Nepal Nurturing Excellence in Higher Education Program For Results Project

Public Disclosure Authorized
FOR OFFICIAL USE ONLY

Report No: PAD4158
INTERNATIONAL DEVELOPMENT ASSOCIATION

PROGRAM APPRAISAL DOCUMENT
ON A
PROPOSED CREDIT
IN THE AMOUNT OF SDR 41.8 MILLION

(US$60 MILLION EQUIVALENT)
TO
NEPAL
FOR A
NURTURING EXELLENCE IN HIGHER EDUCATION PROGRAM-FOR-RESULTS
May 21, 2021

Education Global Practice

South Asia Region
This document has a restricted distribution and may be used by recipients only in the performance of
their official duties. Its contents may not otherwise be disclosed without World Bank authorization.
CURRENCY EQUIVALENTS
(Exchange Rate Effective April 30, 2021})
Currency Unit = Nepalese Rupees (NPR)
NPR 118.00 = US$ 1
US$ 1.43 = SDR 1
FISCAL YEAR
July 16 – July 15
ABBREVIATIONS AND ACRONYMS
AARAP Audit Arrears Resolving Action Plan

CCB Climate Co-benefit
CPF Country Partnership Framework
CRW Crisis Response Window
CSO Civil Society Organization
DLI Disbursement-Linked Indicator
DLR Disbursement-Linked Result
DPC Development Policy Credit
DRR Disaster Risk Reduction
E&S Environmental and Social
EMIS Education Management Information System
EPR Employment-to-Population Ratio
ESSA Environmental and Social Systems Assessment
FM Financial Management
FMIAP Financial Management Improvement Action Plan
FPFRA Financial Procedure and Fiscal Responsibility Act, 2019
FSA Fiduciary System Assessment
GBV Gender-Based Violence
GDP Gross Domestic Product
GER Gross Enrollment Rate
GON Government of Nepal
GPI Gender Parity Index
HEI Higher Education Institution
HERP Higher Education Reforms Project
ICT Information and Communication Technology
IFC International Finance Corporation
IPF Investment Project Financing
ISP Implementation Support Plan
IUFR Interim Unaudited Financial Report
IVA Independent Verification Agency
KPI Key Performance Indicator
LFPR Labor Force Participation Rate
LMRP Labor-Market Relevant Program
LMS Learning Management System
M&E Monitoring and Evaluation
MIC Middle-Income Country
MIGA Multilateral Investment Guarantee Agency
MOEST Ministry of Education, Science and Technology
MOF Ministry of Finance
MOHA Ministry of Home Affairs
MOHP Ministry of Health and Population
MTR Midterm Review
NEHEP Nurturing Excellence in Higher Education Program
NHEP National Higher Education Program
NLSS Nepal Living Standards Survey
NPC National Planning Commission
NREN Nepal Research and Education Network
NUGIP Nepal Urban Governance and Development Project
OAG Office of the Auditor General
PAP Program Action Plan
PBG Performance-Based Grant
PIS Program Implementation Secretariat
PMT Proxy-Means Testing
QAA Quality Assurance and Accreditation
RA Results Area
RBF Results-Based Financing
S&T Science and Technology
SAI Supreme Audit Institution
SEA/SH Sexual Exploitation and Abuse/Sexual Harassment
SHEP Second Higher Education Project
STEM Science, Technology, Engineering, and Mathematics
SUW Scale-Up Window
TA Technical Assistance
TU Tribhuvan University
UGC University Grants Commission
VAW Violence Against Women
YETI Youth Employment Transformation Initiative
Regional Vice President: Hartwig Schafer
Country Director: Faris H. Hadad-Zervos
Regional Director: Lynne D. Sherburne-Benz
Practice Manager: Mario Cristian Aedo Inostroza
Task Team Leader(s): Mohan Prasad Aryal, Shiro Nakata, Tazeen Fasih
The World Bank
Nurturing Excellence in Higher Education Project (P171516)
TABLE OF CONTENT
DATASHEET........................................................................................................................................ I
I. STRATEGIC CONTEXT ..................................................................................................................1
A. Country Context ...................................................................................................................1
B. Sectoral (or Multi-Sectoral) and Institutional Context ............................................................3
C. Relationship to the CPF and Rationale for Use of Instrument..................................................5
II. PROGRAM DESCRIPTION.............................................................................................................6
A. Government Program ..........................................................................................................6
B. Theory of Change ................................................................................................................6
C. Program for Results (PforR) Program Scope .........................................................................8
D. Program Development Objective(s) (PDO) and PDO Level Results Indicators ....................... 11
E. Disbursement Linked Indicators and Verification Protocols ................................................ 11
III. PROGRAM IMPLEMENTATION .................................................................................................. 12
A. Institutional and Implementation Arrangements................................................................ 12
B. Results Monitoring and Evaluation .................................................................................... 13
C. Disbursement Arrangements ............................................................................................. 13
D. Capacity Building ............................................................................................................... 13
IV. ASSESSMENT SUMMARY .......................................................................................................... 14
A. Technical (including program economic rationale).............................................................. 14
B. Fiduciary.............................................................................................................................. 15
C. Environmental and Social .................................................................................................. 16
V. RISK ............................................................................................................................................ 19
ANNEX 1. COVID-19 RESPONSE PROGRAM - SHIFTS IN WBG COUNTRY PARTNERSHIP FRAMEWORK .. 21
ANNEX 2. RESULTS FRAMEWORK MATRIX ........................................................................................ 25
ANNEX 3. DISBURSEMENT LINKED INDICATORS, DISBURSEMENT ARRANGEMENTS AND VERIFICATION
PROTOCOLS ..................................................................................................................................... 36
ANNEX 4. SUMMARY TECHNICAL ASSESSMENT ................................................................................. 47
ANNEX 5. SUMMARY FIDUCIARY SYSTEMS ASSESSMENT .................................................................. 51
ANNEX 6. PROGRAM ACTION PLAN .................................................................................................. 54
ANNEX 7. SUMMARY ENVIRONMENTAL AND SOCIAL SYSTEMS ASSESSMENT .................................... 56
ANNEX 8. IMPLEMENTATION SUPPORT PLAN ................................................................................... 58
ANNEX 9. INVESTMENT PROJECT FINANCING COMPONENT .............................................................. 59
ANNEX 10. SUMMARY CLIMATE CO-BENEFITS................................................................................... 62
The World Bank
DATASHEET
BASIC INFORMATION
BASIC_INFO_TABLE
Country(ies) Project Name
Nepal Nurturing Excellence in Higher Education Program for Results
Does this operation have Environmental and Social Risk

Project ID Financing Instrument
an IPF component? Classification (IPF Component)
Program-for-Results
P171516 Yes Low
Financing
Financing & Implementation Modalities

[ ] Multiphase Programmatic Approach (MPA) [ ] Fragile State(s)
[ ] Contingent Emergency Response Component (CERC) [ ] Fragile within a non-fragile Country

[ ] Small State(s) [ ] Conflict
[ ] Alternate Procurement Arrangements (APA) [ ] Responding to Natural or Man-made Disaster
[ ] Hands-on Enhanced Implementation Support (HEIS)
Expected Project Approval Date Expected Closing Date
11-Jun-2021 15-Jul-2026
Bank/IFC Collaboration
No
Proposed Program Development Objective(s)
The Program Development Objectives are to strengthen labor market relevance and quality of higher education,
boost collaborative research and innovation, and enhance equitable access for underprivileged and disaster
affected groups.
Organizations
Borrower : Nepal
Implementing Agency : Ministry of Education, Science and Technology
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Contact: The Secretary, Ministry of Education, Science and Technology

Title: Secretary
Telephone No: 977-1-4200354
Email: moestdacs@gmail.com
COST & FINANCING

FIN_SUMM_WITH_IPF
SUMMARY
Government program Cost 1,145.55

Total Operation Cost 603.04
Total Program Cost 600.04
IPF Component 3.00
Total Financing 603.04
Financing Gap 0.00
Financing (USD Millions)

Counterpart Funding 543.04
Borrower/Recipient 543.04
International Development Association (IDA) 60.00
IDA Credit 60.00
IDA Resources (in US$, Millions)
Credit Amount Grant Amount Total Amount
Nepal 60.00 0.00 60.00
National PBA 60.00 0.00 60.00

Total 60.00 0.00 60.00
Expected Disbursements (USD Millions)
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INSTITUTIONAL DATA
INSTITUTIONAL DATA TBL
Practice Area (Lead) Contributing Practice Areas
Digital Development, Finance, Competitiveness and
Education
Innovation, Gender, Governance
Climate Change and Disaster Screening

This operation has been screened for short and long-term climate change and disaster risks
SYSTEMATIC OPERATIONS RISK-RATING TOOL (SORT)
Risk Category Rating

1. Political and Governance ⚫ High
2. Macroeconomic ⚫ Substantial
3. Sector Strategies and Policies ⚫ Moderate
4. Technical Design of Project or Program ⚫ Moderate
5. Institutional Capacity for Implementation and Sustainability ⚫ Moderate
6. Fiduciary ⚫ Substantial
7. Environment and Social ⚫ Moderate
8. Stakeholders ⚫ Moderate
9. Other ⚫ Moderate
10. Overall ⚫ Substantial
COMPLIANCE
Policy
Does the program depart from the CPF in content or in other significant respects?
[ ] Yes [✔] No
Does the program require any waivers of Bank policies?

[ ] Yes [✔] No
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The World Bank
Legal Operational Policies
Triggered
Projects on International Waterways OP 7.50 No
Projects in Disputed Areas OP 7.60 No
ESStandards
Environmental and Social Standards Relevance Given its Context at the Time of Appraisal
E & S Standards Relevance
Assessment and Management of Environmental and Social Risks and Impacts Relevant
Stakeholder Engagement and Information Disclosure Relevant
Labor and Working Conditions Relevant
Resource Efficiency and Pollution Prevention and Management Relevant
Community Health and Safety Relevant
Land Acquisition, Restrictions on Land Use and Involuntary Resettlement Not Currently Relevant
Biodiversity Conservation and Sustainable Management of Living Natural

Not Currently Relevant
Resources
Indigenous Peoples/Sub-Saharan African Historically Underserved Traditional
Not Currently Relevant
Local Communities
Cultural Heritage Not Currently Relevant
Financial Intermediaries Not Currently Relevant

ESStandardsNote
NOTE: For further information regarding the World Bank’s due diligence assessment of the Project’s potential
environmental and social risks and impacts, please refer to the Project’s Appraisal Environmental and Social Review
Summary (ESRS).
Legal Covenants
Sections and Description

1. No later than fifteen (15) days after the Effective Date, the Recipient shall establish and maintain, throughout
the period of implementation of the Operation, the UGC Secretariat within UGC with responsibilities, including,
inter alia, planning, budgeting, monitoring, procurement, financial management and safeguards, with
membership, powers, functions and competencies acceptable to the Association.
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2. The Recipient shall maintain, throughout the period of implementation of the Operation, the Central Office to
support the implementation of the Operation under the guidance of the UGC.

