Governments, Private Sector & Development Partners meet to discuss Green Growth & Investment
By Shambhavi Basnet
Why Learning and Sharing?
On March 18th and 19th 2023, Sudridh-NURP organised a high-level Municipal to Federal (M2F) Learning Alliance themed around Green, Resilient, and Inclusive Development (GRID) and Green Investment, convened in collaboration with the Ministry of Urban Development (MoUD). The event brought together 78 senior-level representatives from all three spheres of government, development partners, the private sector, academia and civil society.
On the government side, officials from the Ministries of Urban Development (MoUD), Federal Affairs & General Administration (MoFAGA), Forests & Environment (MoFE), and Finance (MoF), and the National Association of Rural Municipalities in Nepal (NARMIN), Municipal Association of Nepal (MuAN), Town Development Fund (TDF), Office of the Investment Board Nepal (OIBN), National Planning Commission (NPC) joined representatives from the municipalities of Pokhara, Butwal, and Janakpurdham and the Siddhartha Economic Corridor Mayors’ Forum in this two-day event. Stakeholders from development partners and private sector including the World Bank, USAID, United National Capital Development Fund (UNCDF), Nepal Infrastructure Bank Limited (NIFRA) and Nepal Investment Mega Bank (NIMB) also participated.
The endorsement of the Kathmandu Declaration by the Government of Nepal as well as national and international partners in 2021 adopted GRID as the guiding paradigm for its national development agenda. The development of a strategic action plan for Nepal towards GRID will coordinate international and domestic financing for priority investment in Nepal’s recovery from the crisis caused by the COVID-19 pandemic and will also support Nepal’s 15th development plan, Nationally Determined Contributions, Sustainable Development Goals and other international commitments1. NURP has, since then, channelled its efforts into supporting GRID-aligned infrastructure development and investment in green growth projects.
During his presentation “Road to Resilience: Initiatives of Ministry of Urban Development (MoUD)” at the M2F learning event, MoUD Secretary, Mr. Suresh Acharya, highlighted Nepal’s commitment to the United Nations Framework Convention on Climate Change to use clean energy, increase forest cover by 2030 and achieve net zero carbon emissions by 2045. He stated that in order to achieve these goals, Nepal has three major aims: (i) to scale up the efforts and support actions to reduce emissions, (ii) build resilience and decrease vulnerability to adverse impacts of climate change, and (iii) uphold and promote regional and international cooperation. According to Mr. Acharya, the road to resilience for the MoUD consists of planned urban intervention, building holistic resilience, investing in disaster-resilient and sustainable infrastructure, safeguarding access to basic urban services, exploring nature-based solutions and ecosystem-based approaches to adaptation, embracing a pro-poor approach, and building inter-city cooperation for reduction of risks.
The first iteration of this type of Learning Alliance – the Federal to Municipal (F2M) Learning Event – was organised by Sudridh-NURP in 2022 and brought together representatives from all spheres of government as a way to create a systematic approach of knowledge creation – capturing, documenting and sharing lessons and best practices through peer-to-peer exchanges to improve the performance and effectiveness of local governments to strengthen resilience and liveability of cities. The F2M event concluded with the Sauraha Declaration, a commitment to adopting GRID in local level planning, policy and budgeting as well as enhancing inter-government coordination to continue dialogue around GRID-aligned approach to urban resilience. Stemming from this event, Sudridh-NURP aimed to support continuity of similar learning and sharing practices by facilitating a follow-up event with the M2F learning event, building on the F2M event’s achievements and commitment. For the recent M2F learning event, NURP expanded the roster of participants to include representatives from the private sector, development partners as well as relevant organisations working in the realm of urban development and resilience to engage in a wider discussion on the themes of GRID.
Through thematic presentations and panel discussions, the M2F Learning Alliance featured discussions on:
- NDCs-II Implementation Plan and the Role of Federal / Sub-National Governments
- Access of Local Governments to Green Finance
- Public Partnership and Green Investment
- Blended Finance for Green Infrastructure at the Local Level
- Harmonization of Development Cooperation in the Urban Sector
- Green and Inclusive Growth
- Ensuring Resilient Development at the Federal and Sub-National Level
The event provided a platform for dialogue among the different spheres of government allowing the federal government the chance to better understand prevailing issues on the ground faced by the local government and discuss policy-oriented solutions. Government representatives were able to share their perspective and common understanding on how to ensure local budgets are spent on the selection and prioritisation of GRID-aligned projects. Similarly, development partners had the opportunity to hear the governments’ perspectives and share their own priorities. The engagement of different institutions from the public and private sector presented the chance for knowledge-sharing around green investments with the government representatives and discuss opportunities to work collaboratively for the development and financing of sustainable green projects under Public-Partnership Partnerships (PPPs).
Potential for PPP, green investments and blended finance
In a session on PPP and green investments, concerns were raised over the low frequency and success rate of PPP projects in Nepal. As the Mayor of Pokhara, Mr. Dhanaraj Acharya, pointed out, that even though local government has intended to enact PPP laws and invest in PPP projects, a successful case study for PPP has not emerged yet in Nepal.
