Some 800,000 people to benefit from improved solid waste management services

The World Bank, acting as administrator for the Global Partnership on Output-Based Aid, has approved a grant of $4.3million to improve access to high quality and financially sustainable solid waste management (SWM) services in participating municipalities in Nepal.

The grant will finance service delivery subsidies for each participating municipality, over a four-year period, to cover the gap between the costs of delivering SWM services and the beneficiary revenues collected through SWM fees, provided that the said services meet verified minimum performance criteria.

Subsidies will be paid to municipalities based on agreed multiples of verified beneficiary revenue collected upon the services’ meeting pre-agreed minimum performance criteria.

“The project is pioneering a new approach to providing much needed support to municipalities while also encouraging financially sustainable services,” said World Bank Country Manager for Nepal Tahseen Sayed Khan. “If successful, this model may be applicable to other sectors.”

The project will initially target five municipalities – Tansen, Dhankuta, Lalitpur, Leknath and Pokhara – and benefit an estimated total of 800,000 people. The Solid Waste Management Technical Support and the Town Development Fund (TDF) will jointly provide technical and project management support to the participating municipalities to implement the activities covered by the output-based aid (OBA) grant.

Nepal is undergoing significant political and demographic changes. Rapid urbanisation over the past decade has placed considerable stress on urban infrastructure and municipalities are struggling to provide even the most basic urban services, including solid waste management.

Existing municipal SWM services are of poor quality and are environmentally and financially unsustainable.

The project is designed to provide incentives to enable the gradual development of a beneficiary charging mechanism for SWM services in order to enhance financial sustainability, improve service quality, and enable expansion of SWM service coverage.

“The project will help put solid waste operations in a reasonable financial position at the end of the subsidy scheme, thereby strengthening each municipality's ability to commit resources thereafter to cover any shortfalls that may be needed going forward without compromising other municipal services,” said executive director of Solid Waste Management Technical Support committee Dr Sumitra Amatya.

Consistent with the output-based aid approach, the design of the project includes a two-stage independent verification mechanism that will be used to trigger the release of output-based aid subsidies. A first verification will measure how municipalities perform against a scorecard of pre-agreed performance criteria. Where performance is satisfactory, municipalities will receive output-based aid subsidies in pre-agreed proportions to the amount of revenues they collect from beneficiary households and businesses.

The design aims at more than just triggering the release of output-based aid subsidies. The performance scorecard used for the verification represents a starting point for national efforts to benchmark and monitor SWM service delivery. Better monitoring will help target further sector reforms and enable municipalities to learn from one another.

In addition, the project’s methodology for setting output-based aid subsidy amounts is pioneering a model that could eventually help set SWM fees objectively and manage investments in the sector. Advances such as these have the potential to deliver positive impacts long after this intervention.

“It is expected that this project will enhance service quality through improvements in operations, which will in turn enhance the willingness of citizens to pay for services and enable municipalities to gradually recover greater proportions of service delivery costs in order to sustain higher quality services,” executive director of TDF Sushil Gyewali said, adding that the success of the project can open doors for more output-based financing projects through TDF in the municipalities in the near future.

Participating municipalities will each sign Tripartite Project Implementation Agreements with TDF and Solid Waste Management Technical Support committee as a basis for participation in the project. The project requires participating municipalities to prepare SWM service improvement plans identifying those service delivery improvements to be covered under the project; decide on the service delivery model; implement service delivery improvements as per agreed plans; and implement a designated SWM fee charged to all waste generators, and collect the revenues.

The project complements the on-going World Bank-supported Emerging Towns Project in Nepal, which aims to improve the delivery of basic services and priority infrastructure in six municipalities, three of which are part of the initial selection for this OBA project.

Rising import pushes revenue mobilisation up

Increasing imports have pushed revenue mobilisation up, yet, the Finance Ministry is unsatisfied with the mobilisation of Value Added Tax (VAT) and excise duty as the Inland Revenue Department (IRD) has failed to meet its target.

