Overview of Australia’s aid program to Nepal

How we are helping

2016-17 Total Australian ODA Estimated Outcome
$31.6 million

2017-18 Bilateral Budget Estimate
$15.6 million

2017-18 Total Australian ODA Estimate
$31.9 million

The Australian Government will provide an estimated $31.9 million in total Official Development (ODA) to Nepal in 2017-18. This will include an estimated $15.6 million in bilateral funding managed by DFAT.

Australia's relations with Nepal continue to strengthen through development cooperation and people-to-people links. Australia has a long history of supporting Nepal's human and economic development, including through micro-enterprise programs to lift people, especially women, out of poverty.

While Nepal has made progress in reducing poverty rates over the past twenty years, the country remains the poorest in South Asia and among the poorest in the world. In 2016, Nepal ranked 144 out of 187 countries on the United Nations Human Development Index.

Approximately 25 per cent of people live under the national poverty line and 23 per cent earn less than US$1.25 per day. Further, the World Bank estimates that the devastating earthquakes in April and May 2015 may have pushed an additional 2.5 to 3.5 per cent of the country's population into poverty, translating into 700,000 additional poor and demonstrating the vulnerability of Nepali households to shocks. Nepal continues to struggle with disparities and inequalities between regions and social groups, with discriminatory practices based on gender, caste and ethnicity that trap people in poverty.

Australia is committed to providing support for Nepal following the April 2015 earthquake and subsequent aftershock in May 2015. Australia's contribution of $16.7 million between 2015 and 2017 for Nepal's long-term recovery (in addition to $11.9 million provided in 2014-15 for the humanitarian response) is providing critical assistance to help people rebuild their lives. Support for recovery efforts builds on the existing aid program and is consistent with the priorities identified by the Government of Nepal.

Australia's aid program focuses in areas where our experience and expertise can make a difference to the lives of the poorest, particularly women and girls, marginalised communities and people with disabilities. Complementing these key objectives is an emphasis on strengthening resilience and making the most of opportunities afforded by the earthquakes, including by 'building back better'. Underscoring all investments is support for improved governance and public financial management along, with gender equality. The bilateral program is complemented by investments through the regional program in trade, water, energy and connectivity as well as support through global programs for NGO activities and volunteers.

Our program is focused on the three long term objectives, as well as responding to the earthquakes, as outlined in the 2016-2020 Aid Investment Plan Nepal

Objective 1: Expand economic opportunities for the poor, particularly women, by promoting enterprise and job-creation in Nepal

The overall aim of this objective is to boost employment opportunities and income generation. Despite declining fertility rates, Nepal is in the midst of a youth bulge which offers a potential demographic dividend, but also highlights the need to boost employment opportunities.

Australia has supported enterprise and job-creation in Nepal since 1998 through the UNDP-led micro-enterprise development program (MEDEP). Australia will continue with its current phase of funding through to 2018-19 and will then review its options on how to best engage in this sector. This will include exploring opportunities to move beyond income and livelihoods to enterprise development, including working with the private sector to support small and medium sized enterprises (SMEs).

Further analysis will also be undertaken to determine constraints to accessing financial services and other enterprise support for the poor. In the short-term Australia will continue support for recovery of enterprises impacted by the earthquakes in 2015. This assistance is delivering transitionary support for earthquake affected communities to revive their businesses, restore local markets and build long-term resilience.

Investments for expanding economic opportunities for the poor, particularly women, by promoting enterprise and job-creation

Objective 2: Support Nepal to improve governance and policy implementation

Effective and stable governance that delivers services effectively and equitably across the country continues to be a challenge for Nepal. Helping to improve governance and policy implementation is a new objective for Australia.

Over the course of 2017 we will develop a new program of support that focuses on promoting an enabling environment for strong, effective, and inclusive sub-national governance. We will help sub-national levels of government to improve service delivery and economic governance which will contribute to inclusive local economic development and poverty reduction. Where possible, we will encourage strengthened disaster risk governance policies, systems and processes.

This is a large scale and long-term agenda which will require flexibility in order to respond to opportunities and constraints associated with the volatility of Nepal's political processes.

Technical assistance will also be utilised to meet identified gaps, especially if proposed changes to government structures and the constitution occur. This assistance will be targeted and flexible, responding to demand at the sub-national level.