3. No later than fifteen (15) days after the Effective Date, the Recipient shall establish and maintain, throughout
the period of implementation of the Operation, a Program Support Unit within the UGC Secretariat to provide
expert advice and support to the UGC Secretariat and the Central Office for the implementation of the Operation,
with membership, functions and competencies acceptable to the Association.

4. No later than thirty (30) days after the Effective Date, appoint and thereafter maintain, at all times during the
implementation of the Program, independent verification agency under terms of reference acceptable to the
Association (“Independent Verification Agency”), to verify the data and other evidence supporting the
achievement of one or more DLIs as set forth in the table in Section IV.A.2. of this Schedule 2 and recommend
corresponding payments to be made, as applicable in accordance with the terms of the MoU between UGC and
the Independent Verification Agency.
Conditions
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I. STRATEGIC CONTEXT
A. Country Context
1. Over the past decade, Nepal’s economy has performed reasonably well, though vulnerabilities have
increased with COVID-19. Real growth domestic product (GDP) growth averaged 4.9 percent (at market prices) over
FY2009-19. Although declining as a share in the economy, agriculture continues to play a large role, contributing
around 21.6 percent of GDP in FY2019. The service sector has grown in importance, accounting for 52 percent of GDP
in FY2019. Industry and manufacturing have grown more slowly, and their relative share in the economy has averaged
13.5 percent of GDP over the period FY2009-19. Similarly, exports continue to struggle, while imports are fueled by
remittances. Remittances remained stable between FY2009-19, with their share around 22 percent of GDP, supported
by an increased transfer of funds through formal channels in recent years. Inflation has been in single digits for most
of the past decade, with the peg of the Nepalese rupee to the Indian rupee providing a nominal anchor. Fiscal balances
remained sustainable owing to strong revenue growth and modest spending. The federal government is now sharing
revenue and transferring grants to provincial and local governments as part of the recent reforms linked to federalism.
The proportion of households living in extreme poverty is estimated to have fallen consistently, from 46 percent in
1996 to 8 percent in 2019. The pandemic is likely to have increased poverty as about a third of the population lived
close to the poverty line before the pandemic, earning between US$1.90 and US$3.20 per day. Estimates from the
World Bank COVID-19 monitoring survey show that more than two in every five economically active workers reported
a job loss or a prolonged work absence in 2020.
2. The recent COVID-19 pandemic is expected to derail the strong growth trajectory established over the past
three years. GDP growth averaged 7.8 percent between FY2017 and FY2019. It is estimated to have contracted by 1.9
percent, the first economic contraction in 40 years, as prolonged nationwide mobility restrictions from March to July
2020 – imposed to curtail the spread of the virus – significantly impacted all sectors of the economy. On the supply
side, the service sector took a hard hit, contracting by 3.6 percent due to national and localized lockdowns. Tourism
activities ground to a halt and lockdowns hit transport and wholesale and retail trade hard. Industrial output contracted
by 4.2 percent as manufacturing and construction declined due to shortages in production inputs, and constrained
labor mobility and market access. Agriculture remained the single driver of growth, expanding 2.2 percent despite the
shortages in fertilizer supply and disruptions in production distribution channels. On the demand side, lower
investment led the economic contraction. Investment contracted by 3.5 percent in FY2020, reflecting a halt in
construction activity and a reduction in government capital expenditures in the second half of the year. Private
consumption grew at a three-year low of 3.7 percent as remittance inflows, a key driver of private consumption growth
and poverty reduction, dropped by 3.4 percent in FY2020, as outmigration halted due to the suspension of labor
approvals for foreign employment in March and subsequent border closures. The contraction in investment and
exports was only partially offset by higher public spending on wages and COVID-19-related expenditures on health and
social assistance.
3. There are incipient signs of a moderate recovery in consumer sentiment and economic activity in the first
half of FY2021. The economy is set for a gradual recovery, with GDP projected to rise by 2.7 percent in FY2021. Services
are expected to lead the recovery, driven initially by the easing of domestic confinement measures. However, hard-hit
sectors like tourism and hospitality are expected to recover only in FY2022 when vaccination campaigns are completed
and if there is no new second wave of COVID-19. Agriculture is also projected to perform well with continued
government programs to invest in irrigation, promote improved seeds and fertilizer, and support commercialization.
Industrial activities are expected to gradually rebound in FY2021, but manufacturing and construction activities are
expected to remain below pre-pandemic levels until FY2022. On the demand side, consumption will drive economic
recovery in FY2021, reflecting improved consumer sentiment, modest remittance growth, and higher government
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expenditure for COVID-19 testing and vaccines. Private consumption growth is expected to pick up over time as the
economy stabilizes and employment improves. Private investment will start recovering in FY2021, supported by low
interest rates and government relief programs, but is expected to reach pre-pandemic levels only in FY2022 due to
firms’ weak financial positions and lingering political uncertainties
4. Consumer price inflation was elevated in FY20 but has decelerated since. Average inflation accelerated to 6.1
percent in FY2020 from 4.6 percent in the previous year. This was mostly due to an increase in food prices owing to
India’s export ban on onions from September 2019 to March 2020; and COVID-19 related supply and trade disruptions
in the agriculture sector since mid-March 2020. Food prices increased to 8.1 percent in FY20 from 3.1 percent the
previous year. By contrast, lower demand slowed non-food inflation to 4.6 percent in FY2020 from 5.9 percent in FY19.
As the national lockdown ended in July 2020, food supply improved and food inflation slowed, leading headline inflation
to decelerate to a three-year low of 3.7 percent in the first half of FY2021. Non-food prices rose moderately by 2.3
percent (y/y) in the same period, the lowest price increase since the first half of FY2008, largely driven by a record low
increase in the prices of housing and utilities (0.2 percent) year-on-year. The Nepalese rupee (NPR) is pegged to the
Indian rupee (INR) at the rate of NPR 1.6 to INR 1.00. As a result, inflation follows the price movements in India with a
lag.
5. Nepal has a young population and its youth bulge offers an opportunity to reap benefits of demographic
dividend. According to the 2011 Census, ages 15 - 45 years represent 45.6 percent of the population1. There is a danger
of the potential demographic dividend turning into demographic liability if not appropriately managed. Therefore,
Nepal must make considerable efforts to provide appropriate skills and opportunities to its youth so that they can
access better employment and entrepreneurship opportunities. Given limited job opportunities in Nepal, youth are
seeking employment opportunities outside the country, which are currently disrupted due to COVID-19.
6. The national labor force participation rate (LFPR) and employment-to-population ratio (EPR) were 38.5
percent and 34.2 percent,
respectively, with higher share of Table 1: Key Labor Market Indicators by Education Level and Gender
males than females.2 Gender Education Level
EPR, % LFPR, % Unemployment Rate, %
disparity in the labor market Male Female Total Male Female Total Male Female Total
Total 48.3 22.9 34.2 53.8 26.3 38.5 10.3 13.1 11.4
outcomes exists. The male LFPR
No secondary education 46.4 20.6 31.5 51.6 23.7 35.5 10.0 13.0 11.1
was 53.8 percent compared to
Secondary education 49.0 36.3 43.1 57.0 43.8 50.9 14.0 17.1 15.3
26.3 percent for females.
Tertiary 67.4 52.1 61.8 73.9 56.4 67.5 8.7 7.7 8.4
Province-wise, the Bagmati
Pradesh has around 10
percentage points higher and Karnali and Province 2 have around 10 percentage points lower than the national
average. The unemployment rate was higher among females than among males (13.1 percent and 10.3 percent
respectively) at the national level and in most provinces except Gandaki and Karnali. The highest unemployment rate
was observed in Province 2 (20.1 percent), followed by Sudurpaschim (11.5 percent). The lowest unemployment rate
was observed in Bagmati (7 percent). The proportion of those who are employed (EPR) increases with the level of
education irrespective of gender (table 1)3. The LFPR increases with the level of education for both males and females.
Female participation rate among those with higher education was 17.4 percentage points lower compared to that of
males. Among those with higher education, the largest proportion was employed in the formal sector (91.6 percent;
non-agriculture) while with secondary, and lower than basic education these figures are 76.1 percent and 72.0 percent,
respectively.
1 Central Bureau of Statistics, 2011

