Development Planning and Project Formulation in Nepal Pradip

Development Planning and Project Formulation (in Nepal) Pradip P. Upadhyay, Ph. D.

Contents of Presentation 1. Approaches to development and planning 2. Experience of Nepal’s planned development and contemporary issues 3. Process of development planning 4. Project in the context of development planning

Part I Approaches to development and planning

Definition of Planning • A process for determining appropriate future action thru a sequence of choices § orderly sequence of actions for the achievement of the stated goals. • Planning is a goal oriented guidance to the spatial development of a society. • Objectives: – Political: (security and peace); – Social: (social security and social equality, social welfare); – Economic: (fast economic growth, industrialization, e employment generation, economic security, rational distribution of national income; increased living standard); – Human Development: (Sen's Capabilities Approach; command over commodities; capability to function; freedom of choice of functioning; Development as Freedom).

The Nature of Development Planning Capitalist planning: Private sector role – Government only for maintaining law and order. Socialist planning: Government control on all resources and production. Planning in mixed developing economies: Planning based on the framework of mixed (? ? ) economic behavior. • Govt as implementer: to carry out public investment projects (physical & economic infrastructure; public enterprises) thru the use of domestic and foreign resources • Govt as promoter: to stimulate and manage private economic activity mobilizing private sector.

Contemporary Issues of Planning • Inclusive growth strategy: Focus on marginalized and excluded people/groups (dalit, madhesi, adibasi/janjati, women, and people with disability) and geographical areas • Broad-based growth and distribution: Investment in remote areas (public and private sector); social security and social justice, anti-poverty and SDG programs thru local bodies. • Forward linkages (globalization): Focus on international trade; labor as exportable product? foreign aid and economic diplomacy • Sectoral & spatial balanced growth: Agriculture and social sectors for distributive growth; infrastructure for building growth environment; and regional equality.

China/India’s Growth Model & Replication in Nepal (? ? ? ) • Beijing/Delhi Consensus vs. Washington Consensus • Transforming the economic growth & development thru domestic resource mobilization & domestic economic reforms; Foreign direct investment (FDI) • Priorities: From manufacturing to high-tech industries; Socioeconomic transformation and sustainable development; Going global – international trade; Enhancing purchasing capacity in rural areas. • Incremental reform without much social conflict (China) – adjusting conflicting social environment (India) • Economic growth vs. income disparity -- A Challenge

After a good run of growth, China’s economy braces for bumps. The Economist (Apr 17, 2018) • China’s economy grew by 6. 8% in the first quarter of 2018. • The recent improvements: – Government efforts to tackle ingrained problems, – Increasing stability of growth in a maturing economy, and • China faces trade war with America.

Part II Experience of Nepal’s Planned Development and Contemporary Issues

Phases of Planning in Nepal First to Third Plan (1956 -1970) Rural and Agriculture Dev’t; Building planning capability Fourth & Fifth Plans Regional development; (1970 – 1980) Infrastructure development Sixth & Seventh Plans Fulfillment of basic needs; Growth (1980 -1990) with equity Eighth to Tenth Plans (19922007) Sustainable economic growth; Poverty alleviation (PRSP); Reduction in regional disparity 11 th to 14 th Plans (20072019) Employment centric inclusive and equitable growth; poverty alleviation; sustained peace; SDGs.

The Situation Major challenges of development planning 1. Increasing population 2. Poverty, exclusion, gender disparity 3. Unemployment and under-employment 4. Imbalances in development The Capacity 1. Low internal resource mobilization 2. Heavy dependence on foreign assistance 3. Poor inflow of FDI The Governance 1. Lack of political culture and commitment 2. Poor governance

Present Opportunities for Nepal’s Development § Political transformation § High growth of neighboring countries § Open and liberal policies § Natural resource utilization § Cooperation of dev't partners § Physical & social infrastructure § Remittances

The Fourteenth Plan (2016 -19) Vision: Attain the prosperity of Nepali people through making the national economy self-reliant, highly developed and socialism oriented. Goals: Accelerate Nepal to a status of middle income level country by increasing people’s welfare along with maintaining social justice. Objective: Achieve socioeconomic transformation of the country by reducing poverty and attaining high economic growth through generation of productive employment and distributive justice.

