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Responding to Urban Development Needsin Nepal

Urban Development throughLocal Efforts Programme

Published by:Deutsche Gesellschaft fürTechnische Zusammenarbeit (GTZ) GmbH

-German Technical Cooperation-

Urban Development through Local Efforts Programme (udle)P.O. Box: 1457, KathmanduT : 00977 1 4464 767F : 00977 1 4464 735E : [email protected] : www.gtz.de/Nepal

Contributors:Daniel BagwitzFriederike BurkertRam ChhetriJan GrieuthysenIswar JoshiPrayag JoshiFrances KlatzelArjun KoiralaAlexendra LindenManiram MahatSunil PradhanRajendra PradhanangLaxman RajbhandariArun RegmiNoman RodaIngrid SchwörerArun ShresthaGujeshwori ShresthaSudha ShresthaUlf Wernicke

Responsible:Dr. Ingrid SchwörerLaxman Rajbhandari

Design and Colour Seperation: Digiscan Pre-Press, Naxal, Kathmandu, NepalPrinting: Format Printing Press, Kathmandu, Nepal

Photos: page vi, 93 and 94 ; Copyright by Kiran Chitrakar, Bhimsensthan, Kathmandu, Nepal

Kathmandu 2006

Foreword

Section 1: Origins and Phases of udle 1-24Introduction 3Milestones of udle 5Summary of Different Phases of udle 7Experiences of udle Team Leaders 12German Development Service (ded) Cooperationin Local Governance 21

Section 2: udle Service Packages 25-66Municipal Organisational Development and Administration 27Municipal Finances and Urban Economics 31• Financial Resources Mobilisation Efforts in Municipalities 31• Financial Management and Role of Corporate Accounting 35• Joint Local Economic Development Initiative 41Urban Planning 43• Experiences of an Urban Planner of ded in

Dhulikhel Municipality 49Solid-waste Management. 52• Urban Hygiene and Environment Improvement 52• Experiences from Hetauda Municipality 59• Urban Environmental Guidelines 61Training 63

Section 3: Urban Development and Conservation 67-90Conservation and Development in Madhyapur-Thimi 69• Experiences from Madhyapur-Thimi Municipality 73Support to Kirtipur Municipality 76Patan Conservation and Development Project 78Swayambhunath Infrastructure Improvement Project 83Dhulikhel Development Project 85Bhaktapur Development Project 87Banepa Development Project 89Images of a Century 91

Section 4: Support to the Town Development Fund 95-116

Section 5: Strengthening the Municipal Association of Nepal 117-124Support to Municipal Association of Nepal 119• Interview with the Chairperson of the Association 122Manual for Municipal Working in Nepal 123

C O N T E N T S

Section 6: Towards Inclusive Urban Development 125-134Participatory Impact Monitoring 127Gender in udle 129Poverty Reduction in Urban Nepal 131• Experiences from Butwal Municipality 136

Section 7: Working in Conflict 139-146Cease-fire Action Plan Projects 141Integration of Conflict Sensitive Approaches into udle 144

Abbreviations 147

F O R E W O R D

Urban developmentUrban development in Nepal.An issue that evokes a wide range of reactions:outright rejection, embittered lamentation,accepted phenomenon, wholehearted approval.

Urban development in Nepal.An issue neglected in the political agendas.Certainly,people in the remote areas need our support, but,shall we support them in such a way that they all stay where they are?Or do we help them better somewhere else?I think that the choice is not ours,people will continue to migrate.

Urban development in Nepal.An issue not restricted to the Kathmandu Valley alone;but covering also the municipalities of the Terai and in the Hills,the towns of rural Nepal:engines for development, also for their hinterland.

There is a need for urbanization in Nepaland there is an urgent need to be prepared.

In this contextthis book is an opportunity to sharethe experiences in supporting urban development in Nepal through local efforts.

I herewith express my appreciation for the engagement of all those involved:the neighbourhood communities, especially the youth and women groups,the staff and representatives of the municipalities,the professionals of udle, former and present,the partners in government and non-government organisations.

I am proud that the Government of the Federal Republic of Germanycommissioned GTZ to support this process through udle right from the beginning,even before through the Bhaktapur Development Project.I am happy that the German Development Cooperation is willing to stay engaged in this field.and wish that you all will take up the urban issue wholeheartedly and participate.

Ulf Wernicke

Director GTZ Nepal 2002-2006Programme Manager, udle 2002-2003Planning Advisor, Bhaktapur Development Project 1979-1981

August 2006

S E C T I O N

Introduction

Milestones of udle

Summary of Different Phases of udle

Experiences of udle Team Leaders

German Development Service (ded)Cooperation in Local Governance

Origins and Phases of udle

1

3

An estimated 15 % of Nepal's populationlives in its 58 municipalities. Although thisis a small urban population, some of Nepal'stowns are growing at annual rates of 5 to 7%, with new residents looking for incomeopportunities, security, housing, education,and health services. Nepal's neighbouringcountries show urbanisation rates between30 - 40 %, indicating the nexus betweenurbanisation and development.

At the moment, Nepal's governance is ina transitional phase as people hope for peaceand democratic rights that will bring newopportunities. While there are huge challengesto balance development in social, economicand regional terms, economic growth willresult in continuing urbanisation. There arepublic and private choices to be taken whichwill influence the pace and face of Nepal'surban future. The challenge of shapingtomorrow's towns will continue.

We have produced this publication todocument and share the experience ofGerman support to urban development inNepal from 1987 - 2005. In these essays,we reflect upon what was done, what wasachieved, and what failed by examining oldreports, assessing and reassessing the toolsdeveloped, instruments tried, and servicepackages offered. We hope that this review

and reflection can be of use to all involvedin shaping the future of local governanceand urban development.

The programme urban development through localefforts (udle) was formulated in 1987 toprovide advisory support to the Nepaligovernment as it developed municipaladministrations responsible for urban issues.udle was also to assist in the elaboration ofthe general objectives and instruments of anational urban development policy.During the late 1980s, numerous studies andinvestigations concluded that thedecentralisation of responsibility and authorityfor urban issues was not being implementedsuccessfully and that the existing potential ofurban areas to contribute to the overalleconomic development of Nepal was notbeing used. The studies summarised theproblems of Nepal's 29 towns as:

unclear definition of fields ofcompetence between municipaladministration, district administration,and central government;incomplete and inconsistent urbandevelopment policy, objectives, systems,and strategies;poor working conditions and a lack ofcontinuity among municipal staff; anduncertain and inadequate financialsituation of towns.

IntroductionIntroduction

4

From the start of udle, the advisory activitiesfocussed on promoting the development oflocal responsibility or "municipal self-governance" by ensuring that all the activitiessupported by udle, were initiated, organised,and implemented by the towns themselves.Advisory services at the national and locallevels aimed to strengthen decentraliseddecision making for urban development andimprove the utilisation of local developmentpotential.

Nepal's return to democracy in 1990 broughtthe Municipalities Act in 1992, formation offreely elected municipal bodies in 1992, andthe Local Self Governance Act in 1999, whichinfluenced the programme and createdopportunities to support more decentralised,participatory, and responsible urbanmanagement for better living conditions. Theerosion of democratic institutions since 2002,escalation of the conflict, and controversialmunicipal elections in 2006 closed someavenues. The people's movement of April2006 has nourished new hope for effectivesupport to better urban management indemocratically governed towns.Although the specific issues, tasks,instruments, and local capacities have changedover the years, the main approaches udledescribed in 1987 remain surprisingly relevant.Consequently, udle's philosophy and valueshave remained encouraging local efforts andmaking the governance system supportive tolocal solutions.

Within GTZ's worldwide urban portfolio,udle has been unique in the multitude ofsupport interventions it has developed andadapted. These interventions range fromcommunity mobilisation to central levelsupport to develop an adequate regulatoryframework. They cover economic, financial,

and technical aspects related to physicalinfrastructure. Capacity building ranges fromadministrative and organisational support tomedium-term training for municipal staff to onthe job skills development. udle works throughsmall mobile teams of national professionals,external professional support, and a multitudeof partners from government, private sector,communities, and in cooperation with otherdevelopment partners.

This publication documents udle's moremeaningful experiences in capacity building.

At present, udle focuses on reducing urbanpoverty for a more socially inclusive urbandevelopment. It has expanded its support toorganisational and financial issues regarding theTown Development Fund. It has continuedsupport to learning platforms and training onmunicipal planning, financing, and managementwhere requested and useful. The emerginggovernance system may draw on udle'sexperience and expertise when examining optionsfor the future. udle continues to advocate for asimple regulatory framework that is transparent,conducive to local development, rights-based,service oriented, reliably financed, and canactually be implemented.

I hope this publication will be useful to partners,professionals, and the citizens who will debateand decide upon the path to a better urban life.The encouraging willingness of manycommunities to contribute to local improvementswill hopefully translate into commitments tocreate more liveable towns for all.

Dr. Ingrid SchwoererGTZ/udlePrincipal AdvisorAugust 2006

5

Period Year

1987

1987

1987

1988

1988

1989

1990

1992

1992

1992

1992

1992

1992

1992

1992

1992

1993

1993

1993

1993

1994

1995

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Projectagreement

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Milestone

March 1987

Post-phase Bhaktapur Development Project to consolidate physical outputsand results of the original project from (1974-86) started; fee charged to enterthe living museum (city of Bhaktapur) introduced.

Dhulikhel Development Project/Dhulikhel Water Supply Project started; 24hours urban water supply system managed by the user’s committee

Town Panchayat Development Fund formed with the Formation Order underthe Ministry of Panchayat and Local Development.

Banepa Development Project started; a planned bus-park constructed

Panchayat Development Training Centre, Pokhara transferred into PanchayatUrban Development Training Centre and urban issues addressed

Town Development Fund Board under the Development Board Act, 1956under the Ministry of Physical Planning and Works.

Financial management discipline introduced and computers introduced inmunicipalities.

Promulgation of Municipality Act and Rules; municipalities were classified intomunicipality, sub-municipal corporation and municipal corporation.

3 new municipalities making total number of municipalities 36

First municipal election held after democracy.

Organisational development discipline introduced and implemented through amobile task force.

Conservation and Development activities started in Patan in cooperation withPatan municipality; community development section made an integral part ofthe municipality

Concept of preparation of Integrated Action Plans of municipalities introducedtogether with Department of Housing and Urban Development

Swambhunath forestation and conservation activities started. A federation of22 NGOs formally established to conserve and manage Swambhunath

Urban Environmental Guidelines published: urban environmental issueshighlighted and help to solve those issues advised.

Ad-hoc committee for the establishment of Municipal Association of Nepalwas formed.

Images of Century published; haphazard urban growth and damages of 1956earthquake documented.

Panchayat Urban Development Training Centre converted into UrbanDevelopment Training Centre under an autonomous Local DevelopmentTraining Academy Act 1993

Numbering of houses was introduced in Dharan municipality to managehouse and roof top tax.

Manual for Municipal Working published; municipal management practicedisseminated at local level.

Constitution of Municipal Association of Nepal was passed.

4 long term (more than one year) training courses started for municipal staff of36 municipalities on different disciplines. Human resource development of 36municipalities considerably improved

Milestones of udleMilestones of udle

6

Period Year

1996

1996

1997

1997

1999

1999

2001

2000

2000

2000

2001

2001

2003

2004

2004

2005

Milestone

udle took over the educational component of former Solid WasteManagement Project and started urban hygiene and environmenteducation activities in all municipalities.

First general assembly of Municipal Association of Nepal held;Association started fully functioning.

Town Development Fund Board made an autonomous bodyunder the Town Development Fund Act.

Second municipal election held.

Local Self Governance Act promulgated

22 new municipalities making total of 58 municipalities.

Manual for preparation of Periodic Plan finalised and preparationof periodic plan of municipalities made systematic. .

Integrated property tax introduced in five municipalities.

Conservation and development activities started in Thimi;.

Corporate Accounting System introduced in Dharan.

Regional learning centre was first established in Dharanmunicipality. Butwal, Dhangadhi, Hetauda and Nepalgunj follow.

Municipal Management Section was upgraded to MunicipalManagement Division in the Ministry of Local Development.

Ceasefire used for implementation of 121 small projects in 9conflict affected municipalities.

udle and partners adopt to working in a conflict situation.

Urban poverty reduction strategy defined in Butwal.

Poverty reduction programme introduced as a major componentof udle.

mid

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Phase

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1. Orientation Phase: mid-1987 to mid-1990

Major achievements

Within a short period udle is acknowledged and appreciated among institutions concerned with urban

development in Nepal.

The Town Development Fund and the Panchayat Urban Development Training Centre— the two corner

stones of the project—were established in an early stage of the project. They provided a solid basis to

carry out subsequent activities as planned.

Strong representation of the towns in the Town Development Fund Board.

A new organisational structure responding to the training centre’s new functional tasks was developed

and implemented.

The physical facilities of the centre were improved.

The centre’s training programme was fully converted from rural to urban subjects and target groups.

Proposals to strengthen 13 municipalities’ internal administration were elaborated and implemented.

Advisory services on land development issues, on both policy and project levels, were welcomed by

Department of Housing and Urban Development.

Objective Support efficient, decentralised urban development and strengthen towns to develop their own

capacity and make better use of local potential.

Expected major results

Town Panchayat Development Fund established and utilised.

Panchayat and Urban Development Training Centre established and training courses carried out.

Proposals for legal and administrative arrangements as well as conceptual measures to strengthen

decentralised urban development designed and discussed.

Proposals for strengthening the administration of Town Panchayats elaborated and discussed.

Basic tools for urban physical planning designed and discussed.

2. First Implementation Phase: mid-1990 to mid-1993

Major achievements

Funds and services provided by the Town Development Fund Board to municipalities to initiate and

implement appropriate urban development projects.

Activities of the Town Development Fund Board extended. 126 projects with an estimated cost of Rs.

50.45 million were approved.

Objective Strengthen political and administrative autonomy, and promote local initiatives to strive for

improvements in planning and coordinating urban development.


Funds and services provided by the Town Development Fund Board to municipalities to initiate and

implement appropriate urban development projects.

Panchayat and Urban Development Training Centre’s capability strengthened for urban management training.

Bottlenecks for municipal initiatives in urban development removed.

Measures to strengthen the organisational structures of municipalities introduced.

Urban land development approach improved.

Initiation toward improvement of the urban environment supported.

Patan Conservation and Development Programme started.

Summary of Different Phases of udleSummary of Different Phases of udle

8

Organisational development and administration support developed and implemented with the help of a

mobile task force in six cities.

Relevant hardware installed and software developed for municipalities’ accounting and finance section

(book-keeping, control of revenues, loan payments etc.) by the task force on financial management and

management information system. Town Development Fund Board assesses the loan carrying capacity /

eligibility of the towns on this information.

An action oriented planning approach (Integrated Action Plans) developed and good results obtained.

Urban Environmental Guidelines developed in Nepali and English.

Important historical buildings documented. A model frame work / plan containing proposals towards the

extension of the existing Monument Zones, new Secondary Monument Zones, Action Areas, and Pilot

Projects produced.

The training expert provides advice and expertise to the training centre in Pokhara. The advisor for town

planning also functions as a counterpart in the Department of Housing and Urban Development.

3. Second Implementation Phase: mid-1993 to mid-1995

Major achievements

Newly elected representatives of the municipalities consider the Town Development Fund Board as the

only means of urban finance and development.

The Urban Development Training Centre and the facilities it provides were improved.

Increased participation in training offered by the Centre and increase in demands communicated by

municipalities for arranging training for their own specific needs.

Municipalities use the computerised accounting system; two use the professional tax system.

Timely publications and distribution of the annual financial analysis report of all municipalities.

House numbering completed in Dharan municipality.

udle has adopted a very coherent approach towards all partners by introducing organisational

development tools.

The culture heritage of Patan documented in reports, photographs, drawing etc.

Preparation of Integrated Action Plans through the Department of Housing and Urban Development in

selected municipalities successfully completed.

Selected municipalities initiated the process of land development on the advice of udle and the

Department of Housing and Urban Development.

The steering committee of Patan Conservation and Development formed under the chairmanship of Mayor.

The community development section established during municipal organisation and made responsible

for Patan Conservation and Development.

A guideline plan to guide the activities of Patan Conservation and Development prepared.

Building construction and renovation according to by-laws fully adopted in Patan.

Local communities, NGOs, and other concerned stakeholders fully involved in Swayambhunath,

however progress is unsatisfactory.

Afforestation in targeted area of Swambhunath completed.

Objective Capabilities of municipal bodies to manage urban development strengthened.


Town Development Fund Board operates as an autonomous body that supports municipalities with

maximum cost recovery

Urban Development Training Centre functions effectively as an autonomous training institution.

Financial management of selected municipalities further strengthened.

Organisational capabilities of selected municipalities further improved.

Urban planning improved and legal instruments adopted.

Management of urban development and conservation efforts in Patan improved.

Infrastructure and afforestation activities in Swayambunath improved / supported.

9

4. Third Implementation Phase: mid-1995 to mid-1998

Major achievements

Town Development Fund covered financial needs of municipalities to a reasonable extent and present

service delivery of the Fund was satisfactory.

Urban Development Training Centre receives contributions from the Local Development Training

Academy. udle’s support is only in training packages, which is declining.

Efforts to build-up service packages such as improving municipal organisational structures, enhancing

financial management capacities, and capacitating expertise in urban planning successful.

Parallel to this country-wide development work, successful action was taken to implement a

conservation and development programme for Patan, and to encourage development in

Swayambunath. Long-term co-operation proved to be unique and successful, especially in the

Bhaktapur Development Project, setting an example for successful bilateral cooperation.

udle took over and further developed the educational component of the former HMG-GTZ Solid Waste

Management Project, and extended co-operation in solid waste management to municipalities outside

the Kathmandu Valley.

Advice given to improve the curricula for environmental education in formal and non-formal education.

A package was developed and tested at local level.

Objective Municipalities are able to manage their human, financial, and natural resources more effectively

in an ecologically, economically, socially, and institutionally sustainable manner.


Town Development Fund strengthened

Urban Development Training Centre strengthened

Improved financial management instruments adopted in 36 municipalities

Organisation and management improved in municipalities

Improved urban development planning system established

Management of urban development and conservation in Patan strengthened

Infrastructure and afforestation activities in Swayambunath completed

Urban health and environment component developed under udle

5. Fourth Implementation Phase: mid-1998 to mid-2001

Objective Municipalities are able to manage their human, financial, and natural resources more effectively

and in an ecologically, economically, socially, and institutionally sustainable manner.


Town Development Fund stabilised as an urban development finance institution that supports

infrastructure and revenue generation projects in municipalities.

Organisation and administrative management of municipalities improved.

Fiscal management of municipalities improved.

Urban planning applied and implemented as an instrument for guiding development.

Urban population actively involved in improving public hygiene and environmental sanitation in a

sustainable manner.

Management of conservation and development in another municipalities strengthened

HMG and other institutions / partners encouraged to strengthen decentralisation and urban

development efforts.

Major achievements

Municipalities used financial and technical support from the Town Development Fund to launch

projects. Almost all the 115 projects financed through the Fund are complete.

Intensive follow-up activities provided to 12 municipalities to prepare a vision of development and

improve their organisational structure.

10

udle provided support to six municipalities to improve their accounting systems. Computers and

related software were installed in four municipalities. Three municipalities have adopted the

corporate accounting system.

udle assisted six municipalities to improve their revenue collecting system by introducing a house

numbering system. House numbering is linked to a computerised property taxation register in two

municipalities.

Integrated Action Plans of two municipalities updated (Dharan, Butwal)

Building by-laws prepared in six municipalities and approved by the Board in four municipalities

(Siddharthanagar, Dharan, Butwal, Nepalgunj). These municipalities adopted a revised and improved

building permit system. Revised Physical and Environment Development Plans of Butwal and

Dharan have been approved by their respective municipal Boards. Multi Sector Investment Plans for

five municipalities (Siddharthanagar, Dharan, Butwal, Nepalgunj, Hetauda) have been incorporated in

the annual budget programme.

The Department of Urban Development and Building Construction prepared Integrated Action Plans

for six municipalities (Madhyapur-Thimi, Itahari, Rajbiraj, Kapilbastu, Mechinagar, and Hetauda) with

the support of udle.

Orientation and training activities completed for all relevant actors involved and multipliers in urban

hygiene and solid waste management.

Professional trainers, teachers, facilitators and ward volunteers trained in conducting Training of

Trainers courses to their respective groups in a gender balanced way.

udle has actively liaisioned with other External Support Agencies in the urban sector, notably with

UNDP, UNV, and ADB to streamline urban development work in Nepal.

Beyond the urban sector, udle has actively participated in the joint HMG-Donor review on

decentralisation carried out in 2000, along with five other External Support Agencies (DANIDA,

UNDP, SNV, SDC, and CARE).

Conservation and development related outputs cancelled due to GTZ’s budget constraints, however

the Patan component in the udle programme was considered successful.

A medium-term plan for training has been prepared. This is validated by the outcome of the training

impact assessments and the detailed training needs assessment.

Patan municipality established an income generating mechanism and levies entrance fees for

entering Patan Durbar Square. By the end of 2000, the municipality raised Rs. 20 million.

Ward committees, the local committee-in-charge, and the city administration jointly executed projects

in Patan to conserve monuments and sites and utilised them for generating revenues.

Physical facilities were provided to the Municipal Association of Nepal to establish an office and

support was provided to regularly publish ‘Voice of Cities’.

Policy inputs were provided to draft the Local Self-Governance Act (1999) and Rules (2000). In

addition, policy inputs were provided to the Local Government Fiscal Commission, with a focus to

strengthen municipal revenue systems after the abolition of octroi

Backstopping services were provided to the municipal management section of the Ministry of Local

Development to analyse and publish the annual financial data of the municipalities

The Integrated Action Plan of Tansen was prepared with the cooperation of the ded volunteer and the

Western Regional Directorate of the Department of Urban Development.

udle worked closely with the Ministry of Education and Centre for Technical Education and

Vocational Training in various aspects of solid waste management training and education.

The United Nations Volunteer support programme to the Municipal Association of Nepal and selected

municipalities has been prepared with support from udle and will be implemented in close

co-ordination with udle.

11

6. Fifth Implementation Phase:mid-2001 to mid-2004 and extended to mid-2005

Major achievements

Three studies conducted to analyse alternatives and make recommendations to design and implement

an institution that could provide professional advisory and training services currently carried out by

udle. None of them were feasible.

Procurement guidelines to procure goods and services, and policy and procedures to manage

municipal projects were prepared under KfW Phase II.

Under the Small Towns Water Supply and Sanitation Project funded by ADB, the Town Development Fund

participated in the review of proposals and designs of the first batch of eight towns and 2nd batch of 15 towns.

The Town Development Fund provided consultants with funding from KfW, to design health facilities in

selected towns.

Five Regional Learning Centres were established and support provided to improve office facilities; in

addition, Centres exchanged their experiences with surrounding municipalities.

udle provided support to implement cease fire action plans in nine municipalities during the ceasefire with

the help of udle trained staff. The action plans involved implementing 110 projects in nine municipalities.

Ministry of Local Development was supported to organise donor coordination meetings.

Proposals to amend weaknesses of the Local Self Governance Act were submitted to the Ministry of

Local Development based on experiences.

A separate Act was drafted for Kathmandu Municipal Corporation in line with the Local Self-Governance

Act through the Ministry of Local Development.

The Ministry of Local Development, Local Government Fiscal Commission, and the Municipal

Association of Nepal prepared revenue sharing and equalisation schemes between the Government

and municipalities.

Guidelines for municipal periodic plans have been prepared and the testing process in selected

municipalities is ongoing.

Support was provided to establish a resource centre in the Municipal Association of Nepal and to

regularly publish ‘Voice of Cities’.

A discussion paper on a programme to strengthen urban governance and to reduce urban poverty was

prepared and shared with central level partners.

The process to localise poverty reduction activities was initiated and tested in Butwal.

Objective Public service needs of different target groups within the urban population are sufficiently addressed

and self-help initiatives are supported by effectively and efficiently managed municipalities.


A sustainable Nepali institution is established to provide professional advisory services and to organise

relevant training in urban management for municipal employees and civil servants.

The Town Development Fund is able to mobilise resources and to provide technical and financial

services for improving municipal infrastructure, improving the environment; conserving cultural heritage,

alleviating poverty, and other urban sector projects.

Human resource development needs of municipalities are met by backstopping previously trained

municipal staff and by organising further training activities.

Central government and other institutions / partners are supported to promote decentralisation and

urban development.

Five ‘model’ municipalities apply the four areas of udle – support services in urban planning, urban

hygiene and environment education, financial management, and municipal organisation development in

an integrated manner.

Urban planning is applied and implemented as an instrument to guide municipal development in line with

the new Local Self-Governance Act.

The urban population is actively involved in improving public hygiene and environmental conditions in a

sustainable manner.

The revenue basis and financial management of municipalities are improved according to the new Local

Self-Governance Act

Organisation and administrative management improved in municipalities.

Conservation and development measures are supported in selected municipalities.

12

Interview with Former udle Team LeaderMr. Andreas Proksch

1. What were the main challenges duringyour time working in Nepal on urbandevelopment?

The main challenge in my period as udle teamleader was the introduction of democracy inNepali municipalities. The democraticrevolution in Nepal in 1990 had completelychanged the political landscape of the country.A new constitution for the entire countryincluding the governance structure of localgovernments was required. udle contributedto the respective discussions and organisedmany high-level policy talks on different issuesof local governance.

Once the local governments had been elected,udle supported all municipalities in thecountry in the introduction of democracy atlocal level, and the development of a newrelationship between the local political leveland the administration.

Andreas Proksch, Director of the Department for Corporate Development at GTZHeadquarter, was Team Leader of udle from 1991 – 1996. He was also the principal advisor foran urban development project in Ecuador (1996-1999), and GTZ’s Country Director in Vietnam(1999 – 2001).

2. How did you manage these challengesand what were the major breakthroughs?

During the first years of democracy, manystruggles took place between the localgovernments on one hand, and the centrallevel administration on the other. udleorganised several mediation events wherethese conflicts were discussed, and a lot ofbackground talks took place in order to findsolutions, for example, with the NationalPlanning Commission and the PrimeMinister’s Office.

In the long run, only a strong association ofmunicipalities would ensure an adequate voiceof their interests at national level. Therefore,udle supported the establishment of theMayors Association of Nepal.

Another hot issue at that time was thequestion of Octroi - a levy on goods enteringmunicipalities and consumed locally (now long

Experiences of udle Team LeadersExperiences of udle Team Leaders

13

abolished). Many international donors—especially the World Bank— were lobbyingto abolish Octroi, since it was detrimental forlocal business. On the other hand, Octroiconstituted the major share of income formunicipalities, and it was udle’s position thatOctroi could only be abolished once anadequate alternate form of income for localgovernments was developed.

3. What problems hindered most for theurban management and local governancein the municipalities?

The three most pressing shortcomings for thedevelopment of municipalities were: capacity,capacity, and capacity. Capacity development atall levels of the national and local administrationas well as for national and local politicians wasthe highest priority (and still is today).

However, there were many other problems,some smaller, some bigger. I do rememberone day when a group of udle staff includingmyself visited a municipality, which hadrecently received a computer for itsadministration by the project. The computerwas handed over in a large ceremony, in frontof the mayor, the municipal council, and thepublic. We wanted to demonstrate how thecomputer functions but it did not work –what an embarrassment! We enquired whathad happened, only to find out that theelectricity of the municipality was cut off dueto unpaid bills.

4. Are there success stories and lessonslearnt you still consider valid nowadays?

There were many lessons learnt during mytime as udle team leader, which are still validtoday. First of all, the Town DevelopmentFund (TDF): in spite of all other factors,money makes the world go around, andwithout funds municipal development doesnot happen. The instruments of the TDF arevery useful for a municipal government to

learn how to plan and implement projects,and to improve municipal infrastructure.

Second, the Patan Programme: since I havenot been in Nepal for quite some time, I amnot in a position to judge how sustainable itwas to control and guide development –though this is an extremely difficult task allover the world. However, it has introducedNepal to an approach of bringing together allgroups involved – the municipalities, theeconomic stakeholders, and the citizens – todefine the future of Patan.

Third – the well known lesson that wasexperienced again in udle - development isan intrinsic process which cannot be managedthrough development aid alone. It is Nepaland the Nepali municipalities, which areresponsible for their future, and thisresponsibility cannot be shared. Foreign aidmay contribute for a certain period but finalaccountability and responsibility remains anational one.

5. Could you share your highlights ofworking in municipal development inNepal?

There were many highlights and few regrets.The enthusiasm after the rise of democracy—this spirit at national and local level to changethe future— was a very special one. The visitsto many municipalities, especially the remoteones, were extremely encouraging. We sawhow the city governments and administrationswere struggling with insufficient funds andlimited capacity but still tried to do the bestfor their people. There was one very specialhighlight: the photo exhibition “Images of aCity” about old Kathmandu and Patan. Thisexhibition was the talk of the town formonths, with over 25,000 visitors from thePrime Minister to the riksha driver. It re-created the spirit of the Kathmandu valley,what it was, what it is, and what is about to belost, and therefore was extremely inspiring tofight even more for the future of the valley.

14

Interview with Former udle Team LeaderDr. Ing. Ernst Reichenbach

Challenges at the beginning were:Re-organising the human resourcedevelopment approach of udle. Forinstance, the Urban DevelopmentTraining Centre (UDTC) in Pokhara hadbeen built up with considerable inputs ofGTZ, but did not perform as expectedand required.Changing the mode of delivery of udle'stechnical advice (through the mobileteams) from a standardised supply-oriented ("parcel delivery service") to asituation-specific needs- (and laterdemand-) oriented approach ("tailor-madeclient support").Reducing the number of municipalities tobe provided with udle services (originallyudle had been designed for less than 30municipalities, so resources had beenallocated accordingly). Shortly after myarrival, the number of municipalities hadbeen increased to 58, many of which wereremote and had hardly any urbancharacteristics and resources.Fighting dependency syndromes of somepartners of udle, which had beennurtured in the past by udle itself, byincreasing support to their own initiativesinstead of co-financing them.Motivating udle's own staff to takeinterest in own individual and collectivemistakes instead of covering them up,maintaining the façade of expertise;introducing participatory impactmonitoring, and permanently trying toadjust approaches, according to "lessonslearnt".

Now retired from GTZ and a free-lance consultant, Dr. Ernst Reichenbach managed GTZ-udlefrom February 1996 - August 2001. He returned to Nepal from November 2001 to January 2002to prepare a strategy paper on the promotion of local governance through further cooperationbetween HMG and the German Ministry of Economic Cooperation and Development. Dr.Reichenbach was responsible for the urban development desk at GTZ-headquarters from 1992 -1995 and was often the project officer responsible for GTZ's urban projects in Nepal since April1978.

Questions:1. What were the main challenges duringyour time in Nepal working for urbandevelopment?

At the beginning of my assignment in Nepal,the framework conditions for urbandevelopment and municipal self-governmentwere good:

legislation had been passed (with supportby udle during the tenure of mypredecessor) and was practiced at least inprinciple;free and fair local elections had taken placetwice already; andbased on the experience made, a new and"second generation" comprehensive "LocalSelf-Governance Act" was under discussion.

However, on the very day of my arrival inKathmandu (4 Feb 1996), the leader of theCPN (Maoist) handed over to the then primeminister Deuba his 40-point-demands andultimatum to start a "peoples' war". Soon, thisproved to have been a bad omen. Throughoutmy tenure, the overall political situation andstability of government deteriorated, with thecountry slowly but steadily sliding into a full-fledged civil war.

At the project level, I found a smoothlyrunning technical advisory and trainingprogramme with motivated GTZ-staff,organised in four thematic mobile teamstravelling from town to town, and cooperativepartners at central and local levels. The TDFhad just been established and had begunworking.

15

Motivating udle's own staff to improve,develop, and test their own ideas insteadof "waiting for (daily) instructions" fromthe "know-all" patriarch boss (which isthe prevailing style of leadership withinthe public administration).

Challenges towards the end were:Increasingly unstable political andadministrative conditions at the centrallevel. By the end of my assignment, I had"survived" 8 or 9 governments, some ofwhich were "déja vues" despite theirprevious failures. In addition, anarchicalinterruptions through "bandhs" andincreasing deterioration of the securitysituation in remote areas was a challenge,although "our" municipalities were by andlarge less affected by the "peoples' war"than most rural areas.The third local elections resulted in "left"majorities in most municipalities whereascentral governments were formed byunstable "centre-right" coalitions. Thisresulted in some distrust between centraland local level politicians; at the workinglevel, ministerial and the municipaladministrations tried to be remarkablycooperative, but often were drawn intopolitically motivated conflicts.Handling unplanned budget cuts in theGerman funding of the udle-programme.The "bad omen" of the first day of myassignment in Nepal culminated in theassassination of the royal family on 1stJune 2001. Although this event wasindependent of the Maoist insurgency,it was eventually a bigger and sustainedshock to the society at large than thecreeping civil war. It compounded thegeneral political malaise, and added adimension of cultural and religious failure.

2. How did you manage these challenges,what were the major breakthroughs?

Urban Development Training Centre(UDTC), Pokhara: When udle was plannedten years before my assignment, one of theconceptual perspectives of the project

designers (including me) was that the UDTCmight become the institutional anchor andsuccessor of udle, once the latter would haveended as a project. As such, the UDTC wouldplay the role of a service provider to themunicipalities in Nepal in urban managementtraining and advice.

This idea, to secure the "institutionalsustainability" of udle, was still in my mindwhen I started my assignment and I was still"in love" with it, despite the somewhatdesperate reports of my predecessor aboutthe continuous failures of the UDTC. It wasto a large extent depending financially on theudle-budget, asking for funding for even thesmallest repair works, and was providing fewand sometimes irrelevant training courses ofpoor quality (unless udle intervened directly).It was even unable to get its library organised,and had messed up, neglected, and destroyedimportant archival material (plans, photos,exhibition material) of the BhaktapurDevelopment Project.

I decided to make a last and renewed effort tocontinue this ten-year-old concept (as both mypredecessor had also done) by hiring aregional short-term expert whom I knew well(Dr. C.K. Jayarajan) and sending him toPokhara to assess and try to remedy thesituation. After due and painful consideration,it took us nearly a year to bury the old conceptfor good and to decide to stop pouring moreinputs into the UDTC. We decided to choosea completely different approach to organisingtraining for municipal staff in Nepal (makingDr. Jay a long-term expert). First, we did asystematic training needs assessment thatprioritised the training topics in participationwith the municipalities. Then, we developedcurricula and publicly tendered the trainingcourses to existing training institutions(including UDTC, who lost in thecompetition). We also requested andsucceeded in getting the municipalities toshare some costs of the training of their ownstaff, something that had never been done.The lack of such cost sharing arrangementswas a major hindrance towards sustainability

16

that we (GTZ and other donors) had createdourselves by "spoon feeding" too much andfor too long.

The moment UDTC realised that we wereserious in "abandoning" them, they madeserious efforts to survive - their first choice,of course, was to approach other donors.

The lessons learnt were threefold:- Patience and persistence in following up

conceptual ideas is good in developmentwork, but we should not be blind torealising facts that prove the nice idea tobe unrealistic. It was interesting to seethat we had taken ten years to changecourse because we liked our concept toomuch.

- "Spoon feeding" leads to dependencysyndromes that bury independent efforts- we had been constantly violating theprogrammatic principle expressed in theproject title (udle). We had providedtraining services at the UDTC, fullysubsidised from our funds, instead oforganising training with and throughexisting training institutions, which wereat least partially financed by thebeneficiaries of the trainings.

- It is difficult and takes many years tochange course in developmentcooperation. If one donor turns"unfriendly", often another one may bemore lenient and featherbedding, thusextending the dependency syndrome.

Another main component of udle(besides training and financing municipalprojects) was providing advice tomunicipal administrations and decisionmakers through mobile teams. Theseteams of Nepali experts (partiallysupported by foreign experts) coveredfour topics:

• Municipal Organisation Development &Administration

• Financial Management• Urban Planning• Urban Hygiene & Environment

Education Programmes, having been

added to udle shortly before thebeginning of my assignment as aremaining component of the completedsolid waste management project inKathmandu.

• In addition, a separate urban management& upgrading project in Patan wasimplemented under the udle-umbrella.

The three first groups had developedstandardised advisory and on-the-job-trainingprogrammes, which they delivered to allmunicipalities in Nepal. We proudly displayeda huge map of Nepal in the entrance hall ofthe udle-project, indicating how often each ofthe mobile teams had visited all themunicipalities and which "packages" they haddelivered where. Internally, the teams haddeveloped individual corporate identities andwere in fact not really cooperating, althoughthey were sharing nicely a common udle-identity and comradeship ("udle-family").

It took years to make udle-staff (andcooperating counterparts) aware that the"supply-driven" delivery of pre-conceivedtraining packages in the municipalities was farfrom optimal and that the needs and demandsof the municipalities should be assessed andresponded to individually.

