UNCDF has been active in Nepal since 1984, channelling technical assistance and capital investment in several thematic areas, emerging from its mandate from the UN General Assembly (UNGA) to assist LDCs in the development of their economies.
With its capital mandate and instruments, UNCDF offers “last mile” finance models to unlock public and private capital, especially domestic resources, to reduce poverty and support local economic development. UNCDF’s financing models work through two channels: financial inclusion that expands the opportunities for individuals, households and small businesses to participate in the local economy, providing them with the tools they need to climb out of poverty and manage their financial lives; and localized investments that show how intergovernmental fiscal transfers, innovative municipal finance and structured project finance can drive public and private funding for local economic growth, women’s economic empowerment, climate adaptation, and sustainable development.
UNCDF launched its Digital Finance interventions in Nepal in 2013 and focused on creating an inclusive environment for inception and scale-up of digital financial services. Since then, the country has moved from a restrictive to enabling environment, which in 2017 has allowed payment service providers to become licensed and offer digital accounts with more flexible agency banking requirements.
In Nepal, UNCDF works closely with policymakers, ministries, subnational governments, financial service providers, development partners and stakeholders to offer innovative financial solutions that help unlock public and private finance at the local level. We accelerate the development of services leveraging digital finance and innovation by providing the right balance of technical expertise and financial support.
UNCDF's interventions focus on creating an enabling and future-looking eco-system to build a larger inclusive digital economy in Nepal. This vision is line with Nepal’s vision of digital Nepal.
UNCDF played a key role in supporting the Government of Nepal to strengthen local government finance and establishing a strong base for inter-governmental fiscal transfer mechanism, initially through the Decentralized Financing and Development Programme (DFDP), and thereafter has been a key partner in Local Governance Community Development Programmes Phase I and II , as well as during the transition to the Provincial and Local Government Support Programme (PLGSP).
As part of UNCDF’s Global MIF programme, established to support and address urbanization challenges in rapidly growing cities in developing countries through access to sustainable sources of capital financing, policy support and capacity strengthening to local governments and sub-sovereign entities, the programme has been piloted in Nepal in partnership with the Town Development Fund.
In partnership with the Town Development Fund (TDF), UNCDF is preparing innovative solutions to expand financing for local governments and develop financing instruments that diversify and aggregate municipalities’ financial base. Drawing lessons from the Local Climate Adaptive Living Facility (LoCAL) initiative, UNCDF aims to support governments’ channel global climate adaptation financing to the local level to meet the challenges of climate change, and finance sustainable resilient infrastructures.