Major Targets of the 14 th Plan Indicators Status 2015/16 Targets 0. 77 7. 20 Agriculture (Agr & Forest, and Fishery) (%) 1. 33 4. 70 Non-agri (%) 0. 63 8. 40 Average Annual Growth Rate (%) (a) Industry (Mining, Industry, Electricity, Cons’n) 10. 6 (b) Service Sector (Trade, Hotel, Trans’n-Com’n, Finance, Real estate, Admin, Education, Health, & Community services) 7. 8 GDP (Rs in billion) 2, 249 2, 776 Per Capita Income (Rs ‘ 000) 79. 37 116. 50 69 72 Human Development Index 0. 54 0. 57 Gender Empowerment Index 0. 56 0. 58 Population Below the Poverty Line % 21. 6 17 Life Expectancy at Birth (Year)

Major Targets (Contd. ) Indicators FY 15/16 Status Targets Population access to Drinking Water (%) 83. 6 90. 0 Literacy rate (population of 15 -24 age group) (%) 88. 6 91. 0 Net Enrolment rate at Secondary Level Education (%) 37. 7 45 Electricity Installed capacity (MW) 851 2301 74 87. 0 Irrigation (Agr land coverage in ‘ 000 ha) 13. 92 15. 20 VDCs connected with road 2, 739 3, 072 (of 3, 155) 46. 4 65 Population access with Electricity (%) Access to internet services (population in %)

1 5 Increase in production through transformation of agriculture sector, expansion of tourism & enterprises (industrial and small & medium scale) Improve good governance (economic, social & admin reform; efficient & responsive public finance; people friendly public service; protection of human rights) 4 Improve institutional capacity (gender equality, inclusion, environment protection, and science & technology Strategies 2 Develop physical infrastructures (energy, road, & air transp'n, info'n & comm'n; and rural-urban & international connectivity ) Improve high & sustainable human development (social development, social security ) 3

Role of Gov't and the other Actors in the Economy Public Sector Private Coop’ve Pri vat l a c i e. S t m i l o o ect e b t P i a l i : or: z m ; r atio i i k n t o i r t n Cap n; C ova ec ; Leg etwo ital S tion r t m e c n i n a s a tivi ; Ef nag bl itme min risk u ty & f e d icie P m g m A i e ; b nt nt Comhority take aut lity to i Public Private Ab Partnership Civil Society: Stakeholders’ consensus; Utilization of specialized knowledge and civic strength; Serve interests of common people

Investment of Public, Private, and Cooperative Sectors in the 14 th Plan (Total Rs 2, 424 billion) Cooperative Sector , 143, 6% Private Sector, 1, 327, 55% Public Sector, 954, 39%

14 th Plan: PE & Resource Mobilization Rs 2, 744 billion Public Expenditure Foreign Aid, 323, 12% Capital Expenditure 954 35% Recurrent 0, 0% Capital Expenditure , Recurrent Expenditure, 1790, 65% Expenditure , 1, 790, 65% 954, 35% Deficit Financing , 658, 24% Government Revenue , 1763, 64% Financing

The 14 th Plan Introduction (Background; Review of the 13 th Plan; Review of MDGs) Macro Economic Policies (GDP and savings; Pub Finance; Monetary & Fiscal Policy; Intt'l Trade, BOP FDI) Infra'e Devt Policies (Energy; Physical Infra'e; Housing; Recons'n; ) Poverty, Peace & Good Gov'e (Pov Alleviation; Regional Balance; Peace; Gov'e; ; Human Rights) Fourteenth Plan (Vision; Goals; Objectives; Targets; Strategy) Sectoral Devt Policies (Agriculture. . . ; Industry. . . ; Social Development; ) Cross-cutting Devt Policies (Gender, Inclusion; HRD; Employment; Environment) Plan'g Process, Stati'l System and Research (Plan'g & Imp'n, M&E; R&D)

Planning in Federalism? Regions' capabilities are different. Central govt needs to play responsible and catalyst role. National Plans and Programs Debates: 1. Decentralization of Plans Provincial Plans and Programs Urban/Rural Plans and Programs Community Plans and Programs 2. Delineation of Programs and Projects 3. Vertical Integration and Horizontal Collaboration 4. Revenue Generation & Allocation of Resources 5. Inter-provincial linkages

