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Overview of Australia’s aid program to Nepal

2013/14 Estimated Outcome: $27.3 million

2014/15 Budget Estimate: $33.9 million

Australia’s diplomatic relationship with Nepal spans over 50 years. We are supporting the Government of Nepal’s development priorities and our presence enables us to assist during Nepal’s frequent natural disasters. A more stable, prosperous Nepal has the potential to trade more and contribute to broader regional growth. Australia is the twelfth largest donor in Nepal, and will likely remain a modest donor.

Nepal is among the poorest and least developed countries in the world with slow economic growth. Widespread, entrenched inequality exists in access to basic services for minority and traditionally marginalised groups, women and those with disabilities. More than half of Nepal’s population lives in poverty. Poor access to health and education, low literacy rates, limited agricultural productivity, malnutrition and inequities resulting from traditional social structures limit Nepal’s ability to make gains in social development. This inequality has been a key driver of conflict and instability. Delivery of national services is across one of the most difficult terrains in the world.

Australian aid investments aim to expand economic opportunities for the poor and address barriers to participation and productivity. Programs target micro-enterprise development, job creation, improving access to quality health and education services and strengthening the Government of Nepal’s financial management systems. Australia works closely with the Government of Nepal and other like-minded donors in the delivery of these programs.

The strategic objectives of the program are to:

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

Australia will enable private sector development through the Micro-Enterprise Development Program (MEDEP) which aims to foster an enabling environment for private sector employment creation. MEDEP is one of the few donor initiated programs in Nepal that has a strong Government of Nepal buy-in.

Expanding economic opportunities in Nepal

Promote Nepal's human development to expand participation and productivity of the poor

Investments in Nepal’s education and health sectors will contribute to a productive work force, and will include:

  • strengthening public education through the Nepalese Government’s School Sector Reform Program by improving quality and promoting inclusion of more than 3.8 million girls and boys from poor and marginalised communities, including children with disabilities
  • targeted scholarships to Nepalese for post-graduate studies and short-courses in Australia through the Australia Awards
  • improving nutrition, child survival rates and maternal health of the poor.

Improvements to governance are central to both objectives. Australia contributes to the World Bank’s Public Financial Management Multi Donor Trust Fund to support system reform.

Given the risk of natural disasters setting back development gains, disaster risk reduction (DRR) is another important cross-cutting issue. In its education activities, Australia has contributed some of its funding to retrofitting public school buildings so they are multi-hazard resistant.

Promoting human development opportunities in Nepal

Our results

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

In 2013-14, the Micro Enterprise Development Program enabled 8,727 beneficiaries to increase their income, 70 per cent of whom were poor women. Since 1998, the program has created more than 70,000 micro-entrepreneurs and through the micro-enterprises created more than 75,000 jobs. An impact assessment report (2010) found that 80 per cent of the micro-entrepreneurs established by MEDEP continue to be active in their profession.

Promote Nepal’s human development to expand participation and productivity of the poor

In education, the School Sector Reform Program has delivered good results including increasing enrolment in basic education from 73 per cent (2009) to 86.3 per cent (2014) and gender parity in basic education enrolment. In 2013-14, Australia’s funding ($4 million) directly supported an additional enrolment of approximately 50,000 students (25,269 girls) and delivered more than 300,000 textbooks. In 2013, 89 Australia Awards (35 scholarships and 54 fellowships) were also provided to assist Nepalese to study at a range of Australian tertiary institutions.

In health, the Australian-supported Nepal Health Sector Program has made good progress on many health indicators and Nepal remains on track to meet its MDG (4, 5 and 6) targets in health. In 2013 results include a maternal mortality rate of 192 (2015 target is 134), an infant mortality rate of 44 (2015 target is 32) and an under 5 mortality rate of 47 (2015 target is 38).

