Low investment in infrastructure will impede growth

  • The new urban agenda aims to create decent jobs and livelihood

Kathmandu, December 29: Inadequate investment in infrastructure development against rising need for investment due to low revenue base of most of the municipalities will continue to be a major challenge, says a government report.

According to the report published by the Ministry of Urban Development, the growing number of municipalities has put pressure on the distribution of central grant, a major source in the composition of municipal overall OSR. This will further limit their overall resource mobilisation capacity.

“The weak institutional capacity of municipalities to mobilise potential revenue sources remains  a major challenge in overcoming deficiency in municipal finance. The new urban agenda of the government aims at finding out innovative ways to increase municipal resource revenue based on equitable tax- and non-tax revenues, and mobilising potential revenue sources for increased urban financing,” it says.

For effective and efficient municipal finance management, technical and managerial capacity building will be another important agenda for local government.

With federal states coming into existence accompanied by three tiers of governments, managing and sharing of the municipal resource and  expenditure between three tiers of governments will be another prime agenda to deal with in future.

Meanwhile, the report also stated that the prevailing access to housing finance in urban areas was largely based on financing from formal and non-formal financial sectors for both housing developers and housing dwellers. Housing finance through formal sector has remained poor and expensive. Public sector’s investment in housing development is limited to the development of city’s infrastructure. The initiatives to provide affordable housing to the low-income families, especially the urban poor, have met with limited success.

“To create decent jobs and livelihoods, the new urban agenda, therefore, aims at creating employment opportunity through local economic development. It will foster enabling and fair business environment and will support innovations and entrepreneurship by harnessing the capacity of both the formal and informal economies,” it reads

The agenda recognises the diversity within youth groups, their potential  capacity to enter into local business, and employment climate to promote small, medium, and micro

enterprises, and social enterprises.