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Nepal has huge economic potential, but progress is held back by poor governance and corruption, concludes a report from the International Development Committee.

• Report: DFID's bilateral programme in Nepal
• Report: DFID's bilateral programme in Nepal (PDF 677KB)
• Inquiry: DFID's bilateral programme in Nepal
• International Development Committee

Sir Malcolm Bruce MP, Chair of the Committee, said:

"The Committee commends DFID for providing technical support for the Investment Board of Nepal (IBN) when no other donors were willing to do so. Nepal is planning to construct two major hydro-electric schemes which will help address the country's chronic power shortages. If traditional political problems are overcome and these schemes are successful, the Nepalese economy could be transformed and DFID could begin to develop an exit strategy."

But he noted 

"Nepal suffers from poor governance, and corruption is endemic in Nepal. The Committee does not see the use of local NGOs in place of the state as a panacea: in corrupt societies NGOs can also be corrupt. If Nepal is to become less corrupt, improvements in governance and a change of culture have to be made to state institutions. DFID should continue to work through state institutions, but ensure funding is linked to improvements in performance. DFID’s large budget in Nepal can only be justified if there are such improvements, and should be reduced if effective action to combat corruption is not perused vigorously by the Government of Nepal."

The Committee says: 

• Nepal has made huge progress in health thanks in part to DFID's provision of sector budget support: DFID should continue this funding, linked to continuing improvements 
• Given the threats to Nepal from climate change and earthquakes, DFID's focus on these issues is welcome, but DFID's work on disaster reduction is on too small a scale. DFID should engage with the Government of Nepal in urban planning, including transport planning, areas where UK has considerable expertise. If necessary, DFID Nepal should employ an additional adviser.
• DFID's decision to drop support for national elections was the right one: other donors can fund them. DFID should provide support for Parliament as soon as national elections are held, focusing on support for women MPs and committees. Further, DFID should support local elections, their absence is seen as a source of corruption. 
• Nepal has huge potential to benefit from tourism and the jobs it brings. 
• Women and girls in Nepal face severe problems, including trafficking, early marriage, domestic abuse, suicide and even murder. DFID should ensure that its programmes, in particular its Security and Justice programme, adequately address changing social norms as well as ensuring justice for victims.

Further Information

• About Parliament: Select Committees
• Visiting Parliament: Select Committees