Photo Gallery

Examples of Forest Based Enterprises Honey based Enterprises

Examples of Forest Based Enterprises Bio-briquette Making Enterprise Wood Veneer Enterprise

Allo Based Enterprises – Variety of Products ¬About 4, 000 Allo entrepreneurs created. ¬About 170 different products diversified ¬ About 80 percent of yarns are purchased and used in Carpet

Chyuri Herbal Soap

Strawberry Farming in Nuwakot

Technology Improved Banana fibre cloths Improved Banana fibre extraction machine

Vermi compost -- Nawalparasi

Riverbed Farming Product: Water Melon Nepal imports about 4. 3 m mt watermelons each year from India. Opportunity to produce in Nepal Watermelon harvested from riverbed farm Marketing of watermelon in Dhalkebar

Part III Process of Development Planning

NPC and Development Plan • As a central agency of Government, NPC formulates national development plan: • NPC prepares the draft of Base/Approach Paper for the forthcoming development plan before formulating the detailed plan document. • The Approach Paper is presented to NDC for suggestions. • The NDC determines main objective of the plan. • To achieve the objective total and sectoral economic growth rate targets are determined for the plan period.

Structure of Periodic Plan Formulation Plan Implementation Approach Paper Periodic Plan (Ongoing) Review & Evaluation Periodic Plan (Next) Concept Preparation

Formation and Execution of NPC Executive Order - 2074 Long Term Vision; Formulation of Policies Plans Monitoring and Evaluation Vertical Coordination with Provincial and Local Governments Study and Research

Four Functions of Dev’t Planning – Practiced in Nepal 1. Long Term Vision; Formulation of Policies Plans: – Formulates national policies and priorities, and management systems for change and development. – Decides duration of plan (short-term, medium-term, & long-term); and formulates periodic and annual development plans – Formulates goals and long-term targets, objectives, strategies, policies, and sectoral priorities – Sets sectoral indicators, sectoral activities, & modalities – Approves sectoral programs & projects (features: multi-sectoral; and longer period (BEP; ADS; PAF) – Allocates resources according to national priorities; and sets strategies for resource mobilization (foreign, domestic, and local) • MTEF process contribute to realistic priority setting and resources estimation • Allocates resources for plans, programs and projects at national and sub-national levels.

Four Functions of Dev’t Planning – Practiced in Nepal 2. Monitoring and Evaluation: – assess the effectiveness and efficiency in implementation and provide feedback in improving formulation of plan, programs, projects and allocation of resources. 3. Vertical Coordination with Provincial and Local Governments: – Focuses on the agglomeration of programs of macro, meso, and micro levels; Manage institutional coordination and sets implementation strategies 4. Research and Study: – assess the effectiveness and efficiency in implementation and provide feedback in improving formulation of plan, programs, projects and allocation of resources.

Part IV Project in the context of development planning

Programs & Projects as the Part of Development Plan Sectoral (Agriculture, Forestry, Industry) Programs & Projects Fourteenth Plan Infrastructure Devt Programs & Projects Cross-cutting Devt Programs & Projects

Definition of a developmental project • "A project is an individual or collaborative enterprise, possibly involving research or design, that is carefully planned, usually by a project team, to achieve a particular aim. " – "A project may also be a set of interrelated tasks to be executed over a fixed period and within certain cost and other limitations. " (Wikipedia) • A project that sets up organizations, networks and tools that have an impact in terms of synergy and development for the community, a sector, region, etc. • A developmental project can generate or drive other projects and gather actors from different horizons to work towards a common objective.

Features of Project Effectiveness Project Charter Preparation Work Breakdown Scheduling Budgeting Risk Management

Features of Project Effectiveness Project Charter Preparation ØA blueprint -- defines the purpose, objectives and the scope of the project. Ø Includes budgetary guidance, stakeholder lists and a timeline-critical reference points throughout the project’s life cycle. Ø Helps collaborating stakeholders and establishing beneficial relationships. Ø Includes measurable, realistic, and time-bound objectives. Ø Set the project’s preliminary timeline and key milestones. Ø Helps convince the stakeholders thru communications.

