Monday, December 28, 2009

Japan helps Nepal to introduce fortified flour at small mills to reduce anemia

Nepal will enlist the help of small millers to boost the production of fortified cereal flour, which can help reduce anemia and other illnesses linked to vitamin and mineral deficiencies, particularly in poor, rural areas.
To support the government’s goal, the Japan Fund for Poverty Reduction (JFPR) — financed by the government of Japan and administered by the Asian Development Bank (ADB) — is providing a grant of $1.8 million for producing fortified flour at small, village-based milling centers, known as Chakki mills. The project is targeting the addition of iron, folic acid and vitamin A to milled wheat, maize and millet, benefiting around 200,000 people.
Anemia, caused by a lack of essential nutrients, is a major public health issue in Nepal, resulting in many maternal and perinatal deaths and development problems in children. Fortified flour, used to combat anemia, is now produced in large, commercial milling enterprises but this is only a small proportion of the total consumed, and cost, technology and other barriers have hindered its introduction at smaller mills.
The government, along with the Canadian non-government organisation, Micronutrient Initiative, is now testing low-cost fortification systems at water and electric-powered Chakki mills and the JFPR-funded project will help accelerate and expand this process.
“Fortified flour can reduce national rates of vitamin and mineral deficiencies within one year of implementation," said Snimer Sahni, principal Project Economist in ADB’s South Asia Department. "This project will define the conditions, capacities and resources needed for the sustainable expansion of small-mill flour fortification, benefiting the poor and vulnerable.”
The project will seek to find realistic solutions to the problems that currently prevent flour fortification at small mills, such as recurring costs, supply and support system difficulties, quality assurance issues, and a lack of consumer awareness. Among the innovations it will consider are community-based financing options, including possible channels for converting grain received as payment for use of the milling facilities, into hard cash.
Community participation is a key element of the project, with 65 village development committees (VDCs) to receive resources for the delivery and monitoring of the use of nutrients by millers, for collecting payments, for providing quality assurance monitors, and for raising community awareness. The target is to provide 360 small millers with the equipment and training to produce about 19,000 metric tonnes of fortified flour which will give nutrition protection for more than 200,000 people for two years.
Once the project outcomes have been assessed, they may be expanded to other parts of Nepal through ADB’s country assistance programme.
Along with JFPR, the government will provide $122,000, the private sector $14,725, and beneficiaries about $130,000, for a total project cost of $2.066 million. The Ministry of Health and Population is the executing agency for the project which will run from 2010 to 2012.

