KATHMANDU, May 9: Nepal might be the least urbanized country in South Asia, but it is also the fastest urbanizing country in the region, and unless the government makes serious attempts to better manage urbanization, the country could fail to attain economic efficiency from urbanization, cautions a new World Bank study.
The findings of the study -- Urban Growth and Spatial Transition: An Initial Assessment -- which the WB disseminated on Tuesday, says urban population in Nepal has grown at more than 5 percent on average since 1970s, mainly as people moved rapidly to areas of jobs and better economic opportunities.
While that has led some 20 percent of Nepal´s population to presently live in urban areas, the urban areas are together generating about 65 percent of gross domestic product. Given that urban areas serve as powerhouse of economy in any country, the report says Nepal can tap the potential of its cities to leverage their comparative advantages and turn them into competitive advantages.
However, Elisa Muzzini, Urban Economist at the World Bank who led the study, said Nepal´s urban centers, particularly the Kathmandu Valley, are already facing serious challenge due to multiple factors like inadequate infrastructure, haphazard planning and poor business environment.
For instance, she said household access to piped water supply in urban Nepal has declined from 68 percent in 2003 to 58 percent in 2010. While the Kathmandu Valley suffers from unplanned construction, infrastructural bottlenecks in coming years are feared to hit the city´s productivity. While the metropolitan offices and the government have done little to manage the new expansion of the city, the Valley is receiving mere 6 dollars worth of per capita investment on infrastructure -- least among all sub-metros and municipalities in the country.
As a result, the Valley has failed to turn its comparative advantages on areas like cultural tourism, handicrafts and agro-processing into competitive advantages, says the report. As unmanaged urbanizing could also lead other fast growing urban centers to similar situation, it has urged the government to give immediate priority to urban planning and development.
"It is always easy and cost effective to address these issues while urbanization has just started. Once the urban centers grow into full-blown unplanned congested cities, it will be pretty difficult and costly to bring in efficiency in them," said Muzzini.
Referring to such risks, the report has proposed broad policy directions and a number of priority actions in the areas of fostering the growth and sustainability of Nepal´s urban regions. It has suggested to the government to adopt three-prong approach -- institutional, infrastructural and incentives development -- to attain sustainable economic growth.
The report has strongly advocated the government to prioritize investment in infrastructure, connect cities internally and externally, and make growth inclusive in order to foster growth and sustainability of urban areas.
In case of the Kathmandu Valley, it has asked the government to strongly promote the development and regeneration of the Valley. "The government should strengthen and implement planning in the Valley, develop an infrastructure policy and plan for the Valley and regenerate the historic city," said Muzzini.
Likewise, the report has urged the government to enhance competitiveness of the strategic urban clusters by promoting sustainable cultural tourism, modernizing the handicraft sector and improving agro-processing competitiveness -- three areas that have been mainly creating jobs for the migrants.