NEAT project coms to an end, USAID to continue support foster economic growth and improve food security

The US Agency for International Development (USAID) commemorated its almost three-year partnership with Nepal and the private sector to foster economic growth and improve food security, today.

Since 2010, the partnership, through the USAID-funded Nepal Economic, Agriculture, and Trade (NEAT) Project, has sought to improve the country’s business environment, strengthen fiscal and trade policies, encourage competitiveness and exports of tea, ginger, lentils, and coffee; enhance food security and increase access to financial services.

“Advancing economic growth must be a sustained, prioritised effort because it benefits everyone — every political party, civil society and the private sector, and rich and poor Nepalis in cities and in rural areas,” USAID/Nepal acting mission director Sheila Lutjens said, at the closing ceremony.

NEAT worked with more than 75,000 households in 32 districts in the country, directly improving the lives of 560,000 people, according to the USAID.

The USAID NEAT project worked with 20 private firms and almost 67,000 farmers, increasing farmer sales by $26.5 million, with another $10 million in incremental farmer sales projected for the summer of 2013, it said, adding that it has also facilitated the disbursement of more than $3.67 million in rural loans by financial sector partners, creating much-needed cash flow in local economies and supporting small-businesses.
Likewise NEAT also helped more than 19,000 rural customers find new access to formal financial services through either new bank branches or mobile financial service and supported the government to analyse 40 policies and administrative reforms, of which nine are already being implemented, including tax payments through the Any Bank Branching System (ABBS), new seed registration process, revised custom’s valuation procedures, and a data link between the Office of Company Registrar and the Inland Revenue Department.

Implemented by Chemonics with Fintrac, CEAPRED, METCON, Making Cents, Kaizen, WOCAN, Land O’ Lakes, and numerous local partners, the project has built the capacity of more than 40 local organisations, including financial service institutions, business service providers, and private firms, to implement key economic growth and food security efforts.

USAID will continue the successes, best practices, and efforts of NEAT’s agriculture work through the recently launched, five-year Knowledge-based Integrated Sustainable Agriculture and Nutrition (KISAN) project that will work in close collaboration with new government programmes in the mid-and-far west regions to improve food security, increase income, and diversify diets for about one million rural Nepalis.

Business confidence ‘improves’: FNCCI survey

The private sector that has been asking the government to create better business environment has come up with a report of improving business confidence in the country in the last six months.
The Business Confidence Index (BCI) has improved to 49.5 per cent – up by 9.8 percentage points compared to the first report in November 2012 – according to the FNCCI Business Confidence Survey released here today.
However, the 49.5 per cent – below 50 per cent – still reflects that the business confidence is yet to improve for the better investment opportunities in the country.

 According to the survey, business confidence is the lowest in the manufacturing sector – the sector that can create employment in the country – whereas service and agriculture sectors are more confident and optimistic.

The survey has identified governance as the most critical challenge for the economy, followed by political instability, power shortage and corruption.

Governance used to be the fourth most challenging factors six months ago, while political instability, energy and strikes topped the chart. Some 18 per cent respondents attributed corruption – which did not find its place in the last survey – as the fourth most critical challenge.
The survey carried by FNCCI with the support of the USAID funded Nepal Economic, Agriculture and Trade (NEAT) Activity has collected opinion from 420 businesses from agriculture, service and industry sectors.

The survey has also highlighted production, employment, cost of production, profitability, export, import, overall business environment, ease of obtaining loan, inflation and the overall economy, and their role in economic expansion.
The private sector seems to be optimistic of the future as 50 per cent of the respondents believe business climate will improve in the next six months, whereas only a quarter – some 26 per cent – expected it to deteriorate further.
The manufacturing sector, however, is not much optimistic as only 43 per cent of the respondents from the manufacturing sector believe that the business climate will improve in the next six months.

Some 67 per cent respondents expected expansion of their production level, whereas 58 per cent expected an increase in the profit level.

Likewise, some 67 per cent expect that the cost of production would rise and 61 per cent expected that the inflation rate would go up in the next six months.
Though, there has been no new employment generation in the country, more than half – over 51 per cent of the respondents – were hopeful of increase in employment ratio in the next six months.

Technology, input on time, market key to boost agriculture output

Experts today suggested adoption of demand driven technology, provide timely inputs like fertilizers and improved seeds on time, markets and services for the increased agriculture output.
Weak agriculture research and lack adequate resources, coupled with lack of enough extension services, capacity and resources to deliver inputs on a timely manner, commercial banks apathy towards providing loans to farmers have contributed to decline in agricultural productivity contributing to food insecurity in the country, said executive director of Institute for Integrated Development Studies (IIDS) Dr Bishnu Dev Pant during a Consultation Workshop on Agriculture Inputs and Policy, jointly organised by International Food Policy Research Institute (IFPRI), IIDS and USAID, here today.
Agriculture contributes to around one third of total GDP and around four-fifth (some 4.2 million) populace depends on agriculture providing net employment to two-third of the total population, however, agricultural productivity has started declining over the years, he said, adding that Nepal has become net food importing country in recent years from a food surplus country once. "Some 43 out of 75 districts are food deficit."
He also suggested significant increment in investment on irrigation and in technology, massive investment on rural infrastructures, increase in budgetary allocations to at least 20 per cent of total budget and farmers' access to agricultural inputs to boost the agriculture production.
However, agriculture expert at the NEAT under USAID-Nepal Dr Deva Bhakta Shakya recommended establishment and operation of Fertilizer Buffer stock under Public Private Partnership arrangement, with database and monitoring system of fertilizer use and distribution, including both official and informal import.
The government must bring a progressive policy to meet an annual demand of 758,000 MT of fertilizers ($500m), exploit and engage private sector, provide subsidy for remote farmers, where logistics are still a challenge, the experts claimed. "Of the total demand some 200,000 MT is formally supplied, whereas the remaining gap in filled by the informal supply."
Likewise, director of IFPRI Dr Pramod Joshi, on the occasion, said that the wider policy consolation will help government fill the gap. "As more than 90 per cent Nepalis live in rural areas and depend on agriculture, there is high incidence of poverty is in hills and mountains and in the mid-western and far-western region due to low crop yields," he said, suggesting to analyse policy and execute it properly that would guarantee food safety.