Saturday, December 19, 2009

World Bank provides additional resources to upgrade rural roads

The World Bank approved $45 million in additional financing to help scale up Nepal’s efforts at improving the rural road network.
The Rural Access Improvement and Decentralisation Project (RAIDP) has been upgrading rural roads in 20 of Nepal’s 75 districts since 2005, when the World Bank provided a $32 million grant. The government and participating District Development Committees (DDCs) have provided about $10 million, according to the bank.
The Swiss Agency for Development and Cooperation (SDC) has also provided $2.1 million for the Trail Bridges component of the project.
With the new financing, the project will expand its operations to 10 more districts. The additional funds will also help meet cost escalations that have occurred on account of the doubling of input prices since 2005. For example, the cost of reinforcement bars and cement increased by an average of 130 per cent between 2005 and 2007. Costs also increased following an upgrade in technical specification like moving from gravel to low cost black-top roads.
“Nepalis have high expectations of sustained peace and economic opportunities,” said Susan Goldmark, World Bank Country Director for Nepal. “Improving rural roads in these districts will support Nepal’s vision of creating employment, jump-starting economic development, and reducing poverty”.
Of the two project components, the Rural Transport Infrastructure component will rehabilitate and upgrade a further 550 km of existing dry-season rural roads to all-season standard and, in the remote hill districts, upgrade another 140 km of existing rural trails and tracks to dry-season standard.
When combined with the original grant, this will result in 1,165 km and 211 km, respectively.
It will also maintain about 4,500 km of rural roads, construct 160 trail bridges and selected river crossings, as well as develop small community infrastructures. The additional financing is expected to create 150 days of off-farm employment a year for over 30,000 people.
The second component – Capacity Building and Advisory Services – will support institutional strengthening at the Department of Local Infrastructure and Agriculture Roads (DOLIDAR) and DDCs in the areas of road asset management and District Transport Master Plans. It will also aid the Rural Transport Service Study and its policy recommendations and provide project implementation support.
“Once complete, beneficiaries in the project areas will enjoy a 20 per cent reduction in travel time and a 30 per cent increase in transport services plying the roads,” said Marianne Kilpatrick, Senior Transport Specialist, World Bank.
Approximately 2.4 million people are expected to benefit from RAIDP when this phase ends in 2013. In addition to including 10 more districts in the project, RAIDP intends to increase the number of kilometers upgraded in the original 20 districts.
“The partnership with DDCs has resulted in more efficient use of resources and an increased focus on maintenance,” said Surendra Joshi, Senior Transport Specialist, World Bank.
In the meantime, 45 districts are covered under the Rural Reconstruction and Rehabilitation Sector Development Project (RRRSDP) which is supported by the Asian Development Bank (ADB), the Department for International Development of the UK (DFID) and the OPEC Fund for International Development (OFID).
The RAIDP additional financing is a blend of credit and grant from the International Development Association, the World Bank’s concessionary lending arm.

Thursday, December 17, 2009

Top global central banks aim for tougher financial rules

ZURICH: Leading central bankers and national regulators said on Thursday they were aiming to introduce proposals to strengthen international financial requirements on banks by the end of 2012.
The agreed reforms, which have been in the offing for several months, are part of a "comprehensive response" to the financial crisis, the Basel Committee on Banking Supervision said.
"The capital and liquidity proposals will result in more resilient banks and a sounder banking and financial system," said Dutch central bank chief Nout Wellink, chairman of the Basel Committee.
However, the Committee said it was still reviewing possible additional measures on "systemically important institutions," banks that are big enough to have an impact on whole economies and the rest of the financial system if they run into trouble. It will also assess the potential impact of its package of measures and refine them next year.
"The fully calibrated set of standards will be developed by the end of 2010 to be phased in as financial conditions improve and the economic recovery is assured, with the aim of implementation by end-2012," the statement said. "The Committee is mindful of the need to introduce these measures in a manner that raises the resilience of the banking sector over the longer term, while avoiding negative effects on bank lending activity that could impair the economic recovery."
The group of central bankers and national financial regulators from 27 leading economies had alreday approved stregthened regualtion and supervision and revised "Basel II" capital requirements in July and September. AFP

