World Habitat Day 2023: Need of Resilient Urban Economies

2 October 2023, Kathmandu.

Government of Nepal, Ministry of Urban development (MOUD) in collaboration with UN-Habitat Nepal and various stakeholders working in the field of urban and housing development organized a workshop to mark the World Habitat Day (WHD) 2023, on 2nd October with the theme ‘Resilient Urban Economies: Cities and Drivers of Growth & Recovery’.

Honourable Minister of Ministry of Urban Development Ms. Sita Gurung graced the event as the Chief Guest, in the inaugural session chaired by Mr. Dilip Bhandari, Joint secretary of MOUD. Special Guests Mr. Padma Kumar Mainalee, Acting Secretary of MOUD, Dr. Biswoanath Poudel, Former Vice President of National Planning Commission and Chief Economic Advisor of Ministry of Finance, Ms. Januka Dhakal, Development Commissioner, Kathmandu Valley Development Authority (KVDA), and guests as Mr. Surendra Mohan Shrestha, Director General of Department of Urban Development and Building Construction (DUDBC), Ms. Pragya Pradhan, Habitat Program Manager of UN-Habitat Nepal and Mr. Kalanidhi Devkota, Executive Director of Municipal Association of Nepal (MUAN) highlighted the priority areas for Nepal in strengthening urban economy.

Inauguration Session:

Hon. Minister Ms. Sita Gurung reinforced the commitment to ensure the fundamental rights enshrined in the constitution on right to housing and basic services, right to enjoy socio-economic prosperity and livelihood upliftment, which is possible only through managed urban and economic development in the cities. She emphasized the importance of inter-agency, inter-ministerial coordination, stability in leadership in public offices and the role of the local government, for setting and striving for a collective development vision with a long-term strategy for sustainable growth and development. She also expressed her views on the need of integrated settlement in rural areas, where cost of infrastructure is higher due to sparsely scattered settlements, and importance of actualization of land use policy especially in new urban areas for managed urbanization.

Mr. Padma Kumar Mainalee, Acting Secretary, MOUD provided the historical transition on the celebration of World Habitat Day that has seen a shift from ‘housing for all’ to ‘Cities for all’ and now ‘Cities as the centre for growth, recovery and economy’. He underscored that essence of the National Urban Policy - 2007, and the concept of regional development envisaged through urban rural service areas and corridor planning to impact national economy, which has been actualised through the time. He also highlighted various initiatives of MOUD for implementation of the policy which now needs to shift towards perceiving and developing cities as a product for investment and innovation, which demands political commitment for the leadership.

Similarly, Ms. Januka Dhakal, Development Commissioner KVDA stressed the importance of integrating social, economic and environmental aspects of development, to make our cities more liveable and inclusive. Further, she linked it with the concept of satellite cities proposed by KVDA in four locations in Kathmandu valley, aimed to demonstrate liveable cities through better urban management.

Mr. Dilip Bhandari, Joint Secretary, MOUD and the Session Chair reiterated the objective of World Habitat Day as an opportunity to bring together urban stakeholders to discuss on key urban issues of the national concerns. He thanked the stakeholders, on behalf of the organizing committee, for their valuable contribution in making the program a success.

Mr. Surendra Mohan Shrestha, Director General, DUDBC explained about various projects implemented by the department and the planned projects that could be game changer in urban development of Nepal. However, he also highlighted the issue of budget deficit, a major challenge for the department in implementation of the urban development projects.

In the remarks by Mr. Prakirna Tuladhar, Deputy Director General of DUDBC marked the achievement from WHD 2022 to WHD 2023 with delivery of two tangible outputs: the publication Urban Development, a compilation of the articles and journals, and the review of GESI Operational Guideline - 2013 of the MOUD. Both documents as key publications, guided by its WHD 2022 theme “Leave No One and Place Behind” and initiated with inputs received during the participatory discussions during WHD. The GESI Operational Guideline was revised during 2023 with engagement of multi-stakeholders and through technical support from UN-Habitat. The guideline was formally endorsed in September 2023 and launched by the Honourable Minister Ms. Sita Gurung as a gesture to inaugurate the WHD 2023.