Government to bring FITTA soon through ordinance

The government will bring the Foreign Investment and Technology Transfer Act (FITTA) immediately after the Foreign Investment and Technology Transfer Policy, through ordinance, to reverse the current trend of import-led economy, according to minister for industry, commerce and supplies Shankar Koirala.

"Though the incumbent government has been formed with a sole aim to conduct a free, fair and peaceful election of the Constituent Assembly, it cannot turn its back on the pressing needs of the country like economic development," he said during a Public-Private-Dialogue on the draft of the Foreign Investment and Technology Transfer Act, jointly organised by the Confederation of Nepalese Industries and Ministry of Industry, with support from USAID-NEAT, here, today.

Foreign investment is key and a strong instrument for development, said Koirala, adding that the country has, however, received foreign investment of only around $84 million to $85 million till date, not due to lack of an Act but because of lack of implementation.

Though the country had opened foreign investment in the country about three decades back, it was effectively implemented after the 1990 democratic movement that brought a liberal economic policy, he added.

"The proposed Act — that will help attract more foreign investment in the country — will be implemented effectively as it is being finalised with consultations from stakeholders," Koirala added.

However, the effectiveness of the policy will depend on the Act, and that of the Act on implementation, said Koirala, who is also the finance minister.

Emerging countries have been competing to attract foreign investment with attractive packages, said president emeritus of CNI Binod Chaudhary, on the occasion.

Nepal should offer more competitive packages to attract foreign investment, he said, adding that the current Act failed to attract foreign investment. "It failed to encourage foreign investment."

The draft Act — that will replace the current Act of 2049 BS — is expected to encourage foreign investment as it has offered various incentives and packages apart from prioritising sectors that Nepalis cannot invest in — like hydropower generation and transmission; infrastructure development including expressway, railway, tunnel way, metro railway, flyover and international airports; agriculture-based and herbal processing industry; tourism and mines, and manufacturing industry.

Aligned with the Industrial Policy that the government had brought some three years back, the proposed Act aims at regulating foreign investment rather than controlling it as foreign investment is necessary for mega projects.

It has fixed a minimum threshold of $200,000 for foreign investment apart from separate sectoral thresholds for prioritised sectors, and maximum percentage of foreign investment on service sectors, liberal visa regime and one-stop service, and time-bound decision for foreign investments to encourage investors.

The draft Act has also opened limited investment window for Nepali entrepreneurs, who want to invest abroad. But they have to submit their periodic reports, on the basis of which, the government might allow them to invest more, if the country is benefitting.

During the dialogue, the entrepreneurs also suggested to encourage joint ventures in the country.

USAID, government partner to create, distribute food security training materials

The USAID-funded Nepal Economic, Agriculture, and Trade Activity (NEAT) is partnering with Ministry of Agriculture Development to design and disseminate agricultural training materials nationwide.
The materials — 263,000 pieces covering 13 crops and three types of livestock — include durable handouts and flipcharts aimed at increasing the quantity and quality of agricultural production. They are oriented to illiterate and semi-literate populations, using a combination of photos and written descriptions in Nepali to clearly depict and explain critical agriculture practices. The materials will be distributed to Department of Agriculture Training Centres, District Agriculture Development Officers (DADOs), and extension service centers throughout the country.

Developed in consultation with Nepal’s Department of Agriculture, the training materials were officially handed over to the ministry at an event in Kathmandu yesterday. The agriculture development secretary Jaya Mukunda Khanal and joint secretary Ram Prasad Pulami, received the materials.

Joint secretary Prabhakar Pathak, on the occasion, noted that the training materials will be an ‘asset for the training needs of our agriculture sector.’ Speaking at the event, director of USAID’s Social, Environmental, and Economic Development Office John Stamm  said that USAID remained committed to sustainable impact. “The materials being handed over today will build the capacity of Nepali farmers and extension agents throughout the country to increase their food security and their incomes,” he said, adding that long after the project has ended, farmers, DADOs, service centers, and other projects will continue to use the materials created through this joint effort with the government.

NEAT is a 32-month programme designed to promote economic growth, reduce poverty, increase food security, and improve lives. The programme is working with 67,510 food insecure and disadvantaged households in 20 districts of the west and mid-west regions, facilitating their access to markets and improved inputs like seeds, fertilizers, and integrated pest management supplies, and building their capacity to use good agricultural practices like pest and disease control, and improved post-harvest handling.
The farmers supported by the programme have increased their household incomes by a total of more than $8.5 million, with 99 per cent of them reporting increased access to markets for their crops. The project will close this August.