Located on the southern slopes of the Eastern Himalayas, Bhutan is a small landlocked kingdom that has achieved strong economic growth over the past three decades.
The country has also made significant achievements in social development in recent years, reducing the number of poor people by about half between 2007 and 2012.
However, poverty remains a persistent issue, particularly in rural areas, and the eastern parts of Bhutan are significantly poorer than the rest of the country. The country’s population is young – 42 per cent of its people are below age 15.
The country is mostly mountainous, and 70 per cent of its territory is covered in forests. More than 60 per cent of the population lives in rural areas. Many villages are still isolated, and those with limited roads and market access tend to have higher poverty rates.
Agriculture is practised on scattered and scarce arable land that amounts to less than 8 per cent of the country’s territory. The sector employs about 70 per cent of the population, and the rural economy is still primarily based on subsistence agriculture.
Lack of access to technology, business development services, fair markets and suitable financial products constrain rural enterprise. The challenges affecting agricultural production include natural disasters, declining productivity, human-wildlife conflict, insufficient irrigation, farm labour shortages and limited post-harvest management.
Climate change is expected to hit agricultural productivity hard in coming years, due to changes in water availability, soil fertility and incidence of pests and disease. Given the nation’s socioeconomic dependence on agriculture, water resources and forests, the impacts of climate change have the potential to undermine development efforts.
In Bhutan, IFAD investments empower poor rural people to achieve greater food security and higher incomes, while ensuring environmental sustainability.
IFAD operations are aligned with the government’s five-year plans. Our work is focused on the six eastern districts, where rural populations and food insecurity are concentrated. Targeting will also focus on the inclusion of women and youth.
Our current portfolio of programmes and projects is aimed at the development of economic capital, especially rural infrastructure. Key activities include:
- participatory planning and skills development;
- marketing and enterprise development;
- rural financial services;
- rural infrastructure;
- management and coordination;
- building the capacity of support services;
- strengthening decentralized institutions.
In Bhutan, over 90 per cent of poor people live in rural areas.
The agriculture sector, including livestock and forestry, is the main source of livelihoods for about 90 per cent of the population.
Since 1981, IFAD has invested US$65.2 million to finance 8 projects and programmes related to agricultural development in Bhutan, benefiting more than 121,000 households.