Staff members had to be guided gradually andcautiously towards a demand (and client)orientation. They were convinced that themunicipalities were in very bad need of whatthey had to deliver, that their expertise wassuitable and unsurpassed, and that the clientdoes not know what he needs (whichunfortunately was true, to some extent).

To arrive at greater internal cooperation, I wasexperimenting with internal re-organisations,even introducing a kind of matrix-organisation with in-charges for municipalitieson one side and in-charges for theprofessional / sector issues on the other.Probably more effective than these formalinterventions (which created some confusionand hidden jealousy as unwarranted sideeffects) were constant preaching, good

17

examples, and joint missions of mixed teamsto municipalities.

One of the most effective joint exercises were"vision workshops" in the municipalities withthe local decision makers, to prepare long- andshort-term measures to be taken by themunicipalities and jointly define theinterventions of the various units of the udle-programme. However, this could only bedone once the number of municipalities udlehad to look after had been reduced (seebelow).

Originally, the project objective was that"ALL municipalities in Nepal" … woulddo a better job. This "ALL" became agreater burden as more municipalitieswere created, some with political interest.The last time they were created during mytenure, when the number was increased to58, there was a "creative interpretation"of the legal criteria for promotingscattered rural settlements to the status ofmunicipalities. Hence, the objective (ofALL municipalities) became unattainablewith our resources, in particular if wewanted to discontinue the previous"parcel delivery service" in short visits tomunicipalities, and leave them alone tounpack it, wonder about the contents andhow to make use of them.

It was against the wish of our mainpartner - Ministry of Local Development- that we (GTZ and BMZ) graduallyreduced the number of municipalities.First, the "ALL" was deleted and in theend we had arrived at five municipalitieswho should become "hubs of excellence"and who were willing to establish theirown small training centres to help othermunicipal administrations in their regionto improve their performance.

We had to withdraw another comfortablearrangement from another partner, theDepartment of Housing & PhysicalPlanning (DHPP; its name changed overthe years). This Department was

providing planning services tomunicipalities, provided udle paid the fullcost (except the salaries of thedepartmental staff) of them going to themunicipalities, staying and working there,holding meetings and workshops,preparing maps and plans, and writingreports. When we stopped our support,they found other arrangements and thedependency syndrome vanished: wereceived a few proud reports from theDHPP that they were doing their jobwithout our money and that themunicipalities were sharing part of thecost.

Another (self-inflicted) challenge was topractice and introduce a leadership stylethat differed from the traditional Nepaliauthoritarian "management by command"style and was, as it appeared, "verydemocratic" (which was what one of theemployees later called it, after he hadlearned to appreciate it). It took a whilebefore all staff members had understoodthat their own initiatives and proposalswere welcome, and they soon began toappreciate that I (the big patriarch) did notclaim to know everything better.Sometimes, this was obviously a surpriseand created a bit of insecurity if e.g. Iadmitted that I was not a specialist in thefine details of municipal finance and that Iwas myself still learning, and when I toldthe colleagues to "love your mistakes,because you learn from them, but don'trepeat them".

All the other challenges that increasedtowards the end of my tenure werepolitical in nature and beyond myinfluence. What happened in the internalpower struggle in Nepal becameincreasingly frustrating and culminatedin the de facto termination of thedecentralisation policy in the years 2003,and later.

The challenge of budget cuts on the Germanside became so serious that I had to dismiss

18

nearly half of the udle-staff before I left myposition (three months earlier than originallyplanned, for the sake of saving some salaryexpenses). This compulsion to reduce costwas, by the way, another reason why we hadreduced the number of municipalities to five;we simply did not have enough resources todo a reasonable job in more places than that.

3. What problems hinder urbanmanagement and local governance themost, in the municipalities?

More than anywhere else in the world, itseems that in Nepal the most conducivefactor for good local governance issufficient political stability (at least at thelocal level), i.e. a good majority ofpreferably one party (it does not mattervery much which one) and / or a good,charismatic and devoted mayor. Therewere only a few such examples: Dharan,Dhulikel, Bhaktapur, Hetauda, Butwal,Nepalgunj.

In the absence of such conditions at thelocal level, few consistent initiatives weretaken by municipalities, political vanitywas displayed to cover the lack of (good)ideas on how the community could bemotivated in development, clientism andcorruption was common. However, tosome extent this had to be considered assomething normal in an emergingdemocracy, in particular at the local level,where political life experience consistedof following instructions and beingcontrolled from above.

Mayors / municipalities were hesitant tomake use of their new rights to levy localtaxes and fees, in particular local propertytaxes, according to the new Local Self-Government Act. They preferred toclaim more subsidies for their budgetsfrom the central government. The reasonwas fairly obvious: they would have to askproperty tax payments from their ownclientele, which was not necessary in theprevious arrangements. Thus, the mayors

themselves were not promoting fiscaldecentralisation or rather one of its crucialelements- mobilising their own resourcebase.

In general, there were not many serioushindering factors to be pessimistic aboutthe possibilities of developing good localgovernance. We had many goodexperiences. The basic skeleton ofdemocratically legitimised local institutionsand emerging civil society organisationsexisted. The real blow to all this onlycame later when local governments werede facto abolished (as already mentioned)and Nepal moved backwards.

4. Are there success stories and lessonsthat were learnt that you still considervalid now?

Although many development theoristscould consider the project set-up aspolitically incorrect, the udle project (laterprogramme) approach is a success story initself. udle was always a GTZ-run,relatively independent service provider or"consultant" (free of cost), which in factmay be considered as politically andeconomically incorrect, to many Nepaligovernment bodies at central and locallevels. This structure had been establishedfrom the start of the project since the twomain partner ministries could not agree onwho would host the project. Therefore,GTZ and the partners had to make adecision and placed the project in betweenthe two physically separated premises anddeliberately granted a high degree ofautonomy (e.g. there was no directorate orstrong "steering committee" like in mostUN-style projects, where such a super-structure often hinders more thanfacilitates the smooth and appropriatemanagement of the project).

Since more and more Nepali partnerinstitutions joined the programme, inparticular municipalities, this structure

19

proved to be very effective and acceptedby everybody, and enjoyed a lot ofrecognition. In the absence of such agovernment institution or localgovernment association, the project wassometimes even mistaken as being a "one-stop" office for all questions on urbandevelopment in Nepal.

The only disadvantage of such a projectstructure is the somewhat lowinstitutional sustainability; during mytenure, we did not find a real solution tothis issue, although we were constantlytrying to find one (see the discussion ofUDTC above and of MuAN below).

The Town Development Fund (TDF) wasone of the best institution building resultsof udle. In addition, other donors (inparticular ADB) could be convinced tochannel funds for municipal developmentprojects through this offspring of udle.However, later attempts to gain unduecontrol over its operations by motivatedforces could barely be averted.

The municipalities were the last of thethree local government entities in Nepalto form an association. A "club ofMayors" lead by the Mayor of Patan hadexisted for quite some time but never hadany influence and momentum due tointernal rivalries of some of the"heavyweight" mayors, and due to the lackof an internal organisational structure.The transformation and re-organisationof this "club" to the MunicipalitiesAssociation of Nepal (MuAN) was onlycreated after the third local elections whenthe "left" parties won the majority in mostmunicipalities. This political unity led to arelatively high degree of unity within thenew association. The tradition of leftparties to focus on cadre organisation wasconducive to establish at least some formof organisation and to open an office forthe association with a few permanentstaff, paid by the municipalities.

Even in its infant stage, MuAN startedto exert some political influence and toarticulate certain interests of themunicipalities (albeit coinciding withparty interests). Nevertheless, MuANwas a worthwhile attempt and in thefuture, might have become anotherpossibility to solve udle's institutionalsustainability problem. Therefore, udlesupported the establishment with someequipment, subsidised and promotedtheir newsletter and othercommunications and meetings, andprovided advice and some training toMuAN staff.

The attempt to organise some support oreven a partnership with the Germanmunicipal association (DeutscherStädtetag) miserably failed due to its lackof interest and unpreparedness for suchan arrangement. Therefore, I tried toorganise other support for MuAN andsucceeded to get UNV to second someof their volunteers for MuAN. Later, wealso helped to establish a link with theCanadian Municipal Association (thatentertains partnerships with many sisterorganisations in developing countries),and received partial funding from theCanadian Development Cooperation todo so.

5. Could you share your highlights ofworking in municipal development inNepal?

Well, well… the Nepali people are veryfriendly at least towards foreigners (notnecessarily amongst themselves), and alwaysgive a project such as udle and all who workfor it many compliments (see "column ofhonour" in udle's entrance hall). This alsoserves to "featherbed" foreign guests in thebelief that they are doing a fine job so thatthey will eventually forget to look behind thecurtain, where it does not always look verygood at all.

20

In this sense, highlights were to be alwaysinvited as "guest of honour" (or somethingsimilar) to MuAN meetings, conferences, andmany other events and to follow requests to"say a few words" - gradually training me wellin 10-minute political and un-politicaladdresses at various occasions.

Another highlight was the state visit of thethen President of the Federal Republic ofGermany, Roman Herzog and his wife, toNepal in November 1996. This gave me theopportunity to show the president various sitesin Bhaktapur and Pokhara (UDTC), and todiscuss project issues in which he took greatinterest (as former Minister of Internal Affairs

in the federal state of Baden-Württemberg andjudge at the German Federal ConstitutionalCourt). Most of the frequent visits of otherGerman politicians were rather "down lights".

Small but important highlights were all thevisits to ongoing and completed communitydevelopment projects and TDF-fundedprojects in the municipalities. I consider suchpractical successes and visible physicaldevelopment measures as essential"ingredients" of a local governance project likeudle, to bolster its success and legitimacy.Without that, such projects remain pure paper-and conference-work and can hardly commandany respect.

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Introduction

The “Deutscher Entwicklungsdienst” (ded) isthe German national recruitment agency thatsends qualified, experienced personnel tocooperate with project partners in developingcountries. It was established in 1963 in Bonn,Germany.

It is a non-profit public corporation, ownedjointly by the Federal Government ofGermany and a group of volunteerorganisations, called “Lernen and Helfen inÜbersee” (“Learning and Helping Abroad”).

It supports programmes in developingcountries to support the improvement of localconditions. At present, approximately 1,000development workers are in more than fortycountries in Asia, Africa and Latin America.

The Development Workers

The professional competence of deddevelopment workers is based on educationand training in Europe combined with severalyears work experience in their respectiveoccupation.

Prior to their assignment to projects andprogrammes in partner countries, theyparticipate in comprehensive preparatorycourses in Germany and in the respectivepartner country. The preparation in Nepalincludes Nepali language classes and severalweeks staying with a Nepali family.

ded development workers are fully integratedin the partner organisations and work in closecooperation with their local colleagues. Tostrengthen the professional capacity andcompetence of their local colleagues,development workers continuously assist andadvise them more as a facilitator than animplementer.

ded Cooperation in Nepal

ded personnel work in accordance with theobjectives of Nepal‘s Poverty ReductionStrategy Paper (PRSP) and one of the focalareas of German development cooperationwith Nepal, to support and strengthen LocalSelf Governance and Civil Society. Theyfollow the following vision:

German Development Service (ded)Cooperation in Local GovernanceGerman Development Service (ded)Cooperation in Local Governance

At present 23 development workers are assignedto partner organisations in the fields of:

Natural resource management withcomponents soil conservation andcommunity forestry

”””””

“““““ Within the next twenty years, especiallythe poor and underprivileged in towns andrural areas of Nepal will be enabled to actdemocratically and in a self-determining way.

They will be able to use their rights and dutiesas citizens at local levels through interactionwith government offices, local administrationsand non-government organisations.

They will earn their livings in a sustainablymanaged environment and will be able torepresent their own interests through self-helpinitiatives.

22

Local Government, with activities inurban and regional planning as well ascapacity buildingNGO support, with assistance incommunity development and businessdevelopment

Local GovernmentSupport

For the past decade, ded has worked in thefield of local government with the overallobjectives of improving the living conditionsof the local population, supporting efforts fordecentralisation in Nepal, and strengtheningcivil society.

ded aims to improve local management tostrengthen the organisational and humanresource development to foster goodgovernance through transparency andparticipation.

The Local Self Governance Act, which cameinto effect in 1999, empowered the localgovernments with challenging roles,responsibilities and funtions, so that theycould eventually perform as full-fledgeddecentralized, autonomous and self-governinglocal bodies. Responding to the need to adressall those new responsibilities and to build localcapacities, ded assigned development workersto mainly planning sections in Municipalities,but also financial sections.

In addition, development workers are assginedto organisations and institutions like theMunicipal Association of Nepal, theAdministrative Staff College of Nepal and theKathmandu Valley Preservation Trust.

Advice to LocalGovernments

ded does not have its own projects, it alwaysworks at the request of local partnerorganizations to meet their needs. It providedadvice in the following fields:

Urban Planning - Development workerssupported the development of building by-laws and preparation of masterplans and landuse plans to support town planning, whichavoids haphazard construction in developingtown areas and protects historical settlements.As a basis for planning and development, theysupported the preparation of base maps andcollection of necessary data to set up housenumbering systems and prepare a municipalprofile.

Revenue Collection - ded supportedmunicipalities to set up integrated property taxsystems to increase their own revnues andprovide better services to the local population.

Preservation of Cultural Heritage – ded was alsoengaged in the preservation of culturalheritage to create awarenes among the localpopulation, document and conserve historicalmonuments and buildings, and preservetraditional crafts and skill development.It also provided advice on locally adaptedtourism development.

Infrastructure Improvement – Developmentworkers assisted with infrastructureimprovement by supporting the design andimplementation of sewer and drainagesystems, solid waste management schemes,traffic management, and parks and greenery.

Economic Development – ded enabled theMunicipal Association of Nepal to advisetheir member municipalities in local economicdevelopment activities.

Organizational Development and Training –dedalso aimed to improve technical andmanagerial skills of the staff of localgovernments by developing curriculums andimplementing trainings through nationalinstitutions such as the Urban DevelopmentTraining Center in Pokhara and theAdministative Staff College of Nepal.

The following table shows where developmentworkers have worked in the urban sector inthe past decade ten years:

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Partner Organisation(Municipalities)

Banepa Municipality

Butwal Municipality

Tansen Municipality

Bharatpur Municipality

Madhyapur Thimi Municipality

Dhulikhel Municipality

Nepalganj Municipality

Kirtipur Municipality

Itahari Municipality

Mechinagar Municipality

Other Organizations:

Urban Development Training Center

Administrative Staff College

Kathmandu Valley Preservation Trust

Municipal Association of Nepal

From

Apr-95

Apr-96

Apr-98

Jul-98

Jan-99

Jan-00

Jan-01

Oct-01

Apr-02

Jul-04

Oct-96

Jan-01

Feb-01

Nov-05

To

Jun-01

Feb-05

Feb-06

Mar-05

Jan-05

Jul-06

Dec-03

Jul-07

Mar-04

Dec-05

Mar-00

Apr-05

Jun-04

Jul-06

Time Frame* Years ofCooperation

6.0

6.0

7.0

5.5

5.5

5.5

3.0

4.5

2.0

1.5

3.0

5.0

3.5

0.7

Main fields of work

Infrastructure, Conservation,House Numbering, TaxManagement

Greenery / Park Development,Traffic Management, SolidWaste Management, Tourism

Integrated Action Plan, Tourism,Conservation, Sanitation andSolid Waste Management,House Numbering, Land UsePlan, Building By-Laws

House Numbering, Solid WasteManagement, TownDevelopment, sister relationship with german town, LandUse Plan, Building By-Laws,master plans

Conservation, HouseNumbering, Town Planning,Sewage Management

Conservation, Tourism,earthquake proof construction,Land Use Plan, Building By-Laws

Community Development, SolidWaste Management

Land Use Plan, Building By-Laws,House Numbering, Urban PovertyReduction Strategy Program

Land Use Plan, Building By-Laws

Integrated Property Tax

Training and OrganizationalDevelopment

Organizational Development,Training

Conservation / Restoration, skilldevelopment

Local Economic Development

* In some places there is a time gap between the assignment of the 1st, 2nd, or 3rd development worker. The timeframe does notmatch the years of cooperation.

Future Directions of dedNepal in Local Government

The Local Self Governance Act and existanceof democratic local governments wereessential for the involvement of ded in localgovernment. The lack of elected localgovernments has made the involvement ofded in municipalities increaslingly difficult.

Therefore, future support will depend onthe political situation and presence of localrepresentatives in the municipalities. dedhopes for a changed situation that canbring healthy and planned urbandevelopment.

Municipal Organisational Developmentand Administration

Municipal Finances and Urban Economics• Financial Resources Mobilisation Efforts in

Municipalities• Financial Management and Role of Corporate

Accounting• Joint Local Economic Development Initiative

Urban Planning• Experiences of an Urban Planner of ded in

Dhulikhel Municipality

Solid-waste Management• Urban Hygiene and Environment Improvement• Experiences from Hetauda Municipality• Urban Environmental Guidelines

Training

udle Service Packages

S E C T I O N 2

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GTZ launched Urban Development throughLocal Efforts (udle) in 1987. At that time,Nepal had 29 municipalities (then called townpanchayats), and udle was one of the few urbanprojects to assist them using a multi-sectorapproach.

As its name suggests, udle helpsmunicipalities to initiate and manage urbandevelopment with a sense of ownership sothat municipalities function as local urbangovernments. The programme providesorganisational development and administrativemanagement assistance in order to enhancemunicipalities’ institutional capacity to deliverefficient services to citizens.

Initial Phase: 1988 – 1990

In 1988, during the initial phase, udlecontracted the Language, Culture, Training,and Research Centre in Kathmandu to doresearch on municipal organisation. Based onthe principals of the expert model, thisresearch and development approach produceda number of conclusions andrecommendations. Over a dozenmunicipalities were studied andrecommendations were in line with the townpanchayat rules (1988) to improve thefunctioning, structure, and human resourcesof municipalities.

Six municipalities underwent furtherorientation and follow-up programmes, whichwere conducted by individual consultants.The conclusion was that a distinct gap existed

between the recommendations intendedfor improvement and the ownership andresponsiveness of municipal authorities.

Learning Together:1991 onwards

The approach of “Learning Together” wasenvisioned after gaps were observed whenapplying the expert model approach. Thismethod was tested in Pokhara. It has takenthe organisational development activitythrough a dynamic process of action, teamlearning, and reflection to produce insight,change, and improvement. It has benefitedmunicipal clients, civil society, and the privatesector.

In 1992, GTZ adopted the nomenclatureorganisational development and institutedit as a fully-fledged component of udleprogramme. Since then, organisationaldevelopment has passed through severalevolutionary stages in its consultation services.

The following phases of intervention areadopted during the introduction oforganisational development in a municipality

Entry Phase 4 – 6 DaysStep 1: Building a trusting relationship

between the advisory team and themunicipality.

Step 2: Orientation and programmeformation with elected representativesand staff.

Step 3: Setting the programme’s schedule forthe entire preparation period.

Municipal Organisational Developmentand AdministrationMunicipal Organisational Developmentand Administration

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Step 4: Installing an in-built mechanism thatincludes forming the policy committeeheaded by the Mayor, the actioncommittee, and the organisationaldevelopment taskforce headed by theExecutive Officer.

Diagnosis Phase 30 – 40 DaysStep 1: Situation assessment

Collecting information and datausing an informal process informal workshopsDeveloping situational assessments(i.e., organisational goal, culture,structure, management, financialand human resource capacity,external linkages, and overallperformance capacity)Analysing, interpreting data, andpresenting assessment results.

Step 2: Problem assessmentIdentifying, classifying, andstructuring existing problemsReflecting on the nature, intensity,and cause / effect of problems.

Step 3: Possible solutionsGenerating alternative solutionsthat correspond to the problemsidentified.

Step 4: Assessing resources for solutions.

Implementation Phase 6 – 10 DaysStep 1: Activity analysis

All operational solutions aretransferred into activities, thenfurther classified into sub-activitiesand prioritised as short-term orlong-term.

Step 2: Activity planningIntegrated Action Plan: a summarysheet of major activities formonitoring the municipality’soverall progress in organisationalactivities.Individual Action Plan: detailed,individual sheets prepared for

sections and sub-sections. Ifrequired, activities are divided intosmaller activities and assigned toother staff working under section/ sub-section heads.

Follow Up / Monitoring Phase -PeriodicIf there are deviations from the plan,immediate action can be carried out throughindividual counselling, distance counselling,short-term management clinics, or againthrough the action learning process.

To establish a strong internal structure withinmunicipalities, udle focused on organisationalfunctions, structure, and human resourcesusing process consultancy.

Pre-intervention mapping identified thefollowing problems in municipalorganisations:

Inappropriate structures to supportobjectives and functionsAny function, major or minor, wasinstituted as a ‘section’No compatibility between structuralhierarchy and employees’ positionalhierarchyNo inter-sectional relationshipStaff were not involved in decision-making and therefore did not feelresponsibleManagement was centralisedNeither elected bodies nor staff felt asense of achievement

During this phase of organisationaldevelopment through learning together, udlesupported the establishment of a basicorganisational structure and internal workingsystems for 36 municipalities.

Approach to OrganisationalDevelopment: 1995 onwards

During initiatives to improve internalmunicipal systems, problems related to humanresources became more apparent. Municipal

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organisations could not develop if theperception, knowledge, skills, needs, attitudes,behaviour, and achievements of elected bodiesand staff were not considered. Theorganisational structure had to cater to newrequirements regarding interactions betweenelected bodies and municipal staff.

Therefore, related team-building activitieswere conducted for municipal staff andelected bodies. Activities included buildinginterpersonal skills, defining the organisationalvalue system, motivating staff and electedbodies, forming municipal taskforces, anddefining each person’s job.

The human resources department was improvedby identifying the need for specialised, skilledindividuals to carry out development activitiesand by defining the functions of each personaccordingly. Besides establishing a workingprocedure, details were provided for varioussteps that linked administrative work withrevenue generation. Formats for keepingrecords were also formalised.

Integrated OrganisationModel - the Six Ss: 1997onwards

The organisational development process inthe previous stage highlighted the importanceof human resources in an organisation. Anintegrated approach, the Six ‘S’ models, wasadopted and incorporated into organisationaldevelopment.

The Six Ss are:Strategy / VisionSystemStructureStyle of managementStaff (including elected officials)Shared Values

This model provided an integrated approachto organising municipal systems into urbanlocal governments and brought newchallenges to municipalities and udle’s

organisational development practitioners.This required a focus on the following:

Strategic thinking / planning and definingvisionDefining shared valueDeveloping a performance monitoringsystemPersonal auditing.

Good GovernanceInitiative: 1999 onwards

After a year of implementing the IntegratedOrganisation Model of the Six Ss, and withthe increasing role of municipalities as urbanlocal governments, municipalities realised theadvantages of functioning in partnership withcivil society (if not with all citizens then atleast with the taxpayers) and the private sector.The challenge remained to orient staff, electedpersons, stakeholders from civil society, andthe private sector regarding:

Shifting from internal office managementto integrated organisational development,and local self-governments that interactwith stakeholders, clients, and the publicCreating effective partnerships betweenstakeholders and the local government toachieve good governanceSupporting the Six S model as the basicframework without which goodgovernance cannot be realised. .

udle’s venture into advanced organisationaldevelopment revealed the necessity ofmunicipalities and stakeholders jointlydevising and implementing policies. It alsorevealed factors indicating the need forincreased private sector involvement.Municipalities now realised that they neededto mobilise human, institutional, and financialresources outside their own limited resourcesdue to the following:

A fast-growing population within, as wellas along the periphery of, municipalboundariesThe growing needs of municipal citizensand settlers in village developmentcommittees for infrastructure and services

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An increasing volume of urban solidwasteThe necessity to develop the city in amanner conducive to, industrial andcommercial growth, better life options,gender equality, environmentalmanagement, social justice, and povertyalleviation.

Municipalities need to work effectively withtheir direct and indirect taxpayers, and improvepartnerships with different stakeholders. Theycannot reach joint visions without cooperatingwith private investors. Therefore, public-private partnership and private sectorparticipation was initiated in selectedmunicipalities. This was also supported byUNDP’s Public - Private Partnership project,which helped to develop the regulatoryframework and model contracts.

Efforts are now under way to improvestrategic planning, organisational structure,internal systems, leadership, human resources,and organisation values within municipalities.Each municipality is developing a vision and aplan to guide it in becoming a more efficientlocal government.

Achievements of MunicipalOrganisationalDevelopment Interventionat Different Levels

The Local Self Governance Act (1999) raisedexpectations for a more self-reliant andefficient municipal governance system.

However, since 2002, municipal organisationaldevelopment has been affected by the absenceof elected local representatives, thecontinuous change of Executive Officersoverloaded with mayors’ functions, the effectsof the conflict on the municipalities, and thedelay of necessary reforms fordecentralisation. General economic insecurityalso prevented the launching of many public-private partnerships although the base hasbeen set and some partnerships are working.

Organisational development cannotcounteract adverse framework conditions.However, organisational developmentintervention has introduced basicorganisational operating systems, such asorganisational charts, which defineresponsibilities and help to identify personnelneeds and support better service management.

The organisational development interventionalso emphasised the need for personnelmanagement and human resourcedevelopment in municipalities. It hasfurthered the sharing of success stories,experiences, and practices amongmunicipalities and has highlighted the need forgood urban governance, especiallytransparency, accountability (throughpublishing the citizens’ charter), and publicauditing. It has broadened the base to workwith civil society and the private sector asdevelopment partners. Local people, staff,and elected representatives have been exposedto the diversity and complexity of their ownroles and responsibilities in their municipalorganisation.

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1. Introduction of HouseNumbering

In 1993, Dharan municipality startednumbering the houses of one ward withtechnical support from udle. Local peopleappreciated the house numbering because thesystematic house address promoted fasterpostal delivery, which was important to themajority of the city’s inhabitants, who are ex-Ghurkha army service-men. Dharanmunicipality extended the pilot project to allmunicipal wards in 1994-1996.

Visiting officials from other municipalitieswanted to replicate the system in their owntowns. In 1994, udle assisted theimplementation of house numbering inSiddharthanagar and Hetauda. In 1995, itprepared a user’s manual and ‘housenumbering database’ for trainers and users toorient the staff of 36 municipalities about theprocess of house numbering.

With the support of udle, ten municipalities(Dharan, Banepa, Bharatpur, Butwal,Dhangadhi Hetauda, Nepalgunj, Pokhara,Siddharthanagar, and Biratnagar) completednumbering their houses on a street basedsystem and distributed house number plates toall households. Another, 14 municipalitiesstarted data collection on house and land

parcels for house numbering. Only four ofthese 14 municipalities have completed thedistribution of house number plates in allwards. Others are in the process of datacollection. Some have distributed housenumbers on the main streets and arecontinuing to do so in other wards.

2. Use of House Numberingin Resource Mobilisation

Dharan used the house-numbering databasefor collecting “rooftop” tax, a local propertytax levied on individual houses based on thetype of house. The first year of collection in1994/95 brought in Rs. 18,600. By 1997/98,Rs. 492,428 was collected, which was quitesubstantial in terms of direct taxation.

In 1995, udle arranged a study tour for ninemayors to learn about municipal resourcemobilisation tools in Thailand, Malaysia, andthe Philippines. The study tour offered arevelation regarding direct taxation, municipaldevelopment, and accountability. In addition,udle conducted workshops in Dharan,Siddharthanagar, Pokhara, and Hetauda forelected representatives and municipalemployees to explain the use of housenumbering in the collection of direct taxes.

Financial Resources Mobilisation Efforts in Municipalities

Municipal Finances andUrban EconomicsMunicipal Finances andUrban Economics

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udle developed computer software to managethe property data of individual houses andprovided it to all interested municipalities.This helped municipalities to:

organise household data on tax payers’houses and land parcelsbill the taxpayers effectively thus makingtax collection efficientreduce waiting time for tax clearance.

Municipalities encountered challenges whenlinking house numbering with roof-top andbusiness taxes and raise direct taxes, as peoplewere not accustomed to paying direct taxes.Except for Dharan, the municipalities thatstarted house numbering were not seriousabout raising a roof top-tax in a professionalmanner.

3. House NumberingLinked with IntegratedProperty Tax

In 1999, the Government proclaimed theLocal Self-Governance Act for local bodies.It is stated in article 136 of this Act that ‘themunicipality may levy house and land tax, asprescribed, on each house and land parcels within thejurisdiction on the basis of the size, type, design,construction and structure of the house and compoundand area covered by the house, as approved by themunicipal council’. The Act allows municipalitiesto implement either the house and land tax orintegrated property tax.

House and land tax is levied upon the netvalue of a house and the plot on which thehouse is built. Valuation of the property isbased on the size, type, design, and structureof the house. Tax rate for each value of theproperty is charged as prescribed by the LocalSelf Governance Act. Land revenue tax ischarged for land without buildings.

Integrated property tax taxes land andbuilding together based on total net valuationof the property. The Municipal Board fixesthe tax rate for each value of property withinthe ceiling prescribed by the Local SelfGovernance Act. In this system, land revenuetax is not levied.

udle updated the software developed tomanage property data regarding all land andhouse parcels. In 2000, it provided technicaland financial support to Dharan and Butwalto introduce integrated property tax. Theproperty data was collected, entered into thecomputer, and used in the valuation of allproperty (land and building) according toproperty valuation criteria. Depreciation wasalso considered. Tax assessment was based onthe value of each property and billing wasdone in the name of each taxpayer.

Dharan collected Rs. 2.02 million as integratedproperty tax in 2001/02 and Butwal collectedRs. 1.68 million — 10% of the own sourcerevenue of each municipality. The followingtable shows the increment in revenue from theintegrated property tax in two municipalities:

Given the successful implementation ofintegrated property tax in two municipalities,the Municipal Association of Nepal and udleconducted a three-day workshop in 2001.Mayors, officials of the Municipal Associationof Nepal, executive officers, and municipalfinancial officers shared their experiencesabout resource mobilisation in municipalities.

udle prepared a guidebook on theimplementation of the integrated property taxand then provided three days training to 150staff from fifty municipalities on themanagement of integrated property tax. Thetraining presented information on theimplementation process and the merits and

Municipality Year 2001/02 Year 2002/03 Year 2003/04 Year 2004/05

Butwal 1,686,000 2,817,000 3,400,000 3,400,000

Dharan 2,022,000 2,849,000 2,372,000 3,500,000

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demerits of integrated property tax and thehouse and land tax. Immediately after thetraining forty municipalities prepared projectproposals to implement integrated propertytax and sent the proposals to the Ministry ofLocal Development requesting matchingfunds / grants.

In 2004, Dhangadhi and Nepalgunj developeda complete integrated property tax databasethrough field surveys and maps with thefinancial and technical support of udle, anddecided to implement integrated property taxfrom the year 2005/06.

By June 2005, twelve municipalities haddecided to introduce house and land tax.Eight municipalities had already done so andthe rest are preparing to implement it. 34municipalities have decided to implementintegrated property tax. Of the 34, twelvehave started collecting taxes and the rest are inthe process of data collection. Twelvemunicipalities did not choose either of the taxoptions and only collect land revenue tax.

The integrated property tax based on housenumbering and computerisation of thedatabase has assisted the municipalities toidentify taxpayers, their addresses, theirproperties, conduct effective follow-up, updatedatabases, and create effective billing. Theintegrated property tax is also more attractivefor municipalities than house and land taxbecause:

Tax rates on houses and land are fixed athigh rates by the Act; thus, few people arewilling to pay.Municipalities can fix integrated propertytax rates within the prescribed lower andhigher ceilings according to thewillingness and capacity of the people.Municipalities keep records of totalproperty (land and building) of anindividual in the integrated property taxsystem. This ultimately results in greatertax collection.The Act has prescribed a ceiling amount

in terms of the value of the property.People, who have less than the ceiling valueof property, need not pay tax in the houseand land tax system. This narrows thecoverage of the number of taxpayers.

Given the effectiveness of integrated propertytax and the efficient service to taxpayers, mostmunicipalities will probably implementintegrated property tax. Private companieshave started to provide support tomunicipalities to establish this system, whichhas been appreciated and encouraged by theMinistry of Local Development, MunicipalAssociation of Nepal, and udle.

4. Lessons Learnt

After implementing integrated property tax insome municipalities, the following lessons havebeen learnt:

Municipalities should give priority toestablish a systematic database.Medium and smaller municipalities needtechnical support with minimum hardwaresupport to implement integrated property tax.House numbering should not be aprecondition for implementing integratedproperty tax in any municipality.Municipalities can implement integratedproperty tax and house numbering at thesame time or separately. If the municipalityimplements the integrated property taxearlier and house numbering later, both canbe linked later. However, experience showsthat linking the implementation ofintegrated property tax with housenumbering has better results than withouthouse numbering.Private software companies can beencouraged to develop software andprovide training in the field of integratedproperty tax and other resourcemobilisation schemes. This is a healthy andsustainable practice for effective andefficient resource mobilisation in themunicipalities.

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5. Major Challenges

To be able to provide better services,municipalities urgently need to increase theirlocal revenues through direct taxes. With theabolishment of the local development fee in2008, this will become even more pressing.

If the Government does not offer alternativesto replace the local development fee,municipal revenue will decrease (at present44% of the own source revenue comes fromlocal development fees) and most ofmunicipalities will lose the loan eligibility toguarantee the payback to the financinginstitutes, such as the Town DevelopmentFund. The implementation of integratedproperty tax and business tax and public /private partnership projects could serve thepurpose to increase municipal investments.

The rate of financial devolution fromcentral government to municipalities hasbeen very slow. Besides the above nationallevel challenges, municipalities can beginwork on the following:

Creation of an initial integratedproperty tax database, including taxmaps / cadastres to manage integratedproperty tax (data capturing,automation, property valuation, taxassessment, tax billing, and collectingand updating the database).Cross-verification of the data on houseand land parcels two years after theintroduction of integrated property tax.The verification is necessary if theintegrated property tax was collectedthrough self-declaration.

Key steps for house numberingPreparing and agreeing a project plan toimplement the system in workshops withbusiness communities, civil societies, politicalparties, etc. (Project plan consists of detailedoperational steps, revenue potentials, costs,human resources, monitoring tools, andinstitutional mechanisms to continue theprogramme)Approval of the municipal board and themunicipal councilFormation of the field teamsConducting training / orientation to teammembersCollecting street and cadastral mapsNaming and numbering streets and houses onthe mapsConducting field surveys to collect dataregarding house and land parcelsEntry of field dataFixing hoarding boards that show street namesDistribution of house-numbering plates

Key steps for integrated property taxForming a municipal property valuationcommittee,Forming the criteria for land parcel valuationusing the tax-zoning conceptAgreeing the property valuation criteria withtaxpayers, representatives of political parties,chamber of commerce, civil societies, etc.

Completing property valuation using theagreed criteria and data collected on houseand land parcels,Determining tax rates (through a consultationprocess) based on a ceiling provided bythe law,Conducting property valuation based onvaluation criteria, tax rates, and list ofexempted propertyIncorporating feedback and preparing final taxrolls,Delivering tax bills to individually numberedhouses / taxpayers,Enforcing a regular collection system andupdating household data and tax.

Equipment and staff required1 computer (Pentium III or IV)1 dot matrix or laser printerA computer programme for processinghousehold data, tax assessments, and billingA computer operator cum revenue assistantand / or a revenue officerA municipal engineer and a junior landsurveyor

Time requiredSixty to eighty person months required for atown of 10,000 households for streetnumbering, household survey, mapping, anddata entry.

6. Summary of House Numbering and Management ofIntegrated Property Tax

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1. Introduction

Municipalities in Nepal have received technicalsupport from GTZ-udle in FinancialManagement since 1992. TheDecentralization Act in 1982 brought changeswith regards the role of local institutions inthe development agenda. It became clear thatlocal governments had to be strengthened fora country such as Nepal to achieve long-termeconomic development success.

Until 2000, municipal financial managementfocused on simple bookkeeping systems. Thischanged with the view that effective financialmanagement has a crucial role to play whenproviding accountable governance to people.Efforts have since focused on strengtheningaccounting systems, mobilising municipalresources, and formulating an action plan forimproving municipal financial management.

2. Fiscal Situation ofMunicipal Governmentsin Nepal

a. Revenue CompositionWith the enactment of the Local Self-Governance Act in 1999, octroi (levy onincoming commercial goods) wasdiscontinued. This was the single majorsource of revenue that contributed nearly73.53% of a municipal’s income in the year1998/99. Contributions from other tax andnon-tax revenues were negligible andmunicipal authorities did not envisage thata crisis could occur.

To avoid a financial crisis, the centralGovernment arranged an interim option withthe introduction of Local Development Feesthat could be collected from different custompoints of the country (1.5% of everyimported consignment) and re-distributed to

58 municipalities. It was clear from the outsetthat this was an interim option and was notsustainable. Therefore, local authoritieswould have to find an alternative to the localdevelopment fee. The local development feewas never formalised in the Local Self-Governance Act, thus it could be abolishedat any time by the central Government.

The major question was - who was going tokeep Nepal’s local bodies (especiallymunicipalities) functional? The governmenthad several policy and fiscal deficiencies thatmade it difficult to face new challenges in adecentralised framework.