The video message from UN-Habitat Executive Director, Ms. Maimunah Mohd Sharif, was followed by brief note from Ms. Pragya Pradhan, Habitat Program Manager of UN-Habitat. She provided an overview of global scenario of linkage between urbanization and economic growth, which is not reflected in context of Nepal, which is evident from the share of GDP of the provinces (Bagmati being 37%, while Karnali 4%) and urged for the balanced economic development, leaving no one and no place behind in the process. She also underscored the needs of tackling the challenges imposed by COVID and climate change for inclusive and resilient urban development.

Mr. Kalanidhi Devkota, Executive Director of MUAN stressed on the importance of urban-rural linkage, hierarchy of settlement for context specific planning, to make the cities more liveable and with unique identity to build on the economic base. He also emphasized on the need of considering the floating population in urban economy to make the development more inclusive and in making cities vibrant, expanding potentials to function as the engine of growth.

Keynote Speech:

Dr. Biswonath Poudel, Chief Economic Advisor of Ministry of Finance and Former Vice Chair of National Planning Commission of Nepal delivered the Keynote speech, providing critical insights on the development trajectory of Nepal. He started with highlighting the trend of depopulation in 32 out of 77 districts as reflected in the recent census data. He cemented the need of a discourse that focuses on city-based growth and urban management to mitigate outmigration in the hilly areas, and likewise guide development in the tarai region, the required investment in ensuring the basic services including hospitals and schools. With examples from developed countries, he encouraged to aspire for urban amenities such as washing machine, refrigerators, dishwasher, etc. to make life of women comfortable, with feminization of the settlements who are major workforce in Nepal, to assess the development level. This requires investments in adequate and dependable water supply, electricity and energy.

He provided example of hydropower sector in Nepal, on the successful model to attract national (public + private) and international investment, which should be expanded or replicated into other sectors including urban services. He further highlighted the need of fiscal policies and innovative instruments to promote city and private sector investments on housing sector, to make affordable housing a reality that showcases the vernacular architecture and adds to the beauty of the settlements. Dr. Poudel explained key roles of multiple stakeholders in city development, where in case of Nepal connectivity is crucial that promotes economic networking between settlements, and commuting more feasible, whether it is within a city or between cities and between rural and urban areas.

Dr. Poudel also identified key urban areas that could help as natural growth corridors to support the development of the region, that include i. Biratnagar-Jhapa corridor, ii. Madesh Pradesh as a single urban unit with increased social infrastructures, iii. Narayanghat-Hetauda and Chitwan-Nawalparasi region, iv. Butwal-Bhairahawa connects to Pokhara, v. Kohalpur - Nepaljung corridor and vi. Dhangadi-Mahaendranagar corridor and further Kathmandu and Pokhara valleys as megacities. He concluded emphasizing the need of prioritizing and strategic investments in these regions that can yield outputs to help trigger economic development of the entire region.

Technical Session:

The technical session started with presentation from Mr. Ashesh Shrestha from Samriddhi Foundation, a research-based organization. Mr. Shrestha presented on the gaps and challenges of urbanization and economy in context of Nepal.  He highlighted the share of urban population vs GDP per capita of different developing countries around world and Nepal’s performance globally and in South Asia, which is at the lowest quintile. While Nepal is graduating without meeting the GNI per capita criteria, the share of formal employment in Nepal was found only to be 15.4%, Nepal was also doing poor in global competitiveness coupled by the huge gap seen in public sector financing in achieving sustainable development goals, which is not yielding anticipated growth against the rate of urbanization. He also highlighted the low revenue base of local governments, low FDI inflows with respect to commitments made, as the challenges and highlighted key issues on governance, local own source revenue, private sector engagement, informal economy that are hindering the progress of the country.

Followed by the presentation, a panel discussion was facilitated by Mr. Pragya Pradhan, Habitat Program Manager of UN-Habitat Nepal to continue discussions on some of the key issues raised by Mr. Shrestha during his presentation.

Ms. Sunita Dangol, Deputy Mayor of Kathmandu Metropolitan City and the Chair of the session provided brief overview of the achievement of the city in increasing its own source revenue through  various tactical tools that includes increasing revenue through use of volunteer youths, as well as awareness program in each ward in importance of paying tax, simplifying the procedures of tax collection in ward level, providing tax incentives and removal of fine to encourage people from paying tax. This had resulted 20% increase in tax collection than the targeted amount. She also pointed out the challenges faced by local government including the jurisdiction of institutional rent tax, difference in tax among municipalities and technical challenges of tax collection due to lack of integrated online system.