2 Report on the Nepal Labor Force Survey 2017/18
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B. Sectoral (or Multi-Sectoral) and Institutional Context
7. Nepal’s higher education includes 13 public universities, their affiliated campuses,4 and five health
academies. The education system beyond Grade 12 is considered higher education. The universities are affiliated with
the Ministry of Education, Science and Technology (MOEST), whereas the health academies fall under the Ministry of
Health and Population (MOHP). The universities have constituent and affiliated campuses. The affiliated campuses are
privately-owned and community based.
8. Higher education enrollment including female participation is increasing but at a slow pace. In academic year
(AY) 2018/19, the higher education
Table 2: Province-wise share of population, campuses and student enrollment, %
enrollment was 441,819 students Province 1 2 Bagmati Gandaki Lumbini Karnali Sudurpaschhim Total
(Bachelor: 89.38 percent, Master 9.87 Population 17.12 20.4 20.87 9.07 17.9 5.01 9.63 100
percent and others: 0.75 percent) Campuses 13.69 8.59 43.37 10.54 12.92 4.26 6.63 100
from 1,432 campuses – constituent: Enrollment 11.33 6.72 52.33 8.92 11.36 3.07 6.27 100
147, community: 538 and private:
747, with enrollment share of 36.03 percent, 27.41 percent and 36.56 percent respectively. Tribhuvan University (TU)
has the largest share (75.95 percent). The Gross Enrolment Rate (GER) has increased from 9 percent in 2008/09 to
around 14.42 percent in 2018/19 (Male: 15.47 percent, Female: 13.56 percent).5 This is low compared to other Asian
countries: Bangladesh (20 percent), Sri-Lanka (21 percent), India (26.9 percent), Malaysia (41.9 percent), Thailand (49.3
percent), and China (51 percent),6 including considerable inequities across provinces (table 2)7 and income level.
9. The relatively small higher education subsector may not be sufficient to achieve the country’s GER target of
25 percent by 20308 and 40 percent by 20439. Limited skill levels in the labor force prevent people from transitioning
into the types of jobs that can lift them out of poverty and underpin a robust economy. Additionally, more than 44,000
students are also migrating abroad annually for higher studies with greater focus on science, technology, engineering,
and mathematics (STEM)10.
10. Universities have been quick to initiate online learning11 under COVID-19; however, challenges remain in
building the enabling environment. The Higher Education Reforms Project (HERP) helped the higher education
institutions (HEIs) gradually switch to online learning soon after the nationwide lockdown in March 2020. At present
most of the universities have passed regulations for online teaching, assessment and establishing learning management
system despite challenges that include: (a) lack of comprehensive regulatory provisions, especially examinations; (b)
limited digital connectivity, and the digital divide; and (c) capacity constraint, and so on.
11. Policy dialogue is facilitating partnership among the government, academia, telecom service providers and
Nepal Research and Education Network (NREN) for improved broadband connectivity. The University Grants
Commission (UGC), universities, Nepal Telecom, NREN, business communities, internet service and online platform12
providers are in close consultations to facilitate expand the available broadband connectivity beyond 30
institutions/hospitals to provinces, individual institutions, teachers, and students, including underprivileged.
4 Universities have constituent and affiliated colleges, which are also called campuses in Nepal
5 UGC EMIS Report 2018/19
6 UNESCO Institute for Statistics
8 Sustainable Development Goal 4: Education 2030, Nepal National Framework, MOEST, November 2019
9 FY 2020/21 budget and three-year medium expenditure framework, National Planning Commission, February 2020
10 https://wenr.wes.org/2018/04/education-in-nepal/
11 https://theconversation.com/coronavirus-universities-are-shifting-classes-online-but-its-not-as-easy-as-it-sounds-133030
12 Microsoft Office 365 Team, Moodle Platforms are also in use
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12. The affiliation of campuses by universities without proper mapping has resulted the emergence of many
fringe campuses with limited students in non-STEM areas. The universities are providing affiliation of new campuses
without proper mapping, and many affiliated campuses are functioning in secondary school premises using their
physical facilities in different shifts. This has partly helped reduce operation costs, and to improve access in lagging
regions. However, education quality in these campuses has been challenged due to limited due to limited resources.
13. Poor alignment of higher education with labor market needs. Enrollment is largely skewed towards non-STEM
areas with approximately 77 percent of total enrollment in humanities and social sciences, management and
education.13 While the Gender Parity Index (GPI) in some programs is encouraging, women’s share in science and
technology (S&T) is far below the share of men, as low as 0.56 in S&T and 0.20 in the engineering fields. In addition,
while Nepal has further focused on enhanced technical education in the recently endorsed education policy, the share
of technical education (engineering, agriculture/animal science/fishery and forestry) is around 8.25 percent (male: 6.51
percent and female: 1.74 percent)14. These enrollments in S&T are low compared to those in other countries in Asia.15
14. There is an increased demand for higher education because of its high and increasing wage premium in the
job market. Nepal Labor Force Survey 2017/18 shows that the wage premium for higher education completers is 1.52
times that for secondary education.16 Supply of qualified professionals can further lead to increased opportunities.
Higher education, therefore, has a huge potential to use the available youth bulge to contribute the country’s ambition
to graduate to a middle-income country (MIC) by 2030 and its mission to attain the goal of ‘Prosperous Nepal, Happy
Nepali’ by 2043. Higher education enrollment is largely skewed toward richest quintile.17
15. Nepal has introduced several reforms in the higher education sector but with limited coverage. Nepal has
made good progress in some key reforms in higher education: (a) establishment of quality assurance and accreditation
(QAA) system; (b) introduction of performance-based funding (c) initiation of autonomy of institutions and programs;
(d) launching of competitive research funding and publications; (e) supporting under-privileged students using proxy
means testing (PMT) and its mainstreaming; and (f) excellence-based faculty recruitment/promotion. However, the
coverage of the reforms is still limited. The QAA that guarantees compliance with (minimum) standards is slow with
about 82 campuses accredited/ completed peer review. The QAA still does not provide accreditation to the universities.
Similarly, around nine campuses/schools are entertaining governance autonomy, 14 programs are exercising academic
autonomy, and less than 1 percent under-privileged students were supported.
16. Weak governance, regulatory framework, and affiliation and accountability system are discouraging reform
expansion. The decision of the Government of Nepal (GON), in 2018/19, of converting community campuses not
related to STEM fields to constituent campuses is also contradicting with the periodic plans of expanding technical
education. The centralized academic management system inhibits quality teaching, research capacity of a large portion
of the faculty as they are not involved in design of curricula, teaching materials, examinations, and research.
17. Weak competitiveness due to insufficient research, innovation, and weak link with industry. Nepal's ranking
in terms of global competitiveness18 is 110 among the 140 countries assessed. Its respective rankings in infrastructure,
information and communication technology (ICT) adoption, and skills and innovation capacity are 117, 101, 106 and
13 Based on UGC EMIS 2018/19

15 India (34.7%), Malaysia (42.7%), Thailand (33.9%), and Vietnam (35.3%).
17 World Bank Staff compilation using Nepal Living Standard Survey II and III (NLSS II and NLSS III) data
18 Nepal: COVID-19 Response Program - Shifts in WBG Country Partnership Framework
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110. Nepal is also lagging behind in patents in force.19 The global experience shows that universities can contribute
more to innovation outcomes and patenting.
18. Public financing levels low. Higher education is financed by the Government on a cost-sharing basis with
varying ratio. In 2017/18, the public subsidy per student in constituent and community campuses amounted to around
US$450 and US$30, respectively.20 Private campuses do not receive public subsidy. Public financing for higher
education was 0.32 percent of the GDP in 201521 and 0.53 percent in 2020 with a large share towards faculty salary.
C. Relationship to the CPF and Rationale for Use of Instrument
19. The proposed Program is fully aligned with the World Bank Group’s Country Partnership Framework
for Nepal (CPF) FY 19 – FY 2322. The proposed Program will directly support the Focus Area 3 (Inclusion and Resilience)
by assisting in achieving Objective 3.1 (Improved equity in access to quality education) through poverty-targeted
scholarship to the disadvantaged students for enrollment and completion of market relevant programs. This will further
contribute to Objective 3.2 (Improved access to services and support for the well-being of the vulnerable groups). The
Program’s focus on digitization will respond to COVID-19 including supporting students from the poorest quintile and
lagging regions. The PforR will also contribute to Focus Area 1 (Public Institutions) by initiating reforms in public HEIs
to improve service delivery and public accountability. Similarly, it will also contribute to Focus Area 2 (Private Sector
Led Jobs and Growth): support HEIs technical programs on a cost sharing basis, research, also tapping resources of non-
government sectors in maximizing financing for development. The Program will also contribute in achieving objectives
of cross-cutting themes such as citizen engagement, gender, and climate change.
20. The Program supports the economic recovery efforts from the COVID-19 pandemic. The World Bank program
in Nepal has been adjusted to respond to the pandemic (refer to Annex 1). The three stages of support include - relief,
restructuring and resilient recovery across four thematic pillars – (i) support to health for saving lives threatened by
the virus; (ii) social response for protecting poor and vulnerable people from the impact of the economic and social
crisis triggered by the pandemic; (iii) economic response for saving livelihoods, preserving jobs, and ensuring more
sustainable business growth and job creation by helping firms and financial institutions survive the initial crisis shock,
restructure, and recapitalize to build resilience in recovery (rebuilding better); and (iv) support for strengthening
policies, institutions, and investments for resilient and sustainable recovery. The World Bank Group will continue to
work closely with the Government to ensure that the allocation of IDA 19 resources is in conformity with these COVID-
19 related priorities. The financing gap is expected to be bridged through the Crisis Response Window (CRW) and Scale
Up Window (SUW).
21. Rationale for use of instrument. The program will use PforR with Investment Project Financing (IPF)
instrument. The PforR will support the government’s National Higher Education Program (NHEP 2021/22 - 2025/26)
leveraging the Results-based Financing (RBF) and technical support. The disbursement linked indicators (DLIs) will
enhance the incentive for achieving selected priority reforms. The IPF will provide additional capacity building
necessary to ensure the achievement of agreed results and strengthening capacity of relevant agencies.23
19 https://www.wipo.int/ipstats/en/statistics/country_profile/
20 UGC budget on higher education 2017/18
21 MOF budget 2018
22CPF Report No. 83148-NP; July 10, 2018 discussed at the Board on August 7, 2018
23 As per the GON request the rationale for the PforR with IPF was agreed in the concept review and further confirmed, and a comparative table included in the Technical Assessment
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II. PROGRAM DESCRIPTION

A. Government Program
22. The Government program is presented in the NHEP. The NHEP objectives are to develop a knowledge-based
society and economy by making higher education scientific, innovative, research-oriented, technology friendly and
employment-oriented and inclusive. The results areas (RAs) of the NHEP are the following:
a. Increasing equitable access to quality higher education:
i. Increasing GER and enrollment in S&T
ii. Improving scholarship support to disadvantaged groups and HEIs support in lagging provinces
b. Aligning higher education with labor market needs:
i. Improving curricular reform including pedagogy and assessment
ii. Enhancing competencies of faculty members and academic leaders
iii. Promoting industry-academia collaboration, collaborative research and entrepreneurship, publications,
patenting, and civic engagement
c. Enhancing governance capacity, regulatory provisions and financing of higher education:
i. Strengthening QAA, QE, and autonomy
ii. Enforcing the academic calendar
iii. Promoting excellence centers
iv. Enhancing governance through universities/ HEIs restructuring including merger for economies of scale
v. Strengthening Performance-Based Grants (PBG) for improved efficiency and accountability
d. Strengthening digitization of higher education:
i. Increased students in online/blended teaching
ii. Establishing digital learning platforms and online administration to strengthen Higher Education
Management Information System and for improved collaboration and sharing of e-resources.
B. Theory of Change
23. The lessons from the predecessor projects including the recently closed Higher Education Reforms Project
(HERP, closed Dec. 2020) laid the foundations of the PforR. Embracing industry-academia collaboration, the new PforR
program will connect Nepal’s higher education to the emerging market needs considering national priorities at the
core.
24. Enhanced capacity of higher education for faculty training and sensitization of leaders, will strengthen higher
education system capacity for the launch of job-market demand-based programs and entrepreneurship. The PforR will
nurture research culture in the HEIs and promote innovations to address the challenges of the fast-paced society.
Digital development, blended modes of delivery, and targeted support to females and the underprivileged and disaster
affected groups will ensure equitable access to quality education and help address the risk of learning loss due to
disasters/ pandemics. The support for public private partnership will help maximize financing for development. These
interventions ultimately will create a sustainable eco-system of quality higher education to produce graduates for labor
market needs, who ultimately will contribute for improved productivity and economic growth.
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Figure 3. Results-Chain (Theory of Change) for the Nurturing Excellence in Higher Education Project (NEHEP)
PDO: “to strengthen labor market relevance and quality of higher education, boost collaborative research and innovation, and
enhance equitable access for underprivileged and disaster affected groups”
Key Challenges Operation Interventions Intermediate Outcomes PDO Outcomes Long-Term

