IFAD and Nepal mount post-COVID investment programme to build resilience of rural communities

Rome, 12 October 2021 – The International Fund for Agricultural Development (IFAD) and the Government of Nepal recently launched a six-year programme to improve the livelihoods, climate resilience and nutrition of 120,000 smallholder farmers across 28 districts in provinces 2, 3 and 5.

The Value Chains for Inclusive Transformation of Agriculture (VITA) Programme aims to build on successful and inclusive models of rural economic growth that increase smallholder farmers’ incomes.

It advances best practices in part by bringing in the largest financier of agriculture in Nepal - the Agriculture Development Bank Ltd (ADBL). The partnership with ADBL and others will be instrumental in removing critical constraints that small-scale producers often have in accessing finance for agriculture. The investment by ADBL and other domestic banks will also be a large step in building climate resilience into public and private investment practices and will accelerate the development of digital rural financial services.

IFAD will also work with Heifer International Nepal to engage women and youth in a variety of income-generating activities while also improving household food and nutrition security.

 “In the context of COVID-19, VITA is a major and timely new investment programme that will make a valuable contribution to Nepal’s recovery,” said Roshan Cooke, IFAD Country Director for Bhutan and Nepal. “VITA will create new opportunities for smallholder farmers to improve their business model and income from farming. The programme will also include a large number of returning migrants who want to engage in agriculture and off-farm rural business development.”

“The programme will promote practices that ensure farm enterprises become more resilient to climate change, are sustainable and increasingly profitable. VITA will also help to strengthen farm to market linkages by directing the appropriate use of financial services and engagement with the private sector,” he added.

Nepal is highly vulnerable to climate change and is already experiencing more frequent extreme weather events. In this challenging context, VITA will promote a number of climate-resilience building activities, including improving farmers’  capacity to adapt to climate change as well as increase availability of and access to new technologies and climate-proof infrastructure. Importantly, VITA will seek to ensure that all credit provided by ADBL will be climate screened to ensure that risks are appropriately assessed for securing smallholder farmers’ investments.

Of the total programme financing envelope of US$ 196.92 million, IFAD is providing a $97.67 million loan, with ADBL and other domestic banks providing US$ 38.6 million. The Government of Nepal will contribute US$ 9.95 million while US$ 33.75 million is expected to come from the project participants. The local private sector is expected to contribute US$ 16.88 million.

Nepal was one of the first countries to benefit from IFAD loans, beginning in 1978. In Nepal, two-thirds of the labour force is engaged in agricultural production, but a majority are unskilled and lack access to basic inputs, credit and labour-saving technologies. As a result, over 50 percent of Nepal’s food needs are met through imports. Food insecurity remains a key concern in the country, with high rates of stunting and wasting.

IFAD's strategy in Nepal supports the development policies and programmes of the government and as such, invests in smallholder agriculture, poverty alleviation, and redressing inequality and social marginalization. IFAD has focused its work particularly in the hill and mountain areas, where poverty levels are high and access to infrastructure, services and markets is extremely limited.

To date, IFAD has supported 18 rural development projects in Nepal worth US$ 353.84 million, which has gone towards significantly reducing rural poverty.

Read more about IFAD’s work in Nepal.

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