Panellists reiterated the importance of blended finance which has been the government’s focus for generating resources especially for power generation projects in Nepal. Blended finance relies on engaging the private sector as a tool with a potential to bridge funding limitations as well as share inherent liability and risks of any investment2. Mr. Sushil Gyawali, former CEO of the National Reconstruction Authority (NRA), highlighted the importance of periodic planning for local government, specifically planning of projects that are integrated with GRID. Participants stated that a blended approach to financing green projects is comprised of formulating a project bank – a repository of credible and bankable projects for PPP investments selected through a predetermined, structured, systematic, and transparent process for the identification, selection, ranking, appraisal and prioritisation of projects3, a financial/investment plan, relevant policies and the strengthening of the institutional mechanism governing the process. Further, financial entities like NIFRA and TDF are key stakeholders prepared to invest in green projects (electric vehicles, charging stations, waste management, treatment plant, etc.), but emphasised that formulation of concrete legal policies to support blended finance should come from the public sector.
Towards better harmonisation among development partners
Development partners raised the issue of potential duplication across organisations, identifying coordination and communication between the partners as a critical to ensure efficient utilisation of resources. In addition to the collaboration between the three spheres of the government, the wider engagement of development partners and the private sector during this year’s M2F event contributed to a more comprehensive discussion.
As mentioned by both FCDO’s Growth and Resilience Advisor, Dr. Sabita Thapa and Senior Urban Specialist with the World Bank, Jonas Ingemann Parby, the formation of International Development Partners Group two years ago has contributed significantly to policy dialogue around the GRID framework and enhanced harmonisation among agencies. Consistent communication and collaboration between the government and the development partners ensures a two-way exchange of understanding, knowledge, learning, and plans & policies. Mr. Sushil Paudel, Senior Mission Engineer from USAID, emphasised that coordination with the wider community in addition to local government yields stronger results and understanding of where a project fits within the local context.
Where are we on Green and Inclusive Growth?
Inclusion, community involvement, and the promotion of skilled manpower and green jobs are vital components of green growth. Participants emphasised the crucial role of community members, particularly women and marginalised groups, in the planning and implementation of urban development initiatives. “Inclusivity exists only on paper in various parts of the nation,” said Mr. Manoj Kumar Sah, the Mayor of Janakpurdham.
Mr. Suman Salike – S.D.E, MoUD – stated that there is a lack of ownership from the local government on adopting GRID in land use planning, National Building Codes and building byelaws. Mr. Saroj Nepal, with UNCDF, shared the opinion that the local governments are in a more powerful position than they were a decade due to improved governance mechanisms and decentralisation. As Nepal is transitioning from least developed to developing country in 2026, the consensus among stakeholders is that the Official Development Assistance (ODA) coming to Nepal will reduce over time, so it falls upon the local governments to focus on bankable projects that help develop the economy by addressing key societal dynamics and promoting resilience. Mr. Nepal added that for comprehensive development, there should be harmony within and among every planning division (environment, infrastructure, social, governance, etc).
The M2F learning event culminated in a consensus on the way ahead in the form of a declaration that will be finalised with input from all attendees. These points of common understanding and commitments included ensuring local budget is spent on selection and prioritisation of GRID projects; developing a culture of mutual coordination and cooperation with financial institutions, private sector and other development partners; taking serious measures to expand blended finance mechanisms, implement land use plans, national building codes, and promote green infrastructure with defined roles for federal, state and local governments, among other commitments related to mainstreaming NAPs at the local level.
Final thoughts – Further coordination on GRID
Over the 2-day event, stakeholders emphasised the importance of developing a culture of mutual coordination and cooperation between financial institutions, the public and private sectors, and other development partners. Participants recognised the value of such learning platforms to engage in topics that both fit the national agenda and enhance collaboration opportunities among numerous public and private sector entities for GRID-aligned urban planning and development.
All event stakeholders agree with the significant importance of the localisation of international agreements to the Nepalese context. The involvement of all levels of government – local, provincial and federal – for inclusive, environment-friendly economic growth is crucial to this success. Achieving green and inclusive growth requires collective effort and accountability from all stakeholders. Given the significant presence of the Provincial Ministries in the political landscape of Nepal, discussion on their potential roles in GRID planning, green growth and investment are ongoing. Yet, it falls upon the Province Ministries as well to incorporate GRID-aligned policies and support the federal and local governments to do the same. Learning and sharing events like the M2F enable discussions and ensure alignment on the ways forward for effective coordination and collaboration conducive to implement international commitments and promote positive change in the urban development sector.
In his closing remark, Mr. Acharya noted “The objective of this event was to self-commit and understand our responsibilities towards sustainable urban development. We need to make [GRID] a more focused subject as we move ahead”. Based on the success of the F2M and M2F, it is hoped that varied stakeholders from government, the private sector and development partners will take the learnings forward and commit to ongoing dialogue.