Outcomes
• Poor alignment PforR Component HEIs encouraged for labor Number of labor-market relevant programs Number of labor-
with labor market relevant programs, introduced market relevant Increased availability
Results Area 1:
market needs digitization, improved programs introduced of graduates for the
Improved labor- Number of faculty members and leaders trained/
partnership with state and non- in consultation with labor-market needs
market relevance, sensitized: (i) faculty members trained for
state HEIs, and industries (with employers and
• Quality Entrepreneurship, curriculum design, pedagogy, examination
Higher quality HEIs
female participation) industries (% female)
“Assurance” and Collaborative including digital content development, delivery and
for teaching-learning,
and Quality Research Support competitively selected assessment; and (ii) academic leaders sensitized for
Number of students collaborative research
“Enhancement” HEIs to launch labor market- higher education reforms
completed first year and entrepreneurship
Results Areas 2: relevant programs Number of Publications in refereed journals
Strengthening in labor market
• Outdated Support competitively selected Number of students/graduates supported for relevant programs (% Culture of innovation
Governance and collaborative research projects and commercialization
governance and Financing of entrepreneurship training and with seed funds female)
regulatory and entrepreneurs (including developed in HEIs
Higher Education climate responsive projects) Number of HEIs reconstituted as Deemed
framework for Quality Universities Number of HEIs/
Support HEIs with performance- Programs accredited / Increased
Enhancement Number of universities completed peer review for completed peer socioeconomic
• Asymmetrical based grants (PBG) for improved
QAA
quality higher education, review for quality relevance of HEIs
access to Results Area 3:
governance, accountability, and Number of accredited HEIs undertook Quality assurance and programs
higher Widening Access
to Quality Higher gender and climate Enhancement activities accreditation
education Improved level
Education for responsiveness Number of HEIs supported with PBG for improved
Number of playing field for state
Disadvantaged Support disadvantaged for quality delivery, governance and accountability
• Insufficient collaborative research and non-state HEIs to
Students access to quality higher
research and Share of HEIs participating in online data feeding projects awarded operate
education with preference of
innovation Results Area 4: Number of universities passing Rule for blended
girls and in lagging regions Improved environment
Extending mode of course delivery and final examination Number of higher
Support UGC and HEIs in for human capital
• Weak Digitization of Student GER from lagging Provinces increased
education students
extending digitization in higher supported from development to
institutional Higher Education
education Share of female students in STEM programs bottom quintiles (% contribute growth with
capacity
female) improved share of
IPF Component Capacity building and TA for UGC/ universities develop standards, operational females
Capacity building UGC, HEIs for reform policies and guidelines with provision of level
technical support implementation Share of students
playing field for state and non-state HEIs for: (i) Improved environment
and program registered in
Strengthening HEMIS, studies, faculty members and leadership competencies; (ii) of climate resilience
management online/blended
M&E collaborative research and entrepreneurship; (iii)
learning (% female)
performance-based grants; (iv) digitization,
connectivity, and implementation procedures
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C. Program for Results (PforR) Program Scope
25 The PforR Program will strategically support a sub-set of the NHEP. Specifically, it will support reform
agendas for (a) improving labor-market relevant programs (LMRPs) and strengthening collaborative research and
innovation in partnership with industries, leading up to generating products and innovative solutions to local
issues and needs; (b) enhancing governance and financing of higher education system, including quality assurance
system, autonomy, and PBG; (c) providing equitable access to quality higher education; and (d) promoting
digitization of higher education services and broadband connectivity of HEIs. The IPF component will support the
capacity development of the higher education system and the program implementation.
Table 1: Scope of Government Program and Program Supported by the PforR
Reasons for Non-
Government Program Program Supported by the PforR
alignment
Title
Nurturing Excellence in Higher Education
National Higher Education Program
Program
Development of a knowledge-based
society and economy by making
higher education scientific,
To strengthen labor market relevance and quality
innovative, Government program
of higher education, boost collaborative research
Objective research oriented, technology expenditures include
and innovation, and enhance equitable access for
friendly and all recurrent and
underprivileged and disaster affected groups.
employment oriented through capital expenditures
promoting access channeled through
and quality. the UGC over the
Duration FY22 – FY27 FY22 – FY27 program duration.
Geographic Program expenditures
Whole country Whole country
coverage of the PforR exclude
RA1: Improved Labor-market relevance, regular recurrent
Entrepreneurship, and Collaborative Research expenditures,
RA1: Teaching and research;
RA2: Strengthening Governance and Financing of including government
RA2: Governance and financing
RAs Higher Education staff salaries,
RA3: Equitable access and quality
RA3: Widening Access to Quality Higher allowance, and other
RA4: Digitization and connectivity
Education for Disadvantaged Students obligations, and large
RA4: Extending Digitization of Higher Education constructions.
Overall GON: US$1.15 billion GON: US$543.04 million;
Financing IDA: US$57.0 million (PforR)
26. Program Financing. The Government NHEP has an estimated budget of US$1.15 billion for six years
including the base year (2021) and includes US$60 million IDA Credit. The program expenditures are aligned with
the estimated overall government budget allocation for the national-level entities such as the UGC and grant
funding and subsidies for HEIs through the UGC including capital expenditures. It is estimated with respect to the
baseline of fiscal year 2021 budget allocation. Expenditures from revenues generated by HEIs are not included in
the program expenditures. The Program expenditure is carved out of the NHEP expenditure and has a total cost
of around US$600.04 million, which will be financed by GON financing of US$543.04 million and IDA Credit of
US$60 million, of which US$ 57.00 million will be disbursed as PforR and US$3.00 million as IPF. The IDA
contribution thus accounts for around 10.0 percent of the total PforR investment. The GON contribution to the
PforR expenditure comprises development expenditures and capital funding and excludes GON salary in block
grants to universities and HEIs. (Details: annex 4, table 4.1).
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27. Mobilizing Financing for Development. The NHEP will leverage grant funding to mobilize additional
financial resources from community/ private HEIs through institution-level co-financing contribution, which
would include, among others: (a) grants for autonomous/accredited HEIs; (b) competitive research grants for
collaborative research; and (c) PBG against non-tuition/student fee revenue generation to incentivize income
generation activities by HEIs.
28. Component -1 (PforR Component, US$57 million). The NEHEP supports key reforms in four RAs under
the PforR component (Component 1) and capacity development and program management under the IPF
component (Component 2). The four RAs of the Program are clustered around six DLIs: (a) RA1: Improved Labor-
market relevance, Entrepreneurship, and Collaborative Research (DLI 1 and DLI 2); (b) RA2: Strengthening
Governance and Financing of higher education for Quality Enhancement (DLI 3 and DLI 4); (c) RA3: Widening
Access to Quality Higher Education for Disadvantaged Students (DLI 5); and (d) RA4: Extending Digitization of
Higher Education (DLI 6).
29. RA1: Improved Labor-market relevance, Entrepreneurship, and Collaborative Research. This RA aims
to improve the overall graduate employability and boost research and innovation by HEIs in Nepal.
30 Sub-RA 1.1: Improve labor-market relevance of teaching. The program will support strengthening
academic autonomy and support competitively selected autonomous and accredited HEIs to introduce and
enhance their own academic programs that are aligned with local job market needs in the federal context.
Proposed new academic programs will be required to complete a market appraisal during preparation and
develop/update their curriculum in close consultation with employers. This Sub-RA 1.1 will also support the
establishment of continuous professional development (CPD) programs for academic staff and leaders to
promote teaching, including pre-service teacher preparation for prospective school teachers, leadership and
excellence and provide training and sensitization for managers/principals of HEIs and policy makers on academic
management and leadership.
31. Sub-RA 1.2: Promote collaborative research and innovation. The Program will enhance collaborative
research and innovation with industry partners, building on the achievements of the previous operation. The
program will provide additional competitive research funding for selected HEIs, schools, central departments,
and centers of excellence (COE) for collaborative research and innovation with priorities on STEM with a revised
regulatory framework. The UGC will set up a national knowledge-sharing platform for research, innovation, and
patent management and a system for curbing plagiarism.
32. Sub-RA 1.3: Encourage entrepreneurship and self-employment. The Program will support students,
recent graduates, and young faculty members to pursue entrepreneurship and self-employment by providing
competitively selected participants with entrepreneurship skills training, legal training, financial education, Seed
Funds Grants and professional evaluations of their innovative ideas. The UGC will form a committee of qualified
individuals to evaluate the proposals for their innovative ideas and potential to grow as a start-up.
33. RA2: Strengthening Governance and Financing of Higher Education for Quality Enhancement. This RA
aims to improving quality assurance, financing, and governance systems in the Recipient’s higher education
sector to strengthen its quality and labor market relevance.
34. Sub-RA 2.1: Strengthen Autonomy, Quality Assurance, and Accreditation (QAA) and Quality
Enhancement (QE). The Program will expand the existing QAA program nation-wide with the emphasis on QE
activities, and initiate accreditation of universities. Similarly, the Program will also provide dedicated
performance grants to support the transition of around five accredited and autonomous campuses to ‘deemed
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universities’ with reasonable distribution across the provinces24. The deemed universities will be in areas of
provincial development priorities in coordination with respective provinces.
35. Sub-RA 2.2: Extend performance-based grants for improving quality and governance. The Program will
support the expansion of the PBG system for HEIs to high-performing campuses, schools, and departments based
on performance criteria. The performance criteria would include, among others, (a) the merit-based selection of
HEIs’ leadership and excellence-based recruitment of faculty; (b) student centric teaching and learning process;
(c) evaluation of classes and campuses by students, teachers, and other stakeholders; (d) student and faculty
mobility; (e) academia-employer collaboration; (f) distance learning practices and digitization; (g) graduate
tracking and employability; and (h) research outputs including action researches. The Operations Manual will
detail out the performance indicators and grant allocation mechanisms.
36. Sub-RA 2.3: Expansion of non-government sectors for enhancing technical education. The program will
support strengthening policy and regulatory systems to create a conducive environment for expanding technical
education in higher education and developing guidelines to facilitate partnerships with non-governmental
sectors. This will address the low share of technical education in higher education. It would also allow accredited
affiliated institutions to conduct such programs including monitoring arrangements by the affiliating universities.
37. RA3: Widening Access to Quality Higher Education for Disadvantaged Students. This RA aims to support
the recipient’s plan to enhance equitable access to higher education in Nepal, focusing on underprivileged
students, particularly from lagging and/or disaster-affected provinces and remote regions, specifically: (a)
implementing PMT25 or a similar poverty targeting approach for need-based scholarship program, including
students affected by disasters, such as the COVID-19 pandemic and (b) supporting enrollment and continued
education for disadvantaged women; and providing HEIs in lagging and/or disaster-affected provinces and
remote regions with equity grants and encouraging special arrangements to attract quality teachers and improve
the teaching in these provinces and regions including strengthening connectivity, conducting online courses,
making peer learning arrangements from other HEIs/provinces, and sharing resources for efficient use and
capacity building.
38. RA4: Extending Digitization of Higher Education. This RA aims to improving the recipient’s policy and
governance system for digitization and connectivity and strengthening the institutional capacity to digitize
teaching and learning and the administration of higher education.
39. Sub-RA 4.1: Improving the policy and governance of digitization and connectivity. The program will
support the preparation of a new ICT strategy for the higher education sector, including strategies to leverage
the available broad-band connectivity facilities under the NREN or similar institutions and setting up more
collaborative governance arrangements with them.
40. Sub-RA 4.2: Strengthening campus networks and distance learning capabilities. The program will
support in strengthening campus networks and distance learning capabilities by supporting competitively
selected HEIs with Digitization Grants in a cost-sharing approach, specifically (a) establishing last-mile
connectivity, (b) strengthening the bandwidth for better connectivity, and (c) installing in-campus wi-fi
connectivity. The Digitization Grants will also support capacity building of HEIs for integrating online/digital
learning for all aspects of academic activities, from student enrollment to class teaching, examination, and
graduation. HEIs will engage in peer learning opportunities by bringing together the experience of COVID-19
24 Deemed universities are institutions that enjoy academic status and privileges of a university except for the authority of providing affiliations. TU at the province level will
also be regarded as deemed university.
25 The Government can also devise alternate approach of poverty targeting satisfactory to the World Bank, and the beneficiary students’ scholarship will be transferred directly
to their individual bank accounts.
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responses under the online programs that were supported by supported HERP.
41. Sub-RA 4.3: Digitization of UGC and university administration. This RA will support the digitization of
UGC and university administration, including establishing a resource planning system to manage the universities’
human resources, finances and procurement tasks, student administration, and the efficient management of
monitoring and evaluation (M&E) activities. The student administration would include, among others, the
admissions, examination, alumni relations and student scholarship/aid functions.
42. Component -2 (IPF Component): Capacity Building, Program Management, Monitoring and Evaluation
(US$3.0 million). This component will support (a) the capacity development of the MOEST, UGC and TU in
strengthening their core regulatory and financing functions of the higher education sector, including capacity
building activities for, inter alia, QAA/QE systems; autonomy and affiliation; research, innovation and patents;
standardization of teaching/learning; accountability and competitive financing; digitization and connectivity;
establishing partnership; and twinning arrangements with international universities; (b) implementation of all
activities under Part 1, including fiduciary and safeguard management, M&E, strengthening the UGC Education
Management Information System (EMIS), undertaking assessments and evaluation studies, and commissioning
the independent verification agency (IVA). For IPF component see annex 9.
D. Program Development Objective(s) (PDO) and PDO Level Results Indicators
43. The PDO objectives are “to strengthen labor market relevance and quality of higher education, boost
collaborative research and innovation, and enhance equitable access for underprivileged and disaster affected
groups”.
44. The following key performance indicators (KPIs) will be used to measure achievement of the PDO:
Indicator 1: Number of labor-market relevant programs (LMRP) introduced in consultation with employers and
industries (average % female)26
Indicator 2: Number of students completed first year in labor market relevant programs (LMRP) (% female)
Indicator 3: Number of HEIs/Programs accredited/completed peer review for quality assurance and accreditation
Indicator 4: Number of collaborative research projects awarded
Indicator 5: Number of higher education students supported from bottom quintiles (% female)
Indicator 6: Share of students registered in online/blended learning (% female)
E. Disbursement Linked Indicators and Verification Protocols
45. The PforR component with RBF will disburse funds to the Treasury in Nepali rupees following achieved/
verified DLIs. The Program with four RAs, six DLIs, and 17 Disbursement-linked results (DLRs) mapped across the
five-year period towards the achievement of PDOs and specific outputs to incentivize the successful
implementation of critical reform actions in the theory of change. Among the supported DLIs, the results related
to the institutional and system-level actions for enhancing the quality and market relevance receive higher value
and covered under (DLI 1, DLI 3, DLI 4, and DLI 6) to emphasize reform actions to generate highly skilled
professionals for the economy including to ensure equitable access. DLI 2 and DLI 5 will support the strengthening
of research and innovation and enhancing equitable access, respectively. The RBF will provide critical fiscal space
26 Accredited/ peer review completed HEIs/ Department/ Schools would conduct market relevant programs which would be of autonomous nature
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for the UGC to accelerate sectoral reform actions planned under the national program and achieve the PDOs. All
DLRs can be achieved and claimed anytime during the program period unless otherwise specified.
46 An IVA, commissioned by the UGC, will verify the DLIs achievement and provide verification reports.
The IVA candidates can be private or public entities with capability and track records of reliably conducting
verification and the ability to act independently from the influence of the implementing agency. Capability of
contributing to the Government’s long-term systemic strengthening will be one of the criteria for IVA selection.
The selected IVA would be engaged in mid-term to long-term contracts, subject to satisfactory performance.
Table 3: Summary of DLIs and DLRs (allocation in US$ million)

