The Context

Nepal is a landlocked country with a rich diversity of ethnicities and cultures. The country’s topography and ecology are highly varied, ranging from fertile plains in the south to mountains in the north. Nepal’s landmass falls under three ecological zones – the Terai (plains), the hills and the mountains.

Agriculture is central to the national economy. Nearly 80 per cent of households (3.4 million) and 66 per cent of the national labour force depend principally on the sector for their livelihoods. But urban-rural disparities are high, and over 80 per cent of Nepal’s poor people live in rural areas. 

GDP in Nepal has grown more slowly than in any other country in South Asia– 5.4 per cent in 2014, with an annual average of 4.43 per cent between 2006 and 2014. As of 2014 the country had the lowest per capita GDP in South Asia (US$426 in constant 2005 US dollars), and the highest level of poverty, 25.2 per cent of the population, based on the international poverty line of US$1.25 per day. This is unchanged from the 2011 poverty rate.   

The country’s agriculture sector is a mix of crop and livestock farming. Although more than 70 per cent of the workforce is involved in agriculture, the sector generates only around one third of the country’s GDP. 

Nepal has strong potential for development. Its agricultural biodiversity means it can produce a wide range of crops (cereals, pulses, oilseed crops, fruits, vegetables and other cash crops) at different locations throughout the country.

More than half of all Nepalese households have a family member who has migrated for work. An estimated 2 million people are working abroad (the majority men), and their remittances make up 20 per cent of GDP. The women left behind are taking on increasing responsibility for both household and farm management.

The Strategy

Nepal was one of the first countries to benefit from IFAD loans, beginning in 1978. 

IFAD's strategy in Nepal, based on its country strategic opportunities programme for 2013-2018, supports the development policies and programmes of the government and other partners. This is especially the case relative to peacebuilding, reconciliation, reconstruction and economic recovery following a 10-year civil war that broke out in 1996. 

IFAD's investments reinforce these efforts by addressing poverty, inequality and social marginalization, which have been at the heart of conflict in the country.

In particular, we focus our investments on the hill and mountain areas, where poverty levels are high and access to infrastructure, services and markets is extremely limited. 

Key activities include:

• providing rural infrastructure and services;
• targeting the most marginalized ethnic and social groups;
• improving income-generating opportunities for poor rural households;
• supporting good governance and peace-building;
• promoting community cohesion and resilience.