Landlocked Nepal lies between India and China and has a long history of cultural and trade ties with those two countries. A population of 28 million and comprising more than 100 ethnic groups occupies an area smaller than Victoria. Nepal is in a period of political transition following its 10-year civil conflict. It faces significant challenges in maintaining political stability and building on development gains. Due to the focus on consolidating peace, the government has yet to implement reforms necessary to improve the investment climate, stimulate economic growth and create more jobs. Nepal is ranked 157 out of 187 in the UN Human Development Index of 2011. Income disparity is increasing, and the proportion of poor people remains high at 55 per cent.
Australia’s trade with Nepal is small, but there is potential for growth in hydropower, tourism and infrastructure development. Australian exports of food and beverages, especially wine, are doing well. The conclusion of Nepal’s political transition should boost its economic prospects.
Government, business and people-to-people links
Australia and Nepal celebrated 50 years of diplomatic relations in 2010. An Australian diplomatic mission was established in Kathmandu in 1984.
Australia’s relations with Nepal have been built on development assistance and people-to-people links through tourism and education. There are around 26,000 people of Nepalese ancestry in Australia, according to the 2011 census. Australia has been a development partner in Nepal since the 1960s. AusAID’s program has increased significantly in recent years and is set to grow further. In 2012–13, Australia will spend an estimated $34.8 million in Nepal. We have made practical contributions to the forestry sector, primary education, health, water supplies, sanitation and income generation.
Tilganga Institute of Ophthalmology
The Tilganga Institute of Ophthalmology in Kathmandu is a world-class eye health facility supported by the Fred Hollows Foundation and AusAID. It works to alleviate avoidable blindness and, with Australian assistance, treats more than 350,000 Nepalis every year.
AusAID community forestry project
In Nepal, forests are vital to the subsistence livelihoods of rural people. Australia’s early assistance to the forest sector in Nepal focused on trial plantings of Australian tree species. In the mid-1970s, this led to work with local communities to plant forests on degraded land. From the late 1980s, the project began to assist Nepalese foresters to identify the users of individual forests, to empower the community to use the forests wisely and then and then to formally transfer the management of the forests from the Nepalese Government to the forest user groups. This then enabled the local development to use the revenues from sustainable forest management.
This Australian development assistance in the Nepalese forest sector from 1996 to 2006 generated approaches to community forestry that have been adopted around the world. Over 27,000 hectares of forest have already been handed over to about 700 forest user groups.
Nepal has had some major successes in improving education and health care from a low base, partly due to strong local community involvement. Almost all children are enrolled in primary school, and there are equal numbers of girls and boys in public schools. Nepal has also improved child survival rates and reduced maternal death rates. However, there remain marked disparities in many health indicators across rural–urban, caste, ethnic and income divides, and chronic malnutrition still affects about half of the country’s children.
Australians have long enjoyed travel and trekking in Nepal, and tourist numbers have increased rapidly since the end of the civil conflict. From 2005 to 2011, Australian departures to Nepal almost tripled 12,700. An Australian company, World Expeditions, has pioneered a trekking route that traverses Nepal from east to west and is designed to spread the benefits of tourism more widely.
Australian Himalayan Foundation
The Australian Himalayan Foundation is an Australian non-government organisation established by a group of mountaineers who wanted to give something back to Nepal after climbing in the Himalayas. The foundation raises funds to support education and health programs. It is one of many Australian non-government organisations built on enduring people-to-people links.
Australia and Nepal both have proud traditions as contributors to UN peacekeeping operations, serving together in many areas, including in Timor Leste. Nepal is the world’s ninth-largest contributor of military and police personnel to UN peacekeeping operations, and its troop numbers remain impressive relative to its population. Nepal also hosts the secretariat of the South Asian Association for Regional Cooperation. Australia is an observer to the association and is supporting a region-wide agricultural research project to increase food production in water-scarce environments.
Australia works with the international community to help Nepal address the effects of climate change, and to help reduce vulnerability to earthquakes, floods and landslides. Australia has supported UN-led disaster risk reduction efforts by funding the retrofitting of schools in the Kathmandu Valley and establishing the National Emergency Operations Centre at government headquarters in Kathmandu.
AusAID has supported the establishment of the Electoral Education and Information Centre at the Election Commission of Nepal. The centre is modelled on the National Electoral Education Centre in Canberra and is set to play an important role in informing the public about the electoral processes underlying a free and fair democracy.
By 2025, it is expected that Nepal will have made the transition to a federal democratic republic, with accompanying foreign investment and economic growth. Australia is well placed to offer Nepal further support to develop public education programs on elections and democracy.
Improvements in incomes from remittances and better opportunities as a result of economic growth and foreign aid will produce steady progress across all of Nepal’s development indicators. The vast majority of Nepalis will be lifted out of poverty and have more access to better essential services. The transition to federalism will see some gaps in services, but Australia will work with other donors to help Nepal strengthen government systems, reduce corruption and improve the provision of health, education and infrastructure.
India and China are expected to increase their investments in Nepal and lead the way in creating investor confidence. Australian investors may see opportunities in the hydroelectricity sector and the potential for Nepal to sell energy to India. While Nepal’s hilly and mountainous terrain creates challenges in providing infrastructure and services to its scattered population, it is also the basis of its tourism and hydropower industries. Development of the hydropower sector through foreign investment will help solve Nepal’s domestic energy shortages and generate valuable revenue.
Education will also continue to bring Australians and Nepalis together. There will be opportunities for Australian education providers to set up technical education courses in Nepal, given the great demand for vocational training from prospective Nepali remittance workers, such as those in the hospitality and building industries.
A growing number of young Australians are joining NGOs to participate in volunteer development in Nepal. Australia continues to provide scholarships to Nepalis through the Australia Awards. Australian funding for the Micro-Enterprise Development Program contributes to poverty reduction by creating micro-enterprises which target the poor, youth, women, and individuals from socially excluded groups.