PAF ANNUAL PROGRESS REPORT (2009/2010) Foreword Poverty is still a stark reality of Nepal. A quarter of the Nepalese population live in abject poverty and they are denied the fundamental basic amenities of lives like drinking water, education, electricity and health. As Nepal's political agenda is currently debated, the greatest challenge before Nepal is to keep the social and economic agenda high on government's list of priorities and delivering development to the downtrodden communities even during the transitional period. Poverty Alleviation Fund (PAF) Nepal, since its establishment in 2004, has continuously strived in reaching out the unreached. The fund has helped 543,263 poor organized in 14,827 community organizations to realize their dream of securing livelihoods and a dignified life, through the implementation of 13,810 income generation and 2,740 Infrastructure related sub‐projects. These community organizations, spread across 40 regular and other innovative districts, are pursuing income generation, community infrastructure, and capacity development related activities. PAF has underscored the importance of partnership and collaboration with different national and local stakeholders and has stroke a number of agreements and understandings to cater the maximum need of the poor. Agreements with Ministry of Local Development (MoLD), Federation of Nepalese Chamber of Commerce and Industries(FNCCI),United Nations World Food Programme (WFP) and AEPC are some of the glaring examples that demonstrate PAF's inner desire to work together to realize the national goals of poverty alleviation. Six years on the ground, PAF has provided livelihood, empoowrement and social capital development opportunities to the poor women, Dalits and janajatis, bringing them to the mainstream of development. It is indeed encouraging to know that 66 per cent of the CO member beneficiaries are hard core poor, who are unable to feed themselves even for 3 months. Also, the 29 per cent of the CO member beneficiaries are Dalits, 27 per cent are Janajatis and 62 per cent are female and similar is the trend in terms of key position holders of the community organizations. Not only in numbers, PAF has brought about qualitative changes in the lives of the poor with marked increase in education, health, women participation and empowerment, collectivism and social relations also. A recently concluded follow up survey(2010) conducted by Centre for Economic Development and Administration (CEDA), has shown that PAF's IG activities have demonstrated signification positive effect on increased consumption and income in PAF programme areas. It is obvious now, that, had the PAF not assisted thousands of poor people in the remotest districts, they would have fallen deep in the poverty trap and the national poverty level would have further risen. Though there are encouraging signs that PAF assistance is delivering results on the ground, there are areas that PAF needs to give extra focus. They include institutional development of COs, coordination and collaboration, focused approach for hard core poor, market linkages, strengthening monitoring, evaluation based feedback and learning, effective communications, advocacy and exit strategy. Also, PAF needs to strengthen action research on poverty and raise funds for the growing requirements in the expanded geographical areas. i I express my sincere thanks to the PAF Board Chairperson, Right Honorable Prime Minister Mr. Madhav Kumar Nepal for his unrelenting support to PAF, which has truly inspired the PAF family‐‐the Secretariat, PAF partners and CO community members at the remote districts as he paid monitoring visits to different districts. Also, I am thankful to the board of governors and all the professional staff for their incessant support to deepen our efforts in reaching out poor, and in fine‐tuning related plan and policies. More importantly, I take this opportunity to thank Ministry of Finance for allocating significant amount of budget for PAF for the fiscal year 2010/11 from the Government's internal resources. My deep felt gratitude goes to the World Bank and IFAD for their continued support to PAF. Finally, I would like to pay tribute to all stakeholders including the members of community organizations and partner organizations, without whose support and active participation, PAF would not have been able to demonstrate results and impacts on the ground. Vidyadhar Mallik Vice Chairperson Poverty Alleviation Fund November 2010 ii List of Abbreviations and Acronyms AEPC Alternative Energy Promotion Center CBS Central Bureau of Statistics CO Community Organization CI Community Infrastructure CB Capacity Building CCP Community Contribution Plan CBOs Community Based Organizations CG Community Group CIP Community Infrastructure Project DDC District Development Committee EIA Environmental Impact Assessment FMR Financial Management Report GOs Governmental Organizations GTZ German Technical Cooperation GON Government of Nepal IG Income Generation IEE Initial Environmental Examination IESE Initial Environmental and Social Examination IDA International Development Agency, World Bank IFAD International Fund for Agriculture Development LDO Local Development Officer LDF Local Development Fund MDGs Millennium Development Goals MIS Management Information System NEA Nepal Electricity Authority NGOs Non Governmental Organizations NPC National Planning Commission iii NOA Non Operating Account OA Operating Account OAG Office of the Auditor General O and M Operation and Maintenance PAF Poverty Alleviation Fund PO Partner Organization PSOs Private Sector Organizations PM Portfolio Manager PMR Project Management Report RBB Rastriya Banijya Bank REDP Rural Energy Development Program RCIW Rural Community Infrastructure Works R & D Research and Development SM Social Mobilization SAs Service Agencies SNV Netherlands Development Organization TAC Technical Appraisal Committee UG User Group UNICEF United Nations International Childern’s Emergency Fund USD United States Dollar VDC Village Development Committee VCDP Vulnerable Community Development Plan WFP World Food Programme WB World Bank iv Poverty Alleviation Fund (PAF) – Nepal Annual Progress Report (2009/2010) Table of Contents FOREWORD ......................................................................................................................................................... I LIST OF ABBREVIATIONS AND ACRONYMS.................................................................................................................. III TABLE OF CONTENTS ............................................................................................................................................ V LIST OF CHARTS................................................................................................................................................. VIII LIST OF FIGURES ..................................................................................................................................................XI LIST OF TABLES................................................................................................................................................... XII EXECUTIVE DIRECTOR'S REPORT............................................................................................................................ XIV CHAPTER I: INTRODUCTION.......................................................................................................................... 1 1.1 PAF CONTEXT/OBJECTIVES............................................................................................................... 1 1.2 THE STRATEGY................................................................................................................................. 1 1.3 GUIDING PRINCIPLES ....................................................................................................................... 2 1.4 PROGRAMME COMPONENTS........................................................................................................... 2 1.4.1 SOCIAL MOBILIZATION/AWARENESS/EMPOWERMENT.................................................................................... 2 1.4.2 INCOME GENERATION.............................................................................................................................. 3 1.4.3 COMMUNITY INFRASTRUCTURE.................................................................................................................. 3 1.4.4 CAPACITY BUILDING ................................................................................................................................4 1.5 OPERATIONAL MODALITY................................................................................................................ 4 1.5.1 SELECTION OF DISTRICT AND VDC .............................................................................................................. 4 1.5.2 PARTNERSHIP WITH POS .......................................................................................................................... 5 1.5.3 SELECTION OF HOUSEHOLDS/SETTLEMENTS.................................................................................................. 5 1.5.4 COMMUNITY ORGANIZATION (CO)............................................................................................................. 5 1.5.5 COMMUNITY SUB‐PROJECT PREPARATION AND FUNDING ................................................................................ 5 1.5.6 COMMUNITY SUB‐PROJECT