Monday, December 14, 2009

Mauritius ranks top in ‘Paying Tax’ list in Sub-Saharan Africa

PORT LOUIS: Among the 46-Sub Saharan African countries Mauritius tops the rank in Paying Tax, followed by Botswana and South Africa in the second and third positions.
The report – a joint publication of the World Bank, International Finance Corporation, and PricewaterhouseCoopers – is the fifth edition that the World Bank Group’s Doing Business project has included the "paying taxes" indicator.
The indicator measures the ease of paying taxes in 183 economies around the world. Besides paying taxes, the Doing Business project provides quantitative measures of regulations in nine other areas: starting a business, dealing with construction permits, employing workers, registering property, getting credit, protecting investors, trading across borders, enforcing contracts, and closing a business.
However, Mauritius ranks 12th – slipping one position down from last year’s 11th rank – among the 183 economies around the world. “A medium-size company must make seven payments in a given year in Mauritius, whereas the Sub-Saharan African average is 37.7 and OCED average is 12.8 payments per year,” according to the report.
Similarly, it takes 161 hours per year to pay the tax in Mauritius whereas in Sub-Saharan African country, it takes 306 hours in an average.
The paying taxes indicator measures tax systems from the point of view of a domestic company complying with the different tax laws and regulations in each economy. The case study company is a small to medium-size manufacturer and retailer, deliberately chosen to ensure that its business can be identified with and compared worldwide.
The indicator covers the cost of taxes borne by the case study company and the administrative burden of tax compliance for the firm. Both are important for business. They are measured using three subindicators: the total tax rate (the cost of all taxes borne), the time needed to comply with the major taxes (profit taxes, labour taxes and mandatory contributions, and consumption taxes), and the number of tax payments.
The paying taxes indicator measures all taxes and contributions mandated by government at any level (federal, state, or local) as they apply to the standardised business. The total tax rate subindicator measures the impact of taxes and contributions on the company’s income statements. It includes the corporate income tax, social contributions and labour taxes paid by the employer, property taxes, property transfer taxes, dividend tax, capital gains tax, financial transactions tax, waste collection taxes, and vehicle and road taxes. The other two subindicators, on the time to comply and number of payments, also include taxes and contributions withheld or collected, such as sales tax or value added tax (VAT).
In this year’s report, the top reformer was Timor-Leste, which introduced a new tax law, streamlined the business tax regime, and simplified tax administration. Between June 2008 and May 2009, 45 economies made it easier to pay taxes as measured by Doing Business, almost 25 per cent more than in the previous year, according to the report.
“Eastern Europe and Central Asia had the most reforms for the third year in a row, with 10 economies reforming, whereas around the world on average, the case study company faces a total tax rate (percentage of profit paid out in taxes) of 48.3 per cent and spends 286 hours a year, and makes 31 tax payments, to comply with tax laws,” the global report said.
In the EU the average total tax rate for the case study company fell from 46 per cent to 44.5 per cent reflecting in part cuts in the corporate income tax rate implemented in 2007-08 in Germany and Italy.
The number of taxes levied on the company averages 9.5 globally. The average for the EU is almost 11.
Mauritius has climbed to 17th position from 24th in the global Doing Business 2010 report. It has been ranked first among 46 Sub-Saharan Africa economies. The Indian Ocean Island country has climbed seven position up to rank 17 from last year’s 24 position, according to the Doing Business Report – measuring business regulation. Out of the 10 category in the overall report, it has improved in the four categories but slipped in the five categories, whereas it is in the bottom of one of the category – closing business – compared with last year’s report.

The top 10
Mauritius – First
Botswana – Second
South Africa – Third
Malawi – Fourth
Seychelles – Fifth
Zambia – Sixth
Comoros – Seventh
Ethiopia – Eighth
Swaziland – Ninth
Rwanda – Tenth

Sunday, December 13, 2009

Banks need to bring $30 million to open branches

Foreign banks wishing to open a branch in Nepal are required to bring in at least $30 million to get a license to start banking services, according to the central bank’s regulation.
In accordance with Nepal's commitment made to the World Trade Organisation (WTO) during its accession in 2004, the country is obligated to open the door to foreign banks to do wholesale banking in Nepal from January 1, 2010.
According to a new policy of Nepal Rastra Bank (NRB), regarding foreign banks, hopeful banks have to invest at least another $5 million for each branch they want to set up here.
"The capital requirement was fixed as per the WTO's principle of national treatment for foreign companies too," NRB executive director Maha Prasad Adhikari said.
Given Nepal's commitment to allow foreign banks to do only wholesale banking, the central bank is opening the door for them to provide only wholesale banking services.
Foreign banks wishing to enter Nepal must be at least BBB rated as per the evaluation of international rating agencies like Fitch, Standard & Poor’s or Moody’s, as per NRB policy.
They also have to bring a no-objection letter issued by the regulatory authority of their home country to apply to open a branch here.
Foreign banks are also required to follow the rules and regulations of NRB. They can repatriate their profits to their home country after paying taxes, fees and other liabilities as per the laws of Nepal. But they have to obtain the approval of the central bank before taking away the income, according to the NRB regulation.
Branches of foreign banks which are scrapped or liquidated could get their licenses scrapped in Nepal too, the NRB policy states.
However, they will be allowed to open only one branch in the first phase and depending on their performance the licence foer the other branches could be issued, the central bank said.
Similarly, they cannot accept deposits less than Rs 100 million and issue credit of less than Rs 300 million. “They can invest only in large projects like hydro-power, aviation, tourism and railway,” the central bank said.
Contrary to popular speculation that international banks would throng domestic market from 2010, none of the banks have applied so far. According to the NRB officials, they might be waiting for the central bank’s policy.
The opening of branches of international banks in Nepal will particularly not affect the general public but it might help kick start stalled economy by injecting more investment for large infrastructure projects and creating more employment opportunities.

