Far from the bustling streets of Kathmandu, Nepal’s federal capital, a quiet revolution is transforming secondary cities across the country. This transformation is led by local governments as they take charge of their development agendas under the federal structure introduced in 2017.
The World Bank Group’s International Development Association (IDA) is supporting this transformation by helping local governments improve their institutional capacities, service delivery, and infrastructure management. This effort is being executed through the $150 million Nepal Urban Governance and Infrastructure Project (NUGIP), financed by IDA and implemented by the government of Nepal in 33 municipalities across seven provinces.
NUGIP places participating local governments at the forefront of project implementation, allocating about 95 percent of the project budget to these entities.
In Pokhara, NUGIP’s Urban Development Grant is transforming strategic roads into well-planned, people-friendly urban streets. The upgradation of the Talchowk-Begnas Road—a critical stretch connecting Pokhara's main city to Begnas Lake and Rupa Rural Municipality—is set to boost tourism, trade, and local business. This road employs innovative solutions to enhance climate and disaster resilience with efficient drainage systems, erosion control measures, and robust embankments. Local consultations have led to dedicated cycle lanes and wider footpaths promoting eco-friendly transport. Universal design elements in sidewalks and crossings further enhance comfort and accessibility for all users.
"The upgraded road will be more than just convenience," said Shakuntala Sunari Magar, a school teacher from Talchowk. "It will ensure safer journeys for our students to school and back home."
Participating municipalities are learning to handle larger projects through meticulous planning and execution. This includes conducting environmental and social impact assessments; developing E&S management plans; occupational health and safety; and establishing grievance redress mechanisms to ensure sustainable development projects. NUGIP also assists municipalities in strengthening their institutional and fiscal capacities for effective governance. Training sessions provide hands-on assistance across key thematic areas while supporting tailored Institutional Strengthening Plans.
In Itahari Sub-Metropolitan City, NUGIP supports municipal officials in integrating Nature-based Solutions into physical development plans aimed at mitigating flood risks and enhancing climate-resilient urban development.
Labor Intensive Public Works (LIPW) under NUGIP benefit people in participating municipalities with over 50% female participation in cash-for-work schemes for small community-based projects such as road rehabilitation, water works, health infrastructure improvements, environment protection efforts, and public space rehabilitation.
Khima Kumari Chhetri from Phalewas Municipality used her earnings from an LIPW road improvement program to purchase household necessities and invest in her children’s education. Proud of her contribution to community development, she hopes to start a small business with future earnings.
In Dolakha's Bhimeshwor Municipality, NUGIP connected 50 Dalit households with a main road via a stepped trail facilitating transportation of agricultural produce. Community members were fully engaged in this process from project selection to labor contribution leading to better living conditions.
These stories illustrate NUGIP’s positive impact on strengthening local government capacity for improved service delivery, uplifting small-scale infrastructure projects providing employment opportunities while improving living conditions for underserved communities.
The results achieved by NUGIP demonstrate steady progress towards enhanced urban livability and economic prosperity under Nepal's federal system which can be further strengthened by boosting fiscal capacities among municipalities alongside intergovernmental cooperation.
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