Managing rapid urbanisation can contribute to poverty reduction, growth

Managing rapid urbanisation is essential for improving growth, creating jobs and reducing poverty.
"Nepal’s cities have the potential to drive economic growth to benefit the entire country," World Bank country manager for Nepal Tahseen Sayed said during a round table on the results of the findings of a study 'NEPAL: Urban Growth and Spatial Transition: An Initial Assessment'.
With the population of five of Nepal’s ten largest cities growing at above four per cent a year, the study revealed that with only 20 per cent of its population living in urban areas, Nepal is the least urbanised country in South Asia. "But Nepal is also one of the fastest urbanising countries in the region, with the urban population growth rate estimated at more than five percent per year on average since the 1970s," according to the new study.
"The study would contribute to the government's programmes for transformative urban development," said Sayed during the discussion of the the study co-financed by AusAid — the international development agency of the Australian government — with the Ministry of Physical Planning and Works.
Nepal’s economy has undergone major structural shifts over the past few decades, from an agriculture economy to a service-based economy. Urban areas are at the center of this transformation. The urban economy is growing significantly faster than the rural one, and the incidence of poverty more than halved in urban areas from 22 per cent to 15 per cent over 1995-96 — 2010-11, according to the study that has also called for tapping into the potential of the cities to leverage their comparative advantages in strategic sectors such as tourism, crafts and agro-processing.
"Only vibrant and competitive cities can attract high-return investments and generate the jobs required to accelerate growth while creating a wide range of income-earning opportunities, especially for the poor," it said, adding that the Kathmandu Valley is the first area in the country to face the unprecedented challenges of rapid urbanisation and modernisation due to its position as the primary gateway for Nepal’s economic activity.
But, the study noted, rapid population growth is overtaking the capacities of existing institutions to manage urbanisation. Land patterns are rapidly changing but urban development planning lags behind actual growth.
 Infrastructure deficits are growing and unplanned growth has significantly increased vulnerability to disasters, it said.
"Urgent action is needed to develop and regenerate the Kathmandu metropolis to improve productivity and livability and to ensure that growth is environmentally sustainable and inclusive,” according urban economist at the World Bank and lead author of the report Elisa Muzzini.