The financial structure of the fiscal year(2003/04) of 58 municipalities indicates thattotal revenue amounts to around Rs. 2,519.56million, which is nearly 45.57% of thetargeted total revenue. Similarly, 70.07% ofthe total revenue is contributed by ownsource revenue - tax and non-tax revenues(Rs. 1,765.49 million) in which contributionsfrom one single revenue source i.e. localdevelopment fees is around Rs. 986.09million.

In the overall local tax structure,contributions from the local developmentfee amount to around 79.7%, whereascontributions from the most promisingand potential tax (house/land and integratedproperty tax) amount to only 11.48%(Rs. 142.04 million) of total tax revenues.Another potential tax is the professional tax,which yields nearly 3.85% of total tax(Rs. 47.59 million).

b. Expenditure CompositionOn average, current administrativeexpenditures were more than 38%, whereaspublic expenditure or capital investments andsocial programmes shared only 56% of thetotal expenditure (Rs. 2,160.15 million).

Financial Management and the Role ofCorporate Accounting

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Observations reveal that there is always a bigdifference between projected publicexpenditure and the reality. Rs. 3,904.78million was projected as the publicexpenditure for the year 2003/04 and only Rs.983.52 million was actually spent (i.e. only25.19% of total projected achievement).Public expenditure was lower than projecteddue to unrealistic projections of externalrevenue and low yield of internal revenueresources. In the absence of local developmentfees, municipalities find it difficult to coverdaily administrative and current expenditure(Rs. 835.01 million) from their own sourcerevenue of Rs. 779.392 million.

With Nepal’s accession to the World TradeOrganisation in 2004, the surcharge on exciseduty has to be abolished by 2008. While theMinistry of Local Development pushes forincreases in the collection of land and buildingrelated taxes – a reliable foundation formunicipal revenues in many countries – it isalso clear that this will not be sufficient. Newtransfer systems have to be developed whichcombine reliability with need and performanceindicators. Incentives are necessary to ensuresound financial management and revenuecollection.

The instable political situation in the countryand the lack of political will or ability toaddress the future of decentralised financeincreases the risks for sustainable municipalfinancing.

3. udle supports ComputerLiteracy in NepaleseMunicipalities

In 1992, udle introduced a computerisedfinancial management system. First, the projectprovided basic computer skills training incollaboration with the Ministry of LocalDevelopment and Urban DevelopmentTraining Centre, Pokhara, to municipal staffworking in the financial administration section.

Later in 1993, udle provided an accountingpackage and introduced Devanagari (theNepali alphabet) in the Governmentaccounting system. The first computerisedaccounting system introduced in KathmanduMunicipality was developed in DOS. It waslater introduced to Biratnagar, Birgunj,Pokhara, and Nepalgunj municipalities andudle provided computers and regulartechnical support. Lotus spreadsheets wereused for producing monthly salary sheets andan accounting manual was prepared in 1994and distributed to five municipalities as anoperating tool that supported the Devanagarigovernment accounting system.

In 1994, software was developed for taxcollection procedures that includedprofessional and vehicle taxes. The programwas installed in Pokhara for a pilot phase,however due to the lack of properinformation about potential taxpayers, theprogram was unsuccessful.

In 1995, 10 municipalities (Dhangadhi,Mahendranagar, Nepalgunj, Butwal,Siddharthanagar, Hetauda, Biratnagar,Dharan, Rajbiraj and Kathmandu) wereequipped with new computers and modemsso that the central government could accessfinancial information. In 1996 udledeveloped a windows based municipalaccounting system and introduced it in 18municipalities.

udle have been the pioneer of computerisingmunicipal finance in Nepal. However, theexisting software (based on the dbaseprogramme) does not cater to the entiredemands required by municipal finance.Some private software developers are creatingnew and hybrid programs that are equallycompatible for municipal taxation purposesand that are more users friendly.

The intervention of udle and its impact oncomputer literacy in different municipalitiesare as follow:

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No.

1

2

3

4

5

6

7

8

9

10

11

12

13

14

Municipality

Kathmandu

Siddharthanagar

Dhulikhel

Bharatpur

Butwal

Rajbiraj

Mahendranagar

Lalitpur

Bhaktapur

Dharan

Janakpur

Hetauda

Birgunj

Dhangadhi

Intervention

Introductory and refresher training on computeroperation in 1994, and regular technical input toupgrade financial management.

Introductory and refresher training on computeroperation in 1994; accounting software installedin 1995; house numbering software developedand installed in 1995.

Introductory and refresher training on computeroperation in 1994; accounting software installedin 1995.


Introductory and refresher training on computeroperation in 1994; accounting software installedin 1995; house numbering system introduced in1998; Corporate Accounting System (CAS)concept introduced in 2001 with software.





Introductory and refresher training on computeroperation in 1994; accounting software installedin 1995; house numbering system introduced in1998; CAS concept introduced in 2001 withsoftware.


Introductory and refresher training on computeroperation in 1994; accounting software installedin 1995; CAS concept introduced in 2002 withsoftware.

Introductory and refresher training on computeroperation in 1994 and accounting softwareinstalled in 1995. House numbering softwaredeveloped and installed in 1996.

Introductory and refresher training on computeroperation in 1994; accounting software installedin 1995; CAS concept introduced in 2001 withsoftware. House numbering system wasintroduced in 1998 and reintroduced in 2003.

Impact

Finance division is fully computerised.

Accounting system partiallycomputerised. Houses in the corearea are numbered.

Accounting system partiallycomputerised.


Corporate accounting system is in fullpractice; Houses are numbered andthe information is linked to integratedproperty tax collection with the use ofspreadsheets.



Accounting system partiallycomputerised through udle support;new accounting software from marketis in use and the system is fullycomputerised.


Corporate accounting system is in fullpractice; houses are numbered andthe information is linked to integratedproperty tax collection using udlesoftware.


Accounting system partiallycomputerised. CAS discontinued dueto the lack of technical capability ofmunicipal staff and sufficientintervention from udle.

Accounting system is partiallycomputerised and houses arenumbered.

Accounting system partiallycomputerised. CAS discontinued dueto the lack of technical capability ofmunicipal staff and sufficient interventionfrom udle. With reintroduction of thehouse numbering system, houses arenumbered and integrated property taxcollection has begun.

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15

16

17

Pokhara

Nepalgunj

Biratnagar

Introductory and refresher training on computeroperation in 1994; accounting software installedin 1995; house numbering system introduced in1996; CAS concept introduced in 2002 withsoftware.

Introductory and refresher training on computeroperation in 1994; accounting software installedin 1995; CAS concept introduced in 2001 withsoftware. House numbering system wasintroduced in 1998 and reintroduced in 2003.

Introductory and refresher training on computeroperation in 1994 and accounting softwareinstalled in 1995. House numbering softwaredeveloped and installed in 1996.

Accounting system is partiallycomputerised and houses arenumbered. CAS discontinued due tothe lack of technical capability ofmunicipal staff and sufficient interventionfrom udle.

Accounting system partiallycomputerised. CAS discontinued due tothe lack of technical capability ofmunicipal staff and sufficient interventionfrom udle. With reintroduction of thehouse numbering system houses arenumbered and integrated property taxcollection has begun.

Accounting system is partiallycomputerised and houses arenumbered.

4. Innovations in MunicipalAccounting Systems

The financial management component ofudle aimed to improve the existing accountingsystem based on the government accountingsystem, and adapt it for municipal needs. Aseries of orientation and short trainingcourses were conducted for municipalemployees in the Financial AdministrationSection (refer above table).

In 1996, Kathmandu Municipality introduceda computerised accounting system withsupport from GTZ-udle. The accountingsystem was later extended to othermunicipalities outside the valley (Biratnagar,Pokhara, Nepalgunj, Dharan, Butwal,Siddharthanagar, and Hetauda). Thisaccounting system, although still widely usedin most municipalities, has the followingdemerits:

It does not present a clear picture ofactual financial capabilities andweaknesses of municipalities, as thefinancial assessment is made on the basisof income and expenditure only.Fixed assets, inventory, debtors, creditors,and loans are not reflected in the financialstatements.Only receipt and payment accounts areprepared with a projected budget.

It is not compatible with financialinformation required by national andinternational financial institutions.

The Local-self Governance Act, 1999stipulated that the accounts of themunicipality should be maintained either in acash base Government accounting system oraccrual transaction based on the principle ofthe double entry system (corporate/businessaccounting system).

The Corporate Accounting System wasintroduced in Dharan Municipality in January1, 2000, on a trial basis with technical supportfrom udle. Software was developed andintroduced for operation on a trial basis. udleintroduced this system with the necessarysoftware to seven municipalities. However,this system was discontinued after a while inDhangadhi, Nepalgunj, and Pokhara due tothe lack of trained municipal staff and lack ofregular technical backstopping from udle.Dharan, Butwal, Banepa, and Kathmanducontinue to use the Corporate AccountingSystem.

Until now, the government has not made anyserious efforts to encourage or to providenecessary technical input to municipalities tostart the corporate accounting system. Themost difficult task for municipalities to start

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this new system is to make an evaluation oftheir fixed and movable assets. Mostmunicipalities either do not know the statusof their assets or have never kept records ofsuch assets.

In 2005, the Ministry of Local Developmentformed a task force to prepare acomprehensive report entitled'Strengthening the Financial Management ofLocal Bodies - Accounting and AuditingSystem'. The Local Bodies FiscalCommission conducted the study withtechnical and financial support from udleand the Decentralised Advisory SupportUnit supported by the Danish government.The main objective of this study was toimprove the accounting and auditing systemsof all local bodies of the country and toavoid any misunderstandings regardingformats and procedures of local bodies intheir accounting system.

During the preparation of the report, thestudy team visited 14 District DevelopmentCommittees, 13 municipalities, and 37Village Development Committees.Interactions were held, all relevantinformation was collected, and consultationswere carried out with key central levelinstitutions. The main findings andrecommendations were presented to theSteering Committee as well as to interestedprofessionals. Short orientations on theoutcome of the report were provided to 59accountants and tax officers from 19municipalities. The followingrecommendations were made:

Establish an audit board for local bodiesMaintain separate accounts and auditstandards for local bodiesStructure fiscal monitoring of localbodies in relation with public auditingDevise a new accounting code for thecorporate accounting system andsubsequently for computerisationRedesign major revenue formatsCode assets and liabilitiesIntroduce performance-based grantsystems

5. Municipal FinancialDatabase

Since 1992, udle had been collecting andproducing comprehensive financial databasesof all the municipalities. At the beginning ofthe fiscal year udle collects actual andbudgeted revenues and un-auditedexpenditures of the previous year from eachmunicipality. In addition, udle collects otherrelevant information so that the financialstrengths and weakness of municipalities canbe assessed. udle analyses the data andcalculates the following for all municipalities:

Contribution from own source revenue tototal revenueLocal development fee in total revenueContribution from the property based taxto total tax revenueShare consumed by current expenditurefrom own source revenue.

For each municipality, this report showed thedetailed breakdown of:

income and expenditure,total revenue,total own source revenue,total expenditure,current expenditure,capital investment,number of employees,per capita total revenue,per capita own source revenue,per capita total expenditure,per capita current expenditure,per capita capital investment, andemployee per thousand population of allmunicipalities for the last three years.

Financial indicators of each municipality arealso compared with the highest, average, andlowest values of all municipalities for thecurrent year.

udle circulates an electronic copy of thisreport to all concerned stakeholders involvedin municipal management throughout thecountry. The Ministry of Local Developmenthas been producing this report with financialand technical support from udle since 2002.

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6. Achievements

The following has been achieved in municipalfinancial management:

Municipal authorities know more abouttheir financial situation.Central government authorities gainedinsight on the situation of municipalfinances.Separate account heads were reformulatedfor income and expenditure budget lines.Accounting and budgeting has become anintegral part of municipal management.Municipalities are able to provide financialinformation with more accuracy.More and more municipalities are tryingto use the corporate accounting systemand are replacing the governmentaccounting system for accurate andefficient financial data.All municipalities have partiallycomputerised their accounting system andefforts are being made to fullycomputerise the system.Municipalities are encouraged to increasetheir revenue base through theintroduction of integrated property tax.A Local Bodies Fiscal Commission wasestablished.

7. Conclusion

The financial sustainability of localgovernments is one of the pre-conditions fora functioning self-governance system. Most

local government institutions are undersubstantial financial crisis in Nepal. Hence,the following questions arise:

What reforms should be undertaken tomake local institutions more accountableand transparent?What should be done to bring localgovernments into the mainstream ofnational economic development?Which kind of fiscal transfers to localbodies equalise regional imbalances andstill provide incentives to raise localrevenues and improve performance?

To answer these questions, the concernedauthorities should review all the details andbasic groundwork prepared by local as well asexpatriate experts who are involved inimproving the finances of local governments.

Furthermore, finance is an important aspectof the local government reform agenda. Withthe enactment of the Local Self GovernanceAct and Regulation, local bodies areempowered with more autonomy to levydifferent types of taxes, fees, and acquireother financial resources.

The existing rules and regulations haveprovided potential avenues for collecting taxesbased on property, however the existingworking system of most local bodies arebelow the expected level to manage andcollect these direct taxes. Consequently, thebudget process should be fully integrated withan accounting system and auditing process.

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The most recent project progress review ofGTZ’s Private Sector Promotion Project inNepal included recommendations toemphasize Local Economic Development(LED) and to maximize synergy with otherdevelopment projects through closercooperation. As a result, four projects withcomplementary areas of expertise agreed tocombine resources and knowledge under thenew label “Joint LED Initiative”.

The Private Sector Promotion Project hadextensive experience in promotingbusiness services and trade.Urban Development through LocalEfforts (udle) possessed sound knowledgeof how municipalities work in Nepal andhad an extensive programming network.German Foundation for EconomicDevelopment and Vocational Training(SEQUA) had a long history in Nepal anda well-established network within localbusiness communities.The German Development Service (ded)had a large number of experienceddevelopment workers in selectedmunicipalities. Together, these fourprojects formed the Joint LED Initiative.

A Steering Committee for strategic issues anda team for operational issues were formedwith a representative member from eachpartner organization. A letter ofunderstanding articulating the shared visionand detailing the working procedure wassigned in February 2005.

In January 2005, the team conducted atraining to focus on local economicdevelopment initiatives through ParticipatoryAppraisal of Competitive Advantage, alsoknown as Local Competitive Advantage.Thirty-one participants were drawn from twopilot municipalities (Lekhnath and Butwal),the Chambers of Commerce and Industry ofthe pilot municipalities, the Municipal

Association of Nepal, the Ministry of LocalDevelopment, ded, and related consultants.

Immediately following the training, the firstexercise on Local Competitive Advantage wasconducted in Lekhnath, which is a medium-sized municipality, with highly committedpeople in the chamber and the municipalityoffice. SEQUA with its long experience insupport of chambers had prepared a solidfoundation for new projects through itsintensive capacity-building efforts. Theprogramme was then implemented by theLeknath Chambers of Commerece andIndustries with support from the Lekhnathmunicipality office and ded. Income-generatingactivities in six sectors with the potential toproduce visible impact by the end of 2005were selected for development. Technicalsupport and monitoring were provided by theJoint Local Economic Development team..The programme in Lekhnath successfullyaccomplished the following:

Six committees for a corresponding setof six sectors (vegetable, orange, bee-keeping, fishery, poultry, and tourism)were formed.Three-day trainings on cooperativemanagement were provided tocooperative committees resulting in thecreation of cooperative rules andregulations.Training on off-season vegetable farming,use of compost, nursery raising,asparagus farming and packaging wasprovided to members of the vegetablecooperative committee. This included aBharatpur site-visit to look into somebest practices.Training on harvesting techniques, farmmanagement, techniques to preventdiseases affecting mandarin orange plantsand uses of orange and its by-productswere provided to members of orangecooperatives.

Joint Local Economic Development Initiative

42

Support for new fish ponds and trainingon fishery and fingerling managementincluding new technologies on netweaving, net washing, catching techniquesto increase fishery yield were provided tofish farmers.Training on poultry farming coveringchicken breeds, equipment, vaccination,etc. were provided to poultry farmers anda poultry expo was held for promotion ofpoultry farming.Training on Malifera bees, marketing ofhoney and beehive construction wasprovided to beekeepers.A planning workshop was conducted toidentify responsible group or person forsales outlet for all local products and acommittee was formed to develop a parkin memory of late poet Lekhnath toattract tourist to Lekhnath.

After conclusion of the first pilot programme,the team assessed the experience and madeappropriate modifications to the LocalCompetitive Advantage sequence. Keylessons learned from Leknath include:

The importance of effectively managingexpectations, particularly during the build-up phase—partner expectations soaredafter an LED mission and on-locationtraining.Local Competitive Advantage hosts andadvocates in the Lekhnath municipalityare highly committed and are able to

manage the process with almost completeautonomy. This was deemed a key factorin the programme’s success.The team agreed with the LocalCompetitive Advantage manualsuggestion that limiting the team to aboutfive people leads to better results becauseinformation can be processed moreefficiently and consensus can be reachedmore easily.In contrast to urban business people, forwhom time pressure is a source of stressand brief trainings are appealing, the ruralentrepreneurs in Nepal seemed to havemore time for training. They were notsatisfied with brief “mini-workshops” anddemanded more time for discussion.Assigning community representatives tospecific sectors leads to neglectinginterlinks and possible “cross-pollination”of sectors. Successful programmingshould promote “thinking for a localeconomy – not for a sector”.

Overall, the joint initiative has proven to be asuccess. With continuous learning and fine-tuning, the team is confident it will become amodel for cooperation among Germandevelopment agencies. The team will –together with the local partners – look intothe medium term effects of the measures withthe hope, that the uplifting of economicopportunities creates also additionalemployment.

43

The Newari culture produced a rich urbanheritage in the Kathmandu Valley. As a result,six sites within Kathmandu Valley contain uniqueurban structures that are safeguarded byUNESCO and recognised as world heritage sites.

The urban landmarks it created were added toduring the Shah and Rana periods. Theselandmarks simultaneously link and separateplaces, communities, customs and religiouspractices, but they are being overlain by newdevelopments.

The historical development of Kathmandu,however unplanned, is a settlement structurethat defines the complexity of a society and itsunderlying social and economic characteristics,agreements, rules, and its distribution of landand land use rights. The way in which urbanspace has been utilised relates to local people’sutilisation of natural resources, division oflabour and castes, and the powers that sanctionsociety.

The history of modern urban planning in Nepalis recent, but the urban centres had unusualqualities before the dramatic increase in theirpopulations and the new expectations of citylife, the desire of modern amenities, and thedevelopment agenda. However, Kathmandudoes not have the infrastructure to support theburgeoning population and lacks urban facilitiessuch as water supply, drainage systems, wastemanagement, and road networks. Despite legalprovisions, buildings are constructedhaphazardly and usually drainage, electricity, andwater supplies are only sought after a house isconstructed.

Master plans and land use plans weretherefore eventually prepared and planninglegislations introduced for Kathmandu Valleyin the 70s.

In municipalities outside the valley, settlementdevelopment followed infrastructuredevelopment in a piecemeal manner.Therefore, land availability often overruledcost efficiency in terms of infrastructure orenvironmental concerns. At the same time,the absence of strict planning regulationsreduced individual housing costs.

Four types of municipal plans have been usedin Nepal since the 1970s:

Master planning,Structural planning,Integrated action planning in the 1990swith support from udle, andPeriodic planning according to the LocalSelf Governance Act of 1999.

Structural Plans andMaster Plans

With support from UNDP and World Bank,structural plans were prepared between 1987and 1992 for 32 municipalities. Maintaining atop down approach, these long-term plansignored immediate requirements, thecontinuing lack of financial and technicalcapabilities, and overlooked the role of otherdevelopment agencies and their plans. Theplans were not legally binding and did notoverrule any other development interests;public or private sector investment into urban

Urban PlanningUrban Planning

44

infrastructure remained low. In addition,these plans focused on a long-term approach,and thus were not used for making decisions.

Master Plans for Kathmandu in the 1970sfocused on land use control. Again, theseplans were never implemented since they wereprepared without consulting the localpopulation and without implementation tools.

udle Support in Planning

The orientation phase began with the aim todesign and discuss basic tools for urbanphysical planning. Various activities have sincebeen undertaken during successive phases ofudle to improve planning and implementationwith the Department of Urban Developmentand Building Construction (DUDBC), underthe Ministry of Physical Planning and Works(MPPW) and the Ministry of LocalDevelopment (MLD).

During the 1990s, Urban Planning Sectionswere created in a number of municipalitieswhere technical staff members trained byudle were expected to carry out their townplanning functions. udle also assisted toestablish a section responsible for conductingIntegrated Action Planning at central level forthe DUDBC (the former Department ofHousing and Urban Development).

Municipalities are responsible to manage theirphysical development. But in 1998, there wasonly one urban planner working at municipallevel – in Kathmandu. When the Institute ofEngineering started its two years course“Master of Science in Urban Planning” in1996, udle took a long-term view andsupported seven students with scholarshipswho succeeded in first positions in theentrance examinations. Between 1996 and2000, udle has provided 75% of the tution feeto 63 urban planning students.

Integrated Action Planning

In contrast to the practice of master andstructural plans, udle in 1992, supported theDUDBC to develop a participatory planningapproach, which reflected the weaknesses ofthe formal planning system. The newdemocratic spirit and the changed role of thedepartment encouraged staff to reach out tothe public and provide town-planning services.

During this period, planning was based on theassessment that settlement expansion wouldfollow infrastructure improvements. IntegratedAction Planning offered a combination ofphysical and environmental plans and a multi-sector investment programme. Tools used forDhading provided the first example where asmall village developed into a town. The sametools were then developed and applied to 34municipalities (including KathmanduMetropolitan City with the support of the EU).

In order to implement further tools such aslocal area planning, land developmentprogrammes (guided land development, siteand services, and land pooling) weredeveloped and elaborated through manuals,orientation, and training materials.

Integrated Action Planning was deliveredthrough the DUDBC with technical andfinancial support from GTZ-udle. After udlestopped financing mobile teams inmunicipalities, six plans were prepared byDUDBC on its own.

The following indicators reveal the success ofintegrated action plans:

Locals participated in decision makingprocesses and provided their input whendetermining local development plans andprogrammes;Individual projects were implementedafter being identified during communitymeetings;Municipalities gained the capacity andconfidence to plan construction activities.

45

Weaknesses of the Integrated Action Plans:Priorities of the local people could changeat any time according to their change ofpolitics.Plans had to be approved at central level.Plans were not binding for line agencies,municipalities, or private actors.The central delivery system within planningwas not financially sustainable and did notfit with the new powers and responsibilitiesgiven to local bodies in the decentralisationprocess.

Land Development – LandPooling and Guided LandDevelopment

Land pooling was introduced in Nepal in 1975to make land available for development throughpooling and the subsequent subdivision ofplots. Land pooling allows for space (andmoney) to construct necessary infrastructure.udle has developed a manual that explains thedifferent stages involved in land pooling.

One major constraint was the prescription that100 % of the landowners had to agree before

the pooling scheme could take effect. Afterthe DUDBC engaged in the Bagmaticorridor land pooling scheme, anAmendment in the Town DevelopmentCommittee Act reduced the percentage oflandowners 75 %.

Municipalities outside the valley have notactively pursued further land poolingschemes except for in Dharan where a land-pooling project that includes the provisionof space for a bus-park, is currently underimplementation with the support of udle.

Other municipalities have opted for guidedland development. Such decisions aresecured by mutual agreements withoutcompensation schemes; this includescontributions of land and/or shared costsfor constructing or improving roads.

Again, land pooling is only partially successfuland seems to be overtaken by private landdevelopment in areas where land prices arerising. In an atmosphere of conflict and weakpublic institutions the process can behampered by disagreements amongstindividuals.

Steps Involved in Integrated Action Planning

Consultations - A series of community meetings at ward level identifies and prioritises people’s needsand problems. Meetings are held with members of the steering committee, municipal authority and staff,line agencies, NGOs, the private sector, and local intellectuals.

Analyses and assessment - Thematic maps are prepared based on collected data and information inorder to understand the character and dynamics of the municipality. An analysis is made studying urbandevelopment trends and the environment. The findings are then reviewed against existing plans toidentify problems that need to be addressed to safeguard the environment and ensure planneddevelopment in the future.

Problem analyses - All identified problems are brought together, mapped, and rationalised to avoid anyduplication and contradiction.

Project formulation - All projects are assessed for technical feasibility and economic viability and arethen classified into ward and town level projects.

Financial and resource analyses - The financial status of the municipality is assessed to determineexisting and future funds available for development work (based on current practices), and ways toincrease funds by improving revenue collection methods. Institutional and technical resources of themunicipality and other relevant line agencies are also assessed.

Prioritising projects - Projects are prioritised according to available funds, to determine which shouldbe implemented within the next five years on the basis of a) needs expressed by wards, b) views of themunicipality and other line agencies, and c) conclusions of the assessment and analyses.

46

Local Area Planning

Local area planning is a tool applied toimplement a detailed and comprehensive plan(e.g. physical development plan) and addressesthe issues of small settlements. It provides aninterface for local people, planners, and thesupporting agencies. Various modalities wereadopted to prepare local area plans, e.g.:

Local area plans at ward level wereprepared in Dharan, Butwal,Siddharthanagar, and Nepalgunj andinvolved the students of M. Sc. Urbanplanning at the Institute of Engineering.These plans were prepared to basicallyaddress the issues identified by respectiveward profiles.The local area plan of Manakamana Tolein Butwal was prepared to introducepoverty reduction measures. This plan isbeing implemented with the support ofthe municipality and udle.The local area plans of Sisuwa inSiddharthanagar, and Goshaingaun inNepalgunj aimed to improve the physicalcondition of the slum settlements. Theplans were prepared jointly by themunicipal staff, local residents, and udleGoshaingaun in Nepalgunj has alreadybeen implemented with the support ofudle. Physical conditions have beenimproved for this poor community.

Infrastructure Planning

Support has been provided on request forinfrastructure planning activities according toudle’s technical capacities. This includes draftdrainage strategy plans for Bharatpur, andNepalgunj. Similarly draft water supplystrategy plans and drainage plans of ward no.10 were prepared for Butwal. The preparationof drainage plans for Dhangadhi continues.In addition, udle supported the update ofthematic network maps of water supply,drainage, electricity, roads, andtelecommunication during the preparation of

integrated action plans for differentmunicipalities.

Periodic Planning

With the enactment of the Local SelfGovernance Act, 1999, municipalities wererequired to prepare their periodic plansthemselves. udle supported MLD to preparea manual for municipal periodic planning.

Periodic plans integrate different thematicplans according to social, economic,environment, physical, financial, andinstitutional aspects. This comprehensive planrequires a municipal data profile and aparticipatory planning process with a logframe format that includes a rolling budget.udle has been supporting Dharan, Butwal,Nepalgunj, and Dhangadhi to prepare theirperiodic plans according to the manual.Compared to Integrated Action Planning, thecategorical merit of periodic planning is itslegal status.

The manual will be revised once periodicplans for Dharan, Dhangadhi, and Nepalgunjhave been finalised. In 2004, a week-longtraining session on how to prepare periodicplans was jointly organized by MLD and udlefor 39 multidisciplinary staff from sixmunicipalities. In addition, DUDBC and theUrban Development Training Centre (UDTC)also participated in the training and currentlysupport periodic planning processes.

The MLD has stressed that periodic plans areone of the performance indicators ofmunicipalities. Although udle has drawn upan ideal planning process of half a yearcosting Rs. one million, the ground reality isquite different.

Periodic planning processes, even whensupported by udle, have been extremely slowdue to endless data collection, the limitedanalytical capacity to utilise existing proxy

47

data, the unwillingness to make decisions dueto the changing political climate and theconflict within the country, the lack of localrepresentation, and other priorities thatoverride periodic planning.

Periodic plans are often viewed as tools thatprovide legitimacy or fulfil bureaucraticrequirements rather than as management toolsthat actually organise the future developmentof municipalities according to agreed andbalanced priorities voiced by local people.

It is hoped that the changing political scenarioin Nepal will help to provide a more realisticmanagement approach that will provide strongguidelines for urban development according todifferent local interests. A joint vision decidedby all stakeholders will strengthen the legitimacyof all municipalities as being dedicated serviceproviders for local communities.

Development Control andLegal/Regulatory Changes

udle provided support to introduce and adaptbuilding and planning bylaws that includeissues of land use, right of way of roads,minimum plot size, set backs, margins, groundcoverage, ceiling height, number of storeysand building height, the provision of services,parking requirements, provisions for landdevelopment, etc. These bylaws also set thecriteria for what activities can be permittedaccording to a land use zone.

So far six municipalities— Dharan, Hetauda,Butwal, Siddharthanagar, Nepalgunj, andDhangadi have prepared building andplanning bylaws of their own with technicalsupport from GTZ-udle. BharatpurMunicipality was not able to finalise its bylawsdue to the absence of elected ward members.Five municipalities in all are successfullyimplementing theirs, while Dhangadi is stillunder the process of obtaining approval fromits Board.

The municipal building permit system has alsobeen revised. Improvements include:

procedural steps on how the buildingpermit is given by the municipality;the application/documents to befurnished—format for the submission ofthe drawing and technical details of thedrawing; andthe monitoring mechanism.

The improved permit system proposes stage-wise approval before and during construction.At these various stages, the municipalitychecks the extent of compliance to the bylaws.When construction is complete, themunicipality provides a completion certificate,based on the building built as per theapproved design.

Technical staff from the municipalities ofDharan, Butwal, Nepalgunj, Dhangadi,Hetauda, Bharatpur, and Siddharthanagarwere given an orientation on the contents andtechniques of the Building Permit System.The existing building permit system of eachmunicipality was then revised according totheir needs and situation.

The implementation of a national buildingcode to increase the earthquake safety ofbuildings remains a challenge for udle. So far,udle has only sensitised on the nationalbuilding code to urban planner technicians of32 Municipalities.

Over the years, udle has supported drafts andamendments of various acts related to urbanplanning and urban development, e.g. the 1992and 2004 draft on Physical Planning, theKathmandu Metropolitan City Act, and otherlegal provisions. However, the challengeremains to successfully lobby againstinconsistencies within the planning systemwhere limited capacities are overstretched bythe lack of local resources, unclearresponsibilities, sectoral power plays betweendifferent government agencies, and differentlevels of Government.

48

The following issues remain a challenge:The Town Development Committees donot function according to a decentralisedplanning system;The draft of the Physical Planning Act isnot congruent to the Local SelfGovernance Act;

The periodic plan is overloaded with aholistic planning approach, which is farbeyond realistic implementation andservice capacity.

Overall, the need for simple and effectiveplanning tools that are conducive to improvedliving conditions remains a challenge.

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Experiences of an Urban Planner of ded inDhulikhel Municipality

By: Norman Roda

While working in Germany as a freelanceplanner for small and medium sized villagesand towns the German Development Service(ded) offered me a quite interesting job inNepal. A small municipality named Dhulikhel,in the hills surrounding the Kathmandu Valley,needed an advisory urban planner. Everythingstarted moving quickly once I accepted, and inJuly 2004, Dhulikhel Municipality got theirGerman urban planner. Now, after more thana year, it feels like a good idea to look back onmy experiences.

Urban Development inDhulikhel

Rapid urbanisation in Nepal is a recentphenomenon. Within the Kathmandu Valleyold urban centres transformed into heavilypopulated cities. But close behind the valleyrim, in Dhulikhel, most of the municipal areasstill have to be classified as rural. Neverthelessall over the country municipalities are growing.

For a long time Nepal was secluded and littledevelopment occurred. Then, suddenly, thecountry was confronted to moderncivilisation. Whereas most western countriesdeveloped step by step over 150 years ormore, Nepal has seen massive changes in thepast 40 years and struggles with this pace ofdevelopment.

Newari culture, such as in Dhulikhel, has along tradition of town planning. Space forbuilt-up areas was controlled by strictborderlines in order to prevent fertileagriculture land nearby. But complicationswith this new growth are unavoidable. Newsolutions must be found. In addition, whereurban planning once addressed only thephysical layout of a city, today it has to

address social, economic, environmental,commercial, and organisational factors as well.To do so requires the knowledge andcommitment of local civil society, the localpeople, which creates an added challenge fordevelopment planning.

As a Development Workerwith ded

In this context I entered the municipalityhoping to collaborate on solutions to theirurban planning challenges. Unlike manyorganizations (including GTZ), ded actuallyhasn’t any project of its own. Instead, as apersonal sending agency, ded recruitsprofessionals as development workers andsupports partner organizations that haverequested assistance. The developmentworkers generally function as advisors. Thisunique approach to development workrequires a common understanding fromeveryone involved.

Since a few months ded and the partnerorganisations agree on a “Memorandum ofUnderstanding”, which shall clarify eachothers roles and expectations. I think that’s anessential step towards success.

I think it’s also necessary that the partnerorganization should prepare a work plan likethe ded worker does. Requiring this of thepartner organization would help them toconsider their responsibilities and desiredoutcomes. I think this might alleviate thefrustration that development workers oftenexperience in their first few months on the job.

With clarification of everyone’s role, I believethat working in a foreign organization can bequite an interesting experience producing

50

learning for both sides. On the one hand, adevelopment worker comes to theorganization with a totally differentbackground, out of another society.Sometimes this aspect enables him to thinkfurther ahead. On the other hand, manyaspects of work entail social and culturalknowledge that, even after years, a foreignerwon’t entirely comprehend. For thedevelopment worker, it is a challenging andexotic experience to live and work in a totallynew environment. Similarly, his colleagues arefaced with a new working style and new waysof thinking within their own organisation.

Working in Dhulikhel

Dhulikhel municipality has accomplished quitea lot since its founding in 1986. It hassuccessfully collected money from diversesources for community projects and haseffectively turned these projects into reality.The municipality boasts a well-equipped andclean hospital, a formal education systemfrom primary to college level, newly pavedroads, a well functioning drinking water supplyand waste water drainage system in urbancentres, regular electricity for all villages, andother essential facilities. Nonetheless, themunicipality faces serious challenges.

Day-to-day work within the municipality ishighly project-oriented but is defined by abureaucratic-administrative working style thatdoes not facilitate thinking ahead. But exactlythis is aimed by urban planning. The mainobjectives of my working plan are a long-termstrategy and policy of physical, infrastructuraland agricultural development of Dhulikhelmunicipality. When I started working thisturned out to be extremely difficult. Themunicipality was of the opinion that thegerman “volunteer” from ded had to preparethe Land Use Plan on his own, while I tried toestablish an “urban planning team” within thetechnical section.

First, however, I was faced with veryimmediate issues: Up to now, there is no

proper base map from the entire municipalityarea, although it was mentioned that aconsultant should prepare a digital map untilFebruary 2005. Finally a digital map of theSurvey Department and a satellite-image wereused to prepare an improvised base map.

I began by working with the staff to gatherexisting plans and other important data. In theprocess, I learned not only that the technicalstaff were unaware of all the existingmunicipal documents but also that they didnot have an awareness of the socialcomponents to urban planning.

After much searching I held two city works inmy hand: the Integrated Action Plan (IAP)and the Dhulikhel Structure Plan. Both planshad not been implemented. Whereas theStructure Plan is a rough guide to urbandevelopment, the IAP is in some kind asophisticated but detailed plan, which couldserve a guide to an “integrated” urbandevelopment in Dhulikhel.

The Creation of aWorking Team

We have come a long way since then. Aworking urban planning team now exists. Itconsists of one engineer, one overseer, andmyself. We are trying to do land-use planningon a fundamental level. A plan with reservedareas for agriculture, forestry, and otherpurposes has been created, and we are tryingto define development areas for differentpurposes.

We are also working to identifyunderdeveloped wards that need specialattention from the municipality. For theseareas, we want to find reasonable developmentgoals. For the more urban areas, we want toinstitute proper regulations to preventincreased urban sprawl.

The normal timeframe of two years for adevelopment worker on a particularassignment is not enough for the preparation

51

and implementation of a proper land-use planwith community participation. In Dhulikhel,we are trying to do as much as possible; “we”means the recently created and empoweredurban planning team in close cooperation withother municipality staff.

We are also proactive about engaging thecommunity in the process. I can only hopethat when I leave Dhulikhel, the municipalitystaff will continue the work we have startedand will continue to utilize a progressiveapproach to their planning.

Laws and GoodGovernance

Urban planning, especially land-use planning,is a tool to develop an area in a proper way.Therefore, it needs clear rules and regulationsto guide the development. I came from ahighly regulated society where my day-to-daywork consisted of adhering to the finer pointsof a building code, and jumped into a workenvironment with unclear rules andsometimes contradictory regulations.

To develop an area effectively, the municipalityhas to prepare local acts and regulations.These building by-laws should derive fromurban planning for the entire area.Concurrently, there have to be rules andregulations from the central governmentregarding how to implement such plans. InNepal, the Local Self Governance Act and itsregulations provide precise guidance for urbanplanning, but then there are other actsdetailing different regulations for the sameissues, which is why some municipalities andtown development committees are working inparallel under different ministries.