Thursday, December 10, 2009

Government fails to boost exports, forex reserve drops

Trade deficit widens,
Balance of Payment deficit
Current account deficit
Remittance soar by only 11.1 per cent

The third month of the current fiscal year saw poor export business as the exports fell by 16.8 per cent against an increase of 25.9 per cent in the same period of last year, according to the caurrent macroeconomic situation, based on the first three month's data of the current fiscal year.
Of the total exports, export to India declined by 11.4 per cent against a rise of 3.2 per cent in the same period last fiscal year. Exports to other countries also plummeted by 23.2 per cent as against a rise of 70.6 per cent in the same period of the previous year.
The report attributes the decline in the exports to India to the decline in the exports of readymade garments, zinc sheet, shoes and sandals, thread and marble slab, among others. “Similarly, exports to other countries went down due to the decline in the export of pulses, woolen carpets, readymade garments, tanned skin and readymade leather goods,” the NRN said.
However, imports increased by 30.4 per cent compared with a growth of 32.8 per cent in the corresponding period of the last year. “While imports from India rose by 25.2 per cent compared with a growth of 20.9 per cent, imports from other countries soared by 37 per cent compared to a sharp growth of 51.8 per cent in the same period oi last fiscal year.
Similarly, the overall balance of Payment (BoP) registered a deficit of Rs 19.45 billion in contrast to a surplus of Rs 7.70 billion in the same period of the previous year. “The current account also posted a deficit of Rs 11.38 billion in the first quarter of this fiscal year against a surplus of Rs 4.31 billion in the same period of the last year,” the central bank said in the report. The current account deficit is attributed to the expansion in trade deficit by about 48 per cent and the decline in net income by 15.6 per cent.
Likewise, under transfers, while grants fell by 21 per cent , workers' remittances increased by just 11.1 per cent in comparison to a whopping rise of 67.3 per cent in the same period of the last year.
The gross foreign exchange reserves stood at Rs 249.10 billion in mid-October 2009, a drop by 11 per cent compared to the level as at mid-July 2009. Such reserves rose by 8.5 per cent in the corresponding period of the last year.
“In US dollar term, gross foreign exchange reserves declined by 5.7 per cent to $ 3.38 billion in mid-October 2009. In the same period last year, such reserves had gone down by 3.9 per cent. The current level of reserves is sufficient for financing merchandise imports of 8.5 months and merchandise and service imports of 7.2 months only,” the report said.
However, the budget deficit stood at Rs 90.5 million compared with a deficit of Rs 2.9 billion in the same period last year due to a high growth of revenue collection.
But the total government spending increased by whopping 35.5 per cent to Rs 39.7 billion against a decrease of 2.4 per cent in the same period last year. “Recurrent expenditure increased by 54 per cent to Rs 28.5 billion against decreased by 13.2 per cent in the same quarter last year. However, capital expenditure increased by 73.3 per cent to Rs 1.93 billion in contrast to a decline of 60.8 per cent in the same period last year.