"Though both VAT and excise duty have recorded satisfactory growth, the Inland Revenue Department should identify leakages, and analyse reasons for not being able to meet the target," said finance secretary Shanta Raj Subedi, directing the department to monitor revenue loopholes and fix them.

He, today at the revenue evaluation meeting at the ministry, also urged the department heads under the finance ministry to plan for bridging the gap between imports and exports, promoting exports and increasing revenue by taking the private sector into confidence.

"The increase in import of food grains and fruits, which could be substituted, has increased the pressure on rising trade deficit," according to joint secretary at the ministry Rajan Khanal, who analysed the current trend of revenue mobilisation and rising trade deficit. He also stressed on the promotion of agriculture production that could make the country self dependent on food grains and boosting exports of tea and coffee that would contribute to revenue.

VAT — that contributed 30 per cent to total revenue mobilisation in the first eight months of the current fiscal year — has been the largest contributor to revenue for the last couple of years. Instead of export-led revenue mobilisation, rising consumerism has fuelled import-led revenue mobilisation growth, which is not a healthy economic trend.

In Falgun (mid-February to mid-March), the government mobilised Rs 6.65 billion in VAT compared to Rs 5.84 billion in the same month a year back due to rising import-led consumerism. 

But increase in income tax — that contributes 21 per cent to total revenue — mobilisation is a good sign, he said, adding that income tax is followed by customs with 20 per cent, excise 13 per cent, and non-tax revenue 12 per cent in the total revenue mobilisation of Rs 23.37 billion in Falgun.
According to the Finance Ministry, it has been able to mobilise a total revenue of Rs 177.96 billion till the eighth month of the current fiscal year 2012-13. "In the same period in the last fiscal year, the government had mobilised a total of Rs 144.46 billion."

In the eight months of the current fiscal year, the government has been able to mobilise Rs 53.49 billion in VAT, Rs 36.72 billion in income tax, Rs 36.46 billion in customs, Rs 23.08 billion in excise, Rs 21.18 billion in non-tax, Rs 6.24 billion in registration fee and vehicle tax, and Rs 0.19 billion in education service tax, making it a total of Rs 177.96 billion, which is 23.19 per cent higher when compared to the same period of the last fiscal year, the ministry said.

However, the ministry has been able to mobilise Rs 23.37 billion – Rs 18.86 tax and Rs 4.51 non-tax – in a month in Falgun, which is 46.13 per cent higher than the revenue mobilsed in the same month that stood at Rs 15.99 billion in the same month in the last fiscal year.  

 

Sectorwise contribution

VAT — 30 per cent

Income tax— 21 per cent

Customs— 20 per cent

Excise— 13 per cent

Non-tax— 12 per cent

Registration fee — 2 per cent

Vehicle tax — 2 per cent

(Figures of eight months of current fiscal year. Source: Finance Ministry)

Manual cheque clearing closed in Birgunj

Nepal Rastra Bank has stopped manual cheque clearing in Birgunj.

Nepal Clearing House Limited (NCHL)'s electronic cheque clearing has come into full operation from all the branches of member banks and financial institutions  located in Birgunj.

It is a major milestone in the rollout of NCHL-ECC after having been fully operational from Kathmandu, where manual clearing was stopped from December 16, 2012 said NCHL chief executive Neelesh Pradhan. "With this, it is now possible for cheques being presented from/to any of the member banks in Birgunj to be processed the same day," he said, adding that some 41 banks and financial institutions that were members of manual cheque clearing.

Non-standard cheques (cheques currently in use) presented by 12:00pm and standard Magnetic Ink Character Recognition (MICR) enabled cheques presented within 14:00pm are cleared the same day, whereas cheques presented after the cut-off time will be cleared the next business day.

Some member banks may have set their own cut-off time and hence customers are required to consult their respective banks for such cut-off times.

NCHL currently has 101 member banks and financial institutions including Nepal Rastra Bank under its network.

Having been observed the benefits of national electronic cheque clearing, many of the member banks and financial institutions have already started using it from their branches across the country. After the successful migration of manual clearing to electronic cheque clearing at Birgunj, it is expected to provide additional boast for NCHL-ECC rollout in other regions also.

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.