To establish proper way for planneddevelopment, the Central Government willhave to carefully examine existing laws andregulations and make them coherent andimplementable.

While I have been successful in facilitatingurban planning for a local municipality,effective change must start with clearregulation from the central government. Onlythen, will land use plans and building by-lawsbe effectively created and implemented inmunicipalities nationwide.

Literatures

Dhulikhel (brochure), Dhulikhel Municipality, July 2005

Dhulikhel Structure Plan 1989 - 2004 - Draft, HMG Ministry of Housing and Physical Planning, Department of Housing and UrbanDevelopment; Dhulikhel Town Panchayat, prepared with Assistance of Management Support fur Urban Development Project(UNDP/World Bank); March 1990

Integrated Action Plan (IAP) of Dhulikhel Municipality, HMG Ministry of Housing and Physical Planning, Department of Housingand Urban Development, prepared with assistance from udle ; August 1994

Local Self-Governance Act and Regulations, HMG Ministry of Law and Parliamentary Affairs 1996, 1999

Urban Environment Improvement Project Nepal (UEIP) Draft Final Report - Volume 7: Town Report for Dhulikhel, Ministry ofPhysical Planning & Works, Department of Urban Development & Building Construction, Asian Development Bank, NipponJogesuido Sekkei Co. Ltd., Japan; August 2001.

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1. Introduction

The Urban Hygiene and EnvironmentalEducation component of udle provideseducational services on municipal solid wastemanagement. It includes skills training andassists municipalities to manage householdwaste effectively.

This component was integrated into udle afterthe 1995 termination of German support toSolid Waste Management in KathmanduMunicipality, based on the assessment thatawareness and knowledge would be aprerequisite for environmental improvements.The project provided technical support toeducate and activate municipal residents andemphasised how to manage waste by recycling,composting, reducing waste at the source, anddisposing of waste appropriately.

Municipalities receive services and diffusethem at local level through the involvement ofcommunity groups, female health workers,non-governmental organisations, schools,chambers of commerce, and other relevantmembers of the community.

The overall goal of educating urban residentson solid waste management is to motivatethem to keep their surroundings clean and to

manage waste in a responsible manner. Urbanresidents should eventually be motivated tocooperate with municipal staff to improvemunicipal waste management systems.

2. Support Modality

The project adopted different approaches toensure a larger coverage of urban populationin educational activities, which are:

a. Formal EducationIn coordination with Ministry of Education /Department of Education / CurriculumDevelopment Centre, urban hygiene andenvironmental education is integrated into thenational curriculum in primary school as a regularor optional subject. Formal education aims topromote the following with the concept of"school to community approach" for awareness:

Community awareness through rallies,exhibitions, street drama, oratorycompetitions, etc.Positive health practices through classesin schoolsActivism through eco-clubs run by schoolstudents.

b. Non-formal EducationMunicipal residents acquire responsible wastemanagement practices through non-formal

Urban Hygiene and Environment Improvement

Solid Waste ManagementSolid Waste Management

53

educational activities. Participants primarilyinclude women (housewives), local NGOs, andCBOs. These activities are often combinedwith other educational projects such as adultliteracy classes, classes for children out ofschool, and classes on primary health care.

Strategies to promote awareness include:Integrating a household waste educationmodule in an adult literacy classMobilising health volunteers and youthvolunteers to participate in door-to-doorcampaigning

c. Informal EducationThe informal educational sector aims tofacilitate the development of a responsiveattitude and behaviour among various groupsin the municipal area such as:

Business groups JournalistsLocal representatives Municipal sweepersNGOs/CBOs Chambers of commerceWaste collecting vendors

d. Training and OrientationTechnical assistance is provided to conducttraining and orientation for intermediaries ofall three approaches mentioned above and todeliver basic information on proper householdwaste management. After training andorientation, the local community initiatives aregiven technical and financial support in thefollowing areas:

Model demonstration projects (compostplants at vegetable markets, using 'hooks'for plastic waste collection, waste buyingcounters, etc.)Household and community compostingWaste separation at sourceChannelling recyclable waste through wastevendors.

e. Publishing Educational MaterialsEducational materials are created and distributedto support projects that focus on the properhandling of waste. These materials includepamphlets, posters, booklets on compostingmethods, cloth bags to reduce the use of plastic,and other audio-visual aids. They are:

SN

1

2

3

4

5

6

7

8

9

10

11

12

13

Title

Household waste management

101 Questions and Answers

Manual for community meetings

My waste free neighborhood

My neat and clean community; Level I,II and III

Improve the environment of your houseand neighborhood and your health

Let us together make our city clean

My world (Picturesque)

Reduce Waste

Poster on reducing solid waste at source

Teachers' training manual

Facilitators' training manual

School peons' orientation manual

Purpose of use

Composting promotion and composting methodology

Clarify the queries in regards of waste management

Integrate solid waste teaching in adult literacyclasses & community groups and guide to teach"my waste free neighborhood"

Text book for waste teaching in adult literacyclasses and community groups

Integrate in primary school option subjectcurriculum and textbook for students and teaching

Door to door campaign and general awarenessprograms

Guide for local groups, CBOs, NGOs etc.

Reference for school teachers and primarylevel students

General public education

General public education

Teachers' guidebook for teaching

Facilitators guidebook for training

Training manual for trainers

Type

Booklet (Nepali)

Book (Nepali)

Guide Book(Nepali)

Text book(Nepali)

Textbook(Nepali)

Pamphlet(Nepali)

Booklet

Reference book

Poster

Poster (2003)

Guidebook

Guidebook

Training Manual

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3. udle Support andMunicipal Initiativessince 1996

1996 - 1998udle concentrated on formal education withthe focus on the schools of KathmanduValley. The service package for formaleducation concentrated on:

Developing educational materials forformal education projects in themunicipalities.Integrating the educational projects intonational curricula of formal education inprimary level and in the non-formaleducation through health workersstudying in Council for TechnicalEducation and Vocational Training.Developing textbook and guide foroptional education at primary school levelin the country.Training sessions for Mayors, DeputyMayors, District Education Officers,school teachers, and headmasters,facilitators of non formal education,NGOs, CBOs, and municipal wardpromoters in the Kathmandu Valley andtraining of trainers in formal education atthe national level.Consultation and coordination withvarious related institutions on curriculumdevelopment, project modality advocacy,media etc.Information of the objectives of theprogramme disseminated to all 36municipalities.The Basic Primary Education Programmedistributed the first text book onresponsible waste handling to the 22,000

primary schools, 1,000 resource centresfor primary education across the countrytogether with other supplementarymaterial through the Basic PrimaryEducation Programme.

1999 - 2001During this phase, udle support wasconcentrated on capacity building ofmunicipal staff and various groups of theurban population through training andorientation on proper handling of waste atsource level. The service support extended tomunicipalities beyond the Kathmandu Valleyincluded:

Status assessment of municipal solidwaste management and urbanenvironment of five municipalitiesOrientations to local leaders, decisionmakers, chief of health section, wardchairpersons, representatives of NGOs,and local key individuals on solid wasteeducationIntroduction of solid waste education inadult literacy classes and distribution ofguidebook to the facilitators after the trainingMunicipal compost plant fordemonstrative purpose in five focusmunicipalitiesDoor to door campaigns, educationcampaigns etc. through the involvementof intermediaries like female healthvolunteers, schoolteachers, local CBOs,and school students for promotion ofsolid waste educationExtensive distribution of educationalmaterials, learning and teaching materialsfor formal and non-formal projects in themunicipalities

14

15

16

17

Municipal sweepers' orientationmanual

Handbook of solid waste handling

Solid waste education materials -series 4

Handbook for the participants intraining/orientation

Training Manual

Reference book

Reference book

Reference book

Training manual for trainers

To intermediaries promoting for proper wastehandling

Handbook for Trainers' training on waste handling

Reference for training programs participants

55

2002 - 2004This phase focused on advocating theintegration of urban environmental issues inmunicipal planning with emphasis on solidwaste education through public participationin five municipalities (Dharan, Hetauda,Butwal, Nepalgunj, and Dhangadi) of fivedevelopment regions:

Promotion of public participation formunicipal solid waste managementthrough waste reduction at sourcecampaign (household composting).Household composting promotionthrough training and orientation package

including distribution of householdcompost drums to the trainedhouseholds.Advocacy on sensitivity towards urbanenvironmental issues in municipalplanning through interaction andworkshops at municipal level.Inclusion of urban environmental issuesas one of the module of a trainingpackage for solid waste education.Advocacy for Local EnvironmentalAction Plan at municipal level andinclusion of environmental issues intoperiodic planning processes.

Expected coverage

5,000 students through formal education.200 women through non-formal education.500 householders in informal education and135 volunteers participate actively to improvehygiene and sanitation in the urban environment.

Administrations, schools, Community BasedOrganizations, and Health Training Centers in atleast 10 municipalities plan and coordinate formunicipal waste management on a regular basis.

6 professional consultants, 6 teachers, and 6facilitators capable to train instructors of formaleducation, non-formal education, and informaleducation to teach better hygiene and sanitationmethods.

Actual population reached

35,000 children and youngsters reached throughformal education.1,500 women through non-formal education.12,000 households in informal education and 90volunteers actively involved improving hygiene andsanitation in the urban environment.

122 schools, 4 local clubs in 7 municipalities plannedand carried out responsible waste management on aregular basis.

15 professional consultants, 5 teachers, and 85facilitators trained for formal education, non-formaleducation, and informal education to teach betterhygiene and sanitation methods.

Coverage of urban population through educational projects: (1998 to 2000)

Note: The above-mentioned figures covered the outreach of nine municipalities (Dharan, Hetauda, Bharatpur, Butwal, Siddharthanagar,Nepalgunj, Dhangadi, Pokhara and Biratnagar) supported by udle during the phase. The encouraging coverage of population was dueto the high demand of the training project by these municipalities.

Municipal initiatives and its effects after intervention:SN

1

Municipality

Dharan

Initiatives

Self sustained communitywaste management in NewRoad area, which is themain street of DharanCompost shed in agriculturemarket to manage theorganic waste generated inthe marketSchool project promotinghealth and sanitationthrough school teaching andawareness campaignFunctioning of Paperrecycling initiative by privatesectorPromoting householdcomposting to reduce wasteat source

Intervention

Training andorientation tointermediaries

Support formunicipal levelcompostinginitiativesIntegrated SolidWasteManagementeffort withStrengtheningEnvironmentalAdministrationManagement -Nepal (Finnishsupportedproject))

Effects in five focus municipalities

Group organized and set the trendfor local solid waste managementand sanitation improvementactions and monitoring bythemselves.Municipal annual budget allocationfor solid waste educationDirect coverage of populationreached through education was660 persons of 22 groups andindirectly 3,960 family members.

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Apart from these five focus municipalities, the following municipalities were supported by the programme since 2002: Biratnagar,Janakpur, Birgunj, Bharatpur, Tansen, Kirtipur, Madhyapur Thimi, Kathmandu, Lalitpur, Bhaktapur, Banepa, Pokhara, Panauti, andSiddharthanagar.

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Hetauda

Butwal

Nepalgunj

Dhangadi

Environment ManagementCoordination Committee -monitors proper householdwaste managementbehaviour of the public andpromotes educationWomen's groups initiativesfor local community levelhousehold wastemanagementEstablishment of compostshed demonstratingcomposting techniques andmanaging vegetable marketgenerated organic wasteMobilization of schoolstudents through theorganization of Public schooleco clubs of school studentsLocal NGO "Clean Nepal"supports waste collectionand introduced service feecollection system

Formation of municipal levelcommittee named Saghaansarasafai samiti and itsinitiatives for ward levelwaste management andeducationPromotion of householdlevel compostingInitiatives taken for landfillsite

Promotion of householdlevel compostingEstablishment of schoolstudents' eco clubsSchool project promotinghealth and sanitation

Promotion of householdcompostingMobilization of 165 femalehealth volunteers and 165mothers' groups which ismonitoring the respectivecommunity sanitation andwaste management

Training andorientation tointermediariesSupport formunicipal levelcompostinginitiativesStrengtheningthe capacity ofmunicipal levelEnvironmentalImprovementCoordinationCommittee

Training andorientation tointermediariesSupport forward level andlocal group levelinitiatives insolid wastehandling andsanitationimprovement

Training andorientation tointermediariesSupport forward levelinitiatives

Training andorientation tointermediariesMobilisation offemale healthvolunteers andmothers' groups

Formation of municipal level"Environmental ImprovementCoordination Committee" tocoordinate, advise, execute andmonitor the municipalenvironmental improvementprojectRecognized as strong Municipallevel campaign for plasticcontrolled city.Direct coverage of populationreached through education is2,250 persons of 75 groups andindirectly 13,500 family members.34 Female health volunteerscampaigning for proper householdwaste management and localsanitation on regular basis.

Service fee system introduced aspilot project with the coverage of1,100 households.Market area sanitation improved atnoticeable level.Direct coverage of populationreached through education is 540persons of 18 groups andindirectly 3,240 family members.

Female health volunteers transferredsolid waste education throughlocal health clinics to the public.Solid waste educationdisseminated through local groupswith local initiatives for householdcompost and sanitation.Direct coverage of populationreached through education is 270persons of 10 groups andindirectly 1,620 family members.

165 mothers groups focused theirrespective major agenda on solidwaste handling and education aswell as local sanitation.165 female health volunteersfocused their teaching andcampaign on proper householdwaste management.Direct coverage of populationreached through education is5,250 persons of 175 groups andindirectly 31,500 family members.

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4. Best Practices

Promoting the Use of CompostDrums in HouseholdsCompost drums were provided to participantsof training and orientation for practicinghousehold composting. This enabled urbanhouseholders to manage 70% to 75% of thetotal waste generated through compostingorganic waste. Compost drums are now beingused in many municipalities; the most positiveresponses were in Hetauda and Dhangadi.

Presently, 50 to 75-litre compost drum areused by the households, that is sufficient forsix to seven family members, which costsaround Rs. 500/drum.

Large Compost Tanks Placed atVegetable MarketsHetauda municipality placed a compost tankat the vegetable market. The tank serves as amodel example and manages the total organicwaste generated by the market. In addition,the compost is sold at the market and is usedin the municipal gardens. A municipalsanitation worker has been assigned forcollecting and placing the market generatedorganic waste in the tank as well as managingthe whole composting process.

Suiro Project for Managing PlasticWasteHetauda municipality is the pioneer of theSuiro (hook) project. Households ‘hook’together their used plastic waste, which is thencollected through local mothers’ groups andsold to recyclable waste collectors. Mothers’groups can deposit up to Rs. 500 to Rs. 1,200per month into their savings. Othermunicipalities are also replicating this trend,e.g. in Dharan, Butwal and Siddharthanagar.

Mobilising Students and Teachersin School ProjectsAwareness campaigns on proper wastemanagement through exhibitions, inter-schoolcompetitions (oratory, art, folk songs, etc.),and rallies continue to educate the larger

public. Motivated students and teachers areable to mobilise and reach out to thecommunity. Dharan, Tansen, and Banepamunicipalities had extensively launched thisproject during 1998 and 1999.

Involving Local Mothers’ GroupsIn Hetauda and Dhangadi municipalities, 178and 165 mothers’ groups respectively havepromoted composting in households. Theyteach communities how to minimise waste atsource with local sanitation and wastemanagement as their prime agenda.

Female Health VolunteersFemale Health Volunteers are women whocoach and monitor mothers’ groups on aregular basis. They stress the importance ofsanitation in households and are activeintermediaries for educating housewives onthe importance of waste management. 34female health volunteers in Dhangadi and 165female health volunteers in Hetauda have beenactively sensitizing the respective local groupsand mothers’ groups.

Local Clubs and Youth GroupsThe active participation of local clubs andyouth groups has provided long-termcontinuity to local initiatives. Regular,informal interactions between clubs and localshave ensured a level of commitment towardsthe common goal of community sanitation.Nava Jyoti Jeevan Club of Hetauda and SamyakSikchya Club of Dharan are model exampleswhere the clubs mobilised the public toparticipate in their municipality’s solid wastemanagement projects. As a result,communities were educated on theimportance of waste management in theirlocality.

Recycling Paper in DharanThe NGO Samajik Sudhar tatha BatabaraniyaBikas Manch in Dharan municipality run a localpaper-recycling factory. The factory collectswaste paper from the municipality office, BPKoirala Memorial Hospital, public schools,and local government offices and in turn

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produces notebooks, files, visiting cards, andthick cardboard sheets for glass-sheetpackaging. The institutes that provide the rawmaterials to run the factory purchase most ofthe products.

Joint Effort for Integrated SolidWaste Management in Dharan“Integrated Solid Waste Management” efforthas been initiated in Dharan Municipalityjointly with Finnish supported project“Strengthening of EnvironmentalAdministration Management – Nepal” since2002. The main objective of this joint effortis to improve the management of wastegenerated in the main street of the city. Wardlevel environment committees were formed inall four target wards and majority of targethouseholds have started house-holdcomposting. A separate collection system fororganic and non-organic waste has beenintroduced.

Municipal Level EnvironmentalImprovement CoordinationCommitteeMunicipal level coordination committees wereformed in Hetauda and Dharan. The mainfunction of the committees is to coordinatewith different wards on local environmentimprovement issues and to advise, plan andmonitor the activities launched by differentagencies.

The Integrated Sanitation Committee inButwal provides door-to-door waste collectingservices for a fee in wards 6, 7, and 8 of themunicipality. This system has aided themunicipality in their efforts to manage wasteand has mobilised local volunteers to educateresidents.

5. Lessons Learnt

The educational efforts and increase inpublic awareness have not yet translatedinto more integrated managementapproaches that combine household andcommunity level elements with more

efficiency in the municipal collection anddisposal system.The programme tested the supportproject in ten selected municipalities thathad partial success and provided basicorientation in more than twentymunicipalities. The support is in greatdemand and appreciated by the localpopulation. However, it is not the primepriority of municipal authorities, whichspend large amounts of their budget onsolid waste management, but limit theactivities to sweeping, collecting,transporting, and dumping waste. Manymunicipalities lack proper utilization ofavailable funds to purchase the necessaryhardware and are not investing inadequate management.Educational projects can only be effectiveif there is interest and long-termcommitment from municipalities. Inorder to convince urban populations andmunicipal authorities about theimportance and benefit of solid wastemanagement, educational projects requireample time and constant effort.The focus on advisory services andchange of attitudes and behaviourwithout financial subsidies for hardwareputs solid waste management in a lowpriority category in most municipalities.

6. Overall Impact

Educational packages on solid wastemanagement proved to be effective in:

Increasing awareness, responsiveness, andskills to manage household waste;Reducing and managing household wasteat the source itself.Enhancing the capacity of the municipalstaff and population to properly handlewaste;Mobilising local communities to worktogether collaboratively;Inspiring and guiding other communitylevel organisations and groups to promoteand include proper waste managementactivities in their own projects.

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One of the municipalities where theprogramme had the most success wasHetauda in the central Terai of southernNepal. The Environment ImprovementCoordination Committee (EICC), which wasstarted in 2002, coordinates environmentalactivities.

The committee buys all plastic from the tolecommittees at Rs. 6/kg and sells more than halfthus purchased to the scrap vendors at Rs 12/kg.The committe dumps the remaining plastic. Theincome is used to help pay the salaries ofemployees who collect and sort the plastic.Members of the committee, who are mostlyvolunteers, describe their hopes and challenges.

Experiences from Hetauda Municipality

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Shyam Prasad Shrestha is the Coordinator of the Committee.

At first, udle gave training in recycling plastic to our youth club on our tole. Eventually, we won anenvironmental award from the Ministry of Environment. Through this, the municipality realised that tolecommittees could be a solution to the problem of keeping Hetauda clean.

Beegam Baral is the representative for Ward # 1 and isactive in her role as a Female Community HealthVolunteer.

We realized that Hetauda had become very dirty withplastic litter everywhere. There were already tolecommittees, so the municipality helped us to organise theEICC with one volunteer from each of the eleven wards.With advisors, there are 25 members. It is difficult ifhouseholds put all their waste together.

We started committees of 5-9 people in each ward to raisethe conscious less of people to separate their waste intoglass, plastic, and material that can be composted. Eachtole has a compost pit where people take waste.

Our main objective is to make Hetauda clean. We did a rally to make it a plastic controlled zone. We areencouraging people to use cloth bags to reduce the use of plastic. The biggest problem is to get people tochange their habits.

Laxmi Bhakta Ghising is the representative for Ward # 4.

I'm often satisfied with this work, but often dissatisfiedwith trying to convince people. I try to set an example withmy house where we have two kinds of composting --anaerobic and aerobic. Hopefully, other people on the tolewill start to copy us. We are thinking of writing letters to themanufacturers of noodles, to use recyclable plastics in theirpackaging.

Sri Ram Pudashain is the coordinator of ward no. 6.

I have two suggestions for the sustainability of the EICC. The first is tostart a nursery from which we could sell seedlings, the second is to start acompost plant, from which we could sell compost. Both activities would earnincome for the work of the EICC.

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The programme has also provided training tothe 32 Female Community Health Volunteers(FCHVs) in Hetauda who have establishedtheir own organisation ‘Women, Health,Sanitation, and Development Committee’.This is the first such organisation in Nepal.

The volunteers work with their tolecommittees to promote cleanliness. They alsohelp the tole committees to raise funds fromplastic recycling that can be used for localdevelopment activities.

Parbati Lamichane: udle gave us training in 1999, so wecould work in the toles. We learned to keep our tole clean,separate garbage, and compost. We then go house to houseand tell people about keeping the city clean. The biggestchallenge is convincing the people who come here to work for4-5 months.

Prem Kumari Adhikari: The cleanliness of the city isconnected to the active participation of Female CommunityHealth Volunteers because if the city is clean then we cancontrol disease.

Maya Pandit: Since we get income from collecting plastic, people start to understandwhen there is money for the tole development. Each group has earned about Rs 20,000-30,000 from selling plastic.

Sumana Neupane: In my tole, we have 35 members. We have earned Rs 30,000from plastic and now have a fund of Rs 350,000, from which members can take loans atRs. 15 for Rs. 1,000 every month, which is very cheap. We've also put up a board to saythat our tole along the highway is a plastic controlled zone. We also won Rs 5,000 prizefrom the municipality on the World Environment Day.

The Prajatantric Tole Bikash Sansta (Democracy Road Development Group) in Ward 4describe how they have been active to improve the environment of their neighbourhood.

Shanti Shrestha is the Chairperson of the group: We started our group in 2001when the municipality suggested that we start a group like in rural areas. Each month,we each put Rs. 100 in our fund that is now Rs 300,000. We give loans to our membersand the interest depends on the situation whether for income generation or emergencies.We have also just started an emergency fund.

On Saturdays, we do cleaning of our yards and homes. We'vealso planted trees along our street, talked to all the residentsabout sanitation, and operate the plastic collection.We sometimes have a hard time getting everyone to help clean,but there is also demand for activities to generate income.

A member of the Mithranagar Tole Bikash Samiti(Mitranagar Road Development Committee), Bijaya Parajuli,commented: If we let the municipality have all theresponsibility, not much will get done.

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“Guidance awareness and knowledge on the environment provided through the medium ofthe publication is excellent.”

--Visitor comment on Urban Environmental Guidelines for Nepaldisplayed at World Environment Day 1993 at Bhrikuti Mandap.

Urban Environmental Guidelines

In 1991, GTZ/udle organised a workshop withthe Local and Urban Development TrainingCentre in Pokhara to discuss environmentalissues in Nepal. Participants were communityorganisers, schoolteachers, trainers, consultants,local political leaders, local administrativeleaders, and government agency representatives.Experts presented environmental case studiesfor discussion. Participants then identified thesubjects most relevant to Nepal’s urbanenvironment, and recommended courses ofaction, resources for help, and best practices forimplementation. These results weredocumented by thirteen local resource peopleand were finalised after consultation withconcerned professionals in various workshops.

In 1992, GTZ/udle and the Local and UrbanDevelopment Training Centre in Pokharapublished the final outcome in Nepali and inEnglish. Urban Environmental Guidelines for Nepalwas published to guide municipal leaders asthey face environmental issues and thechallenges of creating a pleasant urbanenvironment in the present and for futuregenerations.

The book has identified eleven fields thatmunicipalities must address in order to achievea clean, green, and healthy city:

Water pollution controlDrinking water contaminationSolid waste managementTraffic and air pollutionBuilt environmentLand use planningDomestic sanitationDrainage

Special waste managementCity greeningSlum improvement

For each field, the book outlines the problem,provides guidance for generating a solution, andillustrates useful examples from municipalities.In lieu of providing detailed technical advice, anappendix is included with contact informationfor individuals and institutions where technicalhelp can be found. The book also outlines tenpoints for a municipal environmentalmanagement strategy to guide any municipalenvironmental activity, be it large or small.

Together with Urban Environmental Guidelines forNepal, udle produced a set of posters (2 each inEnglish and Nepali, A1 size) containing themain points from the book to raise awarenesson handling local environment problems at thegrassroots level. The book and framed posterswere provided to all 36 municipalities, whichthen displayed the posters in public places likelobbies, stairwells, and ward offices. Mostmunicipalities still have the posters in theirmunicipal buildings. With encouragement andappreciation from an array of professionals,Urban Environmental Guidelines for Nepal wasreprinted in 1996 and was widely distributedaccording to demand.

The guidelines offered in this publication havereceived widespread attention. While udleutilized the guidelines in education and anawareness programme on solid wastemanagement, various NGO’s working onenvironment issues also used the guidelines forawareness campaigns and in seminars. Students

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and teachers affiliated with urban environmentused the book for their articles and asreference material in their lectures. Moreover,most municipalities restructured theirorganisation and added a sanitation sub-section whose purpose is to look intoenvironmental issues, especially solid wastemanagement.

Producing guidelines for municipal decisionmakers was a pilot project financed by theGerman Ministry of Economic Cooperationand Development and carried out in Thailandand Nepal. Initially the guidelines wereintended as a separate component of udle.Mayoral representatives from fivemunicipalities in Nepal were acquainted withthe pre-test of the guidelines in Thailand.

After successful testing and implementation ofthe guidelines in Thailand, GTZ produced a guidefor environmental action planning in 1995. Afterthorough rethinking and discussions with thedifferent agencies concerned in Nepal, however,it was decided to alter the original strategy and toinclude application of the Guidelines in theIntegrated Action Planning process.

Through creation and publication of UrbanEnvironmental Guidelines for Nepal, broaderawareness on environmental issues was raised.Municipalities found the efforts a good exercisebut concentrated on addressing only their mostserious problem: solid waste management. Thus,udle started a new component in 1996 calledUrban Hygiene and Environment EducationProgramme.

Water Pollution Control Solid Waste Management

Land Use Planning Traffic and Air Pollution

Drainage Domestic Sanitation

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Supporting the UrbanDevelopment TrainingCentre

One of the major provisions in the bilateralagreement between the governments of Nepaland Germany in 1987 was to establish atraining and documentation centre for urbanaffairs in an existing Panchayat traininginstitute in the country.

From 1987 to 1996, the centre held 125training courses, orientations, workshops, andseminars for approximately 2,560 participantswith technical and financial support fromudle. Most participants were electedrepresentatives and staff from 36municipalities throughout Nepal. Most of thecourses lasted for one to two weeks andincluded orientation and conferences forelected representatives (28%), planningprojects and urban service management(25%), technical and engineering components(14%), organisation and management skills(13%), social and health (9%), municipalfinance (8%), and environment (3%).

In 1987, the Government changed the 'Panchayat Development Training Centre' in Pokhara tothe 'Panchayat and Urban Development Training Centre'. The centre aimed to improve andstrengthen the capabilities of municipalities to properly plan and manage towns, and developinstitutions to promote leadership through trainings, workshops, and seminars.

In 1993, the Local Development Training Academy became an autonomous institution under aseparate Act and incorporated the centre under an umbrella organisation renaming it the 'UrbanDevelopment Training Centre'. The overall objectives of the centre remained unchanged; thecentre promoted decentralised urban development, and provided training to officials and electedrepresentatives of towns.

udle provided financial support to improvephysical infrastructure and rehabilitate existingbuildings or construct new ones, and technicalequipment with teaching materials to meet theobjectives of the centre. Major supportactivities included:

Renovating the old training building andfitting it with furnitureRenovating the dining hall, supplyingequipment, and adding toilets in thehostelConstructing a multi-purpose conferencecum training building and fitting it withfurnitureInstalling a computer centre withnecessary hardware and softwareSupplying audio-visual equipment,photocopy machines, motorcycles andone mini-bus.Supplying books, reports etc., to improvethe centre’s library.

The following weaknesses discouraged udlefrom providing further support to the centre:

The lack of a multi-sector, professionalstaff structure and consequently a lack of

TrainingTraining

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quality services and coverage of scheduledtraining programmesAn insufficient and consequentlyinefficient utilisation of its physicalcapacityThe lack of client orientation and inabilityto identify training needs as required bythe municipalitiesThe lack of a sound and sustainablefinancial base.

A New Approach to HumanResource Development

In 1999, the Government proclaimed theLocal Self Governance Act. This Actaccorded more power and autonomy to localinstitutions to make them more self-reliant.

One of the basic needs of any municipality tofunction effectively and efficiently is to acquiretrained middle or sub-professional staff in thedifferent fields of municipal management.Various training needs assessments carried outby udle revealed that sub-professionaltechnicians were the most important cadres inmunicipal administration. These cadres (withthe exception of overseers) are usuallyuntrained and are straight out of school/college; they execute the bulk of municipaltasks either with (or most often, without) thesupervision of professional officers.

Thus in 1999, udle embarked upon a newconcept to provide long-term training to sub-professional cadres in all municipalities withinthe four major fields of municipalmanagement, i.e. urban planning, communitydevelopment, financial management, and solidwaste management.

The purpose of a new approach was alsoto meet the needs of the municipalities asstipulated by the Local Self Governance Act.Accordingly, the training focussed on thepractical projects and tasks that municipalemployees were expected to handle. Staffwere introduced to theoretical and allieddisciplines with a view to broaden theirknowledge, perception, and skills. udle,together with the Ministry of LocalDevelopment and the Municipal Associationof Nepal tried to select the best institutions inthe country - private and public – during thelong term, complementary programmes.

From 1999 to 2001, 120 assistant techniciansfrom 40 municipalities were trained in the fourdisciplines of municipal management.In addition, 40 senior officers, who weresupervising the technicians, were providedwith a two-month complementary trainingcourse in planning and management in theirown disciplines. The following table revealsthe types of training, the supportinginstitutions, and the number of participants:

Types of trainings

One-year urban planning post-diploma

One-year communitydevelopment diploma

One-year financial managementdiploma

Six months solid wastemanagement diploma

Two months planning andmanagement of infrastructure

Two months municipaladministration and management

Two months planning andmanagement of municipalfinance

Supporting institutions

Institute of Engineering,Pulchowk

MSR Development Institute,Lalitpur and RuralDevelopment Centre, Pokhara

School of Management,Kathmandu University,Lalitpur

Training Institute of TechnicalInstruction, Thimi

Staff College, Jawalakhel



Level of participants

Assistant level I

Assistant level I

Assistant level I

Assistant level I

Municipal engineers

Administration in-charges

Finance in-charges

Participants

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36

35

20

15

20

20

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Long-term training provided mid-leveltechnicians with the following:

Thorough technical knowledge on theprinciples and practices of their specificdiscipline;Practical exposure in the field, whichenabled them to observe and understandthe magnitude and complexity ofproblems in municipalities;Opportunities to undertake hands-onexercises in order to master theirdiscipline and to tackle similar issues andproblems in their own municipalities;Opportunities to broaden theirunderstanding on other municipal issues-not just their own specific areas ofdiscipline, thus emphasising the need for amulti-disciplinary team approach to solveproblems.

Setting-up RegionalLearning Centres

In 2001, udle visited 22 municipalities tostudy the impact of long-term trainings indifferent municipalities. The objectives of theimpact assessment were to:

Evaluate the performance of the trainedstaff in their respective municipalities,Assess the type of work being carried outand opportunities afforded to the staffandAppraise the benefits gained by themunicipalities and the communities.

The team interacted with electedrepresentatives, municipal staff, trained staff,and the target groups and physically verifiedthe work carried out by the trained staff.Based on this impact assessment udle, at thebeginning of its fifth phase, conductedrefresher courses to all trained staff on theirrespective disciplines and provided constantback-stopping.

The following points were identified fromassessments made on the impact of long-termtraining in municipalities:

All municipal staff - including non-

professional supporting staff - neededtraining on issues and problems relatedto different disciplines of municipalmanagement and services. They neededto be fully aware of new developments inorder to participate or assist in variousworks carried out by municipalities.Knowledge and experiences gained by onemunicipality in any particular field ofoperation should be transferred toanother municipality through trainedpersonnel.

In its fifth phase, udle had planned to provideits services intensively to just five selectedmunicipalities - Dharan, Hetauda, Butwal,Nepalgunj, and Dhangadi - instead of thinlydistributing its services to all 58 municipalities.However, udle faced constant pressure fromboth municipalities and the Ministry toprovide services to all 58 municipalities.

To meet its objectives, and considering theobservations in the impact assessment, udlesupported in establishing five regional learningcentres in five selected municipalities, with thefollowing objectives:

To sustain and develop institutionalcapacity building services undertaken bydifferent donors and other actors whosupport urban sector development;To develop a municipal informationsystem and make it accessible to allmunicipalities in the region andTo facilitate mutual interaction withsurrounding municipalities in the region,and provide a platform to shareexperiences, best practices, and ideasthrough trainings, workshops, and visits.

Each regional learning centre covers five totwelve municipalities, e.g. Dharan, Hetauda,and Butwal municipalities cover twelvemunicipalities each - Nepalgunj covers sevenmunicipalities, and Dhangadi five. udle iscovering ten municipalities within and nearKathmandu valley, until new arrangementswill be made. Each Centre has designateda member of staff at officer’s level and onesupport staff to manage their particular

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centre. All the centres have built a traininghall within the municipality complex and udlehas provided necessary equipment i.e.a multimedia projectors, cordless soundsystems, screen boards, overhead projectors,computers, etc.

Each learning centre developed their ownoperating guidelines and presented theguidelines to members of the municipalities inthe regional planning workshop. Theparticipants agreed to the operating guidelinesand developed future strategies andprogrammes. Major highlights of theguidelines are:

The role of different partners and theirsupport mechanismCost sharing mechanisms betweenmember municipalities.Cost for using the centre’s facilities andequipment.Establishing and operating the humanresource development fund.Forming and managing the centre’sManagement Committee.

udle has used municipal staff from oneregional centre to conduct training in otherregional centres rather than just relying onresource persons based in Kathmandu valley.All five regional learning centres haveidentified local resource persons to minimisecosts and share local expertise. With technicaland financial support from udle, all thecentres have managed to conducted trainingsand workshops.

During the fifth phase, five centres conducted18 training sessions and eight workshopslasting one to six days. 459 municipal staff(426 men and 33 women) from 51municipalities participated. The following liststhe nature of the trainings and workshops:

Integrated property taxMarket managementFire fightingOffice managementComputer applicationStore management

Ward office managementLegal sensitisationSkill development and communicationParticipatory planningWorkshop for butchersCommunity mobilisationRefresher courses and sharing of bestpracticesHousehold waste management

In different regional meetings, municipalitieshave since identified the need for thefollowing different training programmesother than those mentioned above.

Municipal police managementReport and proposal writingCorporate accounting systemProject managementBuilding permit systemResource mobilisation

The following positive impacts were identifieddue to the functioning of these five centres:

A platform now exists for municipalitiesto share their experiences.Human resources have been developedat the local levelBasic physical facilities have been setto develop human resourcesMunicipalities are committed to develophuman resources

udle and other actors working in the fieldof urban development should be providingsupport in the coming phase to make thesecentres financially and technically sustainable.Major obstacles include:

Weak management of the staff deputedto operate the centre.Difficulties in allocating a budget fordeveloping human resources in poormunicipalities.Questionable sustainability of centreswithout external financial and technicalsupport.Lack of clear policy from the Ministryof Local Development and the MunicipalAssociation of Nepal on how they shouldsupport the centres.

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Conservation and Developmentin Madhyapur-Thimi

• Experiences from Madhyapur-Thimi Municipality

Support to Kirtipur Municipality

Patan Conservation andDevelopment Project

Swayambhunath InfrastructureImprovement Project

Dhulikhel Development Project

Bhaktapur Development Project

Banepa Development Project

Images of a Century

Urban Development andConservation

S E C T I O N 3

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1. Introduction

One of the five historical towns of theKathmandu valley, Madhyapur-Thimimunicipality is located at the centre of thevalley - eight kilometres east of Kathmanduand four kilometres west of Bhaktapur. Itis situated at an altitude of 1,325 metres andspread over an area of 11.47 squarekilometres. Madhyapur-Thimi has a totalpopulation of 47,751 (24,747 men and23,004 women). There are 9,551 householdsin total, and the population density is 4,298per square kilometre. The town's residentsare known for their rich cultural heritageand for producing traditional crafts.

