling the iPad in their stores.

According to Les Echos, Apple does not want to depend on a single Sim card supplier to set the parameters and remotely administer the Sim cards.

Earlier, Apple was working with Gemalto on an iPhone with an embedded Sim card. The network information would be supplied wirelessly and saved in the handset’s memory.

According to the reports, this means a major strategy shift for Apple, opening the way for direct sales via iTunes: users first buy an iPhone and then choose a network. The current type of Sim card, which can be removed from the handset and changed, is central to the relationship between the operator and the customers, and as a result operators are not willing to let this go easily.

The term Sim refers to two things: the Subscriber Identity Module (Sim) that holds the customer and network’s unique details, and the physical case for this, the Sim card. The card is central to the operator’s relationship with the end-user; a Sim card from operator A does not work on the network of operator B.

Gemalto has developed a product for Apple that saves the information on a secure part of the phone’s memory, GigaOM reported citing sources at European operators. This type of System-on-a-Chip (SoC) includes a small operating system and memory for encrypted information, such as the user identity. There is also room for other secured applications, such as for mobile payments (Apple holds a number of patents for NFC). Gemalto will reportedly also supply a platform to manage subscriber details and support over-the-air updates. Several European operators have reportedly already spoken with Apple about the plans, but no one would confirm the talks, and Apple and Gemalto refused to comment.

The Financial Times writes that various European operators are concerned about the possible loss of control in their relationship with the subscribers. They are considering taking action against Apple, such as refusing to subsidy its handsets. One manager told the paper that Apple is risking 'war'. Vodafone, France Telecom and Telefonica were named by the paper, but none of them would comment.

Apple’s plans have technical advantages. With the identity saved in the phone, the Sim and its card are no longer needed, allowing for a flatter and simpler handset to produce.

The physical distribution and management of Sims is no longer needed either, saving costs. Operators and other brands will not profit directly from this, as the Sim card and its related infrastructure will likely continue for some years for other customers and handset brands.

Budget ends uncertainty, raises doubts

Finally, with the finance minister Surendra Pandey presenting a Rs 337.9 billion budget for the current fiscal year through ordinance today, shadow of uncertainty that loomed large over the economy has ended.
The feel-good budget that focused on eduction, health and social service apart from export promotion, infrastructure, and agriculture has targtted a growth of 4.5 per cent and inflation at seven per cent for the fiscal year 2010-11.
However, experts doubt the caretaker government's ability to contain nflation under the target and acheive growth rate. "The expansionary budget could not contain the inflation under seven per cent," said senior economist Prof Dr Bishwambher Pyakuryal. "As our informal economy is as big as formal economy, the government will find it difficult. The price hike will go beyond target and record double digit making general people suffer."
He also questioned government's capacity of spending on development activities as this government is caretaker and budget has also been delayed by four months.
"The delayed budget would find it difficult to achieve growth target as there is no supporting fiscal measures," Nepal Bankers Association president Sashin Joshi said.
However, the incentivising the exports and investment on infrastructure specially road and power is acknowledged.
Learning the lesson from last fiscal year's huge Balance of Payment (BoP) deficit, the budget has tried to boost the confidence of private sector and targetted to substitute imports providing concessional loans to the livestock raising farmers and cash crops like cardamom, ginger, tea, coffee and honey.
Industrialists also find it encouraging that the budget has provided tax rebate to export that could boost domestic industries. "The government has for the first time recognised the importance of real sector," said industrialists Rajendra Khetan. But another industrialist Binod Chaudhary opined that the budget is reluctant to give facilities of Industrial Policy, however he hailed the government for providing security to industry.
Though, its largely a continuity of the last fiscal year's budget, it has also aimed at huge infrastructure projects like 10 new modern cities; construction of six lane wide roads linking international trade routes like Birgunj-Pathlaiya, Belahiya-Butwal, Rani-Itahari and Surya Binayak-Dhulikhel; some half a dozen hydropower projects, the implementation of budget has been under scanner.
"The cooperation from the sectoral ministries and implementation of budget has doubt due to less time with the government and traditional approach," said former finance minister Bharat Mohan Adhikari.
The budget trying to be gender friendly and region-friendly has spread itself thin forgetting the government's reality and delay.
Former finance minister finds budget a little beyond the understanding reached among them. "He must have compulsion to introduce some new policy, though we had an understanding of not including any new ones," he said.
The political dead lock after the Prime Minister Madhav Kumar Nepal has delayed the full-fledged budget presentation forcing Pandey to bring Rs 110.21 billion special budget under special provision for the regular expenses.
"As the full fledged budget for current fiscal year could not be presented before the Legislature- Parliament due to special circumstances," Pandey said, claiming that the ordinances and budget are in line with the consensus reached earlier among political parties.
Since the attempt of the caretaker government to present the budget in the Legislature- Parliament yesterday was foiled by the UCPN-Maoists, the government prorogued the house and decided to bring the budget through the ordinance.

