An integrated regional development approach – lessons from Nepal

Development policy and practice over the past 50 years has largely treated urban and rural areas separately. However, the two are interdependent and there are constant flows of goods, people, and money between them, so this is an artificial divide.

Development policyhas to find out how best to connect development efforts for rural and urbanareas. Research conducted at the Department of Urban and Regional Planning,University of Hawaii, and published by the International Institute forEnvironment and Development (IIED) argues that there should be a regionalapproach to development. Plans and projects should focus on regions that includeboth towns and rural areas.

Experiences suggestthat for strong linkages to be a good thing, they need to be made in such a waythat a significant portion of the benefits are retained in the local economy.Furthermore, increased productivity through connectedness should benefit asubstantial number of local poor people.

What kind ofprogramme intervention best achieves these kinds of linkages in a local contextis, therefore, a matter of great interest. The Rural Urban PartnershipProgramme (RUPP) in Nepal provides important lessons in this regard. Thisproject focussed on community mobilisation, developing enterprises thatincreased linkages, and small-scale infrastructure development. RUPP organised people into sub-neighbourhood level communityassociations, helped people to form or sustain small enterprises and providedgrants to small infrastructure projects such as trail development, and physicalimprovement of bazaars.

Analysis of RUPPshows that the project faced a number of challenges as well as achievingnotable successes:

• Beingsmall meant that enterprise loans were suitable for poor people and succeededin making individual entrepreneurs less poor. However, it also meant that onlyentrepreneurs tendedto gain and benefits were not spread more widely in the local economy.
• The main reasons for business failure were lack of businessexperience and poverty. The poorest entrepreneurs were unable to absorb setbacks like illness because theyhad borrowed to their limit.
• Mostbusinesses are small trading enterprises rather than processing or manufacturing.These have benefits for a small group of individuals involved but contributerelatively little to increased trade.

In order to developrural regions in an inclusive way that includes small towns and ruralsettlements, productivity needs to be improved and mutually reinforcinglinkages developed between communities. Lessons from Nepal for regional ruraldevelopment programmes are:

• Projectsshould support enterprises based on products with the most local linkages. Inthe RUPP area, that meant milk production and trading, because 100 percent ofthe milk came from small local producers.
• Enterprisedevelopment could be more effective with larger loans for slightly larger scalemanufacturing and processing. Clustering enterprises to provide support in training,market information and storage of produce can also increase growth.
• Investmentin infrastructure is necessary to increase productivity, but small scaleprojects concentrating on small enterprises and community mobilisation do nothave the necessary budgets.
• Localgovernment is often fragmented across the region but should take an integratedregional approach.