The settlement of Madhyapur-Thimi isbelieved to have begun in 800 BC (300 AD).The town has approximately 262 large andsmall historical and religious monuments.However, urbanisation combined withnatural disasters (such as the earthquake in1934) led to the deterioration of this culturalheritage. Many buildings are either in adilapidated condition or are completelydestroyed because of a lack of awarenessof their historical significance and also dueto a lack of funds to restore them.

Within this context, udle initiatedconservation and development efforts inMadhyapur-Thimi in 2000 with the objective

to safeguard its cultural heritage and improvethe living conditions of the people ofMadhyapur-Thimi in the context of urbandevelopment with participation from the localpeople.

udle is continuing the project with the sameobjective, however with more focus to reducepoverty through integrated neighbourhoodimprovement programmes.

Local communities formed different groupssuch as user's groups, self-help groups, localclubs, etc., to implement the project'sactivities. Support was provided by udle,Madhyapur-Thimi municipality, ded,UNESCO, and the Department ofArchaeology. The project was guided bythe following principles:

Promote self-help,Utilise local resources and expertise andCreate ownership through localorganisations and communities

2. Major Activities

a. Documentation of Cultural HeritageThe municipality was divided into thefollowing five areas for documentationpurposes: Bode, Nagadesh, Tignani,Chapacho and Balkumari, as each areacontains its own distinct cultural heritage.

Conservation and Development inMadhyapur-ThimiConservation and Development inMadhyapur-Thimi

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In 2000, ded documented historical andreligious monuments in three areas Bode,Nagadesh and Tignani with technicalbackstopping from the Department ofArchaeology. The document containsdescriptions and the history of individualmonuments, the urgency of repair work,and the proposed repair works withphotos. All documented monuments weremarked in a base map (1:5,000). Accordingto the report, there are 192 monuments ofarchaeological and historical importanceand some of them need urgent repair work.The document also prioritises the repairwork. Monuments include 24 temples, 41 patis(resting places), 35 chaityas (Buddhist temples),65 open shrines, 20 stone spouts, 2 historicalgates, 3 dyochhen (god's rest house), and 2 viharand vahies (community religious places).

In 2003, the Department of Archeologydocumented historical and religiousmonuments in two areas, Chapacho andBalkumari, and published the report. Thedocument contains name,, location,material of construction, constructiondate and short description with a photo.Monuments include 64 temples, 37 patis(resting places), 71 chaityas (Buddhist temples),66 open shrines, 31 stone spouts, 2 historicalgates, 2 dyochhen (god's rest house), 6 sattals(community buildings) 7 platforms and 2 viharand vahies (community religious places).

b. Pilot ProjectA pilot project was carried out at the centreof the town - Chapacho ward no. 8, todemonstrate and develop awareness onstandards and quality of renovation work.A Ganesh temple, a stupa and a rest-housewas renovated and an open space in frontof the temple was paved with bricks andstones. 80% of the construction cost wasborne by udle and rest of the 20% by thepeople of Chapacho. Four carpenters weretrained to wood carve and two masons weretrained in traditional brick work and roof

laying. One carpenter and one mason fromTansen municipality participated in the trainingso that similar work could be carried out inthere.

c. Integrated Tole (neighbourhood)Improvement ProgrammeA programme was conducted in threecommunities to demonstrate an integratedapproach towards improvingneighbourhoods by working withvoluntarily youth groups of thecommunity. The following processeswere adopted to conduct this programme:

The municipality interacted with thecommunity leader, ward chairperson,chairpersons of local clubs, the guthi,and major political party leaders, etc.,and separately discussed the objectivesof the programme.The community called a mass meetingin which the municipality explainedthe nature and conditions of support.At the end of the meeting a self-helpgroup was formed comprising youthvolunteers (with an equal number ofmen and women).The community / self-help groupinvited different men / women groups,children's groups, and youth groupsseparately, and identified the existingproblems and the respective projects.The community / self-help groupinvited all four groups to a meeting.In the plenary, projects were prioritisedand annual / biannual programmes wereprepared based on the priority of eachproject.Different tasks were assigned to themembers of the self-help groups.

The following comprises of a list of activitiescarried out by self-help groups in threecommunities, with technical and financialsupport from udle and the municipality, andrespective outputs / remarks.

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Bode, Ward No. 1

No.

1

2

3

4

5

6

7

8

9

10

11

12

Activities

310 private toilets installed with 50% eachcontribution from users and udle

700 sq. m. brick pavement made withcontribution from users, municipality and udle40%, 10% and 50% respectively

60 housewives provided with training on solidwaste management

40 housewives trained how to process food.

20 women trained how to sew and knit.

One saving-and-credit group formed consistingof 10 women.

ded provided 2 computers to the self-helpgroup. 10 members trained how to use acomputer.

One community building constructed withcontribution from users, municipality, and udle40%, 10% and 50% respectively.

7 health camps (2 gynaecological, 2 eye, 2dental, and 1 general) organised

3 exchange visits for self-help groupsconducted in 2 nearby municipalities

5 women were provided with six monthstraining in mask making.

2 members of the self-help group attendedEFTA (Eschborner Fach Tage), Germany.

Outputs / Remarks

Open defecation reduced.

Better place for children to play and elderly to walk.

All households are composting their organic waste incommon compost drums; one compost drum for 10households.

Housewives are using their skills for their householduse only.


The group has Rs. 0.15 million in deposits and providesloans for fertilisers, repair work (of houses), etc.Saving habit of women slightly improved.

Self-help group motivating children on computer literacyand application

This is used as an office for self-help groups, women’ssaving-and-credit groups, and other communityactivities such as trainings, social gatherings, etc.

700 people benefited. Camps were supported byMaternity Hospital, Lions Club, and local dentists

Learned best practices from other municipalities.

The trained women have formed a group that makes 30to 80 masks a day. They charge Rs. 10 to 20 per mask

One member of Chapacho group presented a paper on‘shaping the future: youth as partners’.

Chapacho, Ward No. 8

No.

1

2

3

4

6

7

8

9

10

11

12

Activities

120 private toilets installed with 50% eachcontribution from users and udle

300 sq. m. brick pavement made withcontribution from users, municipality, and udle40%, 10%, and 50% respectively

120 housewives were provided with training onsolid waste management


One women’s saving-and-credit group formed.Members (male and female) have increasedfrom 30 to 300.

One children’s group formed.

One community building constructed withcontribution from users, municipality and udle40%, 10% and 50% respectively.

Five health camps (2 gynaecological, 2 eye,and 1 dental) organised.

5 exchange visits for self-help groupsconducted in 4 nearby municipalities

5 women were provided six months longtraining in mask making.

One member of the self-help group attendedEFTA (Eschborner Fach Tage), Germany.

Outputs / Remarks



100 households are composting their organic wastewithin their houses.


The group has Rs. 2.3 million in deposit and providesloans for education, fertilisers, house repair, etc.Saving habit of women improved.

This group actively participates in clean upprogrammes.

This is used as an office for self-help groups andwomen’s saving-and-credit groups.

500 people benefited. Camps were supported by theMaternity Hospital, Lions Club, and local dentists

Learned best practices from other municipalities.

3 women are making masks at home and earning Rs.10 to 20 per mask. Each woman makes 10 to 30masks a day. UNESCO provided the financial support.

One self-help group member presented a paper on‘shaping the future: youth as partners’.

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Tiganani, Ward No. 3

No.

1

2

3

4

5

6

7

8

9

Activities

8 eco-san private toilets installed with 75% and25% contribution each from an NGO and udle

80 sq. m. brick pavement made withcontribution from users, municipality, and udle.40%, 10% and 50% respectively.

20 housewives trained to manage solid waste


20 women trained how to sew and knit.

One saving-and-credit group formed consistingof 20 women.

ded provided 2 computers to the self-helpgroup. 10 members trained how to use acomputer.

One community building constructed withcontribution from users, municipality, and udle.40%, 10% and 50% respectively.

5 women were provided six months training inmask making.

Outputs / Remarks



Only 4 households are composting their organic wastewithin their houses.

3 housewives are producing food products and earn anincome of Rs. 3,000 per month. Rest are using theirskills for their household use only.

8 housewives sew and knit on demand and chargeaccordingly. Rest are using their skills for theirhousehold use only.

The group has collected Rs. 20,000 only. Saving habitof women slightly improved.

Self-help group motivating children on computer literacyand application.

Self-help group is running a free one-hour class to 40poor children at night. The building is also used bywomen saving-and-credit groups and for othercommunity activities.

None have made use of the training.

d. Conservation and Development WorksIn order to maximise the participation of localbeneficiaries and guarantee the repair andmaintenance of the completed work, thefollowing procedures were adopted in theimplementation of the conservation anddevelopment works:

A community must apply to themunicipality with recommendation fromthe Ward ChairmanThe municipality prepares the project'stechnical details, drawings, and costestimates.The municipality calls a meeting with thecommunity, and the role andresponsibilities of the concerned partiesare discussed.The community forms a user's group toexecute, operate, and maintain the project.The community obtains approval fromthe Department of Archaeology forwork concerning all monuments ofhistorical importance.

The user's group, the municipality, andudle sign an agreement in which the roleand responsibilities of concerned partiesare explained.udle and the municipality providetechnical and financial support.User's groups collect funds from thecommunity and other concerned parties,purchase materials, hire labour, andcomplete the construction work.

With financial and technical support fromudle and the municipality, and financialassistance from ded and other national andinternational organisations, the followingactivities were completed:

32 rest houses, 8 community buildings, 24temples, 5 stone spouts, 2 ponds, 3platforms, and 3 dug wells wererehabilitated.2 children's parks were constructed and15,000 square metres of open space waspaved with brick or stone.

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27 metre drains, 2 eco-san private toilets,and 9 flush-type private toilets wereconstructed.

The percentage of contributions from thecommunity, udle, the municipality, and otheragencies were 48%, 42%, 8%, and 2%respectively. (Other agencies included ded,Lumanti (NGO), World Vision (INGO), andthe Department of Archaeology.)

After renovation, all community buildings arebeing used as offices for saving-and-creditgroups, offices for self-help groups, traininghalls, library, or as venues during festivals.Rest houses are used by old and retiredpeople to rest and meet. Stone spouts,ponds, and dug wells have been a goodsource of water supply to the community andchildren now have places to play in parks andpaved open spaces.

3. Overall Impact

Local communities have learnt the strength ofcommunity mobilisation and have gained apositive attitude towards communityparticipation in developing theirneighbourhoods. Other major impactsincluded:

Communities, who have activelyparticipated in the project, are encouragedto continue the ongoing process ofconservation and development work andlook for local and international donors.Communities from adjacent wards ortoles where project activities have notbeen initiated, have noticed the changesthat have occurred in theirneighbourhoods and have beenencouraged to improve their own areas.The municipality has increased its annualbudget for conservation anddevelopment work, which is implementedthrough local participation.

Biku Bahadur Shrestha is a carpenter working on thereconstruction of historical buildings in Madhyapur-Thimi:

Since, udle came to work in Madhyapur, we have had lotsof development. udle gave training for four carpenters..

First, I had work on the Bishwo Binayak Mandir. Then, theysent me for training on wood-carving in 2000. The training wasokay and since then I have been continuously working inconservation projects in Madhyapur. It is good that we havehad this work but there is not any after we finish working onthis pati. We have asked udle if they would give us work.

Sushila Napit is the Chairperson of the Madhyapur Bode Ward # 1, women group

Before, the tole was very dirty and then udle come towork with our women’s group in 1998. Since then we havedone tole cleaning, training in sewing and making mats anddental camps.

We constructed the pati and paved the streets with stones in2003. We also made a dry toilet (eco-san toilet) and havemade a compost pit. There are many benefits for thecommunity.

The big problem was getting our grants cleared by themunicipality, which had a long process to clear the advances,

Experiences from Madhyapur-Thimi Municipality

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before we could get the final payments. This meant that we had to take a loan from our saving-and-creditgroup. Usually we give loans to our members for their houses or for income generating activities likeraising chickens or vegetables.

The Chapocho Tole (Street) Self Help Group Kamala Prajapati is the secretary of the group andBijendra Prajapati and Shajani Prajapati are members:

When udle sirs came here and called us for a meeting, we started the group. First, we did “SaharSaphai” (city cleaning) because our tole was very dirty. The group would meet every Saturday to clean it.Eventually we convinced people to put their rubbish in tins. Eventually, the municipality also helped us.

We started the savings-and-credit group with 25 women members who would put in Rs 50 each month.Now we have 300 men and women members and our fund is about Rs 2 million. There is only Rs 82,000 inthe bank, the rest is out as loans, mostly for shopkeepers to invest in goods or for potters to buy clay.

One of the biggest advantages is that before we knew each other but did not talk, now with getting to knowone another at meetings, we are all like one family and can work together. Our biggest problem is a lack offunds for projects like the library building — we ran out of money so could not build the second storey.

We also need more training for employment skills and income generation. udle did one, but they tried toteach people to make too many items in too short a time, so people can’t really use what they learned.

But, there are more advantages thean problems with having the group. Through udle, we’ve made, thishouse, fixed the mandir, and brick-paved the street. We’d like to finish the library building. The library is onthe first floor and the children’s group operates it. They are 15-16 year-olds.

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Now, most of us do not work as potters because weare educated and have other jobs. As well, there isnot as much clay available as in the past. Ours wasthe first saving and credit group, now most othertoles have such groups.

Rajendra Pradhananga is the udle staff memberworking with Madhyapur-Thimi.

Although I am a civil engineer, I find thecommunity work and social mobilization mostsatisfying. More and more people ask how they canimprove their income to reduce their poverty. Since,this is the new focus of udle, we need to give itsome serious thought.

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Kirtipur, the fourth ancient city in theKathmandu valley, is located on a hill (1,418 mabove the sea level) toward the western edgeof the valley and about seven kilometres fromKathmandu city. Unlike other towns in thevalley, which are mainly situated in the flatplateau, the houses of Kirtipur are laid out inthe steep terrace connected by steep paths.The lay out makes this hillside town verypicturesque and impressive both internally andfrom a distance.

Kirtipur is a settlement dominated by Newartradition, practice, and social systems. Itcontains a socially and culturally rich heritagewith unique examples of Newari art andarchitecture.

However, Kirtipur has long been neglected inthe areas of preservation and developmentand as a result many monuments havedeteriorated or have been left unattended.Locals are unaware of their historicalimportance and lack the funds for their repairand maintenance. Kirtipur municipality wasformed in 1998 and is committed towardsurban development.

Based on experiences drawn from theBhaktapur Development Project, GTZ hadprovided support since 1974 in the areas ofconservation and development in Kathmanduvalley and its nearby towns, Banepa, andDhulikhel. GTZ’s objective is to safeguard

cultural heritage in the context of urbandevelopment with local participation. In thecoming phase, udle plans to link its supportin conservation and development works withpoverty reduction measures.

udle and Kirtipur municipality have jointlycarried out the following activities:

Documenting historical and religiousmonuments. The document containsinformation on historical monuments,local religious practices, estimated costsof renovation, present and future use ofmonuments, etc. According to the report,there are 262 monuments ofarchaeological and historical importanceand 51 need urgent repair work. Thedocument has also prioritised repair workin 16 wards out of 19 in the municipality.Monuments include 57 temples, 59 patis(resting places), 64 chaityas (Buddhisttemples), 10 open shrines, 10 stonespouts, 8 historical gates, 10 ponds, 8dyochhen (god’s rest house), and 7 vihar andvahies (community religious places).Preparing detailed drawings (plans,elevations, and sections) of historicallyimportant monuments. A local NGOconsisting of professional youth, hasvolunteered to prepare detailed drawingsof important monuments such astemples, patis, stupas, bihars, etc withinthree historical complexes of VishnuDevi, Narayana Mandir, and Lhoha

Support to Kirtipur MunicipalitySupport to Kirtipur Municipality

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Dehga. The NGO has so far completeddrawings of eight monuments and is inthe process of preparing drawings for tenmore monuments. The preparation ofthese drawings will expedite theconservation process.The municipality has drafted aquestionnaire for gathering baseline datafor a poverty profile of Kirtipur. With

the aid of the questionnaire, themunicipality also plans to prepare amunicipal profile and develop a housenumbering system with support from ded.According to the 2001 census, themunicipality’s population is 40,835(21,686 men and 19,149 women) in 9,487households.

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1. Introduction

Often referred to as Lalitpur, Patan is themost ancient of the three cities of theKathmandu valley and dates back 2000years. It represents the legacy of Newarfarmers, artisans, and craftsmen, whoshaped Patan and gave it its distinctidentity.

In this beautifully organised city, spaceswere created according to powerful andconsistent cultural values. Thepredominantly Buddhist community builtan abundance of monastic complexes in theBahal and Bahil forms. With their largecentral courtyards, these were importantcells of urban organisation. Buddhist andHindus alike built many temples, shrines,and chaityas in these courtyards.

Despite the wave of modernisation thatchanged the character of all the citieswithin the valley, Patan maintained muchof its traditional, cultural, and architecturalidentity. However, Patan’s urban fabricwas threatened at an alarming rate bydevelopment pressures that led to increasedcongestion, demolition of historicstructures, and inappropriate constructionthroughout the core area.

In this context, the Patan Conservation andDevelopment Project was initiated in 1992under udle programme to carry out

conservation and development activitiesoutlined in the Guideline Plan with thefollowing main objective:To safeguard the cultural heritage of Patan inthe context of urban development with theparticipation of the local people

The project was guided by a steeringcommittee headed by the Mayor of Patanwith members from different organisationsand agencies. All activities within the projectwere executed by the Sub-MunicipalCorporation, the Departmentof Archaeology, or the people of Patanthemselves. They carried out these activitiesaccording to the following principles:

Promoting self-help;Utilising local resources and expertise;Encouraging ownership by localorganisations and communities.

2. Components of thePatan Project

These included:Documenting the city’s cultural heritageFormulating action plans and projectsExecuting pilot projects and emergencyrepairsFormulating building control measuresInitiating integrated tole (neighbourhood)improvement projectsCreating public awareness and supportProviding training and supportinginstitutional development

Patan Conservation andDevelopment ProjectPatan Conservation andDevelopment Project

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2.1 Documentation of Cultural HeritageTo begin safeguarding sites of culturalheritage, they are first classified andpublished in the gazette. Ten documentson different monuments and objects wereprepared and published on: Bahas, Bahis,and Kacca Bahas (monasteries), Caityas,Hindu Temples, stone temples, Dabulis(platforms for historical and religiousperformances), Hitis (stone spouts), Chapahand Digis (community buildings), Pukhus(ponds), traditional residential buildings,and Patis (rest houses).

Though the classification of monumentshas not been done by the Department ofArchaeology (as targeted), most of thesedocuments have been used as references byengineering / architectural students ofdifferent universities, and researchers.HMG’s high-level committee also referredto these documents for an inventory ofhistorical monuments of the valley.

2.2 Action Plans and ProjectsAction plans and projects were introducedinto the project to preserve areas of specificimportance, revive traditional water supplysystems, create a pedestrian route betweenPatan Gate and Durbar Square, and tointroduce an entrance fee for touristsentering historic Patan.

The following six action plans wereprepared for:1) Effective management of Patan Durbar

Square, a part of the World HeritageSite.

2) Improvement of the historical Cyasah(the first settlement of historic Patandating back to the first century)

3) Improvement and management ofLagankhel, an open space presentlybeing occupied by both transportersand hawkers.

4) Restoration of traditional water supplysystems, including Rajkulo and Hitis toprovide to the people an alternativesource of water

5) Conversion of the route from Patan Gateto Durbar Square into a pedestrian zone(restricting traffic through Patan DurbarSquare)

6) The introduction of entry fees fortourists entering historical Patan.

Among these plans, the fifth and sixthaction plans were implemented in January1, 2001. Activities to make pedestrianzones had to be cancelled about six monthslater due to intense public pressure.However, traffic restriction within DurbarSquare is still being observed. Theremaining four action plans (1-4) were notimplemented due to lack of funds.

Since January 1st, 2001 Lalitpur Sub-Municipal Corporation earned an average often million rupees every year —in total, Rs.66.7 million by the end of the year 2005from tourist fees. With this money, theSub-Municipal Corporation has paved thestreets of Patan mainly within the WorldHeritage Site with bricks / stones, repaired/ restored monuments, and conductedsocial welfare activities in many parts ofPatan in the last five years.

2.3 Pilot Projects and Emergency RepairsConservation and development projects werepiloted to demonstrate and develop awarenesson the need to preserve Nepal’s culturalheritage. Local craftsmen and technicians ofpartner organisations were provided on thejob training through two demonstrationprojects on brick and stone paving, to producequality work and to replicate these activities /ensure continuum after the phasing out of theproject.

During the project period, 89 monumentswere repaired / restored (not includingsmall-scale repair works) and 26,400 squaremeters of streets / lanes were paved bybricks / stones after improving theinfrastructure underneath. The followingmonuments were repaired / restored: 24 Patis(rest houses), 7 Hitis (stone spout), 2 Pukhus

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(pond), 5 Dabulis (dancing platforms), 2 Jadhus(traditional water tanks), 1 school, 1 well, 2Caitya, 27 temples, 3 Aganchhen (shrines), 6Chapah / Digi (community building), 1 Dhoka(gate) and 8 Bihar (monasteries).

The most important aspect of the projectwas the participation of local people intheir implementation from the beginning.Up to 40% of contributions, mainly foremergency repairs, came from the localpeople either in cash, kind, or labour.

These monuments are currently all beingused and are being preserved well. Forexample Patis are being used by elderlypeople; Nakabahi Dabuli is in use toperform the Astamatrika dance during theDasain festival each year; Aganchhen isbeing used by the local community ofOmabaha to conduct daily Puja (offerings),and Patan Sundhara (the golden spout ofPatan) is used by about 3,000-3,500 peopledaily for water.

Local communities use most of the public,open spaces for social gatherings and forparking vehicles. Lalitpur Sub-MunicipalCorporation has been collecting parkingfees through the Rotaract Club of YalaPatan since 2001, by introducing one of theopen spaces within Durbar Square as adesignated parking lot. According to thecontract made between Lalitpur Sub-Municipal Corporation and the RotaractClub of Yala Patan, the latter collectsparking fees, manages, repairs andmaintains the parking area and pays theformer 25% of the amount generated everymonth.

2.4 Building ControlThis component was introduced to mainlysafeguard cultural heritage sites bycontrolling the haphazard growth of bothprivate and public buildings. The projectprovided support to partners to formulateappropriate building and design bylaws, toamend legislations, and to introduce aneffective building permit mechanism to

control urban growth in and around theseareas. The support package also includedtechnical as well as material support as anincentive to individuals willing to build /repair their buildings as per the specifiedbylaws.

Despite intense material support, only sixbuildings within the World Heritage Site weresaved from demolition: the popular ShakyaHouse located right in Durbar Square,another in Hakha, one in Tinchhu Galli, onein Patko and two on Swatha Square. Otherhistorical buildings such as the GuitahChapah, Dupat Chapah, and Tyagah Chapah(community buildings all located outside theWorld Heritage Site) could not be saveddespite efforts to convince the owners topreserve them.

Buildings are usually demolished becauseowners prefer to build modern structuresand turn them into shops for commercialactivities. Weak monitoring and enforcingmechanisms and political will (from electedrepresentatives who would rather not to takeaction against voters) contribute towards theproblem.

2.5 Integrated Tole Improvement ProjectPatan is divided into hundreds of toles withdifferent types of people / communities, andlocal resources. The only way a tole could beimproved was through the active participationof the local people and through the use oflocally available resources.

With this objective, 32 self-help groups, 24women’s groups and 24 children’s groups wereformed. During the entire project periodthese groups were regularly involved in thefollowing activities: cleaning the streets withintheir respective toles; generating awareness onhealth and hygiene (mainly on the need fortoilets in households), solid wastemanagement (cleaning sagals or semi-privatecourtyards, where people dump householdwaste), and on the need of preservingmonuments.

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About 500 sagals were repaired, more than800 private toilets were built with 50%contribution from the owners of thehouseholds, more than 50 small scaledrepairs of monuments were carried out,and more than 80 awareness raisingactivities were conducted in the form ofstreet drama, video clips, processions, andmeetings.

These groups were also behind more than14 successful saving-and-credit groups(mostly run by women) and other incomegenerating activities such as candle making,knitting, and sewing, making potato chips,etc. Most of these groups are stillfunctioning and generate income. TheIntegrated Tole Improvement Projectapproach is now being replicated in tenmore localities throughout Patan.

2.6 Public Awareness and SupportThe public were informed about the activitiesthrough the publication of the “PatanBulletin”, posters, media campaigns and tours,and documentaries.

The ‘Patan Tour’ for example, was acarefully designed package tour showinginternal and external tourists howtraditional buildings were preserved andmaintained, the differences betweenmodern buildings and traditional buildings,different ways of life, culture, and thedifferent traditions of people living in thearea. 25 tourist guides were providedorientation on how to conduct the tour. Aleaflet was also published with descriptionsof neighbourhoods, routes, and maps thatmentioned all the localities. The tour hasbecome so popular that most touristsvisiting Patan follow this route today.

2.7 Training and Institutional DevelopmentIn order to ensure sustainability, partnerorganisations need to be fully capable.With this objective in mind, three trainingsessions on conservation and developmentwere conducted for 10 technical staff

belonging to partner organisations, 25community workers, and 18 local craftsmen.A training session on institutional developmentand an orientation on conservation,development, and management wereconducted for elected representatives ofLalitpur Sub Municipal Corporation.

Exchanges and exposure visits were organisedfor the staff of partner organisations,community workers, and members of theSteering Committee - mainly the Mayor andDeputy Mayor, and the Director General ofthe Department of Archaeology respectively.

To strengthen the municipality institutionally inits conservation and development works andto coordinate social development activities, theLaliptur Sub-Municipal Corporationestablished ‘Community Development Section’and the ‘Architectural and Planning Section’ in1993., This also ensured sustainability of theproject after the phasing out of GTZ-udleand helped to systematically execute pilot andother needy projects.

With regard to expenses of the CommunityDevelopment Section, 100% was borne by theproject in the first year of its establishment, 75%in the second, 50% in the third year, and 25% inthe fourth year. Lalitpur Sub-MunicipalCorporation was responsible for covering allthe expenses after the fourth year. This policywas introduced mainly to make the CommunityDevelopment Section sustainable so that it canreplicate similar activities after the withdrawalof external support.

2.8 Strategy PlanningStrategy planning was not initially consideredas a component of the project and wasintroduced later. This component involvedward meetings in all 22 wards to identifypriorities and projects. The then Departmentof Housing and Urban Developmentprepared the plan in the form of two separatereports / maps, which were discussed amongpartner organisations before being officiallypublished. No further activities were carriedout based on this plan.

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3. Overall Impact

In order to see the impact of the project, animpact assessment was made in 1997through a baseline survey and interviewswith different personalities. A report wasthen produced stating the following:

Pilot Projects and the Integrated ToleImprovement Projects were consideredas the most successful components ofthe project.Matching funds provided by LalitpurSub-Municipal Corporation wasconsidered as a successful cooperationbetween the donor and the executingagencyBuilding Control, Action Plans andProjects, and Strategy Planning havebeen considered as unsuccessful orpartially successful components.

The real impact of the Patan project canfinally be seen today. For example, buildingcontrol was unsuccessful in the past, butnow many residential buildings withinWorld Heritage Sites have facades oftraditional bricks and traditional windows.People now understand the importance oftraditional buildings better than before. Forexample, Chhayebaha Chapah (a communitybuilding) was similar in nature to Tyagah orGuitah Chapah in terms of the ownership.However, it was restored using traditionalmethods about five years ago with abeautiful brick facade and carved windows.With this new attitude, it can be hoped thatthe endangered World Heritage Site will bepreserved.

Lalitpur Sub-Municipal Corporation is nowfinancially and technically capable to preservehistorical monuments and to carry out socialwelfare activities. Its Architectural andPlanning Section regularly maintains andrepairs monuments. More streets and laneshave been paved by the municipality with upto 40% local financial contributions with dueconsideration given to the infrastructureunderneath.

The Community Development Section isequally strong and its staff committed. It isnow successfully running 10 Integrated ToleImprovement Programmes replicating all themodalities of the project through differentsocial groups.

Future action plans include Lalitpur SubMunicipal Corporation’s intention toimplement Rajkulo Rehabilitation Project (apart of the traditional water supply systemsof Patan) with support from other donors.

It can be concluded that the Patanprogramme was a successful contribution tourban development based on:

Activities carried out by Lalitpur Sub-Municipal Corporation in the fields ofconservation and development,Improvements in the attitude andbehaviour of the people towards theconservation of their cultural heritage,andActivities of different social groups in thedevelopment of their respectiveneighbourhoods.

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The Buddhist stupa, Swayambhunath, is animportant place of worship and one of theseven World Heritage Sites within thevalley. The distinctive domed stupa standsat the pinnacle of a small hill due west ofKathmandu. Its date of construction isuncertain, however statues in theimmediate vicinity are considered to befrom the 9th or 10th century.

Swayambhunath, and the hill upon whichit stands, have been affected by theconstruction of new dwellings over theyears, which have resulted in seriousdeficits in water supplies, sanitation, anddrainage facilities. In addition, the gradualdemise of the forest that covered the steephillsides has caused concern over thestructure’s stability. The concern wasjustified when a landslide occurred in 1979following heavy rains.

The Swayambhunath InfrastructureImprovement Project began in 1992 uponrequest from His Majesty’s Government ofNepal, as part of the udle programme.Activities under this project were based onthe ‘Swayambhunath Conservation MasterPlan’ prepared by the Department ofArchaeology in 1989, with support fromthe German government. The followingactivities were implemented under theproject by the end of 2001:

3,400 indigenous saplings were plantedon the hill slopes all around the stupato stabilise the slopes.

Swayambhunath InfrastructureImprovement ProjectSwayambhunath InfrastructureImprovement Project

Fences were erected around eachsapling and along the periphery of thestupa to protect the saplings frommonkeys and other encroachinganimals.Guards were hired for three years toprotect saplings until they were fully-grown and stable.A new water supply system wasconstructed with water from a newsource (Panch Mool). 23 metres ofprivate taps and seven public taps wereinstalled to cater to the needs of thelocal households and the visitors.Three public toilets were constructed atthree entry points for visitors, and 27private toilets constructed in individualhouses.25 youths were trained in communitymobilisation and solid wastemanagement, and were oriented withongoing conservation and developmentactivities in Patan.Two old private buildings wererenovated to their traditional design.Covered brick drains were constructedand flag stones paved for the smoothflow of rainwater.

The project was designed and executed inclose collaboration with the Department ofArchaeology and 23 independent NGOs /committees. These 23 groups formed the‘Federation for SwayambhunathManagement and ConservationCommittee’ in 1995, with encouragement

Swayambhunath InfrastructureImprovement ProjectSwayambhunath InfrastructureImprovement Project

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from udle. udle handed over the completedproject to the Federation.

The Federation has 25 members from eachgroup and one from the Department ofArchaeology and Kathmandu MetropolitanCity. It is run by the ExecutiveCommittee consisting of nine membersunder an elected Chairman. TheFederation has built its own office and has65 staff. It manages the entireSwayambhunath area through its five sub-committees of water supply, sanitation,financial management, traditional andritual management, and revenuemobilisation.

In 1998, the Federation began to collecttourist service fees of Rs. 50 per personfrom non –SAARC countries and Rs. 30

from SAARC countries. By the end of 2005,Rs. 56 million had been collected from touristfees, which is an average of Rs. 7 million peryear.

Besides operating and maintaining publictoilets, solid waste, water supply, streetlighting, and security, the Federation hasimplemented two ponds for monkeys, anoffice building, steps to the hillock, landslide prevention work, and plantedadditional trees, etc.

As a result, Swayambhunath is one of themost successfully managed World Heritagesites in the country. During differentinteractions and forums, the Department ofArchaeology and UNESCO have highlyappreciated the efforts of the Federation inits management of Swayambhunath.

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An Example of Effective People’s Participation onManagement of a Water Supply System

In 1977 Dhulikhel was still a village. A groupof people from Dhulikhel visited BhaktapurDevelopment Project to learn about theproject activities. Discussions with the relevantinstitutions following this visit resulted inpreparation of a feasibility study report in1982. In this report people of Dhulikhelidentified insufficient water supply as problemnumber one and drainage and toilets asnumber two. Based on this report anagreement between the Government of Nepaland the Federal Republic of Germany wasmade in 1983 with an aim to improve theliving conditions of the inhabitants ofDhulikhel by stimulating and exploiting as faras possible the willingness for self-helpexisting among the population.

Dhulikhel Development Committee, alocal committee of people from Dhulikhel,was formed for implementing variousprogrammes under the project. After initialconflicts and delays and unclear authoritiesof the Committee the Ministry of LocalDevelopment made the Local DevelopmentOfficer as the project in-charge andactivities began properly in 1987.

Also in 1987 Dhulikhel became amunicipality. Looking at the large scale ofthe water supply scheme HMG separated

the project activities into two components:Water supply scheme under the Departmentof Water Supply and Sewerage and remainingactivities under the Dhulikhel municipality. Bythe end of the project in 1993 the Dhulikhelmunicipality achieved the following:

285 sulav toilets with matching fund fromindividual households4 schools including one in neighboringvillage4 public toilets with operation andmaintenance responsibility toconcerned institution5 km of concrete pipes for drainageImprovement of old water supplysystemConstruction of Dhulikhel WaterSupply Users Committee building730 sq. m. of stone pavement on lanes andcourtyards, and 14 km of earthen roads.3 small water supply schemes inneighboring villages.

In 1988 the Department started theconstruction of the water supply systemwith technical and financial support ofGTZ and completed in 1992. It is the only24 hours supply gravity flow system inNepal. It is designed for 25 years for apopulation of 15,000 with its intake 14 kmfar from the town.

Dhulikhel Development ProjectDhulikhel Development Project

86

It was envisaged in the bilateral agreement thatthe system will be fully independent and will beoperated and maintained by the people ofDhulikhel from fees collected by the users.However, the nature of the organizational set-up for operation and maintenance was notclear. During this time, HMG published apolicy on drinking water which would allowlocal people to participate in the managementof the water supply systems.

In 1990, a study was undertaken on tariff andmanagement for the Dhulikhel Water SupplySystem. Based on this report, on July 1991,HMG decided to hand over the system to theusers committee and constituted 11 memberswater supply ad-hoc users committee under theChairmanship of the former Mayor Mr. B. P.Shrestha. The role of the committee was tomonitor the ongoing water supply scheme, tocoordinate with villagers along the source andmain line of the system and to operate thewater supply system.

Detail rules and procedures for operation andmanagement of the system were finalised in1992 and the Government handed over thesystem to ad-hoc users committee in July 1993.An eleven member users committee wasformed from direct election in September1994 for four years on the basis of one votefrom one house-connection. The Mayor ofthe municipality was made ex-office member

and the Manager of the office of thecommittee was made Member Secretary.

The committee has carried out successiveelections in 2000 and 2004. It meets firstweek of the month and publishes itsdecisions next day. It also conducts publichearing/general assembly once a year. Atpresent, it serves 894 households in ward nos.2, 3, 4 and 5 and parts of ward 6 and 7.The project is viewed as a pilot exercise inforging partnership between the governmentand the beneficiaries for an autonomousmanagement of an urban drinking watersystem in the country.

With the supply of water Dhulikhel hasbecome a major education, health and touristcentre. There are 8 private schools, oneuniversity, one 160 beds hospital and 20hotels compared to 1 private school and 3hotels in 1988. Outside visitors have becomean additional population which was notforseen in the project design. To address thisissue and the acute water situation in otherwards the municipality has signed a loanagreement with Asian Development Bankfunded Urban Environment andImprovement Project for a new water supplysystem. The municipality and the Committeeare looking into the possibility of combiningtwo systems for 24 hours water supply to allwards of the municipality.

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A Source of Inspiration to Urban Development in Nepal

In 1970, the Federal Republic of Germanyrestored the Pujari Math on DattatrayaSquare as a wedding gift to the then CrownPrince, late King Birendra. This initiatedthe Bhaktapur Development Project whichbegan in 1974 under a bilateral cooperationagreement with the aim of improving theliving conditions of the people in the townof Bhaktapur.

This integrated urban development projectwas the most complex project in adeveloping country the newly foundedGTZ undertook, with interventions in aliving historical urban environmentcovering physical, socio-economic andurban management activities.

The project carried out works in thefollowing sectors:

Restoration and preservation of historicand religious monumentsWater supply and sewerageSchoolsBasic urban social infrastructureHealth educationCommunity developmentEconomic promotionLand development and housingProvided support to the Municipalityand the Archaeology Department for

Bhaktapur Development ProjectBhaktapur Development Project

repairs and maintenance of constructedinfrastructure and restored monuments.

Initially, activities focused on therestoration of temples and other historicmonuments, preparations for a MasterPlan, and studies for infrastructure work.Over time, the priorities shifted fromconservation works to infrastructureimprovements such as water supply,sewerage, pavements, solid wastemanagement, and the promoting ofeconomic activities.