Features of Project Effectiveness Work Breakdown Ø Developing a work breakdown structure (WBS) is a critical planning item in managing a project. Ø WBS helps organize the scope of the project, allocating resources and defining deliverables. Scheduling ØSchedule of activities for the completion of tasks. Ø Helps to plan the most efficient path for delivering tasks and sequencing them on the schedule. ØMilestones are used as check points to the schedule. Ø Baseline schedules help compare the plan versus actual in execution. Ø Flexible schedule to adjust delays or changes.

Features of Project Effectiveness Budgeting Ø Estimating and writing project budgets is an important hard skill for getting projects properly funded and for controlling them. Ø Approved budget gives a baseline to determine the activities of the project and helps judge whether the project is on the right track or not. Ø Need to identify possible risks and add contingency (padding) for risk mitigation. Risk Management Ø Projects rarely go exactly as expected and stuff goes wrong along the way. Ø Need to determine vulnerabilities and require risk management strategies. Ø Need to capacitate risk toleration and calibrate risk management plans. Ø Need to create a mitigation plan for all high risk vulnerabilities. The cost of risk management plans need to be built into the budget.

Results Framework in Dev't Project Planning • Results framework in a sequence of different approaches - ZOPP (objective oriented project planning), - RRA (Rapid Rural Appraisal), - PRA (Participatory Rural Appraisal), and - Logframe • Results framework for improvements from - Poorly specified objectives - Ill defined responsibilities - Too much emphasis on delivery of inputs (budget) • Results framework for - efficiency & effectiveness

RBM – Meaning & Features • Meaning: — RBM is a management approach aimed at ensuring in achieving desired results — RBM focuses on performance monitoring (whether results are being achieved and measures taken to improve them). • Features: — Analytical structure for performance measurement; performance indicators; responsibility and accountability; resource flexibility; M&E; and transparency • Common Elements: — Structuring of programs around a chain of desired results addressing causes (causality in the chain of results) & ‘change in future') — Result matrix to describe changes the chain of results towards outcomes and impacts. Reliance on indicators to measure performance. — Costing of results rather than input/activity budgeting

Indicators § Indicators as measures of performance § Indicators = How do we know? § Monitoring = How are we doing? § How the intended results are measured: § Objectively verifiable measures § Clarifying the result § Must be accompanied by baselines and targets § The SAMRT way: § Specific; Measurable; Attainable; Relevant; Trackable

Results Chain – Planning & Implementation What do we want? How? Inputs Money, HR, Materials Activities Canal Design & Imple'n Outputs Const'n of Canal Resources Why? Outcome Rise in Emp't & Prod'n Impact Reduction in Poverty Level Results Implementation Planning How do we do it? What do we need to do? What is the change we want to see?

Results Chain Impact Example: Irrigation Project Outcomes Outputs Inputs Construction of Canal; Experts; equipmen t; funds Irrigation of Agricultural Land Reduction in Poverty Level Increase in Production & Employme nt Rise in Living Standard

The Hierarchy of Results Project Impact Project Outcome Project Output

Example: Strengthening NASC Training Project Impact Stakeholde Project rs’ utcome TOrainees knowledge satisfaction on administration & level management enhanced Project Output Support mechanisms are in place System designed for monitoring of training activities Enhanced training performance The Hierarchy of Results

Baseline, Target and Achievement Performance Commitment Achievement At end of period Planned Level of Achievement Current Level of Achievement Ba se lin e Ta rge t Ac hie ve me nt

CAAN's 5 -Yr Plan ple m Exa Results and Resource Framework of Civil Aviation Academy Outcome/ Results Outputs Transform ational Change of CAA & recognized as a Centre of Excellence in civil aviation training CAA’s Master Plan for Transformational Change is implemented Priority Actions Review and revise the existing Master Plan to address the urgent physical infrastructure needs of post-earthquake Start construction of 1 Pre-fab and 4 buildings as per the Master Plan CAA is certified Review findings of CAAN and as Approved identify steps to be taken to Training implement the Organization recommendations (ATO) as per Prepare documentations to international obtain CAAN’s certification standards for CAA as ATO CAA becomes full Make preparation for on-sight member of assessment from ICAO trainer Budget (Rs'000) 2072 -- 77 300 Responsible Dep't, Faculty CAA 206000 Eng. Dept 200 1100 300 CAA Breakdown of Annual Budget Needed

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