DLIs Allocation DLRs (quantitative DLRs are scalable)
RA1: Improved Labor-market relevance, Entrepreneurship, and Collaborative Research
DLI 1: Labor market-driven 11 DLR 1.1: Standards, operational policies and guidelines for faculty competency development
autonomous programs, faculty and academic leadership sensitization designed and approved
members training and academic DLR 1.2: 1,600 faculty members trained and academic leaders sensitized
leaders’ sensitization DLR 1.3: 100 labor- market driven autonomous programs introduced
DLI 2: Collaborative research 10 DLR 2.1: Standards, operational policies and guidelines for collaborative research and
and entrepreneurship program entrepreneurship programs designed and approved
DLR 2.2: 20 collaborative research projects awarded
DLR 2.3: 50 entrepreneurs trained and received seed funds grants
RA2: Strengthening Governance and Financing of Higher Education for Quality Enhancement
DLI 3: Quality Assurance and 10 DLR 3.1: 50 accredited HEIs undertook at least three QE activities
Accreditation (QAA), and Quality DLR 3.2: Five HEIs reconstituted as Deemed Universities or equivalent TU Chapters
Enhancement (QE) DLR 3.3: Five Universities or Academies have completed peer review for QAA
DLR 3.4: Additional 220 HEIs or programs of HEIs have been accredited or completed peer
review for QAA (cumulative 297)27
DLI 4: Performance Based 10 DLR 4.1: Standards, operational policies guidelines for performance grants designed and
Grants approved
DLR 4.2: 400 HEIs received performance grants (cumulative)
RA3: Widening Access to Quality Higher Education for Disadvantaged Students
DLI 5: Enrollment of 10 DLR 5.1: 100 HEIs in lagging and/or disaster affected Provinces and Remote Regions received
disadvantaged students in Equity Grants
lagging and/ or disaster affected DLR 5.2: Additional 20,000 higher education students supported from bottom quintiles
provinces and remote regions
RA4: Extending Digitization of Higher Education
DLI 6: Online teaching, learning 6 DLR 6.1: Standards and operational policies for higher education digitization, connectivity, and
and digitized administration implementation procedures designed and approved
DLR 6.2: Share of students registered in courses with online/blended teaching methods
increased to 50%
DLR 6.3: Digital learning platform and online administration established at UGC
TOTAL 57 17 DLRs
III. PROGRAM IMPLEMENTATION