Budget for fiscal year 2010-11
GDP forecast 4.5 per cent
Inflation projection seven per cent
Total budget outlay -- Rs 337.90 billion
Recurrent expenditure -- Rs 190.32 billion
Capital expenditure -- Rs 129.54 billion
Principal Repayment -- Rs 18.42 billion

Sources
Revenue target -- Rs 216.64 billion
Foreign grants -- Rs 65. 34 billion
Deficit -- Rs 55.91 billion
Of the total deficit
Foreing loan – Rs 22.23 billion
Domestic borrowings – Rs 33.68 billion

BUDGET 2010-11: Highlights

* Manufacturing industries and hotels will get the benefit of direct purchase of diesel form the NOC at dealer’s price, in quantity exceeding at least one tanker at a time, for industrial and commercial uses.

* Arrangement has been made to provide two per cent of incentive in equivalent Nepalese currency to exporters on submission of bank documents that they have received convertible currencies earned from exports. If the value addition of exported commodities exceeds 50 per cent, such incentive will be three per cent and if it is more than 80 per cent then the incentive will be four per cent.

* They will also be entitled to a 25 per cent income tax exemption.

* The government will arrange a health post staffed with health workers and a police post of five-armed police personnel to any manufacturing industry that offers employment for more than 500 Nepalis.

* Any manufacturing establishment providing employment for more than 100 people will get the benefit of black topped roads reaching the premises, electrical grids and waterline.

* Likewise, infrastructure of Pokhara, Gautam Buddhha, and Janakpur airports will be developed to make them capable of operating international flights.

* The birthday place of Lord Buddha Lumbini, Kapilvastu, Devdaha and Ramgram will be developed as 'International Peace City'.

* A Strategic Master Plan to develop Janakpur, Pokhara and Lumbini as interdependent and complementary triangular destinations for tourism.

* Government will provide Rs 500,000 cash to any event that brings more than 100 foreign passport holders entering Nepal through air- route.

* Allocation of necessary budget for publicity of Nepal Tourism Year 2011 through international communication media.

* Advertisement Code of Conduct to be to make advertisement and commercial publicity systematic and respectable.

* Micro hydropower projects will be implemented in the entire hilly and mountainous region where the access to national grid is not possible and there is possibility of micro hydropower.

* Budhi Gandaki (600MW), Naushyalgad (400MW), 300 Tamor (300MW) and Aandhikhola (175MW) projects will be brought into operation under the appropriate partnership. Feasibility study will be carried out for Tamakoshi V and Upper Arun Project.

* National Building Code will be revised and brought into implementation in order to manage and facilitate modern amenities to address increasingly unmanaged urbanisation and housings.

* Establishing 10 new modern cities for business and residential purpose in the vicinity of Mid-hills Highway (Lok Marga) and North-South corridors.

* The old bridges of Godawari of Dhangadhi, Bheri of Surkhet, Dharke and Mugling, and bridges across Pathalaiya to Koshi will be maintained and repaired with priority.

* Construction of six lane wide roads linking international trade routes namely Birgunj-Pathlaiya, Belahiya-Butwal, Rani-Itahari and Surya Binayak-Dhulikhel.

* Existing land classification system will be refined. New Classifiaction system of land into six categories: agricultural, industrial, forestry, commercial, residential and public community.

* To encourage cooperative sector to establish and operate large agriculture and animal farms, government will provide infrastructures like roads, irrigation and electricity.

* To purchase machinery and equipment for processing cardamom, ginger, tea, coffee and honey, 50 per cent capital subsidy will be provided to the cooperative of the small farmers.

* Concessional loans to the livestock raising farmers to be lent through Small Farmers Development Bank and Small Farmers Cooperatives.

* Nepal-based authorised dealers of the vehicle importers need to publish maximum retail price of the vehicles in the national-level daily newspaper every four months.

* One can pay an advance lump sum payment of vehicle, land and house taxes for the next five years at existing rates.

* Among the existing seven slabs of import duty, the 25 per cent rate slab has been removed, reducing the present seven slabs to six slabs.

* 25 per cent tax rebate to people who earn income out of export of goods produced by using local raw materials.

* Department of Revenue Investigation (DRI) will be restructured as 'Department of Revenue and Money Laundering Investigation' and will be equipped with adequate resources.

* 40 per cent tax exemption in income accruing from investment in the construction and operation of infrastructure development sectors like roads, bridges, airports and tunnels.

* Fiscal Year 2010-11 will be observed as 'Tax Implementation Campaign Year”.

* Establishment a 'High-Level Public Enterprises Management Board' to monitor public enterprises.

* Management of 5,400 schools will be handed over to the communities during the current Fiscal Year.

* Has made arrangements for compulsory VAT registration for educational consultancy, discotheque, health club, catering, party palace business, mechanically operated dry cleaning service and restaurant with bar operating in municipality areas and other areas specified by Inland Revenue Department.

* Free education to girls students and students from extremely marginalised communities from grade 1 to 8 in the community schools.

* Legal provisions will be made to set up credit rating agency in order to enhance the credibility of the credit market.

* Investment of NRNs in the capital market will be allowed.

* The law will be promulgated for the effective regulation and supervision of futures and commodities' markets.

* Small Deposit Guarantee Programme covering up to Rs 200,000 started last year for D-Class financial institutions extended to B and C also.

* Price cartelling, quantitative complicity and any other type of organised syndicating will be treated as unlawful.

* Grants will be provided for the registration of collective trade marks for tea and coffee in the international market.