In 1980 an evaluation of the past projectactivities revealed a crisis of confidence andcommunication gap between the projectand the local people. Too much was doneby the project itself; too many GermanExperts took - sometimes contradictory -decisions.

Thus, a thorough reorganisation andrevision of procedures and policies of theproject was carried out and that respondedto the changing political environment ofthe country. A Community DevelopmentUnit was formed to intensifycommunication with local communitiesand to acquire people’s maximumparticipation to implement the project.

88

Also the planning and management skills ofNepali experts were upgraded and local lineagencies were made responsible toimplement project activities.

By the end of 1986, local line agenciescapacities had further improved and theywere capable to implement the projectaccording to the spirit of theDecentralisation Act through localdevelopment committees. Ongoingactivities were handed over to therespective institutions like BhaktapurMunicipality, Department of Archaeology,Industrial Service Centre, and Nepal WaterSupply Corporation.

In 1986, the Bhaktapur DevelopmentProject ended. The two Governmentsagreed upon a follow-up phase of five yearsthrough the udle programme. Technicaland financial support was provided to therespective institutions to completeremaining works which had been plannedat the end of the direct support.

During the follow-up phase, Bhaktapurmunicipality established a technical unitthat repaired and maintained alreadyconstructed social infrastructure. AMonument Maintenance Office under theDepartment of Archaeology started towork in Bhaktapur to carry out repair andmaintenance work on monumentscompleted during the project period.

This was followed by a permanent institution,the ‘Monument Maintenance and DurbarCaretaker Office’ (MMDCO) to look after thepreservation of the cultural heritage ofBhaktapur and surrounding areas. MMDCOwas further supported to restore othermonuments and repair of already restoredones.

By the end of this phase, Bhaktapurmunicipality made two important decisions to:

increase the entrance fee for foreigntourists to enter the town, andtake over the entire sewage systemfrom Nepal Water SupplyCorporation.

Revenue from tourist entrance fees hassince been the major source of income forthe municipality and is spent on therestoration and rehabilitation ofmonuments as well as on other publicworks. Although HMG decided to handover the sewage system to Bhaktapurmunicipality in 2001, the move is stillunder consideration.

Bkaktapur nowadays is a vital town whichis able to maintain its built cultural heritageand to manage its development. Inaddition, the Nepali-German cooperationcreated many networks beyond the jointproject endeavors, fostering theunderstanding between cultures andpeople.

89

In 1985, GTZ prepared a project proposalbased on the joint three-year developmentplan of Banepa municipality and theMinistry of Local Development.Following lessons derived from theBhaktapur Development Project, thisproject was based on the principle thaturban development should be pursuedthrough local efforts. The joint German-Nepal Banepa Development Project startedin 1986 with the objectives of:

Safeguarding and extending basicmunicipality infrastructurePreserving and extending communityself-help potentialStrengthening local planning andimplementation management

Unlike the Bhaktapur DevelopmentProject, the Banepa project wasimplemented by the municipality and didnot have its own GTZ project team.Established in 1982, Banepa municipalityhad successfully constructed 462 sulav (pittype) household toilets with grantassistance from GTZ from 1983 to 1985.

The Banepa Development Project wasimplemented in close cooperation withlocal bodies and with technical supportfrom local consultants, without a long-term

German expert. The municipalityadministered the project funds, whichconsisted of its own contribution and theGovernment grant (51%) and grants fromthe German Government (49%).

Despite problems like a blockade in 1988-89, political change in 1990, and delay inassembly meetings in 1991, the projectprogressed according to plan due to thegood performance of everyone involved.Necessary government resources wereallocated. The management andorganisation skills of the municipality'sstaff were sufficient to cope with projecttasks and functions. Political leaders wereenthusiastic and cooperative toward thedevelopment work.

According to the agreement, the projectended in July 1991. However, not all theagreed-upon activities had been completedbecause the German contribution hadbeen limited. By the end of July 1992, themunicipality had used its own resources tocomplete all activities that were initiatedwithin the original project period. Thephysical achievements during the total six-year period were:

Addition of classrooms at sevenschools and physical improvements attwo campuses

Banepa Development ProjectBanepa Development Project

Safeguarding and Extending Social Infrastructures byDevolving Management Authorities to the Local Level

90

Restoration of nineteen temples, tenponds, ten water spouts, two wells, andtwo ghatsConstruction of 26 water storage tanksand repair of four water supplydistribution linesBrick-paving of streets and courtyards(7,680 sq. m. of stone and 3,778 sq. m.of brick)Construction of four small irrigationdamsConstruction of a new municipalitybuildingRenovation of Chandeswari temple andadjoining gardenConstruction of 301 sulav householdtoiletsConstruction of an open-air theatreImprovement of two major watersupply systems (Shasipani andDhaneswar) and installation of eightkilometers of new water supply mainand distribution pipelinesInstallation of concrete pipes (5.5 km)as main drains and provision of houseconnections throughout their lengthWidening of thirteen roads along theperiphery of the municipality, levellingof eleven other roads and repair of sixsmall bridges

Completion of 557 m. of drain and5,167 sq. m. of gravelling on roads,shops, toilets and footpaths in the buspark complex

As a result of the Banepa DevelopmentProject, substantial changes in the towninfrastructure are noticeable and the hygienicconditions of central Banepa havesubstantially improved. People haveappreciated the better hygienic condition oftheir surroundings. The core area of themunicipality has become a more attractiveplace where water supply and disposalfacilities are arranged clearly. Streets, lanes,and courtyards are cleaned regularly and easilyso that walking is more pleasant. Opendefecation has been nearly eliminated becausemost households have toilets. The watersupply is available throughout the year,although the quantity is not always enough.Surface drainage is working effectively so thatroads are passable even during monsoon.

With the declared objective of "learning bydoing" in the field of urban development, theBanepa Development Project is considered asuccessful experiment in participatoryplanning and implementation.

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“It is sad to see the beautiful city deterioratelike this. It is still not too late; whatever is leftcan be saved.”

“We definitely have inherited a lot from ourforefathers – only if we could preserve it forour future generation – a spectacularpresentation reminding us of the once upon atime Shangri La”.

The above quotes are excerpts from thevisitor’s book of a six-week photo exhibitionentitled ‘Images of a City – The Oldtownscape of Kathmandu and Lalitpur, 1919– 1992’. The exhibition was organised in May1992 by the Nepal Heritage Society andGTZ/udle and inaugurated by the lateGanesh Man Singh.

The 139 photographs, some dating as farback as 1880, were put on display at BirendraArt Gallery, Bal Mandir. The exhibitionimpressed late King Birendra Bir Bikram ShahDev so much that he made a surprise secondvisit with his children. Many visitors returnedwith their ageing parents, who were bothoverwhelmed as well as saddened to seephotographs of their time after witnessing theenvironmental changes that had occurred sincethen. Nearly 40,000 visitors came to see theexhibition.

Photographs from Kathmandu, Lalitpur, andBhaktapur towns before, during, and after the1934 earthquake were collected from thealbums of 10 donors. Images included:

Bhaktapur Durbar Square before the1934 earthquake with Harishankaratemple in the far background and theeight cornered Chyasilin Mandap in theforeground.Patan Durbar Square, before and duringthe earthquake.A view of New Road in 1942 and a viewof part of the valley in 1950.A feast hosted by Prime Minister ChandraSumshere Rana in Tundikhel, probably in1910.Pre-earthquake Dharahara andGhantaghar.A Rana family crossing the Bagmati Riveron elephants by-passing the old metalbridge.

The photo exhibition was then documented ina book entitled ‘Images of a Century; TheChanging Townscapes of the KathmanduValley’ and was published in 1995 by GTZ/udle. 880 hard backs and 1,840 paperbackswere printed in Germany.

In February 1996, the photographs wereexhibited again for a week in Keshav NarayanChowk, Patan and during the occasion, the

Images of a CenturyImages of a Century

The Changing Townscapes of the Kathmandu Valley

92

ex-Prime Minister Krishna Prasad Bhattaraireleased the book to the public. Out of 880hard backs and 1,840 paperbacks printed,10% was distributed to certain institutions andpersonnel whilst the rest were put on sale at adiscounted price.

In the book, photographs are grouped intothe following nine chapters:1. A valley changing2. Religious places of the valley3. Dharahara and its surroundings4. Tundhikhel and its perimeter5. The heart of Kathmandu6. Bagmati – the holy river7. Patan – city of grace and beauty8. Bhaktapur – the Durbar square under

change9. Neoclassical Nepal – the Rana palaces.

Each chapter provides an overview of thehistorical importance of the photos.

The Importance of theBook as a Reference toUrban Development

Few cities in the world have managed toescape this process of change and destructionfrom their old townscape into modernity,which many people argue, is inevitable. Manyalso claim that as a poor country, Nepal hasother more pressing priorities than conservingthe remnants of the past.

The photos and texts in the book do notoffer answers to these questions, but

demonstrate the rapidity of change. Thebook also opens room for discussion aboutthe possibilities of guiding the changes intodesired directions for a better future,reconciling conservation and development.

The views expressed by visitors during theexhibitions demonstrate that the effects ofurban development are increasingly becominga public issue. People have begun to showconcern for the changes in their cities, whichprovides encouragement to those committedtowards sound urban development.

The National Society for EarthquakeTechnology and Banepa Municipality displaysphotos every year during Earthquake Day toraise awareness on the effects of earthquakesin the valley. Lalitpur municipality and theInstitute of Engineering regularly displayphotos of the book to demonstrate thenegative impact of haphazard developmentthat destroys the beauty of the townscape.

This book has become a reference tool forinstitutions such as the Kathmandu ValleyPreservation Trust and Kathmandu valleymunicipalities. It provides historical images ofthe original condition of certain monumentsthat can be compared according to their statustoday.

The book is still on demand as a gift orsouvenir amongst Nepalese as well asforeigners. The exhibitions and the bookwere a great success and contributed towardspromoting awareness of the cultural andarchitectural heritage of the Kathmandu valley.

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Support to the TownDevelopment Fund

S E C T I O N 4

97

The population of urban areas in Nepalalmost doubles every 10 to 15 years.According to the 2001 census, Nepal’s urbanpopulation is 14% of the national populationand increases at a rate of 6.65% per year. In1991, the urban population was 1.7 million; by2001, it had risen to 3.2 million, which placesheavy demands on limited existing urbaninfrastructure and service provision.

In addition, 55% of the urban populationlacks access to garbage disposal facilities, 46%to sanitary systems, and 47% to pipeddrinking water. According to an estimate in1987, Rs. 14 billion would be required to bringessential services in 58 municipalities to anacceptable level.

Central agencies undergoing uncompleted anduncontested reforms towards privatisation anddecentralisation have not been able to extendtheir services according to the increase indemand for proper infrastructure. Municipalitieslack adequate capital surplus to meet even aquarter of the total required services.

The Local Self-Governance Act and the TenthNational Plan have placed increasingresponsibility on municipalities to managetheir urban growth. Given their narrowrevenue base and the limited capacity of thegovernment to perpetually finance capitalexpenditures without corresponding returns,the capacity of municipalities to finance theirdevelopment from effective use of loans, andsupported by grants, has become animperative condition to meet the longer termgoal of improvement in basic services.

1. Forming the TownPanchayat DevelopmentFund

In March 1987, the Government of the FederalRepublic of Germany and His Majesty’sGovernment of Nepal signed an agreement topromote urban development in Nepal throughlocal efforts. The objective of this agreementwas to establish and develop a fund for urbanplanning and to create an efficient, decentralisedurban development administration with betteruse of local potential.

In December 1987, the Town PanchayatDevelopment Fund (presently known as theTown Development Fund) was established witha formation order as a semi-autonomousinstitution with a grant from GTZ/udle underthe Ministry of Panchayat and LocalDevelopment. The fund provided support intechnical, financial, and institutionaldevelopment of towns to ensure their all rounddevelopment (according to the policy ofdecentralisation) and strengthen the processesof formulation, implementation, and evaluationof plans in an effective manner.

The fund was supervised by a board of 11members, with representatives from theMinistry of Finance, National PlanningCommission, Nepal Rastra Bank, ChiefEngineer of the Department of Housing andPhysical Planning, and Mayors of five towns.The Secretary and the Division Chief ofTown and Local Development Division ofMLD serve as the Chairman and Member-Secretary respectively.

Support to the Town Development FundSupport to the Town Development Fund

98

Working rules and regulations, grantapplication forms, and guidelines for fillingforms were prepared. The mayors andexecutive officers of all 33 municipalities wereoriented in three separate meetings in threetowns. Of 71 applications from 25 towns, 23projects from 18 towns were approved andthree projects were completed.

2. Transforming theFund into the TownDevelopment Fund Board

In February 1989, a Town Development FundBoard was formed as a body with perpetualsuccession under the Development Board Actwithin the Ministry of Housing and PhysicalPlanning. The board emphasised thefollowing two objectives:

To provide financial support to municipalitiesto implement social infrastructure andrevenue generating projects, andTo strengthen the technical andmanagerial capability of municipalities toimplement projects.

A separate office was established and managedby an Executive Director. Two members —arepresentative of the Ministry of LocalDevelopment and one from a financialinstitution, were added to the new board. TheSecretary of the Ministry of Housing andPhysical Planning acted as Chairman of theBoard, and the Member Secretary was theExecutive Director of the fund board.

The Town Development Fund BoardFormation Order (1989) was amended (FirstAmendment 1993) and published in thegazette. In 1994, the government approvedadministrative and financial rules andregulations, and the following majoramendments were made:

The number of board members wasreduced from 13 to 11.Towns already represented in the boardwere not to be re-nominated until alltowns had been represented in the board.Accounts had to be maintained accordingto commercial accounting principles andin accordance with the rules, regulations,and by-laws of the board.Accounts had to be audited by an auditorappointed by the board andrecommended by the Auditor General.The board could operate its own accountsand invest its income and any surplus fund.

A. Support (Loan) from theInternational DevelopmentAssociation of the World BankIn April 1989, the government entered into adevelopment credit agreement with theInternational Development Association (IDA)of the World Bank to finance theestablishment and operation of the fundboard and provide seed loans for urbaninvestment projects for municipalities.

The board provided loans of up to 90% (80%from IDA credit and 10% from thegovernment equity in civil works) of theestimated project cost for social infrastructureand revenue generating projects, whilst themunicipality had to furnish the remaining 10%in matching funds from its own source.

Municipalities that demonstrated a capacity tomanage their investments and generate sufficientincome to service debt were eligible for loans.Loans ranged from Rs. 250,000 to Rs. 20 million.

In 18 municipalities, 28 projects (18 socialinfrastructure and 10 income generating) werecompleted at a cost of Rs. 178 million. Of these,the IDA loan was Rs. 124 million. The followingtypes and numbers of projects were completed:

Type of project

Bus Parks

Solid Waste Equipment

Black Topping of Road

Storm-water Drains

Number

3

3 tractors with trailers andone suction tanker

800 meters

15 kilometres

Type of project

Shopping Complexes

Municipal Building

Recreational Park

Number

7

1

1

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IDA cancelled US $ 7.5 million out of US $10.5 million in loans in March 1995, and creditwas closed in June 1996 due to the slowdisbursement of funds. Although progress wassatisfactory at later stages, the first four yearswere slow due to the following main reasons:

Absence of elected representatives formore than a year (until local elections inmid-1992)Late arrival of the external advisor fromUNDPSlow preparation and appraisals ofprojects.

Larger municipalities such as Janakpur,Siddharthanagar, Biratnagar, Birgunj, Butwal,Bharatpur, and Dhangadi benefited from theconstruction of major drains in their towns,thus avoiding regular monsoon floods in mainmarket areas. Bus Parks were constructed inHetauda, Dhangadi, and Mahendranagar forthe first time outside Kathmandu valley.

The repayment of loan (interest and principle)by municipalities was very encouraging. Thestatus as of June 30, 2005 was as follows:

Technical expertise and other logisticalsupport came to an end in November 1993.

Besides providing three international advisorsfor a total of 77 person months, the projectprovided costs for operation and maintenance,training and study tours, travel expenditures,vehicles, and local consultants. The followingactivities were carried out under this supportprogramme:

Policies, procedures, methods, and criteriafor loan projects were formulated in a setof manuals.Loan proposals submitted by eligiblemunicipalities were appraised and approved.Long-term loans were channelled.Staff members were trained to managefunds, appraise the social, financial,technical, and economic viability of loanproposals, and supervise projects.

c. Technical and Financial (grant)Support from GTZAll assets of the Town PanchayatDevelopment Fund, including the ongoingand completed projects with technical andfinancial support from GTZ/udle weretransferred to the Town Development FundBoard in 1989.

In September 1989, the grant policy andworking rules and regulations were revised inorder to streamline funding and implementmechanisms. Under this policy, grants wereprovided to municipalities on a matching basisfor a wide range of capital investment,planning, and non-formal education. Thefollowing major improvements were made:

Types of projects were added and wereclearly identified.A grant ceiling was introduced accordingto the grant type.A maximum grant amount and numberof projects were limited to a municipality.Project appraisal and implementationprocedures were clearly defined.

A guidebook on the grant programme waspublished and distributed to all concernedinstitutions and stakeholders. The guidebook

b. Technical Support fromUNDP/UNCHSThe United Nations DevelopmentProgramme with the United Nations Centrefor Human Settlements serving as the UNexecuting agency, agreed to support the TownDevelopment Fund Board in April 1989. Theobjective to provide support was to enable theboard to function as a technically capable andfinancially viable entity that provided long-term finances to eligible municipalities forpriority investment projects.

The support commenced in January 1990 withan advisory team that consisted of a ProjectAdvisor, an engineering and technical advisor,and a Municipal Finance and Loan Specialist.

Loan

Interest

Principle

Receivable in Rs.

75,695,706

80,390,778

Received in Rs.

74,763,208

77,516,837

In %

98.77

96.43

100

described the objectives, scope, applicationprocedure, and procedures of grant appraisal,approval, and disbursement. The guidebookalso provided profiles of different types ofprojects, e.g. integrated public toilets, privatetoilets, small drains, pavements, bus-parks,vegetable markets, cattle markets, townextension schemes, etc. The main objectivesof this guidebook were to:

Clarify the scope and limitations of theGTZ grant programme and the loanprogramme supported by the WorldBank.Help the decision-makers at municipalitiesto identify appropriate projects and applyfor them in the correct manner.

In 1991, thirteen completed grant projects ineleven municipalities were evaluated through alocal consulting firm in order to make thegrant programme more effective. Accordingto the report, municipalities and theirinhabitants benefited from most of theprojects. The evaluation report also identifiedthe following major problems:

Weaknesses in identifying and planningprojects.The process of approval for grantprojects was long and complicated,Some projects were poorly executed.Lack of proper supervision.The ceiling was not appropriate with theincrease in projects costs.Lack of vision regarding the sustainabilityof the fund board.No distinction between rich and poormunicipalities.

Many of the critical problems were due to thelack of political representatives inmunicipalities. The fund board wasdeliberately designed not as an implementingagency, but as an institution that supports andfinances activities carried out by municipalitiesthemselves. Considerable progress wasachieved after local elections in May 1992, andthe following major changes were made in thegrant policy:

36 municipalities (three added just before

the local election in 1992) were classifiedinto three categories according to theirpopulation, total revenue, and per capitarevenue.Grant ceiling, matching funds, and typesof grant projects were changed accordingto the classification of municipalities andyearly inflation.Payment of 10% service charge on grantprojects from udle to the fund board.Contributions to income generatingprojects were exclusively given as softloans and no longer as grants.A revolving fund was established frominterest, principle, and service charges.

To strengthen the financial sustainability ofthe fund board, a soft loan window wasintroduced based on the revised policy. Amaximum of Rs. 1.5 million in soft loans wasallocated to all municipalities for differenttypes of revenue generating projects andcompost plants. Matching funds differedaccording to the classification of eachmunicipality. The interest rate for soft loanswas placed at five percent, and loans had to berepaid within eight years, with a three-yeargrace period.

Progress in the soft loan component wassatisfactory, however, the World Bankobjected it and criticised that there was anoverlap in the lending windows with thedifferent terms and conditions.

Many municipalities expressed their concernover the suspension of soft loans sincefinancially poor municipalities, which were noteligible for IDA loans, lost the opportunity toobtain loans for revenue generating projects.This was also a setback to the board in termsof the loss of resources, which otherwisecould have been used as a revolving fund forfuture loans to municipalities.

Soft loans were finally provided again to thosemunicipalities not eligible for IDA loans andfor revenue generating projects not exceedingRs. 1.5 million for one project.

101

The repayment of soft loans (interest andprinciple) by the municipalities as of June 30,2005 was:

By 1994, the fund board discontinuedapproving projects financed by soft loans dueto the saturation of funds and over-commitment to grant projects. All projectsfinanced by soft loans were completed by July1996.

The following physical achievements weremade from 13 soft loans in 10 municipalitieswith a soft loan of Rs. 13.456 million:

Mayors expressed their concerns about howtheir municipalities could progress if theagreed funds between the two governmentswere saturated. In the same year, the GermanMinistry of Economic Cooperation agreed toprovide Rs. 26.37 million to the board (inaddition to the DM 3.4 million agreed in 1987and subsequent agreements in 1990 and 1993),from the German Counterpart Fund to meetthe costs of the approved grant and soft loanprojects.

In August 1994, the grant policy was againreviewed with the following major policyamendments:

The ceiling of the grant amount wasraised in average by 50% for all types ofprojects.The percentage of the grant contributionincreased from 40, 60, and 80% to 50, 70,and 90% for A, B, and C categories ofmunicipalities, respectively.Two new types of grant projects wereintroduced:• 100% grant to all municipalities with a

grant ceiling of Rs. 600,000 forsupervising the construction ofprojects financed through grants, softloans, and loans.

• 80% grant to only category Cmunicipalities with a grant ceiling ofRs. 800,000 to construct a newmunicipality building and a grantceiling of Rs. 400,000 to improve anexisting municipality building.

The number of grant projects that couldbe approved for any municipality wasraised from three to five, and studyprojects were exempted from this ceiling.The Executive Director could approve allgrant and soft loan projects with prioragreement with the donor.

Contributions from Germany were fullyutilised for approved grant and soft loanprojects by July 1997. The following were theachievements from 303 grant projects in 36municipalities with a total grant fund of Rs.99.748 million:

Type ofproject

Shoppingcomplexes

Vegetablemarkets

Suctiontanker

Number

7

2

1

Type ofproject

Bus park

Goat markets

Number

1

2

SoftLoan

Interest

Principle

Receivablein Rs.

02,976,017

13,484,785

Receivedin Rs.

02,976,017

13,484,785

In %

100

100

According to the revised policy, udle provided10% of the grant amount disbursed as aservice charge for handling grant projects tothe fund board. The board established arevolving fund for future grant and soft loanprojects with 50% of the 10% service chargeagainst grant projects, and interest andprinciple earned from soft loans.

As a result from the fiscal year 1993/94onwards, the board met its operating expensesfrom its own income, a large part of whichcame from the 10% service charges providedby udle for administering grant projects.During the previous years, HMG providedgrants for all administrative costs and UNDPprovided technical assistance.

During the second national conference in1994 held in Pokhara, Mayors and Deputy

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3. Establishing the TownDevelopment Fund as anAutonomous Institution

In 1992, a draft Town Development Fund Actwas prepared and submitted to the Ministryof Housing and Physical Planning in order tomake the board legally and financiallyautonomous. Although it was hoped that theact would be passed in the next winter sessionof parliament, the plan was eventuallydropped due to a lack of politicalcommitment and the belief that the ultimategoal was to establish the Town DevelopmentFund Board as an Urban Development Bank.

In 1995, the King mentioned establishing anUrban Development Bank in his speech at the8th parliamentary session. The Ministry ofHousing and Physical Planning formed aPolicy Working Committee under thecoordination of the Joint Secretary of theministry to draft concrete proposals for theidea, and the Executive Director of the FundBoard acted as the Member Secretary of theCommittee.

A preliminary draft for converting the boardinto the Urban Development Bank under aseparate act was prepared and submitted tothe committee. In addition, a financialanalysis of the board for the period 1995/96to 2019/20 was prepared to show that the

institution could aspire to this role with theproper use of IDA loans and KfW grants ofDM 9,000,000. Unfortunately, the idea didnot materialise due to the lack of aDevelopment Banking Act and politicalchanges within the country.

In 1996, the following two alternatives wereconsidered to change the legal status of theboard in order to increase its financial andadministrative autonomy:

The board should be established under aseparate act of its own, orThe board should be established as anUrban Development Bank under theDevelopment Banking Act.

The first alternative provided a more logicalchoice. A draft for a separate act was almostready without changes in the board’sobjectives and how it functioned. If the latteroption were to be followed, it would require alot of effort and time since the DevelopmentBanking Act had only been established in1996. Also, the board had not matured andwas not yet independently sustainable tobecome a bank.

In 1996, a bill to establish and manage theFund Board under a separate act, called theTown Development Act, 1997, was approvedby the cabinet and forwarded in the ongoingsession of parliament for approval. In

Type of project

Storm-water drains

Private toilets

Public toilets

Solid-waste equipment

Stone and brickpavement

Recreational parks

Ponds

Technical equipment

Number

30 kilometres

1,050

24

20 tractors with trailersand 150 containers

6,000 square meters

6

6

Type of project

Municipality building

Preparation of base map

Feasibility studies and detaileddesigns

Shopping complexes andvegetable markets

New schools and improvementof old schools.

River training works

Library and campus buildings

Number

1

1

68

26

37

480 metres

4

21 computers, 25 fax machines, 16 levelling instruments, 5 theodolites,23 photocopy machines, 20 printers, and 36 drafting sets.

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February 1997, both houses of parliamentapproved the Town Development Fund Bill.The Town Development Fund BoardFormation Order (of 1989) was repealed andall assets, liabilities and employees of theFund Board were transferred to the TownDevelopment Fund.

His Majesty’s Government framed rulesnecessary to implement the objectives of theFund in September 1997. In 1998, theBoard of the Town Development Fundapproved the administrative and financial by-laws submitted by a sub-committee underthe Town Development Fund Act, 1997 andthe rules framed under the Act.

The new board has one representative eachfrom the Ministry of Local Development,Ministry of Finance, Nepal Engineer’sAssociation, Association of CharteredAccountants, and five Mayors from fivedevelopment regions. The Secretary of theMinistry of Housing and Physical Planningis the Chairman, and Executive Director ofthe Fund is the Member Secretary of theboard.

The Town Development Fund became afully autonomous institution under this Act,enabling it to expand its field of activitiesfrom municipalities to villages developingtowards towns, and institutions related withurban development.

4. Technical Support fromGTZ and Financial (grant)Support from KfW

In 1994, the Town Development FundBoard requested the Kreditanstalt forWiederaufbau (KfW - the GermanDevelopment Bank) for financialcooperation for an initial period of threeyears starting from mid-1995. In September1994, KfW carried out a pre-appraisal study

of the board through a team of foreign andlocal consultants. The team visited 13municipalities and looked into 50 grant, softloan, and loan projects. Besides detailedtechnical evaluation, the team also studied thelegal, economical, and institutional status ofthe board with positive results.

In addition, GTZ/udle decided to continue toprovide technical support to the boardsimultaneously with financial assistance fromKfW. GTZ/udle deputed an externalconsultant and a senior local coordinator toassist implementing the programme. Supportwas provided to strengthen the organisationand manage the funds, as well as to assistmunicipalities to implement, operate, andmaintain KfW funded projects.

a. KfW Funded Town DevelopmentProgramme Phase IA mission from KfW visited Nepal inNovember 1994 to make a final appraisal ofthe Town Development Programme.Following this, HMG and KfW signedfinancial and separate agreements inNovember 1995, which aimed to providesupport to municipalities in the field of urbandevelopment through the Town DevelopmentFund Board. Under these agreements, thefollowing major provisions were made:

KfW provided a grant amount of DM 10million to the board to finance grants andloans to municipalities for socialinfrastructure and revenue generatingprojects over a period of four and halfyears starting from 1995/96. Thisincluded service charges to the boardagainst the disbursement of grants, andfees for consulting services forsupervising the preparation andconstruction of grant and loan projects.The repayment of loans and interest fromthe municipalities would be used to buildup a revolving fund within the board.A special interest bearing account wasopened in the Rastriya Banijya Bank to

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establish a Disposition Fund, thusenabling a smooth disbursement of funds.The board’s grant policy with GTZfunding and the IDA loan policy wererevised in accordance with the KfWguidelines for KfW funding. The followingmajor changes were made in the policy:

All municipalities were categorisedinto high income and low incomegroups according to their own sourcerevenue per capita.Procurement of all types ofequipment was discontinued (exceptfor equipment for collecting solidwaste, as part of a package with theconstruction of a landfill site).Interest rates, maturity periods, andgrace periods were lowered for socialinfrastructure projects for bothincome groups and lowered forrevenue generating projects for lowincome groups.All municipalities became eligible forloans based on the current accountsurplus of the most recent three fiscalyears. The maximum loan eligibilityrate was raised and a minimum ceilingwas fixed.Types of grant projects, proportions ofcontribution, and ceiling amounts wereseparated for high and low incomegroups, and the maximum grantamount for each project was increased.If requested, the board could providelocal consultants to identify andimplement projects, make detailedfeasibility studies, and supervise theconstruction of all types of projects.The board would bear 100% of thecosts.

During a one-day orientation programme, theboard presented a draft on the grant and loanpolicy procedures under KfW funding, to theMayors, Deputy-Mayors, and Executiveofficers of 36 municipalities. The followingcomments were made:

KfW provided soft loans for socialinfrastructure and revenue generating

projects only to low incomemunicipalities. Many municipalities thatare neither rich nor poor, however fallwithin the high income group, areexcluded from this source of assistance.A critical review was required of howmunicipalities are categorised.Interest rates on loans were very high andrequired revision. Prevailing interest ratesof commercial banks needed to be takeninto account during revision.Proposed procedures of grant and loanfunding seemed complicated and lengthyand might discourage municipalities toapply— especially for loans.

Meanwhile, two major changes occurred in HMG’spolicy concerning the income of municipalities:

MLD allocated Rs 1 million to each ofthe poorest 24 municipalities as a grant tofinance the required matching fundnecessary for loan projects. If this moneywas not used within a fiscal year, it wouldbe carried over to subsequent fiscal years.The government declared that octroiwould be abolished from the next fiscalyear. Instead of octroi, HMG will collectone and half percent in local developmenttax on all imported goods from 1996/97and distribute it to the municipalities as anequivalent amount to that collected fromoctroi over the preceding three years.

Based on the comments received from theorientation and the above mentioned changesin government policy, grant and loan policy/procedures under KfW funding were finalisedin 1996 with the following majorcharacteristics:

Municipalities with an average per capitasource of revenue of Rs. 150 or moreover the last three years, and total revenueof Rs. 7.5 million were categorised as highincome ones and the remaining as lowincome municipalities.All projects were finally appraised andapproved by KfW.The number of projects (loan or grant)was limited to five.

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High income municipalities were providedsoft loans for infrastructure projects at aninterest rate of six percent, and loans forrevenue generating projects were fixed atan interest rate of 12%. Low incomemunicipalities were provided loans for alltypes of projects at a six percent interestrate. Maturity period, including the graceperiod were put at 12 years in all cases.

The Town Development Fund Board becamethe Town Development Fund (TDF) under itsown Act in February 1997. An internationalconsultant analysed the financial situation ofthe TDF and the eligibility criteria, interestrates, service charge, etc., under KfW funding.During the same year, a local consulting firmreviewed 20 projects under World Bank andGTZ funding in 12 municipalities. Theobjective of both studies was to make thegrant and loan policy under KfW fundingmore effective and to strengthen the financialbase of the Town Development Fund.

As a result, the grant and loan policy wasrevised in 1998 and comprised of thefollowing changes:

The maximum grant ceiling for both typesof municipalities was raised 20 - 40%.The Fund could appraise and award allprojects with consent from the externalconsultant for grants and loans up to Rs.10 million.Municipalities with an average per capitaown source of revenue of Rs. 230 ormore over the last three years, and totalrevenue of Rs. 7.5 million, werecategorised as high income municipalitiesand the remaining as low incomemunicipalities.

A broad framework of ‘procurement guidelineswas prepared in 1998 for works (executed bycontractors) and services (carried out byconsultants). A four-member procurementcommittee under the coordination of theExecutive Director of the Fund was formedand empowered for processing and makingdecisions for procurement of works andservices with approval of the board and theKfW as and when necessary. The ExternalConsultant from GTZ/udle was a permanentinvitee of the committee. This was approvedby the board and concurred by the KfW. Majorhighlights of the guidelines on procurement ofworks were:

Use of standard tender documentsprepared by the TDFTendering under a two-envelope systemProcedures of procurement through the users,on force account and by local shopping.

Procurement guidelines for services included:Grouping of pre-qualified localconsultants in Architectural andPlanning/EngineeringMode of procurement under competitivebidding, local shopping, and directnegotiationEvaluation criteria for technical andfinancial proposals.

By mid-2000, the entire grant amount of DM10 million was allocated towards approvedprojects and by 2001, almost all grant and loanprojects were successfully completed asplanned under Phase I from KfW funds. Theproportion of use of funds for grants andloans was 56% and 44%, respectively. Thefollowing table reveals the number and types ofprojects and respective financial contributions.

Types projects

Grant

Soft loans and loans

Studies

Supervision work

Total

Number of projects

96

17

35

48

Fund disbursed in Rs.

154,334,853

113,446,606

12,809,041

30,359,301

310,949,802

Number of municipalities

30

14

25

30

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Loans andsoft loans

Interest

Principle

Receivablein Rs.

38,828,728

55,452,292

Receivedin Rs.

39,550,801

56,752,454

In %

101.86

102.34

The following table indicates the repayment ofinterest and principle from 17 loans and softloans from 14 municipalities as of June 30, 2005.

b. KfW Funded Town DevelopmentProgramme Phase IIBased on satisfactory results of the TownDevelopment Programme Phase I and on theanalysis of the economic situation of theTDF, including the evaluation of the loan andgrant policy by an external consultant, FRGand HMG agreed to continue support to TDFunder Phase II.

On November 30, 2000, KfW and HMG withTDF entered a new agreement in which KfWcommitted a further DM 14,002,431.52 (Euro7,159,329.56) to be disbursed by June 2005.Under subsequent arrangements, this grantwas increased to Euros 8,047,658 (equivalentto Rs. 656 million), which included theremaining amount from Phase I. Thedeadline for final disbursement was fixed toDecember 2007.

Technical support from GTZ/udle to TDFprovided in Phase I of the TownDevelopment Programme, continued in PhaseII. New arrangements included enhancedmatching funds and disbursement with aproportioning of 75% loan to 25% grant forsocial infrastructure and revenue generatingprojects in 58 municipalities.

Types of projects

Storm-water drains

Municipal buildings

Pavement

Park and ponds

Private toilets

Schools and campuses

Integrated public toilets

Protecting river bank

Shopping complexes

Bus parks

Roads

Under grant

10,644 m

10

5,152 sq. m.

10

2,849

22

11

400 m.

Under soft loans and loans

2,983 m

2

10,600 sq. m.

8

3

1,773 m.

Total

13,627 m.

12

15,752 sq. m.

10

2,849

22

11

400 m.

8

3

1,773 m.

Physical achievements made through 96 grants and 17 soft loans and loans:

The most common projects were sanitationprojects, (44) followed by education (22),drainage (12), administration (12), recreation (10)commerce (8) and transportation (5). Infinancial terms, drainage works amounted to themost (Rs. 57 m.), followed by transportation (Rs.53 m.), sanitation (Rs. 48 m.), education (Rs. 39m.), administration (Rs. 35 m.), commerce (Rs.23 m.) and recreation (Rs. 13 m.).

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The following major amendments were madefor seeking grants, loans, and soft loans underPhase II from KfW funds:

KfW authorised TDF to decide onappraisals and contract awards forprojects up to Rs. 8.5 million withcertification by the external consultant.Municipalities were categorised into A)metropolitan and sub-metropolitan citiesB) with own source revenue equal to andabove Rs. 10 million or per capita ownsource revenue equal to and above Rs. 230and C) rest.Category A municipalities were madeineligible for grants and grant funds werelimited to Rs. 3 million for municipalitiesunder category B and C. Grants wouldnot be approved for category B unless aloan agreement was concluded.Interest rates for loans and soft loanswere set at four percent and one percentabove the gross interest rate for long-termdevelopment bonds.Matching funds for grants would beincreased over the years by 10% everyyear.All municipalities could obtain soft loansfor infrastructure projects at differentmaturity periods. Categories A and Bcould obtain loans for revenue generatingprojects, and Category C could obtain softloans for the same.Municipalities will be providing matchingfunds for study and constructionsupervision based on their categories.

Procurement guidelines established in 1998were revised in 2003 based on the new policyfor Phase II, with the following changes:

Municipalities will use contractors forprojects costing more than Rs. 2.5 million.Awards for construction contracts will bebased on 30% weight to technical scoreand 70% weight to financial score.The procurement committee will approveof additional costs of up to 10% of thetender. The technical committee formedby the board, with the external consultantas an invitee will approve of an additionof up to a limit of 35%.