A. Institutional and Implementation Arrangements
47. The PforR will use the government system for Program implementation, oversight, financial
management (FM), procurement, safeguards, M&E, and reporting arrangements. The MOEST will be
responsible for Program coordination and policy matters. The UGC Secretariat consisting of different
27 In average 50 percent shall be accredited
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divisions/sections will be responsible for overall implementation including annual planning/budgeting and will
work closely with the MOEST. The TU with its central office also consisting of different divisions/sections will
implement the TU program as subsidiary implementing agency under UGC guidance. The Program support units
at the UGC and TU with additional human resources/experts will provide implementation support under the
Project. At the beneficiary level, the main frontline actors are the universities and their constituent and affiliated
institutions. The governing bodies of these institutions will be responsible for managing all institution-level
activities. The UGC in coordination with affiliating universities will provide training, management, and monitoring
support to these institutions. The organogram for the Program implementation, especially fund flow, reporting,
and coordination, and the Program planning and budget approval process are presented in annex 4. (For detail
see technical assessment).
B. Results Monitoring and Evaluation
48. The UGC Education Management Information System (EMIS) and the M&E section will be responsible for
the overall M&E function of the Program. The Research/QAA divisions will be responsible for feeding into the
UGC EMIS and M&E data system. The TU Central Office will also feed into the UGC data system. The data and
reports generated will be used for the annual and trimester progress reporting of the Program. The trimester
physical and financial reports collected from universities/ HEIs will be consolidated and reported to the MOEST,
National Planning Commission (NPC), and the World Bank.
49. Considerable enhancement of the M&E system and processes are foreseen to effectively support the
PforR implementation. Joint implementation support consultations will be carried out twice a year. A midterm
review (MTR) will be conducted in 2023. Beneficiary satisfaction survey in Year 1, Year 3, and Year 5, and
performance audit once in the Program period will be carried out.
C. Disbursement Arrangements
50. The disbursement against the DLIs will be contingent upon the Government furnishing the IVA report
about the achievement satisfactory to the World Bank according to the verification protocol. The UGC will submit
the DLI verification report of IVA along with the achievement report and a letter for reimbursement to the World
Bank as part of the supporting documentation. The World Bank may further review the evidence of the DLIs
achievement. Program expenditure will be reconciled at the end of the Operation (also see annex 5).
D. Capacity Building
51. The IPF component will support capacity building, program management, and M&E. The capacity-
building activities will support: (a) the MOEST, UGC and TU (through the provision of Grants) in strengthening
their core regulatory and financing functions in higher education sector, including capacity building activities for,
inter alia, QAA/QE systems; autonomy and affiliation; research, innovation and patents; standardization of
teaching/learning; accountability and competitive financing; digitization and connectivity; establishing
partnership; and twinning arrangements with international universities. (b) implementation of all activities of the
Program including fiduciary and safeguard management, M&E, strengthening the UGC Education Management
Information System (EMIS), undertaking assessments and evaluation studies, and commissioning the IVA. A
separate budget head will be created for the Project.
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IV. ASSESSMENT SUMMARY
A. Technical (including program economic rationale)
52. Strategic Relevance. The PforR is highly relevant to the current country context of federalism with
development opportunities as one of the key contributors for growth. The Government has put human capital at
the forefront of the national development agenda. Many education indicators/targets have been set up to
achieve the aspirations of graduating Nepal to an MIC by 2030. This demands significant reforms to address the
higher education challenges which include among others (a) short supply of youth in technical area and poor
relevance to the job market; (b) weak research due to the shortage of qualified faculty members, and low
research outputs/entrepreneurs; (c) underfunding of public higher education, while non-public HEIs lack
incentives to maximize contribution; (d) disparity in access to higher education across income groups; and (e)
low GER and at the same time insufficient space and capacity to absorb the growing demand of secondary
education graduates. Nepal has the opportunity to exploit the demographic dividend and the failure to equip its
youth bulge with a skills and education can turn the same youth into a demographic liability.
53. The objectives of the proposed Program are aligned with the NHEP. The Program also builds on the
successes of the HERP and expands the national program in transforming the country into a knowledge- and
innovation-driven economy. The Program therefore prioritizes: (a) selective expansion of enrollments in critical
fields with upgrading and updating curricula, pedagogy and assessment methods; (b) equipping of quality
assurance and QE with new tools; (c) skilling of faculty members and academic leaders with higher education
emerging trends; and (d) promotion of development-oriented research culture.
54. Technical soundness. The Program design and interventions are technically sound, adequately reflect
lessons learned from the previous operations, and are aligned with the NHEP and global good practices. The
Program also addresses the challenges posed by the global COVID-19 pandemic - building resilient higher
education system by supporting digitization. While the HERP contributed to the expansion of e-learning deployed
under the lockdown, the NEHEP will further strengthen it. The NEHEP RAs address the critical constraints and
gaps in higher education through its innovative features and builds on successful approaches of the predecessor
projects. Specifically, (a) digitalization in teaching, connectivity in collaborations and resource sharing help
improved online/blended teaching-learning; (b) collaborative research and innovation addresses the need for
high impact research of the economy; (c) performance-based financing incentivizes excellence in HEIs’
governance, teaching and learning; (d) continuous professional development programs for faculty members and
sensitization of leaders provides the skills for improved teaching of revamped LMRP; (e) QE is ensured through
an improved quality assurance system; (f) entrepreneurship program encourages graduates and faculty members
in innovation and self-employment; and (g) scholarship support and equity grants to HEIs in lagging provinces
and remote regions supports widening access to underprivileged students to quality higher education. The
Program will also address the system-level issues to fill critical gaps in the financing and governance capacity of
the higher education sector also bringing the non-public sectors together in the federal set up.
55. Expenditure framework. The PforR supports a sub-set of the national program with a total cost of around
US$1.15 billion over six years including the base year (2020/21). The PforR expenditure framework covers the
development and capital investment of the national program but excludes salary to university faculty/ staff as a
block grant and large-scale construction. The summary of the expenditure framework is in annex 4.
56. M&E capacity. The Project will ensure adequate Program management capabilities, and M&E. The
Project will also help the UGC Secretariat for better coordination among the MOEST, universities, HEIs,
stakeholders and the World Bank. It will provide technical expertise for implementing the Program and
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monitoring the progress. The TU Central Office as a subsidiary implementing agency will provide technical
support to and coordination with their constituent and affiliated HEIs, data collection and monitoring. The IVA
will verify the DLI achievement. The M&E plan for the KPIs and IRIs, especially frequency, data source,
methodology for data collection and responsibility is elaborated in annex 2. The DLIs, disbursement
arrangements, and verification protocols are presented in annex 3.
57. Economic Rational. The economic analysis considers detailed costs and benefits accrued from the
proposed Project so that a comprehensive cost-benefit analysis (consideration of all major costs and benefits)
and estimation of the internal rate of return (the interest rate at which net present values of both costs and
benefits are equal to zero) can be undertaken. To accomplish the task, the counterfactual situation – that is, what
would happen if the proposed PforR is not in place – is also considered.
58. The economic analysis for the proposed PforR, as baseline case, first assesses expected benefits and costs
related to the program using a ‘counterfactual’ identification approach where the estimated additional cost is
compared with the additional benefits that will be accrued as a result of the new Program. With proposed
Program, there will be benefits that may come from three sources: (a) increase in university graduates with
higher wages (compared to non-graduates); (b) higher wage-premium as a result of increased quality of
education for all university graduates; and (c) increased efficiency as a result of reduced dropouts and repetition.
Costs include additional Project costs from new and enhanced programs, and private costs that include both
direct household expenditures as well as opportunity costs of going to university. In the process, the analysis is
based on: (a) literature on economic impacts of different levels of education, particularly of tertiary education;
and (b) analysis of labor force demand and skills gaps pertaining to post-secondary graduates.
59. Using a discount rate of 12 percent, the cost-benefit analysis shows that the present value of net benefits
is positive and the program’s internal rate of return is 17 percent, substantially higher than the discount rate.
The analysis assumes that activities and interventions proposed in the NEHEP will substantially increase the pass
rate at the tertiary level, and better alignment of higher education with labor market needs will greatly increase
their future earnings. This return can be considered a lower bound estimate, given that positive externalities
associated with enhanced education quality and equity have not been included in the analysis. Thus, the results,
including the findings of a sensitivity analysis, suggest that the program is expected to be a sound ‘investment’.
B. Fiduciary
60. FM. Nepal’s public financial management system (FMS) has made significant progress. The major reforms
are functioning of the new Financial Procedure and Fiscal Responsibility Act, 2019 (FPFRA) and Nepal Public
Sector Accounting Standards (NEPSAS), rolling out an improved Computerized Government Accounting System
(CGAS) to all GON offices, and Sub-national Treasury Regulatory Application (SuTRA) to sub-national level, and
developing internal auditing standards and the Nepal Government Public Sector Auditing Standards in line with
the International Supreme Audit Institution (INTOSAI) standards are the major reforms. A systematic external
audit of government transactions by the Supreme Audit Institution (SAI) with its increased capacity to conduct
performance audit is a great strength in establishing fiscal transparency and reliability.
61. The fiduciary system assessment (FSA) identified significant fiduciary risks particularly, inadequate staff
capacity in the program FM and weak coordination among implementing agencies. This poses a threat to
adequate monitoring and reporting. The internal control framework within the main implementing agency (UGC)
is not well-established and may pose risk of the World Bank financing for intended purpose. The UGC is yet to
developed adequate accounting policy and system. The present financial management system (FMS) does not
cover all types of financial transactions of the UGC to generate general purpose financial statements. Submission
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of the financial statements of the World Bank supporting earlier projects was also delayed, internal audit was
not carried out regularly, and follow-up on the internal audit observations was also weak. Similarly, final audit
arrears and the audit observations were not adequately documented and addressed.
62. The key actions the UGC will complete to implement Financial Management Improvement Plan (FMIP)
include: (a) develop accounting policy; (b) carry out internal audit regularly including one performance audit by
the Office of the Auditor General (OAG) during the Program period; (c) record and resolve the observations of
the internal and external audits in the Audit Arrears Resolving Action Plan (AARAP). The key actions to be
delivered for the Project will include: (a) timely submission of the interim unaudited financial reports (IUFRs) on
a quadrimester basis within 45 days of each quadrimester and external audit report by nine months from the
end of the financial year; and (b) record and resolve the observations of the internal and external audits. There
are no outstanding audit reports for any of the implementing agencies.
63. Disbursement. While the Program expenditure will be reconciled at the end of the operation (see Annex
5), the disbursement of the Program will be based on the statement of expenditures (SOE) with provision of
direct payment as needed for which a separate budget head will be created.
64 Procurement. The Program’s procurement systems are considered adequate with additional measures
to address shortcomings that cut across sectors and these measures will be included in the Financing Agreement:
(a) methodologies for calculating performance security, (b) contract termination clauses related to cost payable
to the employer, and (c) duration allowed for bid submission in the case of re-bidding. These issues will be
resolved by preparing model bidding documents modifying the existing National Standard Bidding Documents
(SBDs) to contribute competitiveness/fairness. The UGC will have competent procurement staff/consultants to
support program procurements at the UGC and other cost centers, and technical Assistance (TA) is also
envisaged. The UGC will publish all the procurement master plans and consolidated annual procurement plans
of the Program on official website to enhance wider publication and transparency. Further details are included
in annex 5 (Summary) and the detailed report of the FSA. For the IPF component see annex 9.
65. Fraud and corruption risks, and mitigation. The Program has a significant, but manageable risk to
potential fraud and corruption due to prevailing weaknesses: (a) implementation of procurement and contract
administration; (b) internal control systems and processes; (c) monitoring and oversight in program preparation/
implementation; (d) transparency and accountability; and (e) potential collusions among bidders. The World
Bank’s Anti-Corruption Guidelines will be applied during the Program implementation, which also include the
GON sharing with the Bank the complaints of material nature received under the Program regarding fraud and
corruption.
66. Considering the existing weaknesses in the fiduciary systems and the proposed actions to implement the
FMIP and the proposed capacity-building initiatives, the residual fiduciary risk is rated as Substantial.
C. Environmental and Social