Investments supporting Nepal to improve governance and policy implementation

Objective 3: Promote human development through improved access to and quality of basic education in Nepal

Basic education has been a priority sector for the Government of Nepal since the 1990s. Education remains critical to enabling the poor, particularly women, to participate in the economy and to lifting living standards. Australia has provided long-term support to this sector and will invest in a new program that improves the quality of basic education and strengthens the leadership of the Ministry and Department of Education in program management and implementation.

We will work with the Government of Nepal and other donors through a sector-wide approach (SWAp) which has a proven track record of delivering strong results and demonstrates excellent donor coordination. By combining our contribution with others we will work to influence policy reform based on analyses which identify those issues we can best influence.

The earthquakes in 2015 have had a major impact on education infrastructure and Australia will fulfil its commitment of targeted support for building back better and safer, and to encouraging children (particularly those with a disability) to return to school. Opportunities also exist to build resilience to disasters through school education programs including on hazard awareness and evacuation.

Investments in promoting human development through improved access to, and quality of, basic education

Investments supporting both objectives

Our results

Promote human development through improved access to, and quality of basic education

  • The School Sector Reform Program has increased enrolment in basic education from 73 per cent (2009) to  91 per cent (2016) and achieved gender parity at primary, basic and secondary levels.
  • The program has also seen an increase in the literacy rate for children 6 years and above from 69 per cent in 2008 to 78 per cent in 2016.

Expand economic opportunities for the poor by promoting enterprise and job creation

  • Since 1998, the Micro Enterprise Development Program  has created more than  78,000 micro-entrepreneurs, with 70.7 per cent being women.
  • The micro enterprise program has created more than 154,000 jobs (68.5 per cent of which were for women).

Humanitarian support to the 2015 earthquakes

Australia's $11.9 million humanitarian response package (2014-15) focused on providing lifesaving support through UN Agency Appeals, Australian Red Cross and NGO partners operating on the ground by:

  • supplying emergency shelter and family kits; maternal and child health services; water, sanitation and hygiene promotion; protection support including child and female friendly spaces providing psycho-social and educational services; logistics for emergency food distribution and medical supplies
  • 15 tonnes of humanitarian relief supplies for up to 5,000 people including water purification and hygiene kits, tarpaulins and family kits and blankets; and
  • 31 deployments including consular, medical, logistics and humanitarian specialists.

Earthquake Early Recovery Package

Australia's $16.7 million early recovery package (2015-17) focused on providing lifesaving support through UN Agency Appeals, Australian Red Cross and through NGO partners operating on the ground by:

  • supporting the UNDP's Rapid Enterprise and Livelihoods Recovery Project to stimulate local economic recovery
  • working with Plan International to provide more than 17,000 children, particularly marginalised girls and children with disabilities, with access to education and psycho-social support in safe temporary learning spaces to help them transition back into school
  • supporting the Global Facility for Disaster Risk Reduction and Recovery to conduct damage and structural integrity assessments of public and private education infrastructure and provide technical advice on rebuilding and retrofitting affected schools
  • deploying Australian Civilian Corps infrastructure specialists to Nepal's Department of Education to assist assessments and reconstruction planning, and
  • funding The Asia Foundation's project to assist in resolving community disputes related to resettlement, land and resource use, unequal allocation of relief and recovery resources and increased vulnerability of marginalised groups especially in regards to gender-based violence.

Our changing program

Australia's changing aid program in Nepal reflects our areas of experience and expertise and focuses on activities through which we can make a real difference to those living in poverty. Focusing on education and economic opportunity builds on long standing programs and Government of Nepal development priorities.

Thorough deliberations led to a decision for Australia to exit the health sector. Australia's financial contribution to the health sector was small compared to other donors who were considered better placed to progress reforms in partnership with the Government of Nepal.

In response to political developments, including a new constitution and decisions to hold elections at the local and provincial levels, Australia will develop a new program in the governance sector. We continue to provide support through global programs for NGO activities, volunteers and DFAT's Direct Aid Program (DAP).

Last Updated: 22 September 2017
Tul Bahadur BK runs a furniture making business that has received electric tools as part of the MEDEP support (credit: DFAT).
Mother Nishal Thapa brings her child to a health clinic in Pokhara, Nepal (credit: DFAT).
A student at a primary school in Pokhara, Nepal (credit: DFAT).