30 local consulting firms were short-listedand placed into five groups for procuringall types of engineering services.A local consultant will supervise projectsthat cost more than Rs. 2.5 million.The procurement committee can hirelocal professionals to supervise theconstruction of projects costing less thanRs. 6 million.

In 2001, the following modifications to loanand grant policy/procedures were adopted forPhase II:

Increment in percentage of matchingfunds of the total project cost was revisedto five percent instead of 10% forCategory B and C municipalities for grantprojects andGrant funding per municipality, regardlessof category B or C was limited to Rs. 4million instead of Rs. 3 million for theduration of Phase II.

As of June 30, 2005, 17 grants, three loans,three soft loans, five studies, and sixsupervision works have been completed outof an approved 32 grants, nine loans, 11 softloans, 14 studies, and 16 supervision works.

Number wise, education ranks first with 18out of 52 approved projects, followed byadministration (9), transportation, sanitationand commerce at equal ranks (7) and drainage(4). In terms of approved costs, commerceleads, followed by transportation andadministration. The following charts revealthe number of approved and completedprojects and respective approved amount anddisbursements as of June 30, 2005.

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implemented in cooperation with GTZ’sHealth Sector Support Programme indifferent phases.

In April 2003, the department signed aMemorandum of Understanding with theTown Development Fund to implement theDistrict Health Project, Phase I (component Aonly) excluding the delivery of equipment.The objective of this arrangement was to takeadvantage of the experiences of the TDF andthe availability of established procedures andstandardised bidding /tendering /contractdocuments from the Town DevelopmentProgramme I, financed by KfW.

The following health facilities and theirrespective districts were selected under Phase I:

Bheri Zonal Hospital, Nepalgunj, BankeDistrictBardiya District Hospital, Gulariya,Bardiya DistrictDhading District Hospital, DhadingDistrictSorahawa Primary Health Care Centre,Sorahawa, Bardiya DistrictRajapur Primary Health Care Centre,Rajapur, Bardiya DistrictGajuri Primary Health Care Centre,Gajuri, Dhading District

TDF maintains the following functions:Selects local consultants to providedesigns detailed engineering work andsupervision workMonitors the performance of localconsultantsTenders and selects contractorsMonitors the quality of workmanship,material, and physical and financialprogress under the awarded contracts

Types of projects

Lane Pavement

Reinstatement ofmunicipal building

School furniture

Public toilets

Schools

Under grant

1,400 sq. m.

4

8

2

2

Types of projects

Shopping complexes

Bus parks

Roads

Municipal buildings

Under soft loans and loans

1

2

350 m.

2

Loans andsoft loans

Interest

Principle

Receivablein Rs.

6,215,896

4,932,182

Receivedin Rs.

6,042,414

4,947,257

In %

97.21

100.31

c. The District Health ProjectFunded by KfWWithin the framework of the German FinancialCooperation, the German government agreedto provide support to rehabilitate or extendhealth facilities and provide medical equipmentto various districts of Nepal through theGerman Development Bank (KfW).

The aim of the project was to improve thehealth situation of the population in selectedproject districts. The District Health Project’sexecuting agency is the Department of HealthServices under the Ministry of Health, and is

Physical achievements made from 17 grants, six soft loans, and loans in 22 municipalities.

TDF has committed Rs. 230 million for variousprojects; this amount equals to approximately35% of the available fund. TDF has disburseda total of Rs. 109 million (Rs. 75 million forloan projects and Rs. 34 million for grantprojects, studies, and supervision works); thisequals to approximately 17% of the availablefund. Repayment from loans and soft loans(interest and principle) as of June 30, 2005 wasas follows:

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An International Consultant on behalf of KfWprovided guidance to TDF and was in-charge ofmonitoring and handling the quality of detailedengineering designs of all health facilities, andselecting contractors for three health facilities.

In return for the technical support mentionedabove, TDF will receive the following servicecharges for implementing the project, at a rate of

15% of the total payment to localconsultants for design and supervisionFive percent of the total payment forconstruction works.

The local consultant prepared the draft designand engineering reports for Bheri ZonalHospital, Dhading District Hospital, andGajuri Primary Health Care Centre by 30 June,2005. Comments were received from theDepartment of Health Services, theinternational consultant, and staff andmanagement committees of health facilities.The consultant is preparing the final reports.

In addition, design and detailed engineeringplans for Bardiya District Hospital, SorahawaPrimary Health Care Centre, and RajapurPrimary Health Care Centre were finalised.Tender calls were made for construction andcontracts were awarded. The signing of thecontract has been deferred until a conceptpaper on the maintenance of these facilities isreceived by the Department of Health.

The total estimated cost of these six facilitiesis Rs. 178,552,896 (approximately Euros2,006,212) and construction should becompleted by the end of 2007.

5. Financial (loan) Supportfrom the AsianDevelopment Bank

Based on the report’s recommendations on thefinal preparations for the project, the SmallTowns Water Supply and Sanitation SectorProject, HMG, and ADB agreed that loans tothe users’ committees would be best channelledthrough the Town Development Fund to

ensure repayment. Although the loanconditions and institutional arrangements forloan recovery differed in the following projectsfunded by ADB, the following reasons persistas to why TDF has a crucial role:

TDF is an established institution with themandate to facilitate the financing ofsocial infrastructure through loans andgrants to local governments.Its record of loan repayment is exemplarywith more than a 95% repayment rate.It has a recognised and accepted localagreement format and a loan repaymentprocedure that borrowers honour andabide by.It has the institutional capacity to supportprojects and manage a significantlyincreased loan portfolio.GTZ through udle is providing TDFwith technical support in institutional andfinancial management.By treating the cost recovery (partly)component as a loan from anindependent institution, users’ committeeswill understand their own commitmenttowards repayment.Departments will not need to develop andrefine procedures for collecting paymentsdue to TDF’s involvement.

a. Small Towns Water Supply andSanitation Sector ProjectOn December 18, 2000, HMGN and ADBsigned a loan agreement to provide potabledrinking water and sanitation facilities to 43municipalities and emerging towns of Nepal bythe end of December 2006. TDF also signed anagreement with ADB for warranting the financialsustainability of the water supply component ofthe project by providing loans of 30% of theproject cost to the Water Users Associations.

Customers had to meet 20% of the cost ofthe project through upfront contributions andHMG had to provide the balance (50%) as agrant from the ADB loan. The mainimplementing agency was the ProjectManagement Office under the Department ofWater Supply and Sewerage, within theMinistry of Physical Planning and Works.

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In March 2001, TDF signed a subsidiaryloan agreement with the Ministry ofFinance for US $ 12 million with 5%interest per year (reduced to 3.5% under anew arrangement). The loan has to berepaid in 20 years with a five-year graceperiod beginning in 2007.

TDF will provide loans to users’ committeesin selected towns with annual interest rates of8% (reduced to 7% under a new arrangement)for a period of 15 years with a three-yeargrace period. TDF is also responsible forbuilding the financial and institutional capacityof associations and supporting them toimplement appropriate measures for collectingtariffs, operating, maintaining, and debtservicing town projects.

Of 23 water supply projects in 23 townsunder the first and second phases, 10 projectsare under construction, two projects have justcommenced, four are in the process ofawarding contracts, three are in the process ofre-bidding, two are under approval for bidevaluation, one is under tendering, and oneunder detailed design. Draft feasibility studiesof nine projects under the third phase havebeen completed and final studies are beingconducted.

TDF has disbursed Rs. 70 million for 10projects under construction, which is 14% ofthe total sub-loan agreements made with 21towns, and is 11.5% of the total loan fundavailable to TDF. ADB is considering arequest for a time extension for the projectuntil the end of December 2008.

TDF has proposed the following amendmentsin the agreement with the Ministry of Financedue to the project’s slow progress:

Increase the interest spread to a maximumof 3.5% to cover associated risks,Extend the principal repayment by anadditional two years, i.e. up to December1, 2008 to address potential mismatches incash flow andReduce the interest rate for water users’associations by at least 1% to utilise

generated resources for poor anddisadvantaged groups.

b. Urban EnvironmentImprovement ProjectIn September 2003, the Town DevelopmentFund signed a subsidiary loan agreement withthe Ministry of Finance for the UrbanEnvironment Improvement Project funded byADB.

Out of a total loan of US $ 30 million fromADB to HMG, the Town Development Fundwill be receiving approximately US $ 3.38million for funding loans at an interest rate of5% over a period of 15 years, and for fundinggrants to facilitate small urban communities.In return, TDF will provide soft loans forrevenue generating projects at an interest rateof 8% for 12 years to eight municipalities andone emerging town.

Contributions, loans, and grants fromdifferent sources (project, community,municipality, HMG, and the private sector) aredifferent depending upon the nature of theproject and the type of municipality. Forexample, the government will givemunicipalities 70% in loans and 10% in grantsfor social infrastructure projects, such as solid-waste, road, drainage, etc. The remaining 20%should come from within the community andmunicipality. For income generating projects,80% of funds will come from loans and 20%from the private sector. The project shouldbe finished by March 2010.

The Ministry of Housing and PhysicalPlanning is executing the project through theDepartment of Urban Development andBuilding Construction. A ProjectionCoordination Office under the Department ismanaging the overall project with supportfrom the department’s staff and a localconsulting firm.

The Project Coordination Office is responsiblefor the whole project and for implementinglarge-scale projects identified and studiedduring preparation work. TDF is responsible

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for carrying out projects listed under UrbanCommunity Facilities (mainly small projects toimprove environmental conditions), and PublicPrivate Partnership Enterprises (mainly revenuegenerating projects).

Eligible towns that will be implementingdifferent projects are Dhulikhel, Banepa,Panauti, Hetauda, Bharatpur, Bidur,Kamalamai, Ratnanagar, and Dhading.During Phase I, the project will concentrateon Hetauda, Dhulikhel, and Bharatpurmunicipalities, and during Phase II, Banepa,Panauti, and Ratnanagar municipalities. TheProjection Coordination Office hasestablished Project Implementation Units inthese six municipalities.

For Phase I, three local consulting firms havebeen hired to provide feasibility studies,detailed engineering designs, and incomegenerating projects in three towns. Thefollowing types of projects are beingconsidered: playgrounds, roads, public toilets,vegetable markets, water supply, land pooling,bus-parks, sanitation and wastewatermanagement, and river training works. Theproject is also hiring three other consultingfirms for towns under Phase II.

TDF has hired a consulting firm to design theCentral Bus Terminal in Bharatpurmunicipality with funding from KfW. Thescope of the plan is large and if it is feasible,TDF has agreed to finance it jointly withADB. A similar joint financing venture hasbeen discussed to improve the highway inBanepa municipality.

6. Technical andInstitutional Capability

udle has provided financial and technicaladvice to the Town Development Fund sinceits inception, and has helped to enhance itstechnical, financial, and organisationalperformance. TDF has provided support toregularly communicate and exchangeinformation with municipalities through

orientation seminars, newsletters, and projectleaflets. Technical training, guidelines, andmanuals are prepared to improve staffperformance and to ensure municipalitieseffectively utilise the fund.

udle together with TDF has been carrying outperiodical in-depth reviews of the grant andloan policies on the basis of projectevaluations made by local consulting firms.This ensures that TDF’s input towards theoverall development of municipalitiescontinues to be more efficient and effective.

TDF’s staff and udle regularly visitmunicipalities to appraise applications and toadvise them on issues related to technicaldesign, construction supervision, andmaintenance of ongoing and completedprojects. Costs for travel, food, and lodgingfor these visits are provided by udle. TDFhas provided travel costs for its staff sinceJuly 2004.

TDF provided the following with supportfrom udle:

A one-week training session to fouraccounts officers, nine accountants, andfour assistant accountants from 17municipalities. Basic accounting principleswere introduced and a double entryaccounting system enabled municipalaccountants to develop skills in budgeting,recording, accounting, auditing, andrepaying loans and soft loans on time.A two-week introductory training sessionto 21 municipal staff members from ninemunicipalities working in the accountsand tax section on Nepali wordprocessing, the Nepali accounting system,and the Nepali tax record-keeping system.A one-week refresher course on operatingcomputers and keeping records for 16municipal staff working in the accountssections of 12 municipalities.Two 3-day orientation seminars in Birgunjand Pokhara for elected representatives,line agencies, NGOs, and municipalitystaff on policy, programme, and activitiesof TDF.

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A two-day technical training workshopfor overseers and engineers of 13municipalities on identifying, preparing,implementing, and supervising projects,and maintaining quality control andprogress reports.A one-day brain-storming session by aninternational expert for TDF staff, pre-qualified local consultants, and concernedline agencies such as DWSS, NWSC, etc.,on planning and designing drainage andsewage systems under differentgeographical conditions.A one-week training cum interactionsession with TDF staff, pre-qualified localconsultants, and concerned line agenciessuch as DWSS, NWSC, DOR, etc., onguidelines for designing, constructing, andmanaging drainage and sewage systemsprepared by the international expert onsanitation.On-the-job computer training to all TDFprofessional staff on word processing.Training in auto CAD (computer aideddesign programme) to seven TDF stafffrom different sections.Booklets published on TDF’s grant andloan policy and distributed to allmunicipalities and other institutionsrelated with urban development.Quarterly newsletters published inEnglish and Nepali and distributed to allconcerned stakeholders to disseminateTDF’s regular activities.A one-week training session for threeTDF engineers on designing seismic-resistant concrete buildings and a two-week training session on computermaintenance for two TDF computeroperators in the Institute of Engineering.A one-month training session at the StaffCollege to two TDF office assistants thatwork in office administration andmanagement.A three-month training session at a privateconsulting firm for two TDF junioraccountants on practical accounting systems.A one-week course on the durability ofconcrete at the Institute of Engineeringfor a TDF engineer.

A General English Proficiency Course at alanguage centre lasting a month and ahalf, to an office assistant.A two-month training session in a privateconsulting firm to two senior accountantson Advanced Level Accountancy.A one-week course on Presentation andGroup Work Facilitation at a private trainingcentre to a senior professional from theAdministration and Finance Section.A one-week computer course on E-mailand Internet at a computer institute tothree computer operators.A two-weeks training session on OfficeProcedures and Management at the StaffCollege to a Senior Office Assistant ofthe Administration Section.A one-week training cum workshop onProject Financing under Consortium atthe Management Association of Nepal toan Administrative Officer.A two-month training course on Planningand Managing Municipal Infrastructure to14 engineers from 14 municipalities andfour TDF engineers (part time),acquainting them with the techniques andskills for planning, designing,implementing, maintaining, and managingmunicipal infrastructure.An eight-week (part-time) training sessionat a local consulting firm on ComputerAided Structural Analysis and Design tofive engineers.One engineer completed a two-yearMasters in Business Administration fromthe Institute of Management, KathmanduUniversity.One overseer completed a five-weektraining course on GeographicInformation Systems at the NaturalResources Planning and Managementsection in the Department of Geography,Tribhuvan University.A one-week training session at the StaffCollege on ‘Negotiation Skills forProblem Solving’ to four engineers.A manual for a new accounting systemwas prepared and all members of staff ofthe accounts section were provided on-the-job training.

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A three-day orientation on TDF’s grantand loan policy under KfW funding washeld in Dharan, Hetauda, and NepalgunjRegional Learning Centres for nominatedMayors, Deputy Mayors, and ExecutiveOfficers from 58 municipalities.

The above training and support has ensuredthat projects undergo proper design andfeasibility studies so that municipalities carryout planned development work rather thanerratic, ill-conceived projects. Technical staffand other staff within municipalities havebeen trained how to carefully prepare andimplement projects and properly manageaccounts.

Inputs from different components of udlesuch as organisational development, financialmanagement, urban planning, etc., have helpedmunicipalities to reach a level where they canabsorb financial assistance from TDF.

udle and TDF have been sharing the sameoffice space (within adjacent buildings) sincetheir formation. In addition to advisory andfinancial support, udle provided TDF withthe following necessary hardware to functionas a fully equipped, modern office.

elections have not been held since then. Mid-term elections announced for November 2002were cancelled due to security problems andmunicipalities have been functioning throughExecutive Officers and Boards ofRepresentatives from line agencies.

During October 2003 to July 2004,municipalities nominated mayors, deputymayors, and ward chairpersons throughout 58municipalities. However, nominees werecontinuously threatened and attacked, andsome even resigned. Four Mayors fromBirgunj, Pokhara, Dhangadi, and Gulariyawere assassinated and the Mayor of Butwalwas seriously wounded.

Besides the lack of elected representatives,poor progress in phase II has been attributedto widespread violence, restricted travel due toblockades affecting several municipalities,general strikes at different times and places,and unmotivated management staff at TDF.

In 2001, the Ministry of Local Developmentdeposited surplus revenue collected from localdevelopment taxes in a ‘reserve fund’, andopened a new window for providing grants toall categories of municipalities to implementalmost all types of social infrastructure andrevenue generating projects from 2002. Amunicipality can apply for two projects at atime and a maximum of five projects in a year.The cost of each project must not exceedmore than Rs. 5 million. The grant can varyfrom 40% to 70% depending upon the natureof the project.

Compared to the policy of the TownDevelopment Programme Phase II, the termsand conditions are simple and lenient.Detailed designs are not required and projectsare not appraised on technical and financialviability, nor does a project undergosupervision during execution (other than thatof municipal technical staff as and whennecessary).

From July 2002 to June 2005, the ministryprovided Rs. 329 million in grants (53% of

1 lap-top computer 1 fax machine

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7. Remarks

a. Progress of TDP Phase IIAlthough loans have been repaid satisfactorily,there is substantial concern over thecommitted and disbursed amount incomparison to the available fund.

In July 2002, the terms of the electedmunicipal representatives expired and local

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the total cost) to 58 municipalities for 192social infrastructure and 32 income generatingprojects. Contributions from municipalitiesand users were Rs. 225 million (36%) and Rs62 million (11%), respectively.

Two-thirds (66%) of the projects cost morethan Rs. 2 million, which has placedconsiderable pressure on the availability offunds for loans and grants, with grants beingmore affected. TDF needs to develop a policyto make this ‘reserve fund’ available. One ofthe options presently under discussion is toshift the responsibility of TDF from theMinistry of Housing and Physical Planning tothe Ministry of Local Development.

In terms of commitment, much depends onsuccessful marketing and promotion, and thesituation of the ongoing conflict within thecountry. In the report on TDF’s marketingand institutional matters, the internationalconsultant recommended simplifyingprocedures to shorten the process fromapplication to approval, and suggesteddeveloping a policy to make the ‘reserve fund’available to TDF. In the best-case scenario,full commitment may be achieved by 2008,and full disbursement by 2009.

b. Developing Human ResourcesDespite the efforts during both phases, thetechnical capability of municipalities is stillweak. Municipalities either do not know orneglect the importance of proper planningand regular maintenance of completedprojects. Conditions to qualify for grant andloan projects are enforced to ensure thatcompleted projects are repaired andmaintained properly, however projects areoften in poor condition due to the lack ofproper management.

Municipalities need to be strengthened inorder to develop their capacities in the areasof planning, prioritising, making feasibilitystudies, documenting, implementing,supervising, and maintenance. Trainingprogrammes for municipal staff should

continue and be reinforced according to theirneeds.

TDF has seven technical staff of a total of 38staff; 14 permanent professional staff, and 24support staff (22 permanent, 2 temporary).Retention of technical staff, whethertemporary or permanent, has been a majorissue for TDF since its formation. This hasnot only resulted in the loss of expertise, buthas also caused serious constraints whenprocessing projects. The following reasonshave been cited:

Poor salary structure and minimumalsalary advantage compared toadministrative staff.Limited scope for promotions.Lack of opportunity for personneldevelopment.

Until June 2000, TDF had its own salary scaleand grades. As a result, staff enjoyed 50 –70% higher salary than government staff. InJuly 2000, the government declared the samesalary structure for all institutions under it.

It is debatable whether TDF can provideadditional benefits to its unproportionatelyhigh number of staff. The developmentpolicy on human resources needs to bereviewed with a view to introduceperformance-based incentives and schemes.TDF needs to re-organise and possiblytransform into an Urban DevelopmentBank.

c. Institutional DevelopmentTDF has become a financially autonomousintermediary with policy, rules, and regulationsthat have been tested; it now has the capacityto process and finance more infrastructureand revenue generating projects.

Although it has achieved considerableinstitutional sustainability, TDF is still linkedwith the government and its practices.According to an international expert onmarketing and institutional issues, TDF needsto develop a strategy and plan with a long

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term vision to transform it into an UrbanInvestment Bank in order to become a self-sustainable autonomous institution.

Under the present circumstances, thefollowing institutional improvements wererecommended:

Increase responsibility and customerorientation by appointing one person tobe responsible for the whole project cycle.Reorganise and create integrated teamsthat take charge of one area with targets,internal competition, and incentives.Negotiate with KfW for more authority tomanage TDF instead of undergoingregular approval from it.Review the development of humanresources, and policies on public serviceoriented salaries, and introduce incentiveschemes.

d. Financial SustainabilityTDF is the only financial institution thatfinances urban infrastructure projects longterm. There is no competitor at presentexcept the MLD through its reserve fund.

In 1997, a financial analysis of TDF wasprepared for the period 1995/96 until 2019/20. It revealed that with proper management,TDF would be financially sustainable for atleast 25 years without any additional capital.This conclusion was based on theassumptions that:

50% of the total KfW contribution(Phase I) would be utilised for loans andthe remaining 50% for grants, and100% repayment of principle and interestwould be achieved.

If these assumptions were sustained, it wasestimated that the overall value of TDF at theend of a 25-year period would beapproximately Rs. 209 million.

The report also recommended the following:High income municipalities should becharged a minimum 14% interest rate forincome generating projects, and low

income municipalities 12% for financialsustainability andThe long-term financial sustainability ofTDF depends less on the amount ofadditional capital contribution and moreon the interest rates for loans given.

The above assumptions involve a process ofde-capitalisation, which will take place fromthe year 2011/12 onwards. The prevailinginflation rate in Nepal (approximately 10% in1997) exceeds the soft loan interest rate of6% for social infrastructure projects. Thisprocess of de-capitalisation would not occurif 60% of the total KfW contribution isgiven as loans and the interest rate of 6% forsocial projects is raised to 10%. However,this might prejudice the positivedevelopment impact of TDF and/or reducethe utilisation of funds. Alternatively, afurther capital contribution would be neededfor TDF, which came as Town DevelopmentProgramme Phase II.

In another financial analysis in 1999, thefinancial expert remarked that TDF shouldlook into possibilities to expand its capitalbase or its sources of income in the longterm. The expert also recommendedexploring possibilities for TDF to act as anagent for other international donors since itsoperational set-up has the capacity to handleadditional projects from other donors.

TDF has Rs. 113 million in revolving fundsfrom the principle recovery and interestincome of GTZ and KfW funding, and it hasretained earnings of Rs. 42 million frominterest from IDA, GTZ, and KfW funds andservice charges from KfW funds. However,its operating expenses are increasing annuallyand operational costs are paid from intereston the bank balance rather than from interestincome and service charges.

Operating expenses in the year 2004/05amounted to 67% of the total expenditure,including income tax. Until 2000/01, lessthan 20% of the operational cost was met by

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the interest on bank balance. Since 2001/02,the trend has considerably increased to about40%. This scenario is largely due to thefollowing reasons:

Saturation of income from interests fromGTZ soft loans by 2000/01,Decreased income from interests fromIDA loans,Saturation of KfW Phase I,Allocation of grants are less in proportionto loans (75% loan and 25% grant) and Poor progress in grant disbursement.

Under the present scenario, it would betimely and worthwhile to commissionexperts to conduct an economic assessmentof TDF, and the financial situation ofmunicipalities, in order to guide TDF to

define its vision, mission, core values,strategic goals, and indicators. Eventuallythis should lead to the development of acomprehensive concept regarding business,finances, management, and marketing anddesigning appropriate finance products forvarious types of investors.

A governance framework is necessary withinmunicipalities and central institutions toincrease the responsiveness, transparency, andaccountability of different actors involved.This includes actors from urban communitieswho request services through municipalplanning and a prioritisation process from amore efficient and service oriented TownDevelopment Fund – a vision of hope in anincreasingly difficult environment.

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Support to the Municipal Association of Nepal• Interview with the Chairperson of the Association

Manual for Municipal Working in Nepal

Strengthening the MunicipalAssociation of Nepal

S E C T I O N 5

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Overview

The Municipal Association of Nepal(MuAN) is the umbrella organisation thatrepresents all 58 municipalities (i.e., 1municipal corporation, 4 sub-municipalcorporations, and 53 municipalities) ofNepal. MuAN strives to increase thecapacity of municipalities to provideaffordable urban services to theirconstituents. Continuous policy inputs,advocacy, and lobbying for municipalcauses have established MuAN as a nationalvoice for urban sector and municipalgovernance in Nepal.

The vision of MuAN is to become an activeinstitution for safeguarding the overalldevelopment of urban sector and commoninterests of municipal local governments inthe spirit of decentralised good governance.MuAN believes that this can be achievedthrough coherent, systematic, collectiveefforts and cooperation amongmunicipalities and different stakeholders.

According to MuAN’s constitution, allmunicipality mayors, deputy mayors, andward chairpersons are able to act asmembers of the General Assembly. TheGeneral Assembly meets every year to setup budgetary and programme priorities.

To implement approved policies andprogrammes, the General Assembly formsa twenty-one member Working Committee.

This Committee consists of a chairman, vice-chairman, secretary-general, treasurer, andseventeen members. (Six members arenominated by the chairman including at leastone woman.) The Working Committeecreates a seven-member secretariat to facilitatethe everyday work of MuAN and tosupervise the executive secretary and otherstaff directly. MuAN has also institutionallyrestructured its office and created a women’sdepartment to be sensitive to gender issues.

Evolution of MuAN

Political uprising restored the multi-partydemocratic system in Nepal in 1990 andabolished the 30-year-old Panchayatsystem. After promulgation of a newnational constitution, the first multipartydemocratic general election was held in1991. A year later, the first local electionswere held. It was not easy to work in thenew political framework.

Acts and rules that govern local bodieswere not fully modified to be compatiblewith the changed political system.Moreover, the local elected politicians werenew and had come from different politicalbackgrounds. Many of them did not havegovernance experience.

Many mayors felt a need for support in urbanmanagement and municipal functioning. Withsupport from GTZ/udle in 1992, the

Support to the Municipal Associationof NepalSupport to the Municipal Associationof Nepal

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Ministry of Local Development (MLD)organised the first national workshop ofmayors and deputy mayors at the UrbanDevelopment Training Centre in Pokhara(UDTC). Mayors and deputy mayors of allthirty-six municipalities participated in theworkshop.

In addition to the orientation, participantswere also given an opportunity to expresstheir concerns regarding municipal affairsin the changing political situation. Theyfelt the need to develop a common forumto articulate the interests of allmunicipalities, but this was not realised inthe first year.

In 1993, the second national workshop washeld at UDTC, and participants pursuedestablishment of a platform to articulatethe interests of all municipalities.Unanimously an eleven-member ad hoccommittee was formed with Mr. BekhaRatna Shakya, the mayor of Lalitpurmunicipality, as chairman and theMunicipal Association of Nepal was born.

In 1994, with continuing support fromGTZ/udle, MuAN’s secretariat wasestablished and the Working Committeestarted overseeing MuAN business. Aseven-member committee drafted aconstitution, and the special assembly heldin Lalitpur municipality passed it in 1995.In the same year, a task force formed underthe coordination of Mr. Bijay KumarGupta, Mayor of Nepalgunj, submitted areport with recommendations foramendments of Municipal Act, 1991 andRules, 1992.

With financial and technical support fromGTZ/udle, MuAN continued to evolvethrough the following events:

Inaugural MuAN general assembly(May 1996) was held inMahendranagar. This was the first

time that agendas and issues weresystematically tabled and discussed.Important resolutions passed by theassembly were for the orientationworkshop of elected representatives,construction of the association’sbuilding, networking with national andinternational organisations, computernetworking among municipalities, andsome MuAN constitutionalamendments.Second general assembly (November1997) was held in Hetauda immediatelyafter the second local election. Theassembly elected a new 15 memberworking committee and named Mr.Dora Mani Paudel as the secondchairperson of MuAN. He laternominated six members according tothe constitution of MuAN.Secretariat office fully was establishedin a new building in 1997-98. MuANobtained its formal legal entity in June1998 by registering under the NationalDirective Act, 1961.Third general assembly (July 1998) washeld in Dharan. The assembly passedfifteen resolutions to address issuesincluding fiscal rationalisation,streamlining of the Local SelfGovernance Act, enactment of LocalSelf Governance rules, shiftingownership of public land tomunicipalities, and payment ofstreetlight electricity bills. To makethe association financially viable, themembership fee structure was alsochanged. The assembly also discussedthe establishment of an urban bankthat could meet the municipal financialshortages for infrastructuredevelopment.Fourth general assembly (April 2000)held in Siddharthanagar including thesecond general election of MuAN’sworking committee. Mr. Dor ManiPaudel was re-elected as chairperson.

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UNV Support (November2000 – October 2004)

Support from United Nations Volunteers(UNV) to MuAN was the outcome of a jointinitiative between GTZ/udle, MuAN, andUNV for technical assistance. In May 2000,the three-year project commenced tostrengthen local authorities, enable them todeal effectively with challenges, andcontribute to improving the quality of lifein urban areas. UNV has supportedMuAN by providing volunteers to implementa number of activities. The main objectiveswere:1. To strengthen the institutional capacity

of MuAN in the areas of technicalassistance, advocacy, representation,and resource mobilisation.

2. To secure the understanding of localauthorities about the real potential ofMuAN.

Under this project, five national UNVspecialists (in finance, communitydevelopment, economics, urban planning,and information networking) plus oneUNV team coordinator worked withMuAN.

Other contributions of GTZ/udle includedregular publication of ‘Voice of Cities’,web page design and hosting, resourcecentre strengthening, organisationaldevelopment of office/secretariat,international networking development, andcoordination of an urban issues workshop.

Major Achievements

After continuous efforts to benefitmunicipalities and to strengthen theirrights, the government was compelled torecognise MuAN and its pivotal role inpolicy formulation and changes in the legalframework. Subsequently, the government

included MuAN in several policy and steeringcommittees including the:

Local Bodies Fiscal CommissionLocal Development Fee Fund OperationCommitteeDecentralisation Implementation andMonitoring CommitteeSteering Committee of UrbanEnvironment Improvement ProjectStreetlight Task ForceHIV/AIDS Control ProgrammePeriodic Plan Manual PreparationMetropolitan Act PreparationNational Development CouncilNepal Tourism BoardTax Monitoring CommitteePolicy Committee of Public PrivatePartnership.

Since its inception, MuAN has influencedlandmark policy reform in decentralisation,governance, urban poverty reduction, andenvironmental issues. It was heavilyinvolved in bringing about the Local Self-Governance Act 1999 and the Local Self-Governance Regulations 1999. Both havebeen applauded in the international arenaas some of the most decentralisedframeworks ever adopted in the Asian andAfrican regions.

UNV support to MuAN built the internalmanagement capacity of the MuANsecretariat. The number of staff membershas been increased from four to thirteen,subject matter specialised units werecreated (in urban planning, municipalfinance, community development, andeconomics), an information anddocumentation centre was established, andthe secretariat was equipped with modernoffice amenities and a vehicle.

Even in the present political turmoil andcivil unrest, MuAN has successfullyrepresented the interests of municipalities,where there are no elected representatives, by

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offering a common platform for dialogueand negotiation with the central governmenton various urban and municipal governanceissues.

MuAN’s role has become even more vital insafeguarding the interests of municipalgovernments, especially when no local electedrepresentatives have been in office since 2002.MuAN is empowering local governments inNepal by actively working with theAssociation of District DevelopmentCommittees of Nepal and the NationalAssociation of Village DevelopmentCommittees of Nepal. It has also successfullybuilt cordial relationships with international

organisations working in local governance andthe urban sector such as:

International Union of Local Authorities,Regional Network of Local Authoritiesfor the Management of HumanSettlements,Network of Local Government Trainingand Research Institute in Asia and Pacific,Federation of Canadian Municipalities,Associations of NetherlandsMunicipalities,International Council for LocalEnvironmental Initiatives, andFriedrich- Ebert- Stiftung.

Interview with the Chairperson of the Association

Dora Mani Paudel is serving his second term as theChairperson of MuAN and was the Mayor of Hetauda for10 years.

I’ve been involved with udle for 14 years, 10 years asMayor at Hetauda and also as MuAN. GTZ/udle was the first(programme) to offer support in the urban sector as we had justbecome a municipality and were not sure how to proceed. Ithelped us in four areas: administration, finances, urban planning,and health and sanitation.

GTZ/udle helped us to build the capacity at our institution, staff members, and citizens. They helped usto develop the municipality as an institution. The staff have had good training so they are able to do theirwork, they’ve also supported the regional training centre.

GTZ/udle’s support to the establishment at MUAN was very important. MuAN mainly does lobbying,advocacy and supports municipalities, coordinates with INGOs, and lobbies for the rights ofmunicipalities, such as more independence. This would mean that MLD could not control our finances.We need more rights to collect resources and revenue without central control. More independencewould make the responsibilities clearer.

So far there is just udle working in the urban sector, so MUAN is trying to encourage INGOs to work inurban areas to provide water, sanitation, etc. The support would be coordinated through MuAN.

The greatest benefit of udle is that they strengthened the internal workings at our municipalities. Theyalso mobilised the public to act on improving the environment.

A suggestion is that udle works in all 58 municipalities. As well, if it did a very visible pilot project likeUrban Environment Improvement Works in each municipality it would inspire the communities.”””””

“““““

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The Municipality Act in 1992 grantedautonomy and decentralisation tomunicipalities, thus increasing responsibilityand accountability to the first democraticallyelected municipal governments. This forcedmunicipal governments to realise themagnitude of problems related to urbanmanagement.

A manual was produced in 1995 in bothNepali and English with support from theUrban Development Training Centre inPokhara, in response to the urgent need toimprove the performance of municipalgovernments. The manual was to providedetailed advice on all issues related to urbanadministration.

The manual contains 27 chapters and isdivided into five volumes. Each chapterbegins with a summary of the chapter andends with useful tips and legal provisions.Commonly used terms are illustratedseparately in boxes and annexes are attachedat the end of each chapter.

Various parts of the manual contain usefulmaterial on legal provisions, proceduraldetails, and recommendations for action ondifferent aspects of municipal work. Somesections offer further help in the day-to-dayworking and decision making of municipal

bodies, for both elected representatives aswell as all staff working in different units.

The first volume is entitled ‘Introduction andSummaries’ and offers help on the use of theManual. This volume provides a detailed listof contents and summaries of each chapter.One can select the volume and/or chapter ofinterest without having to go through all thevolumes.

The second volume entitled ‘Organisationaland Legal Framework’ contains nine chapterson the topic. This will be helpful for decisionmakers to review the workings of themunicipality and to initiate a restructuringprocess to improve its performance. Thefollowing nine chapters are in this volume:

Role of development agencies and districtdevelopment committees in municipalareas,Town development committee andmunicipality,Procedure for adoption of by-laws,Model organisational set-up for differenttypes of municipal bodies,Personnel management in municipalbodies,Conduct, discipline, and appealregulations for the municipal employees,Supervision by the Executive Officer andsection heads,

A Tool to Manage Municipal Administration Effectively

Manual for Municipal Working in NepalManual for Municipal Working in Nepal

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Training for efficient performance ofmunicipal bodies andMeeting management.

The third volume entitled ‘Internal OfficeWorking’ contains eight chapters and coversvarious aspects of internal working,processing letters, files, etc. This volumemainly benefits the supporting staff of themunicipality. The following eight chapters arein this volume:

Internal and external officecommunication,Receipts, registration, and internalprocessing as well as dispatch of mailsand documents,Filing, record keeping, and retrieval ofcases,Municipal data management,Management of municipal assets, storemanagement purchases, inventory control,and auction,Civil construction works, tendering, andcontracts,Handling of legal matters in the municipalbodies andRegistration of births, deaths, marriages,divorces, and immigrations.

The fourth volume entitled ‘FinancialManagement’ contains six chapters and coversbudgetary processes, accounts, and other issuesthat are essential for better financial management.The following issues are included:

Municipal financial management-revenuesand expenditure of municipalities,Municipal budget and its formulationprocess,Elements of improved financialmanagement,Municipal accounts, financial control andaudit,The Town Development Fund Board, itsgrant and loan policies andStreet naming and house numbering.

The fifth and final volume entitled‘Development Planning and ProjectImplementation’ contains four chapters andcovers mainly project management andbuilding and planning by-laws. It includes:

Municipal development planning fororderly development,Project management,Building and planning by-laws and theirenforcement, andPublic lands and their protection.

In 1998, HMG defined 22 newmunicipalities and conducted the seconddemocratic elections in 58 municipalities.The manual proved to be very useful fornewly elected representatives and forstructuring new municipal administrations.Some chapters of the manual need revisionand updating in appliance with theintroduction of the Local Self GovernanceAct (1999).