67. The Program’s environmental and social (E&S) risks and impact are expected to be Moderate. Social
impacts are expected to be positive as the Program intends to improve equitable access to quality higher
education.
68. PforR component. The Environmental and Social Management Systems Assessment (ESSA) was
undertaken to ensure consistency with six core principles outlined in the World Bank Operational Policy -
Program-for-Results Financing. The ESSA includes assessment of the Government’s E&S policies, legislations,
program procedures, and institutional systems against the World Bank’s E&S Principles for program
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implementation and recommends actions to address capacity gaps to enhance performance on policy and
operational aspects relevant to the Program risks. The ESSA included stakeholder consultations and disclosure of
the ESSA Report following the guidelines of the World Bank’s Access to Information Policy. The PforR is not
expected to have significant adverse E&S footprint, as the program activities relating to minor civil works,
installations of ICT equipment/tools for digitization and so on would be well managed. Risks and impacts brought
on by small-scale civil works/physical activities such as construction of annex buildings, laboratories, and
upgrading of infrastructure are envisaged to be moderate and are expected to be confined to existing premises
of the recipient institutions. Associated environmental risks/ concerns include solid waste management, disposal
of e-waste and wastewater, water supply and sanitation (latrines), air, noise and water pollution during
construction, construction waste/ spoil storing/disposal, flood and landslides, health and safety issues (workers,
students/ teachers, and neighborhood community), use of forced and child labor, and disposal of waste from
laboratories, and so on. These risks are not anticipated to cause significant impact on the ambient environment.
69. The GON regulations of the E&S management system applicable to the PforR are consistent with the
world Bank’s PforR Policy and Directive. However, the institutional capacity for effective implementation/
monitoring and timely reporting with allocation of adequate human resources and budget should be improved.
On occupational health and safety (OHS), Nepal lacks adequate policies, laws, management initiative, corporate
culture and employee willingness to work safely and does not meet the World Bank’s Environmental, Health and
Safety Guidelines. While laws and regulations to avoid child and forced labor in the implementation of program
activities exist, their enforcement is weak mainly due to lack of awareness among the relevant authorities, and
the weak monitoring capacity. Nepal also lacks legal provision on e-wastes management albeit the waste volume
is expected at a low level. While there are legal and policy frameworks including government commitment to
gender and social inclusion, the risk of exclusion due to lack of clear strategy to mainstream gender and inclusion
strategy and stakeholder engagement still exists.
70. The assessment also identified key measures to strengthen system performance for E&S management
and key actions are included in the Program Action Plan (PAP): (a) the UGC to develop and implement UGC-wide
framework/ guidelines to cover E&S aspects including gender and social inclusion, stakeholder engagement,
GRM, labor standards and OHS, among others; (b) the UGC to establish a dedicated E&S unit with adequate
staffing and budget; (c) the UGC to develop a strategy for strengthening capacity of beneficiary HEIs for
mainstreaming E&S aspects in higher education. Mitigation measures for gender-based violence (GBV) including
sexual exploitation and abuse/sexual harassment (SEA/SH) and violence against women (VAW) are of higher
priority and included in the PAP. For the IPF component see annex 9.
71. Gender. The program will address gaps in access to tertiary education among poor women. The GPI in
higher education enrollment on average is 1.09. However, this masks many dimensions of exclusion for women.
Women from lower income quintiles are much less likely to be enrolled in higher education than men from the
same quintiles. The probability of being enrolled in higher education is only 0.07 percent for women from the
lowest quintile compared to 0.18 percent for men, whereas for the richest quintile, women are 0.58 percent
likely to enroll in higher education. The three main reasons identified for low female enrollment in the poorest
income quintiles according to NLSS are, the need to help at home, education was too expensive, and parent did
not approve of enrollment in higher education.28 While the granular data showing connection between women’s
low STEM enrollment and their labor market outcome are not available in the NLSS report, the Program will
support to carrying out targeted surveys during rapid market appraisal of the market relevant courses and find
out possible ways for female support in those courses.
28 Nepal Living Standard Survey 2010/11
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72. Across the various dimensions of disadvantages that the program will focus in supporting women from
the poorest quintile is through the PMT based scholarship program. Additionally, the online/blended modes of
delivery as a priority of the national program and universities will also encourage girls to attend the courses from
home or in the vicinity, which is also highly desirable for females from the cultural and the guardian perspective.
The NEHEP will also support launching of a communication strategy for improved female participation as a
national priority for human capital development, productivity and growth as charted in the 2018 - 204329 vision
and national plan documents. The poverty targeted support in secondary education with preference on science
in the earlier higher education projects and now mainstreamed in the school sector program under the same
ministry has helped to increase the pool of students from bottom quintiles for higher education. The NEHEP will
continue this support in higher education. The female students supported from bottom poorest quintiles will be
45 percent of total students supported (KPI 5; DLI 5). Additionally, the female share of students registered in
online/blended learning will be 45 percent of the total registered students (KPI 5; DLI 6).
73. While the LFPR for men is 51.12 percent higher than for women on average for all levels of education,
the same indicator’s difference for individuals with higher education reduces to 23.68 percent. Similarly, the
respective differences in employment are 52.58 percent to 22.7 percent.30 This gives an indication of value
addition of HE for females in labor market. The female share (GPI) in some of the STEM streams is lagging behind:
S&T (0.56), engineering (0.20), agriculture (0.62), forestry (0.74)31, while in other areas it is encouraging:
management (1.27), education (1.76), medicine (1.60), social science (1.03). It is noteworthy that the Bank
continued poverty targeted support to grades 11-12 STEM students in the past 12 years and its mainstreaming
in the school sector has made visible contribution to increased enrollment in higher education STEM from
2011/12 to 2018/19: medicine (36.4 percent); S&T (55.6 percent); agriculture (313.0 percent); forestry (362.5
percent); education, management, and humanities with ICT (76.0, 54.9, and 28.8 percent respectively).32
However, the progress in Engineering is slow. This means that the issue of low share in Engineering is not largely
related with female skill gaps for STEM, but other aspects.33 The Program will also collect additional information
on this front and provide possible support for improving share of females in engineering during the program
implementation. A communication strategy will also be launched on this aspect.
74. The Program will support several actions to narrow the gender gap in STEM enrollment, namely 400
HEIs will be incentivized with performance grants to launch STEM education and increase women’s enrollment,
among other performance indicators (DLR 4.2). A total of 100 HEIs in lagging regions will be supported with
equity grants, which will also incentivize women’s enrollment in STEM as a performance indicator (DLR 5.2).
Furthermore, the Program will launch a coordinated communication strategy at the secondary level to continue
increasing the pool of eligible STEM students for higher education and achieve gender parity. Additionally, the
program will also address the enrollment of women in LMRPs, which have an employment potential for women,
such as tourism, hospitality, nutrition and dietetics, gender studies, banking and finance, computer applications,
entrepreneur development programs, and other service sectors. The HEIs, which are allowed for the design and
assessment of the LMRPs would involve all eligible female faculty members in their institution for this task.
Additionally, the number of teachers and leaders trained/sensitized will also include all eligible female
teachers/leaders (KPI 1; Intermediate Results Indicators [IRI] 4a, 4b, and DLI 1). The program aims to have 45
percent of all students completing first year in LMRPs to be female (KPI 1; DLI 1). Similarly, the number of female
students/graduates participating in entrepreneurship training is targeted to be 40 percent (IRI 5; DLI 1).
29 Currently the Nepali calendar year is 2077.