Mr. Padma Kumar Mainalee, Joint secretary, MOUD highlighted the importance of understanding the concept of urban and need of the balanced urbanisation taking in consideration of the environment and empowering the local government in the process to make the cities function as a centre of growth. He highlighted the essence of the National Urban Development Strategy and the parameter of Urban Infrastructure Condition Index to measure the competitiveness of the cities. He further elaborated on how NUDS recognizes these priorities through clustering, concept of hierarchies of cities and strategy for overcoming challenges through ensuring inclusiveness, capacity building, urban and infrastructure governance, while the challenges in its implementation in full-scale.

Dr. Mahendra Subba, President Regional Urban Planners Society of Nepal - RUPSON, taking example of Taplejung, he put forward the question if we have enabling environment to make urban centre to contribute substantially to growth and be the centre of growth, economy and innovation, and if our approach of development is adaptative to the challenge put forward by climate change. He stressed the quality of urban services, reliability and continuity, and importance of political governance, policy stability, and institution building in making it possible. He emphasized the need for paradigm shift in how urban planning is taken forward at the local level and further the role of provincial government on an integrated regional development, to establish linkages between the rural and urban areas.

Mr. Krishna Sapkota, Executive Director, Town Development Fund, explained about the investment gap prevailing in local government and how TDF has been working on filling the investment gaps through investment in improving the service delivery and basic urban infrastructure that are key for economic growth with excellent examples of water supply, landpooling, waste management, bus stations, etc. He also pointed out that the major challenge at the local government level as their capacity to develop bankable and strategic projects and less capital expenditure capacity as well as misconception of the elected representatives on debt financing and blended \financing, which is unpopular among politicians.

Mr. Purushottam Poudyal, representing private sector (Nepal Land and Housing Developer’s Association – NLHDA) emphasized the need to prioritize housing as a part of urban development ecosystem, and current limitation of the private sector that are concentrated only in big cities due to lack of ability to pursue sizable and viable projects. He also highlighted challenge due to policy instability in land management, and disconnection between land-use and planning, which makes investments challenging in an unpredictable environment that varies from place to place at the local level. He highlighted the importance of economic activity for sustaining a city, and urged to improve financial policy to engage private sector in housing and further support from the government in providing connectivity and services for development of housing that can be affordable for all.

The program was followed by discussion from the floor, mostly focused on enabling environment by KMC in tax collection, how public procurement act has been challenging at the local level for construction of infrastructure and particularly of heritage value, and how private sector can be attracted in investing on the urban sector.

The day concluded with commitment from the stakeholders to continue un-bundling and understanding various issues of urban development linked to economic growth, to further pursue actions that helps in informing conducive policies and plans at the national and local levels.

Key takeaway

Cities significantly contribute to the national economy, co-relates with GDP and sustainable development. This requires political commitment and conducive financial policies that attract investments in urban infrastructure - vital for driving economic vitality, attract also Private and Foreign Direct Investments. Strengthening a balanced urban economic system needs strategic investments on connectivity (physical and digital), basic site and services, risk mitigation, networking based on inter-dependency, etc.

The Local Government or municipalities are key actors, whether it is infrastructure investments or creation of jobs, employment, etc. However, investments requires a resilient municipal financing system, strong base of own source revenue and ability to tap blended financing to attract further financing. The cities need to exercise innovative tools to mandate and expand taxation scope to increase revenue. Cities need support on innovative urban financing and management, to develop bankable projects guided by strategic plan of economic development of their municipalities.

The priorities for cities should be beyond physical infrastructure to social infrastructure and inclusive development, in building liveable cities, that provides decent job/employment opportunities, socio-economic vibrancy and access to basic services. Tapping the high potential informal sector through its formalization process should be a priority, as examples of Bazil are replicable.

A strategy to curb both national and international migration requires a thoughtful approach. Addressing the underperforming infrastructure investments is crucial for generating new capital, wealth, and job opportunities, linking cities identity as a product to develop further income generating activities. The improvement in infrastructure can create a foundation for economic development and employment opportunities. Fostering skill development can generate a local work force, making them more competitive in the job market.