Fiscal year 2010/11 - Poverty Alleviation Fund, Nepal

(POs) would also be used to facilitate the process of community
organization and capacity building in advance for the preparation of subproject
proposals. Community contributions would average 10%, with
adjustments made for very remote and difficult areas. In the sectors
where policies are in place that require a higher community contribution
(e.g., 20% in rural water, with possible adjustments for very remote or
poor communities), such rates would be applied to ensure consistency.
Examples of sub-projects implemented to date under PAF include link
roads, culverts, footbridges, micro-hydro, micro-irrigation, water supply
and sanitation schemes, and community meeting halls, schools, health
facilities and other small-scale infrastructure.
(b) Income Generating Sub-projects: Matching grants is provided
to self-selected groups of poor and excluded people for incomegeneration
activities, based on objective criteria including ethnicity,
caste, gender and poverty levels. Beneficiaries contribute 10 per cent
of the sub-project cost in cash. A proportion of the grants is reserved
for technical assistance to be contracted by communities themselves
in areas where they felt such need. Under PAF I, communities have had
discretion as to how to manage the funds received, with a number of
them choosing to revolve the funds within their group. Under PAF II,
any groups choosing to manage resources in this way are receiving
training in community-managed finance – under the capacity building
component – with a view to strengthen them to eventually have access
sponsored by organizations representing or working with the target
groups, target groups themselves and/or local bodies. Examples under
the first phase of PAF have included innovations such as arsenic filters,
forest based cardamom cultivation, evaporative cooling technology for
food preservation and women’s health projects.
(d) Capacity Building: This would include five sub-components:
(i) Social Mobilization of Community Groups: This subcomponent
is supporting training/skills development for POs
themselves and for capacity building of community groups. POs
are selected to work in target areas to disseminate information
about the project, mobilize community groups, work with them in
developing sub-project proposals and develop their skills in project
management, financial management (FM), procurement, monitoring
and evaluation etc. where local governments are functioning,
POs are also liaised with them to ensure that the proposed subprojects
are consistent with VDC plans and priorities. In addition to
mobilization of communities, capacity of POs themselves is also
built under this sub-component, such that they are sensitive to key
social, environmental and livelihoods-related issues such as gender,
caste, disability, sustainability, accountability and local governance,
natural resource management, and market linkages, etc. More
importantly, POs are partnered exclusively for social mobilization,
facilitation, technical backstopping and monitoring of COs.
to broader financial services for livelihoods initiatives. As with other subprojects,
POs are contracted by the PAF to work with all communities,
including through locally selected community facilitators, to assist in
participatory processes, group formation, and development of sound
sub-project proposals. Particular attention is paid to the commercial/
economic viability of income-generating sub-projects to avoid the risk
of supply or NGO driven proposals which are not sufficiently well linked
with markets. Common examples to date under PAF have included
micro-irrigation, micro enterprises/service sector activities, artisan/
crafts, land productivity investments, trading and animal husbandry.
Analysis of a representative sample of these investments shows income
increases for beneficiary households of 10-15%.
(c) Innovation and Special Programs: An innovation window is
continued to support proposals meriting special consideration owing
to exceptional needs in a given context, or demonstrating innovative
ways to improve livelihoods development and reach targeted groups.
These proposals can be national or regional in coverage and may be
(ii) Capacity Building for Local Bodies: The extent of
decentralization in Nepal is limited, particularly given the continued
absence of elected local bodies which were dissolved during the
conflict period. With a view to supporting intermediary delivery
channels that lay the foundation for strengthened local government,
this sub-component is focusing on building capacity of functioning
and interested local bodies (VDCs, DDCs) in pro-poor planning and
monitoring, and other relevant topics to promote inclusive planning
and service delivery for local development, as well as on the rules of
operation of the PAF in order to enable local bodies to assist groups
and communities to access PAF resources.
(iii) Capacity Building for Target Groups Engaged in Income-
Generating Activities: All sub-projects include some provision for
technical assistance as needed, but groups engaged in incomegenerating
activities may require more support to help prepare for
the activity or to help implement it successfully. Therefore, this subcomponent
would focus on developing skills such as marketing,
2 ANNUAL PROGRESS REPORT (2010/2011)