The foundation for sustainable and inclusive economic development has been laid following the election of representatives to all 753 local units.

With parliamentary and provincial elections slated for November and December, political parties are working on their election manifestos, highlighting the goal of making the country economically prosperous and inclusive.

New political forces are emerging, and old ones are forming alliances. Civil society is playing a constructive role in pushing political forces towards a new dynamism that can help to overcome the prevailing rent-seeking mindset. 

Both our neighbours, China and India, are extending financial support for mega infrastructure projects. The international community and development partners are helping to implement small, medium and large-scale infrastructure projects and other programmes on governance and institutional capacity building.

This is where we have to design Vision 2.0 for the country, which is developing an inclusive and prosperous society. Vision 1.0 was about political rights at all levels for all communities. This has been achieved with the promulgation of a federal constitution.

The job of institutionalising and strengthening the capacity of new provincial and local institutions will be challenging, but this is what we have agreed to do believing that it will lead to an inclusive and prosperous society.

Targeting growth acceleration

We now have to look forward to the possibility of accelerating the pace of economic development and becoming a middle-income country (MIC) by 2030. Economic growth should be investment driven and sustainable in the coming years.

Investment should be made in large-scale infrastructure and sustainable urban infrastructure. Recent growth rates do not provide an encouraging scenario to look forward to, but there are some underlying developments which can be considered to be major foundations for a prosperous future. 

There should be a push towards structural transformation of the economy through investment in priority sectors. Economic growth has so far been agriculture-driven, but there are signs of other sectors moving to the forefront of development.

The service sector has been performing much better lately. Industry and manufacturing are rebounding with an improved power supply and labour market. Urban development is coming up as one of the strong drivers of the economy with a remittance-driven rise in the urban population.

However, more than 70 percent of the urban population lacks access to basic facilities like medical services, education, sanitation, drinking water, energy and transportation. 

Sustainable, inclusive and resilient cities are prerequisites for better livelihood of the people and sustainable economic growth.

Urbanisation has been growing at a rate of around 6 percent since the 1970s. But this has not fully contributed to economic development due to inadequate urban planning, weak institutions and neglected operations and maintenance.

The Asian Development Bank (ADB) estimates that there should be investments totalling $24.5 billion up to 2030 to meet future demand. Development of rural roads, which supports the urbanisation process by connecting the hinterland with urban cores, is another major progress.

These rural roads also create an enabling environment for the rural population to enjoy quasi-urban facilities. 

Highway to the future

Nepal is well ahead in terms of achieving the Sustainable Development Goals (SDGs) so far. Rural roads play an indispensable role in achieving more than half of the SDGs and fulfilling the promise of the 2030 Agenda for Sustainable Development to ‘leave no one behind’.

A research paper issued by Research for Community Access Partnership states that although there is no SDG dedicated to rural transport, there are numerous linkages between rural access and SDGs. 

The authors of the paper claim that successful scaled up implementation of rural transport will contribute to realising SGD1 (to alleviate poverty), SDG2 (to achieve zero hunger and ensure food security), SDG3 (to ensure health and well-being), SDG4 (to provide access to education), SDG5 (to empower women in rural areas), SDG6 (to facilitate access to clean water and sanitation), SDG 8 (to promote inclusive growth and economic opportunities), SDG9 and SDG11 (to contribute to sustainable infrastructure and communities for all), and SDG13 (to increase climate resilience and adaptation in rural areas).

The above mentioned connections between rural transport and achievement of SDGs is based on the following five key messages: (i) Improved rural transport drives sustainable rural development and national growth; (ii) Better rural transport is key to food security and zero hunger; (iii) Subpar rural transport condemns the poor to stay disconnected and indigent; (iv) Additional money and commitment is needed to build and maintain rural road networks and develop sustainable rural transport services and, (v) Better rural transport calls for local solutions to local challenges. 

Around 50,944 km of blacktopped, gravel and dirt roads have been built across the country. Since very few of them are all-weather roads, the challenge is to upgrade them. One of the major achievements in Nepal since the early 2000s is the opening of rural road tracks. Many small and emerging towns in different parts of the country are served by roads that are usable only during the winter season.

The country needs to come out of the labyrinth of low investment, low job creation, weak and inadequate infrastructure and slow economic growth. As we now have local institutions in place, the central government should work on arranging a financing mechanism for local councils such as municipalities and village councils.

If there is adequate investment at all local councils, the economy can steer a course towards structural transformation within a short period of time.

The new constitution has granted greater rights and responsibilities to the local councils.

Accordingly, the central government should arrange the required funding to carry out development activities during this transitional phase and focus on institutional capacity building of the local councils. 

- Poudel is a consultant economist for the Asian Development Bank, Nepal Resident Mission