Sunday, December 6, 2009

Nirdhan becomes national level Microfinance Development Bank of Nepal

Nirdhan Utthan Bank Ltd (NUBL) received formal recognition as “National Level Microfinance Development Bank” from the central bank of Nepal, Nepal Rastra Bank (NRB).
The recognition came after the NUBL fulfilled the minimum capital requirement of NPR 100 million as paid-up equity. NUBL is first microfinance bank of Nepal to be recognized as National level microfinance bank.
Being a national level microfinance bank, it can now expand its service all over the country by establishing its branch network in all 75 districts of Nepal.
The journey of NUBL started with the inception of “Nirdhan” as an NGO in 1993 with establishment of project office in Siktohan VDC of Rupandehi, Nepal. Later, NUBL was created as a limited company to operate microfinance activities under Development Bank Act of Nepal. Now, operating under Bank and Financial Institution Act, Nirdhan Utthan Bank limited operates in 24 districts with 75 branch network.

Tuesday, December 1, 2009

Global FDI flow increases in second quarter of 2009

Global foreign direct investment (FDI) flows experienced a rebound during the second quarter of this year compared with those in the first quarter. However, this flow of FDI is much lower in comparison to the same period last year. The Global FDI Quarterly Index in the second quarter of 2009 was 45 points lower than that a year ago, it said adding that initial indicators for the third quarter show no signs of a further pick-up in FDI flows.
According to the UNCTAD’s Global FDI Trend Monitor, the global FDI quarterly index rose to 115 from 70 in the second quarter.
“The rebound was reflected in G20 economies with a 38 per cent increase in FDI inflows as compared to the first quarter of this year,” said the report. But this rebound was not uniform. For example, the pick-up in the second quarter was particularly marked in some European Union economies such as France, Germany, Spain, Ireland and Sweden, while flows remained relatively low in economies such as the United States or, in a few cases, even declined (e.g. the United Kingdom). In emerging economies, slight increases were observed in Brazil, India and the Russian Federation, while inflows remained practically unchanged in China.
Two factors, however, suggest that the pick-up in the second quarter of 2009 should be treated with some caution. First, the absolute level of FDI flows was considerably lower than that in the same period of 2008 (figure 1), which puts the rebound in perspective. Second, this pick-up seems to be mostly attributable to an increase in intra-company flows and reinvested earning, while equity flows remained unchanged, and at a low level. As equity flows are the FDI component, most directly related to TNCs’ longer-term investments strategies, this suggests that companies remain cautious about their international expansion.
However, this flow of FDI is much lower in comparison to the same period last year. The Global FDI Quarterly Index in the second quarter of 2009 was 45 points lower than that a year ago, it said adding that initial indicators for the third quarter show no signs of a further pick-up in FDI flows.
The report said that overall, global FDI for this year – as a whole is likely to remain sluggish and significantly lower than in last year despite gradual improvement in world business outlook.
In order to provide the international investment community with a timely periodic assessment of global FDI flows, UNCTAD’s Investment and Enterprise Division has launched today the Global Investment Trends Monitor (GITM). The Monitor will be released every quarter of the year (in mid- January, mid-April, mid-July and mid-October). Each issue of the Monitor will provide 1) FDI trends for the latest quarter for which definite data are available, as well as 2) an early indication of trends for the quarter ending just prior to the publication of the Monitor. In order to present the global investment trends clearly, with a view to user requirements, UNCTAD has developed the Global FDI Quarterly Index. This index is based on quarterly data of FDI inflows for 67 countries and economies,2 which together account for roughly 90% of global FDI flows. The index has been calculated from the year 2000 onwards and calibrated such that the average of quarterly flows in 2005 is equivalent to 100.
The current inaugural issue of the Monitor covers global FDI trends in the second quarter of 2009 and also FDI estimates for the third quarters of 2009.

Global FDI Flow Quarterly Index
(2005 = 100)
2008 Q2 – 159.6
2008 Q3 – 132.9
2008 Q4 – 136.2
2009 Q1 – 69.6
2009 Q2 – 114.5