Related documents

Expanding economic opportunities in Nepal


Slow economic growth during the past decade has resulted in a lack of job opportunities in Nepal, especially for the youth. Many Nepali youth are either unemployed (more than two times more likely to be without work than adults) or trapped in vulnerable and low-paid jobs. The situation is even worse for women who typically earn up to half of what men earn for similar work. The deeply entrenched social and structural inequalities, compounded by chronic poverty, have been key drivers of conflict in Nepal. Australia is supporting people in rural communities to move out of extreme poverty through sustainable micro-enterprises that increase household incomes and provide food security and social benefits.

Related initiatives

Micro-enterprise Development Program (MEDEP)

$32.3 million, 2013-2018

The Australian funded Micro Enterprise Development Program (MEDEP) is implemented by the Nepal Ministry of Industry and the United Nations Development Program. MEDEP aims to expand employment opportunities and alleviate poverty for the poor, youth, women, and individuals from socially excluded groups. To date, MEDEP has helped directly create more than 70,000 micro-entrepreneurs and through the micro-enterprises 75,000 jobs, with about 60 per cent of them being to women.

MEDEP is one of the few donor-initiated programs in Nepal that has strong government support. In 2009, the Government of Nepal introduced its own micro-enterprise program, the Micro Enterprise Development for Poverty Alleviation (MED-PA) programme. The MEDEP program will be integrated into the Government’s MED-PA program by 2018.

In 2012, a series of short films were developed to tell the stories of a range of women who have benefited from MEDEP. The Australian funded project was managed by Australian Youth Ambassador Kevin Tse. One of the beneficiaries, Ms Kesha Kumari Damini, was awarded the international Business for Peace Award in 2014. Ms Damini was cited for her leadership and success in mobilising micro entrepreneurs, mainly women, to become self-employed and overcome discrimination. She is currently chair of the National Micro-entrepreneurs’ Federation of Nepal. The films can be viewed by following the links below.

Related documents*
Name of document Year published Type
MEDEP Independent Evaluation 2012 Evaluation
MEDEP Independent Evaluation: management response 2012 Management response
Related links

Short films

Promoting human development opportunities in Nepal


Promoting economic growth and poverty reduction requires a foundation of strong human development. Improving education, health, gender equality and women’s empowerment are essential to both building a skilled and competitive workforce and lifting living standards. Educated women have fewer, healthier children who are themselves more likely to go to school. Healthier adults have better opportunities to earn an income, and children who are well-nourished and free of disease are able to learn at school and gain the skills needed to break out of poverty.

Despite impressive poverty reduction efforts, more than half of Nepal’s population lives on less than US$1.25 a day and about three quarters of the population lives on less than US$2 a day. In reducing poverty, Nepal needs to address high illiteracy, malnutrition, poor access to basic services and inequities resulting from tradition-driven social structures and poor governance.

Related initiatives

School Sector Reform Program

$26 million, 2009-2016

Australia’s support for Nepal’s School Sector Reform Program aims to increase access to quality primary and secondary education, particularly for girls and children from marginalised groups. As the program is implemented, all primary school children will receive free textbooks. A new component of this initiative is improving structural safety in schools, especially in densely populated areas given the high risk of earthquakes.

The School Sector Reform Program is supported by a consortium of 10 donors, including Australia, through a pooled fund managed by the Government of Nepal.

Name of document Year published Type
Nepal School Sector Reform Program Mid Term Evaluation 2012 Evaluation
Related links

Nepal Health Sector Program

$26 million, 2010-2015

The Nepal Health Sector Program Implementation Plan II is a sector-wide program implemented by Nepal’s Ministry of Health and Population. The program is based on Nepal’s long-term health sector plan. The Nepal Health Sector Program aims to increase people’s access to and use of quality essential health care services, including maternal and child health services.

Australia and four other pooling donors—the UK Department for International Development (DfID), World Bank, the Global Alliance for Vaccines and Immunisation (GAVI) and the German Development Bank (KfW)—support this program in Nepal.

Related documents*
Name of document Year published Type
NHSP II Implementation Plan 2010 Implementation plan
Related links

Last reviewed: 16 December, 2014