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Participatory Impact Monitoring

Gender in udle

Poverty Reduction in Urban Nepal• Experiences from Butwal Municipality

Towards Inclusive UrbanDevelopment

S E C T I O N 6

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udle began to practice participatory impactmonitoring in 1999 using the followingapproaches:

Methods were developed to monitorgoals and results with the help ofindicators from the project planningmatrix, to enable more effective action.Results-based monitoring wassystematised and made transparent for allstakeholders.Monitoring was integrated into ongoingproject activities instead of being handledas a separate and additional task.Monitoring was viewed as an integral partof quality management for allparticipating actors.Monitoring was understood as amechanism to gather and deliverinformation to help design furtherinterventions, rather than as a controllingmechanism.Partners and beneficiaries (of differentage and gender) were guided to criticallyobserve the results, evaluate the progress,and be able to provide adequatesuggestions for planning further activities.

The following tools were developed forparticipatory monitoring activities:

Participatory impact monitoringchart - This is a guideline tool forprofessionals to review inputs that havehelped to achieve the set goals and catersto the responses of beneficiaries from allcategories. It consists of a list ofmonitoring groups (such as teachers,

students, municipality, etc), topics relatedto monitoring (such as environment,behaviour of students, performance ofmunicipality, etc.,) and monitoringmethods (such as guided observation, selfassessment, etc.). It is prepared for theentire phase of each discipline of theproject.Activity-impact-movement chart -This chart is prepared every one to threemonths. It shows short-term outputindicators in relation to the set goals andrequired activities for the planned period.It also reveals the time and place of eachactivity. In consultation with thestakeholders / partners one milestone isformulated for one planned activity.Achievement chart – udle uses thistool to review the pros and cons of agiven input on a regular basis from theperspectives of all partners, stakeholders,and beneficiaries. The chart reveals:

Participatory Impact MonitoringParticipatory Impact Monitoring

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the expected status of the inputaccording to the planned milestoneplanned and unplanned resultsproblems encountered duringexecutiondeeper reasons for problemsencountered, andcorrective course of actions to betaken.

Participatory monitoring enhanced thecapability to analyse results at activity level

critically and proved to be effective forprofessional review at the level ofcomponents / disciplines and individualprofessionals. Direct and indirect partnersand beneficiaries at all levels were involved inthe process. However, monitoring methodsfocused on milestones and achievements ofthe activities rather than on an analysis of howthe achievements were made and their impact.

udle stopped this monitoring practice in 2002as:

it lacked overall analysis of the impacts ofthe programme,it was time consuming to collect andmanage the bulk of information, andthe tools were too complicated forintermediaries and partners to internalise.

GTZ has since changed its planning system toemphasize monitoring impacts and indicators.In this context, the present tools need to berevised or new tools created to focus onresults-based monitoring with properbaselines for the coming phase of udle.

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GTZ’s corporate gender policy provides aclear mandate on gender issues for countryprogrammes. The corporate strategy,formulated in 2001 has been translated intoNepal specific GTZ-Nepal gender strategyin 2002, providing a framework forincorporation of gender equality andwomen’s empowerment. And a draft socialinclusion and gender strategy was preparedin 2005 into programme planning in linewith the National Tenth Plan of Nepal.Gender (in conjunction with poverty,impact monitoring, and conflicttransformation) is one of the themesthroughout GTZ-Nepal programming.

Since 1996, GTZ-Nepal has instituted apolicy to mainstream gender in allprogrammes and projects. In 2002, GTZ-Nepal formally adopted the following GTZCorporate Gender strategy statements:

Men and women derive equal benefitsfrom the development support oftechnical cooperation and are able toparticipate equally in shaping this.Equal participation by men and women indevelopment processes is a central concernof German development cooperation.

Through these strategic statements, GTZacknowledges the social differencesbetween women and men and promotesgender equity in the design andimplementation of its programmes. Tofacilitate awareness, gender-sensitivity alerts aresent regularly to project staff to encouragethem to adopt activities that address inequityand contribute to societal progress.

In Nepali society, women and men differ intheir access, control, and benefits with regardto social resources. There are also criticalgender-based differences in education,exposure, mobility, access to resources, andinvolvement in decision-making. For holisticdevelopment that contributes to an equitableand just society, issues of socially-excludedpeople and disadvantaged groups must alsobe considered.

Equity assessments ofcaste, ethnicity, andother social aspectsare similar to thisgender-specificdiagram showing thelimited participation ofwomen even within ourproactiveorganisations.

Gender in udle

udle Staff Composition 2004

GTZ Staff Composition 2004

Gender in udle

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Although gender is not the main focus ofGTZ/udle, German developmentcooperation requires mainstreaming ofgender. Government stakeholders such as theMLD, MuAN, and municipalities haveexpressed clear interest in working with udleto create mainstream initiatives for gender andsocial inclusion issues.

The Local Self Governance Act 1999, which laidthe groundwork for mainstreaming gender at themunicipal level, can provide the basis for suchcollaboration. The Act encourages therepresentation of women and disadvantagedgroups in municipal board and ward committees,soliciting their involvement in communityplanning, and giving priority to projects directlyaimed at them.

The activities related to planning processsupport, training, and Urban Health andEnvironmental Education are strong platformsfor the active implementation of such genderequity initiatives. The challenge in this arena isthe absence of gender-specific targets andperformance indicators in programme activitiesas well as limited reporting of gender-disaggregated statistics. Without suchinformation, it has been hard to measure udlecontribution to gender equality, women’sempowerment, and social inclusion.

Given both the priority and the challenge ofpromoting gender equality, GTZ-Nepalundertook a self-assessment in this area withthe technical support of SNV Nepal. Thegender audit was conducted in 2004 andyielded the following findings:

The lack of an explicit gender componenthas resulted in a non-systematic approachto gender mainstreaming within udle.Activities that contribute to women’sempowerment and social inclusion aregenerally not designed into theprogramme component level. Exceptionsto this, hygiene and environmenteducation activities, conservation anddevelopment works and women-targetedtrainings have produced positive results.The Ministry of Local Development

recognizes udle as the only donor-fundedproject that supports urban developmentwith a focus on capacity strengthening ofmunicipalities for effective service delivery.Because of this, the Ministry and theMunicipal Association of Nepal have astrong interest in collaborating with udle todevelop a more explicit gender policy andstrategy for the municipal level.Municipality officials and staff alsoexpressed their need for gender equityplanning skills.Specifically, government partners areinterested to strengthen the women’s sectionof the Municipal Association of Nepal anddevelop the capacity of potential womenleaders in municipalities. Partners alsoexpressed a need to enhance the ability ofofficials and staff to engage in gender-issueanalysis and to incorporate gender equity inthe municipalities’ planning process.Furthermore, they support inclusion ofgender-sensitive guidelines in the municipalplanning process in order to ensureprogramming of gender equality andwomen’s empowerment activities.Gender equity awareness andunderstanding are high among the udleprofessional staff. The main challengesfor staff are to internalise the conceptsand translate them into practice.

In general, partners are satisfied with thecapacity-building process and the quality oftechnical expertise provided by udle thus far.The Ministry and the Municipal Associationof Nepal conveyed their concern that fewdonors and international organizations areproviding support for the urban population atlarge. They feel that in the tenth five-yearnational plan, the government has notsufficiently addressed policies for the urbansector. This is of particular concern given thecurrent nationwide conflict, which continuesto spur a massive urban migration.

Urban areas are experiencing a rapid increasein their responsibilities due to the populationinflux and therefore have a pressing need toexpand their capacity.

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Since 1987, the GTZ programme UrbanDevelopment through Local Efforts (udle), incooperation with KfW and ded, hasconcentrated on building municipalities´capacity to enhance city services andimprove the living conditions of the urbanpopulation. Present priorities of udle arebased on the four pillars of Nepal’s PovertyReduction Strategy: broad based economicgrowth, human development, socialinclusion, and governance.

To improve social, economic, political, andenvironmental conditions in urban settings,udle has actively supported local, regional,and national Nepali bodies to meet thechallenges of decentralisation, local self-governance, and sustainable urbandevelopment. GTZ/udle advisory teamshave worked with administrative personnelto improve financial management,administrative organisation, humanresource management, urban planning,infrastructure, service delivery,environmental education, and wastemanagement.

Nepali-German cooperation hascontributed to an overall improvement inthe quality of life for tens of thousands ofcity dwellers. This has been accomplishedthrough local consulting and advisoryservices and supporting practical measures,such as the construction of roads, drainagesystems, toilets, bus stations, and schoolfacilities. Some cities have integrated new

instruments for financial management,planning, and administration into theirsystems.

Currently fifteen percent (3.6 million) ofNepal’s population lives in 58municipalities, with half of the urbanpopulation in the Kathmandu Valley.Migration to Terai towns has increased,partly due to the Maoist insurgency inrural areas since 1996. The number ofinternally displaced people in the urbanareas has contributed to the increasingpercentage of urban poor (current estimate23%). Nepal faces the challenge ofreconciling rapid urbanisation withproviding socially and economicallyacceptable living conditions for its people.

Since 2002, the dissolution of national andlocal elected bodies, the royal takeover of2005, and the erosion of democracy sloweddown institutional reforms. In the absenceof elected bodies, direct cooperation withlocal target groups and encouragement ofpotential leaders from civil society becamemore important in order to fosterparticipatory planning and to implementlocal poverty reduction measures. Withthe democratic revival in 2006, there ishope for sustainable peace and a newconstitution, which might change urbangovernance. At this time, continuingsupport to alleviate urban poverty couldstabilize urban development until new localrepresentatives have been elected.

Poverty Reduction in Urban NepalPoverty Reduction in Urban Nepal

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A new cycle of udle started in 2005 that has aspecial focus on poverty reduction in urbansettings. GTZ/udle also supports the nationalreform agenda to reduce poverty andstrengthen local self-governance, as detailed inthe Tenth National Development Plan (2002-2007) and the Local Self Governance Act(1999). Both strategic documents are inaccordance with UN MillenniumDevelopment Goals for poverty reductionand livelihood improvement by 2015. Withnational reform emphasising decentralisation,the strengthening of local governments andinstitutions for economic growth is a majorstrategic element to fight poverty. Specialattention is given to local conflicttransformation measures.

Poverty ReductionApproaches

GTZ/udle has suggested a range of povertyreduction strategies to local stakeholders,including public and private sectorinstitutions, civil society organisations, andpoor communities themselves.

Participatory concepts utilised in variousmunicipalities include installation ofinfrastructure, income generating measures,economic development, communitymobilisation, and institutional capacitybuilding targeted at the support of low-income communities. The degree of publicinstitutionalisation of the differentapproaches varied from the development ofpublic policy and responsible municipalsectors to the promotion of informalnetworking.

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The Municipal PovertyReduction Strategy inButwal

Of 80.000 people living within ButwalMunicipality, 25% are poor, and 60% ofthe poor are recent residents. ButwalMunicipality responded to the growingchallenge of urban poverty by preparing alocal poverty reduction strategy. Withsupport from GTZ/udle and ded/Nepal,the municipality is implementing its own plansto address the urban poor and coordinatingassistance provided by others (e.g. UNDP-RUPP, NGO Lumanti, NGO Water Aid).

The municipality’s new developmentpriorities include adoption of a “pro-poor”bias to assist socially and economicallyweak people to improve their physical,social, and economic livelihoods.Attention will be given to marginalisedgroups, especially internally displacedpeople, as part of the municipalresponsibility to ensure consistency andequity in services to all beneficiaries.Butwal has institutionalised the localpoverty reduction strategy and approachthrough the following measures:

Set up of an institutional/policyframeworkIdentification of a continuousprogramme budgetSet up of guidelines and agreementpapers on roles and responsibilities ofstakeholdersSet up of an action plan for incomegeneration and social infrastructureParticipatory planning andimplementationActive community development

In Butwal, the process of localising povertyreduction began with a preliminaryassessment of the municipality’s willingnessto cooperate, followed by conduction of apoverty baseline survey. The preparationof the local strategy paper, the set up oforganisational structures for strategy

operation, and the establishment of pro-poorbudgeting were all key factors in theinstitutional set up. Regular monitoring bythe municipality and the local users´committees accompanied implementationof activities in infrastructure, incomegeneration, and social development.

Challenges remain in the operation ofrevolving funds, which should be done byacceptable (micro-) finance institutions andnot through the municipal bureaucracy. Ifthese work, the concept could also beextended to housing or construction loans.Stronger private sector involvement isnecessary while at the same time clarifyingthe responsibilities of the different partnersfor more professional and sustainableincome generation activities.

Conservation andDevelopment / IntegratedTole Improvement

In Madhyapur-Thimi, an institutionalisedcooperation between the municipality andits communities was established forhistorical conservation, generalinfrastructure improvement, and incomegeneration measures. This approach hadtwo components:

The Conservation and DevelopmentProgramme is designed to empower urbancommunity groups to plan, manage, andimplement conservation andinfrastructure projects, therebyenhancing urban development throughthe repair of public infrastructure andthe restoration of monuments.The Integrated Tole (Neighbourhood)Improvement is focused on communitydevelopment and social mobilisation.It entails income generating measuresand skill development, especiallytargeting women and youth. Thespecifically installed MunicipalCommunity Development Sectionsupports community groups in the design,

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management, and execution ofinfrastructure projects.

The Conservation and Development approachwas first used in 1992 in the Lalitpur/PatanMunicipality. It will be used in KirtipurMunicipality, where a poverty baseline surveyhas been started. If the community is willingto cooperate, a participatory urban appraisalwill be done to determine developmentpriorities. Once the project agreement andthe shares of contribution are fixed, activitieswill be implemented with regular monitoringand final public auditing. Photo-documentation and monument drawings willensure continuous knowledge management.

NeighbourhoodImprovement in Nepalgunj

In Nepalgunj Municipality, the povertyreduction approach started by addressing avery poor and socially marginalisedcommunity. GTZ/udle actively supportedthe municipality during the set up,implementation, and monitoring of theNeighbourhood Improvement that was a pilotproject in the tole of Goshaingaun.

The project’s approach is based upon theorganisation and social development of poorcommunities to foster their integration intosociety and enhance their voice and access topublic services. The primary goals areimprovement of physical and environmentallivelihood and building up of confidenceamong the urban poor. The project worked ina participatory manner by formulating a LocalArea Action Plan and by tangible upgradingof the neighbourhood through a pilot projectmanaged by the community itself.

During the project set-up, the communityparticipated in the Local Area Action Planningand was supported in setting up a users´committee. After signing the projectagreement and defining the financingprocedures, implementation of the priorityproject took place with participation and

contribution in cash and kind from thecommunity.

The user’s committee – mainly women, havestarted to voice their interests on other issuesand keep up connecting to other agencies andtheir programmes and the Municipality

Local EconomicDevelopment

Starting in 2004, a joint initiative to promotethe Local Economic Development (LED)approach in Nepal was formed by GTZ/PSP,GTZ/udle, ded, and the INGO, SEQUA.The aim is to reduce poverty throughemployment and achieve economic vitalisation.The LED concept is based upon themobilisation of local stakeholders from thepublic and private sector, as well as civil society,in order to identify economic opportunities incommon. LED addresses different levels oflocal economy by fostering pro-poor growth,creating sustainable livelihood, and reducingregional, gender, and ethnic disparities.

Promoting these goals, the Joint LED Initiativeassists local stakeholders in improving locationfactors and the business environment inselected areas to achieve sustainability in criticaleconomic development skills:

Identifying economic opportunitiesAddressing development needsEstablishing a network of localstakeholders and resource providersIncreasing investment volumeGenerating new employment

The LED approach is based upon a low degreeof institutionalisation introducing a newconcept of local business development torelevant stakeholders and thereby promotingprivate-public networking for common goals.

In the case of the first intervention in Leknath,the preliminary analysis began withidentification and training of a local LEDsteering committee and business stakeholders,followed by the participatory definition of

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economic priority and opportunity issues.The subsequent programme set-upconcentrated on identifying viable and durableeconomic initiatives within determined localsub-sectors, on the selection of beneficiaries,and on the set up of an adequate fundingsystem.

These activities are currently taking placeaccompanied by social awareness and capacitybuilding. Regular monitoring on a definedbaseline, as well as an evaluation of the“before–after” situation will assess proceduresand achievements as well as detail successesand failures. The Joint LED Initiative will beresponsible for continuous knowledgemanagement and a local consolidation of theLED experience. The following questions areyet to be evaluated:

Are the joint investments economicallysustainable in a medium term underchanging market conditions,Will public-private networks continue towork andDoes the income generation translate intoemployment generation?

Progress and Challenges

During 2005, MuAN, MLD, ded, and udleinitiated further poverty reduction measures inthree municipalities: Kalaya, Janakpur, andBiratnagar. Based on surveys poverty profileswere elaborated, a strategy was formulated andfirst measures were implemented in prioritizedareas/communities. The following challengesremain:

Financial Sustainability. Especially in regard to anincreasing programme focus on very poor andmarginalised communities, the question offinancial sustainability and the set up ofintentionally revolving funds (which are de factooften devolving) funds for poverty reductionmeasures becomes more pressing. It should bere-examined whether the municipality itself is theadequate institution for the management of such

funds because it does not possess the necessaryskills in funds management and can be affectedeasily by politicisation. A clearly targeted subsidypolicy might be more helpful than badlymanaged funds.

Private Sector Involvement. Thepossibilities of private sector involvementin reducing poverty, in designing incomegeneration measures, and in financinginfrastructure have to be explored further.Whether calling upon its socialresponsibility can widen the involvementof the private sector or if a public-privatecooperation can to be explicitly fostered ifrule of law can be improved.

Potential Conflicts. Legal compliance andimplementation of laws has never been veryeffective in Nepal and has become even moredifficult during the current (June 2006)transitional phase. With few resourcesavailable, decision-makers will face thechallenge of ensuring equal access to servicesand resources to all, especially formerlyexcluded groups.

Institutionalisation. The degree andcomplexity of institutionalisation necessaryfor local poverty reduction measuresshould be considered thoroughly. Ideally,a municipality should work for the publicbenefit of all its citizens, by regulating theuse of public goods and providingdevelopment opportunities. Thisnegotiation at local level has just restartedin May 2006.

Income Generation. The design and focusof income generating measures has to beexamined with regard to their overallsustainability and actual impact innumbers. The continuous orientation tomarket demands should be ensured throughclose cooperation with the local private sector.Further, the future sustainability ofcommunity-based economic initiatives shouldbe examined.

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very poor people were able to come. About25% of them were women. All 72participants passed the course and 32 foundpart-time job in Butwal. Rest 40 are in theprocess of getting jobs with skill training.

We are trying to help the others find jobs andthe municipality will provide loans to thosewho want to open their own workshops.Most participants are happy and hope theywill have success. We take it as an indicator ofhow good the Butwal Technical Institute(BTI) training is that none of the participantsdropped out.

We have also identified 33 poorneighborhoods in Butwal and providedorientations on safer motherhood, health, andsanitation. The support for the orientationswas 60% from ded and 40% from themunicipality.

To choose the participants, we put notices inthe local papers and on FM radio. We madecriteria that they had to be poor. After theapplicants filled a form, we ranked them andmade a short list. The other criteria was‘lower’ caste and women. Then weinterviewed them and they had a written testto see if they had the capability to understandthe course. We took people with class 5-10.

We have also supported vegetable farming inthree communities. In three groups, weprovided pump sets and motors for irrigationand seeds. They are just in the process ofpreparing their land for planting.

udle supported for hair cutting training tofour men and dress design and cutting trainingfor five women, then give them loans to startwork. Two men opened salons and oneworks in his own house. Five women gotloans for sweing machines and clothes. All areproducing garments and gowns and selling inthe market.

Through udle, the municipality of Butwal hassupported a variety of activities to reducepoverty. ded supported a six-month trainingprogramme with 72 participants, who learnedskills in mechanical fitting, automobile repair,motor parts repairing, plumbing, and houseand industrial wiring. An employee ofButwal municipality, Nirmala Adhikari,was the programme officer for thetraining:

“It was skill development training for poorparticipants as part of the poverty reductionstrategy. Most participants were from youthclubs. Since we gave them pocket money;

Experiences from Butwal Municipality

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Bikash Gurung was one of theparticipants in the mechanical fittingcourse:

Last year I was in class 10, but we hadproblems at home, so I had to leave schoolfor 13 months. I worked in friend’sworkshop. Then I tried for the ButwalTechnical Training Institute. The trainingwas good and I now have a job, which isgood. We wish the course was for 1 yearso we could learn more.

Tej Prasad Bharal is the Chairperson of the povertyreduction committee on Manakamana tole in Butwal:

We started the group three years ago when Lumanti (anNGO for poor housing) came and told us that it would begood to have a fund for when we need it. I have beenchairperson since the group started. We have had trainingfrom the municipality on tailoring, hair cutting, and support topeople to start selling vegetables. Sometimes, some peopleare very weak and it takes time to get them to understand. Iwould like to hand over to a new committee to build their skillsand confidence. I will support them from behind.

The group has raised Rs170,000 and has given Rs130,000in loans. Often the loans are to women whose husbands areaway working — they are waiting for remittances to come.

Hom Nath Pokharel had barbertraining and set up a shop bythe bus washing pond:

Before I didn’t have anyincome, so I took the training. I’vejust started this last week andearn Rs100-150 per day.

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Cease-fire Action Plan Projects

Integration of Conflict SensitiveApproaches into udle

Working in Conflict

S E C T I O N 7

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1. Context and ProjectObjectives

In October 2001, studies and activitiesbased on GTZ-Nepal’s strategy were begunin order to assess the existing conflictsituation in Nepal and suggest on howGTZ could contribute to addressing theconflict at the community level. Thestudies made recommendations on howGTZ could adjust both the implementationportfolio and the modalities of individualprojects and programmes.

Immediately after the announcement of theceasefire in 2003, GTZ- udle, with approvalfrom the Ministry of Local Development,launched projects in a number ofmunicipalities in order to involve andbenefit the following:

Poor people lacking access to earning alivelihood;People living in areas where basicservices and infrastructure are notavailable;Poor people who are internallydisplaced or who are affected by orvulnerable to the conflict,

The projects were launched with objectives to:Provide immediate employmentopportunities to the target groupProvide access to basic services andsmall-scale infrastructure (e.g. drinkingwater, toilets, primary health services,drains, roads, small-scale irrigationprojects, school buildings for primaryeducation);Enhance the skills of municipal staff

trained by udle and involve them inprojects wherever applicable.

2. Municipalities andProjects

The following criteria were adopted whileselecting municipalities:

Municipalities most affected by theconflict;Districts where GTZ projects arealready being implemented;Municipalities with staff trained byudle;Municipalities that can be helped byother municipalities with staff trainedby udle.

Priority was given to projects thatcommunities had long ago requested andmet stated objectives, and that had not beenimplemented due to lack of municipalfinances.

3. ImplementationModality

Multidisciplinary teams of udle conductedfield visits and formulated labour intensiveprojects together with municipal staff andlocal residents. The following featureswere necessary for preparing andimplementing projects:

Interaction with former electedrepresentatives and municipal staff forpreliminary selection of projects;Site visit and interaction with the

Cease-fire Action Plan ProjectsCease-fire Action Plan Projects

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community and rapid-preliminaryfeasibility assessments;Cost overview and consensus on tentativecontribution ratio (sharing of costsamong beneficiaries, municipalities, andudle);Formation of user’s committee fromamong target groups;Professional interaction in udle;Design, cost estimate, and agreementbetween user’s committee,municipality, and udle;User’s committees as the primaryimplementers; technical input bymunicipal staff trained by udle, andoverall backstopping by udle;Progress reporting and issuance ofsuccessive instalments;Interim assessments and final assessment.

In general, the corresponding contributionratio was about 70% from udle and 30% fromlocal contributors (municipality andbeneficiaries). Completed projects (numbersin bracket) and respective municipalities areas follows:

some municipalities because the projects wereformulated close to the end of the fiscal yearand municipal budgets had already beenallocated to other areas of concern. Inaddition, the overall low budget fordevelopment was also one of the factors forlimited financial contributions frommunicipalities.

Benefits and BeneficiariesProject beneficiaries were those employedin the projects and users of project outputs.Local residents of project areas, especiallyDalits, Tharu, people affected by theconflict and poor people were employed inand benefited by the project. Among thenotable benefits were:

Dalit settlements had improved accessto their settlements;Motorable roads contributed toincrease livelihood in the settlementsaway from city centre;Children of dalits and poorcommunities had better schoolbuildings with furniture;Small farmers had better irrigationfacilities thus contributing to access tomarket and income;Improvement in the sanitation andhygiene condition through toilet andwater supply projects.

Drain construction projects were mostly inareas where relatively high-income peopleresided. This was a contrast to the targetgroup but in line with municipal priorities.The floating population also benefitedthrough the public toilets. Overall, projectefforts contributed to reducing poverty andimproving the existing physicalenvironment.

Operation and MaintenanceModalityUser’s committees usually take responsibilityfor operation and maintenance work. Localresidents can manage minor maintenanceneeding physical labour, whereas majormaintenance is managed with financialassistance from the municipality.

4. Findings

User’s Participation and ContributionLocal people were successfully mobilised toparticipate and contribute towards projectsthrough user’s committees. Municipalcontribution remained lower than expected in

Development region

Far-western

Mid-western

Eastern

Municipalities

Dipayal-Silgadhi,Amargadhi,Mahendranagar,Dhangadhi, Tikapur

Tribhuvannagar,Tulsipur, Gulariya

Triyuga

Type of projects

Vegetable markets (2),roads (3) , drain (3), schoolbuildings with furniture (2),public toilet (3), communitybuilding (2) and streetimprovement (2)

Small Irrigation works (5),culvert (3), water supply (5),school building (2), publictoilets (2), fish pond (1),and tube wells (10)

School toilet (15), hospitaltoilet (1), tube wells (55),community wells (4) andtemple (1)

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Perceptions of Local Residents,User’s Committee Members, andMunicipalitiesThe residents, communities, schoolmanagement committees, members ofuser’s committees, and municipal officialsappreciated the projects. Residents andmembers of user’s committees have feltthat these projects directly reach andbenefit target groups. User’s committeeshad opportunity to manage their funds ontheir own than receive support indirectlythrough municipalities. However,municipalities felt that the financial supportof udle should have been channelledthrough municipal accounts. The projectswere appreciated for their proper selection,successful implementation, and quality ofwork.

5. Conclusions

Implemented projects were of top priorityand needed external financial support.Projects were specific to target groups(including children) and local peoplewere responsible for implementingthem. This enabled the municipality tounderstand and address issues of thepoor and gave the poor a chance torepresent themselves in the community.Opportunity was created to work withresidents living in less developed areas.People from low-income backgroundswere highly involved in construction work.Projects can be a model approach toaddress the existing poverty in acommunity.Projects of this kind can contributetowards understanding betweendifferent groups.

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1. Context and Objectivesto Build Peace andMinimise Conflicts

In 2004, GTZ-Nepal increased its efforts towork in the context of the conflict situation inNepal. The following additional annual goalswere introduced:

Increase training on conflict related issues,Integrate conflict sensitive developmentapproaches in programmes andInitiate conflict minimisation activities.

GTZ established a separate unit at its office tocoordinate programmes that build peace andminimise conflicts.

udle was able to implement the followingadjustment strategies:

Orient its own staff and municipal staffto work safely and effectively in thecontext of conflict.Provide training on conflict managementskills to young people, women, and NGOsto help them to address the issues of socialinclusion and financial support to initiateactivities to minimise conflict first at locallevel.Provide scholarships for poor andmarginalised schoolchildren.

2. Achievements inChanging our WorkingPractices

All professional staff at udle were oriented onhow to transform conflicts through the

principle of ‘Do No Harm’, and to conductsafe and effective development practices thatspecifically address issues of conflict.

The following activities and achievementswere possible through udle’s new strategy:

Professional staff took part in an in-house workshop on the conflict sensitivedevelopment approach (CSDA).Professional staff participated in differenttraining / workshop packages (especially‘Do No Harm’, basic risk management,conflict sensitive developmentapproaches, conflict transformation, andpeace building activities).Drivers and support staff were orientedon basic risk management.Field staff exchanged information on adaily basis regarding field activities and thesecurity situation.Pamphlets on basic operating guidelineswere distributed to and accepted byconcerned parties.udle periodically reviewed its work (inmeetings, workshops, risk managementmeetings, training programmes, andmunicipal working sessions) and tried toincorporate safe and effectivedevelopment practices throughout therunning phase of its programmes.udle began to focus on issues of poor,women, and other socially excludedsectors of society. Projects that promotedpeace promoted a positive image of udlein selected municipalities and alsoimproved the urban population’sperspective towards their municipality.

Integration of Conflict SensitiveApproaches into udleIntegration of Conflict SensitiveApproaches into udle

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Within the context of conflict and capacitybuilding, staff safety is a priority. Conceptssuch as impartiality, inclusive policy, andgender sensitivity were integrated intoprogrammes.

3. Achievements byPartner Organisations

a. Trainingudle conducted a three-day workshop on‘Peace, and Conflict Transformation andDevelopment’ in Kathmandu. Thefollowing people took part in theworkshop: Executive Officers and Managersof five regional learning centres (Dharan,Hetauda, Butwal, Nepalgunj, and Dhangadi),two officials from the Ministry of LocalDevelopment, the Secretary of the MunicipalAssociation of Nepal, the Principal of theUrban Development Training Centre andthree udle professionals.

With support from udle, Dharan andButwal municipalities conducted a one-dayworkshop on conflict management inrelation to the delivery of services in theirrespective municipalities. Service providers(municipal staff) and service receivers(representatives of civil societies, NGOs,political parties, etc.) took part in thisworkshop.

udle conducted a three-day workshop onconflict transformation, peace building, andreconciliation in Tikapur, Amargadhi,Dipayal-Silgadhi, and Dhangadhimunicipalities separately. Participantsincluded youths, municipal staff, politicalleaders, journalists, human rights activists,teachers, women groups, and NGOs.

A NGO from Tikapur municipality and fiveNGOs from Amargadhi municipality sharedthe outcomes of the workshop with membersof NGOs, students, and women in theirworking areas. Teachers of Dipayal-Silgadhi,Amargadhi, and Tikapur municipalities further

passed on their knowledge on how totransform conflicts and build peace in theirschools and communities.

b. Peace ProjectsYouth, women groups, and NGOs weretrained in conflict transformation and peacebuilding in Tikapur, Amargadhi, Dipayal-silgadhi, and Dhangadhi municipalities. Theyidentified small, locally manageable activitiesthat could promote peace, such as holdingpeace rallies, creating chautaris, providingtraining, broadcasting radio programmes,writing diaries, and placing bulletins withmessages of peace.

The following activities were implementedin coordination with respectivemunicipalities and with financial supportfrom udle.

Peace rallies – Different groupsorganised peace rallies in Tikapur,Amargadhi, and Dipayal-Silgadhimunicipalities. Journalists, teachers,students, and women groupsparticipated in these rallies. Theyconveyed their messages for local peaceby writing slogans on placards.Peace chautari (public resting place) –In Tikapur municipality, a women’sgroup built two peace chautaris on theside of the main road in ward numbers6 and 9.Peace radio programme – In Dipayal-Silgadhi municipality, a group ofjournalists broadcasted peace relatedprogrammes once a month on theirlocal radio station for 15 minutes.Peace bulletin – In Dipayal-Silgadhiand Amargadhi municipalities, localjournalists started a regular columndedicated to peace articles and messagesin local newspapers. In Dipayal-Silgadhi municipality, a youth groupstarted a regular magazine called ‘voicefor peace’.Peace diary – In Tikapur municipality,a local NGO organised training onconflict transformation and peace to 30

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students and distributed a diary to all.Students were asked to write down theirexperiences on conflict related incidencesand their efforts to transform conflictinto peace.Peace drama – Youth clubs and NGOsconducted six dramas in six differentplaces to spread messages of peace tolocals.Peace journalism – Amargadhimunicipality together with the NepalJournalist Association and a localNGO conducted training for fivestudents (three boys and two girls)from five higher secondary schools onchild journalism for peace.Technical training for youths –Dhangadhi municipality organised athree-month long course for six youths(one woman and five men) to train aswaiters. In addition, 14 youths (sevenwomen and seven men) took part in athree-month cooking course and 14women took part in a three-monthdriving course for four-wheeledvehicles. The municipality contracteda local hotel and a local drivinginstitute for the training.

c. Municipal Scholarship FundMunicipal Scholarship Funds wereestablished in Amargadhi, Tikapur,Dhangadhi, and Mahendranagarmunicipalities under the management ofthe Municipal Scholarship ManagementCommittees (consisting of localintellectuals, resource persons from DistrictEducation Offices, members of SchoolManagement Committees, and municipalrepresentatives). The objective of the fundis to help children from poor andmarginalised families complete their SchoolLeaving Certificate.

In 2005, 1,110 socially and economicallymarginalised students (542 boys and 568girls) from class six to ten from 74 publicschools received scholarships from fundssupported by udle for tuition fees,examination fees, and stationery. The averagescholarship per student was Rs. 796.

Scholarship committees decided the quota andagreed on the selection criteria for giving outscholarships. The concerned schools, basedon the given quota and defined criteria,selected students, and distributed scholarshipsaccordingly.

Besides contributions from udle,committees are pursuing municipalities,local NGOs, District Education Offices,and other donors working in the area ofeducation to recognise the scholarship fundas a general basket fund for scholarshipswithin municipal areas.

4. Lessons Learnt

The following key lessons were learnedfrom the peace building programmes:

udle should integrate issues of socialinclusion and conflict management inthe running phase of the programme.udle and partner staff should beoriented and capacitated to work safelyand effectively in conflict situations andbe able to manage local conflicts ontheir own.Regular assessments should determinewhether a programme can continue towork safely and effectively, andwithout doing harm.Development approaches should beadapted to cater to the larger spectrumof the urban population in order tominimise possible conflicts.

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AbbreviationsAbbreviations

ADB : Asian Development BankADDCN : Association of District Development Committee of NepalBDP : Bhaktapur Development ProjectBMZ : German Federal Ministry for Economic Co-operation and

DevelopmentCAS : Corporate Accounting SystemCBO : Community Based OrganizationCCI : Chamber of Commerce and IndustriesCFAP : Ceasefire Action PlanCSDA : Conflict Sensitive Development ApproachDDC : District Development CommitteeDED : Deutscher Entwicklungsdienst/German Development ServiceDOA : Department of ArchaeologyDOR : Department of RoadsDUDBC : Department of Urban Development and Building ConstructionDWSS : Department of Water Supply and SewerageEO : Executive OfficerESA : External Support AgencyEU : European UnionFNCCI : Federation of Nepal Chamber of Commerce and IndustriesFSMCC : Federation of Swayambhu Management and Conservation

CommitteeGLD : Guided Land DevelopmentGTZ : Deutsche Gesellschaft for Technische Zusammenarbeit/German

Technical Co-operationIAP : Integrated Action PlanIDA : International Development AssociationIDP : Internally Displaced PersonIPT : Integrated Property TaxITIP : Integrated Tole Improvement ProgrammeKfW : KfW Entwicklungsbank/KfW Development BankKVMP : Kathmandu Valley Mapping ProjectLAP : Local Area PlanLBFC : Local Bodies Fiscal CommissionLDTA : Local Development Training AcademyLED : Local Economic DevelopmentPRS : Poverty Reduction StrategyLSGA : Local Self Governance Act

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MLD : Ministry of Local DevelopmentMMD : Municipal Management DivisionMoF : Ministry of FinanceMPPW : Ministry of Physical Planning and WorksMSIP : Multi-sector Investment PlanMuAN : Municipal Association of NepalNAVIN : National Association of Village Development Committees of NepalNGO : Non-government OrganizationNPC : National Planning CommissionNWSC : Nepal Water Supply CorporationPCDP : Patan Conservation and Development ProjectPEDP : Physical and Environmental Development PlanPP : Periodic PlanPPM : Project Planning MatrixPPP : Public Private PartnershipPPR : Project Progress ReviewPRS : Poverty Reduction StrategyPSP : Private Sector Promotion ProjectRLC : Regional Learning CentreRMO : Risk Management OfficeRUPP : Rural Urban Partnership Programme (UNDP)SEDC : Safe and Effective Development in ConflictSEQUA : Partner of German BusinessTDF : Town Development FundTLO : Tole Lane Organizationudle : urban development through local efforts programmeUDTC : Urban Development Training CentreUEIP : Urban Environment Improvement Programme (ADB)UHEEP : Urban Hygiene and Environmental Education ProjectUNDP : United Nations Development ProgrammeUNESCO: United Nations Educational, Scientific and Cultural OrganizationUNV : United Nations VolunteersWHS : World Heritage SiteWB : World Bank

Deutsche Gesellschaft fürTechnische Zusammenarbeit (GTZ) GmbH

-German Technical Cooperation-

Urban Development through Local Efforts Programme (udleudleudleudleudle)P.O. Box: 1457 / New Baneshwor / KathmanduT 00977 1 4464 767F 00977 1 4464 735E [email protected] www.gtz.de/Nepal

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