30 Report on the Nepal Labor Force Survey 2017/18.
31 UGC EMIS Report 2018/19.
32 UGC EMIS Report 2011/12 and 2018/19.
33 Low share in engineering might be location of engineering colleges for easy outreach for studies with residential facilities; perception that the labor market needs for
engineering such as civil, mechanical, hydropower, electrical and so on, would demand work placements in rugged terrain with frequent travel needs and so on.
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Additionally, the program will also support increase in the share of female enrollment in STEM programs from
8.70 percent (baseline) to 14 percent in year 5 (IRI 3). The program will encourage HEIs to recruit female faculty
members as an indicator of performance grants (DLI 4) to increase the share of female faculty members, which
is very low with GPI of 0.20.
75. Climate Co-benefits (CCB). The PforR and the IPF components include CCB as an integral part of the
operation. The CCB builds on the Government’s Disaster Risk Reduction (DRR) National Strategic Plan of Action
(NSP) 2018–30 with four key priority areas: understanding the risk, strengthening management at three
government levels, promoting private and public investments for resilience, and enhancing preparedness for
effective response to ‘build back better’. The operation also supports the government’s program of green power
production for prosperity in the 15th five-year plan and other policy documents. The operation includes climate
actions with the 16 DLRs with total value of US$ 54.0 million except for the DLR 3.2. Specific climate actions in
terms of Mitigation and Adaptation measures under each of the 16 DLRs are explained in annex 10.
76. Citizen engagement. The citizen engagement activities are embedded in the Program design to enhance
citizen participation in policy dialogues; and to facilitate meaningful consultation with students, graduates,
industry stakeholders, and labor unions in design and administration of LMRPs; and involve students in
performance evaluation of participating HEIs. Under RA-1, the program will support and extend graduate tracking
systems as a critical input in the design of LMRPs. The UGC will identify and consult with relevant civil society
organizations (CSOs), industry representatives and labor unions in the policy dialogue process, ensuring that they
help inform market relevant programs. Similarly, under RA-2 students will be empowered to participate in
evaluating performance of the HEIs as part of the QAA cycle. As part of the UGC's mandate, policy dialogue with
stakeholders in the education sectors including CSOs, local representatives will also be continued to address
access to higher education for disadvantaged students. These citizen engagement activities will be monitored
through beneficiary satisfaction surveys involving industry, academia, and organized labor unions to ascertain
the level of satisfaction and collect feedback on alignment of academic programs with labor market needs.
V. RISK
77. Political and governance risks are high. The political situation in Nepal is currently evolving as a result of
the recent breakup of the incumbent ruling coalition. Through exercising the provisions of the 2015 Constitution,
new alliances are in the offing as Nepal is likely to be headed for a coalition government or new elections. To
mitigate this risk, the World Bank has been meeting with key members of all political parties to build continuous
relationships and has confirmed that the policies underlying this Program are accepted across the political
spectrum. In addition, all recent political changes remain within the parameters of the 2015 Constitution,
highlighting that the country remains on a trajectory of post-2015 institutional development. Federalism and
COVID-19 also pose significant challenges for Nepal’s development landscape, as weak intergovernmental
coordination and low subnational capacity can undermine the implementation of reforms. Mitigation measures
include the World Bank’s sustained dialogue at all levels of government and the continued support to strengthen
the federal institutions through the Program.
78. Macroeconomic risks are substantial. Delayed vaccination deployment and a further escalation of the
COVID-19 outbreak domestically and globally would dampen the nascent momentum for economic recovery,
especially in tourism. The recent political uncertainty, if prolonged, could further undermine investment
sentiments. On the upside, effective vaccination campaigns in Nepal and abroad could facilitate the resumption
of tourism and hospitality services. While downside risks are significant, Nepal’s strong record of sustained
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macroeconomic stability during various global crises and natural calamities demonstrates its capacity to handle
the macroeconomic risks, as evidenced by relatively stable macroeconomic and fiscal indicators during the
pandemic, compared to other countries in the region.
78. Fiduciary risk is Substantial. The Fiduciary Systems Assessment has identified gaps in procurement and
FM capacity. The risk mitigation measures are included in the Program Action Plan PAP.
Overall risks are rated as Substantial. The overall Program risk for achieving the PDOs is Substantial. While the
main risks to achieving the intended results are political and governance, macroeconomics, and fiduciary the
evolved political uncertainty has further increased the risk that may influence at the implementation level. These
risks will be mitigated through specific measures as noted in the PAP. Additionally, the capacity of implementing
agencies will be strengthened, and sustained policy dialogue will alleviate the risks associated with political shifts.
79. PAP. The PAP has been developed based on recommendations of the technical assessment, FSA, ESSA,
and risk assessment. The PAP includes key activities/actions agreed with the Government to achieve Program
objectives and results, and the DLIs/ DLRs including GBV, SEA/SH, and VAW.
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ANNEX 1. COVID-19 RESPONSE PROGRAM - SHIFTS IN WBG COUNTRY PARTNERSHIP FRAMEWORK
1. Nepal is also facing a major public health and economic crisis as a result of COVID-19. Nepal has
recently been hit by a devastating second wave of COVID-19, with an exponential rise in positive cases, with May
2, 2021, registering a high of 7,388 new cases. Thirty-two districts have more than 200 active cases and seventeen
districts more than 500 active cases. While the national cumulative positivity rate has slowly increased to 13.6
percent from 8 percent on January 7, 2021, with the ongoing second wave, the positivity rate as of May 3, 2021
has breached 40 percent in five of the seven provinces. Over 80 percent of the infected are in the 25-59 age
group, with 63.8 percent of the affected being males. Case fatality ratios are highest in the age group 80-85+.
COVID-19 ICU beds and ventilators are rapidly being occupied. In addition to the imminent shortage of ICU beds
and ventilators, the nation is facing acute shortage of oxygen supplies—a critical therapy for patients with
compromised lungs. The escalation in cases has prompted a series of localized lockdowns since April 19, 2021.
The protracted pandemic has had significant consequences in terms of lost income; learning losses due to
protracted closure of schools; increased morbidity and mortality from both COVID and non-COVID related
illnesses as the population struggled to access timely and quality health care services. The psychological burden
of the these impacts along with distanced social engagement has exacerbated stress levels universally.
2. The recent COVID-19 pandemic is expected to derail the strong growth trajectory established over the
past three years. GDP growth averaged 7.8 percent between FY2017 and FY2019. It is estimated to
have contracted by 1.9 percent in FY2020, the first economic contraction in 40 years, as prolonged nationwide
mobility restrictions from March to July 2020 – imposed to curtail the spread of the virus – significantly impacted
all sectors of the economy. The service sector took a hard hit, contracting by 3.6 percent due to national and
localized lockdowns. Tourism activities ground to a halt and lockdowns hit transport and wholesale and retail
trade hard. Estimates from the World Bank COVID-19 monitoring survey show that more than two in every five
economically active workers reported a job loss or a prolonged work absence in 2020 due to the pandemic. On
the fiscal side, tax revenue decreased by 5 percent in FY2020 due to widespread trade restrictions, supply chain
disruptions and weaker demand. In response, the Government of Nepal contained discretionary spending to
keep the fiscal deficit in check. The fiscal adjustment, together with difficulties in executing budgets due to the
lockdown measures, led to lower budget execution: only 71.4 percent of the overall and 47 percent of the capital
budget were spent in FY2020. Consequently, the fiscal deficit increased moderately from 5 percent of GDP in
FY2019 to 5.2 percent of GDP in FY2020. Total public debt is estimated to have increased to 36 percent of GDP
in FY2020, from 27.2 percent of GDP in FY2019.34
3. The Government of Nepal has responded to the crisis through fiscal and monetary measures. Fiscal
measures fall into three broad categories. First, there are immediate health measures aimed at increasing access
to testing for COVID-19 infections, establishment of quarantine facilities, and availability of medical items such
as masks, sanitizer, and surgical gloves. Second, to reduce the crisis’ impact on livelihoods, the government has
ensured continued delivery of its core safety net programs, implemented food distribution programs, extended
eligibility for the Prime Minister’s Employment Program, and provided discounts on utility bills. Third, to provide
economic support to firms, the government has deferred the payment of taxes and provided concessional loan
facilities to severely affected sectors. The cumulative cost of these programs is estimated at 5 percent of GDP.
Measures taken by the Nepal Rastra Bank – the central bank – included a relaxation of regulatory requirements
for banks and financial institutions and a reduction of targeted interest rates as part of the country’s interest rate
34The large difference between debt and the deficit arises because the federal government devolves 30 percent of VAT revenue to subnationals which increases borrowing
requirements.
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corridor and were aimed at providing liquidity support to banks and facilitating the provision of credit to the
private sector.
4. The economic framework to chart Nepal’s emergence from the crisis is structured by the Government
in three stages: relief, restructuring, and a resilient recovery. During the relief stage, the priority is on addressing
the immediate health impacts of the pandemic and providing support to livelihoods and firms to reduce
vulnerability. During the restructuring stage, the focus is on strengthening health systems and adjusting to a new
normal that prioritizes domestic employment generation in a greener and more digital economy. The resilient
recovery stage focuses on new opportunities to invest and reforms to promote more sustainable, inclusive, and
resilient growth in a post-COVID world. There is also understanding that economic recovery for a small,
landlocked country like Nepal also requires cooperative engagement with the immediate neighborhood,
recognizing the importance of connectivity and trade for growth and development.
5. The WBG Country Partnership Framework (CPF)35 continues to be relevant, albeit with some shifts
aiming at striking a balance between pivoting to address the short and medium-term needs from the COVID19
crisis and the focus on the long-term economic development path. World Bank, IFC and MIGA will continue to
collaborate closely in implementing these shifts which also align with the four thematic pillars of the World Bank
Group Approach Paper36. The World Bank Group will continue to work closely with the Government to ensure
that the allocation of IDA 19 resources is in conformity with the COVID-19 related priorities and the four pillars
of the World Bank Group Approach Paper, as detailed below.
6. Pillar 1: Support to health for saving lives threatened by the virus. The Bank responded immediately
to the crisis caused by COVID-19, via US$29 million IDA credit for the Nepal COVID-19 Emergency Response and
Health System Preparedness Project approved in April 2020, to strengthen national systems for public health
preparedness in the country. In addition, the US$75 million Additional Financing to the Nepal COVID-19
Emergency Response and Health System Preparedness Project which was approved in March 2021 will support
the procurement of COVID-19 vaccines and related activities. The medium-term response will be framed through
the envisaged continued support in the sector-wide program in the health sector.
7. Pillar 2: Social response for protecting poor and vulnerable people from the impact of the economic
and social crisis triggered by the pandemic. As a measure for immediate response to the COVID-19 crisis,
US$10.85 million Global Partnership for Education (GPE) COVID 19 Accelerated Funds to respond to COVID-19
impact on the school sector, was approved in August 2020. Further, in FY21, with a view toward supporting the
response to the COVID-19 pandemic, the following World Bank-financed projects have been approved: Rural
Economic Development Project (US$80 million) and Urban Governance and Development Project (US$150
million). In FY22, Provincial and Local Roads Project, Finance for Growth Development Policy Financing 2, and
Water Sector Governance and Infrastructure Support Project are potential areas of support. Additional Financing
for School Sector Development Program and Nepal Health Sector Program of US$50 million each are also being
provided to bridge the financing gap for FY2021/22 budget. The proposed Sustainable Tourism Project will be
redefined to focus on reinvigorating the sector (the most impacted sector in Nepal) with a focus on grant and
job-creation schemes. Across existing investments, including Youth Employment Transformation Initiative (YETI),
Emergency Housing Reconstruction Project (EHRP), Strategic Road Connectivity and Trade Improvement Project
(SRCTIP), and the recently approved Nepal Urban Governance and Development Project (NUGIP), World Bank
35 Report No. 83148-NP; July 10, 2018 discussed at the Board on August 7, 2018
36 The thematic pillars of the World Bank Group Approach Paper are: (i) support to health for saving lives threatened by the virus, (ii) social response for protecting poor and
vulnerable people from the impact of the economic and social crisis triggered by the pandemic, (iii) economic response for saving livelihoods, preserving jobs, and ensuring more
sustainable business growth and job creation by helping firms and financial institutions survive the initial crisis shock, restructure and recapitalize to build resilience in recovery
(rebuilding better), and (iv) support for strengthening policies, institutions and investments for resilient and sustainable recovery.
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investments are expected to create over 19 million person days of employment. This includes COVID responses
to increase creation of temporary employment opportunities for the most vulnerable, including those COVID
affected particularly under YETI and NUGIP. YETI supports the government’s key employment program. The
proposed US$80 million Unlocking Human Capital for a Prosperous Nepal aims to promote greater access to a
set of inter-related and mutually complementary human capital services, particularly for over 100,000 poor and
vulnerable households in selected disadvantaged areas, and the Nurturing Excellence in Higher Education Project
(US$60 million) aims to modernize higher education sector through digitization, a key aspect of the response to
the issues caused by the COVID-19 pandemic. The medium-term response will be framed through the envisaged
continued support in the sector-wide program in the education sector.
8. Pillar 3: Economic response for saving livelihoods, preserving jobs, and ensuring more sustainable
business growth and job creation by helping firms and financial institutions survive the initial crisis shock,
restructure, and recapitalize to build resilience in recovery (rebuilding better). As a measure for immediate
response, the Bank also initiated repurposing and restructuring of the ongoing World Bank portfolio through
reallocations, cancellations, and creating CERC in six projects, and thereby making about US$300 million available
for COVID-19 relief and recovery efforts. Initiatives were also undertaken to expedite release of about US$140
million in advances or accelerating achievement of results across the Program for Results (PforRs) operations.
These represent approximately 18 percent of total committed amounts. The Government of Nepal and
Development Partners37 have recently started a joint green recovery initiative to help Nepal get back on track
to achieve Middle Income Status and the Sustainable Development Goals by 2030. The initiative follows the
shared principles for green recovery support that will: (i) support the Government’s plans and sector strategies,
(ii) ensure the green recovery is inclusive, promotes stakeholder engagement and the active role of women and
civil society in Nepal’s development, and (iii) support the constitutional mandates of Nepal’s local, provincial and
federal governments.
9. IFC has been providing various types of support (advisory and investment) and will continue to explore
more ways to help leverage the private sector’s contribution to the COVID-19 pandemic recovery. IFC has notably
been focusing on helping struggling firms to access critically needed capital to weather the impact of the
pandemic.
10. In June 2020, IFC committed $25 million loan to NMB Bank to boost Small and Medium Enterprise (SME)
and green financing. In May 2021, IFC committed $10 million to Dolma Impact Fund II (DIF II) to further deepen
the private equity (PE) market in Nepal. IFC's equity in DIF II also includes $5 million from the IDA’s Private
Sector Window (IDA PSW). IFC’s participation in this PE fund will send a strong signal to the market, especially
given the ongoing new wave of COVID-19 cases in Nepal. DIF II will provide financing to SMEs in health care,
renewable energy, technology, and other sectors in Nepal. First close of $40 million is supported by IFC, CDC,
FMO and Swedfund. IFC is presently working toward a possible a possible $40 million loan this fiscal year to
Global IME Bank to also support SMEs. On the advisory side, key engagements notably included knowledge
sessions for banks have focused on crisis management and stress testing. IFC also assisted Nepal Rastra Bank in
developing and approving the Quick Response (QR) Code Specifications and Standardization and Interoperability
Framework, an important milestone for the promotion of digital banking. In Tourism, IFC has been helping to re-
establish trust in the market by introducing appropriate enterprise standards and protocols that meet
international expectations. More recently IFC helped the Nepal Tourism Board develop Standard Operating
Procedures (SoP) for health/hygiene standards for mountain tourism enterprises; and co-organized an
37Development partners associating themselves with this statement Include: ADB, EU, Finland, France, Germany, INGOs, JICA, KOICA, Norway SDC, UK, UN, USAID, and
the World Bank.
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investment forum focused on Tourism Recovery and Sustained Growth with the aim of capitalizing on Nepal’s
competitive advantages in the post-COVID Era.
11. Pillar 4: Support for strengthening policies, institutions, and investments for resilient and sustainable
recovery. The FY21 program includes a Finance for Growth DPC (US$200 million) series which responds to the
challenges brought about by the COVID-19 pandemic through addressing financial stability, disaster risk finance,
capital and insurance market reforms, and constraints to SME financing. This DPC reiterates WBG’s focus on
private sector-focused market solutions and similar approach would be expected in the upcoming operations
including the Programmatic Fiscal Policy for Growth Recovery and Resilience DPC Series. The new Programmatic
Fiscal Policy for Growth Recovery and Resilience DPC Series (US$100 million) will build on the previous series,
with a focus on aspects of the COVID-19 response related to fiscal resilience and economic recovery aimed at
sustainable and inclusive growth, as well as social protection to support the poor and vulnerable. These DPC
initiatives draw on IFC advice as to key enabling environment reforms that can foster the increased private sector
initiatives and investments required for a resilient recovery. Policy reform actions would be centered around the
Government’s 3R (Recovery, Restructuring, and Resilience) Plan. The FY22 pipeline may include the next series
of Finance for Growth DPC and/or Fiscal Policy for Growth, Recovery, and Resilience DPC.
12. The financing gap is expected to be bridged through the Crisis Response Window (CRW) and Scale Up
Window (SUW). Estimated resources available under IDA-19 concessional financing include US$956 million38.
Total demand for FY21 is about US$845 million. To meet the financing gap, Nepal recently received additional
allocation of US$210 million. For the proposed FY22 delivery, additional IDA resources including CRW and SUW
will be explored.
38 US$ amount may change due to exchange rate fluctuation against SDR. IDA 19 allocation is SDR 661.8 million.
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ANNEX 2. RESULTS FRAMEWORK MATRIX
Results Framework
COUNTRY: Nepal
Nurturing Excellence in Higher Education Program for Results
Program Development Objective(s)

The Program Development Objectives are to strengthen labor market relevance and quality of higher education, boost collaborative research and
innovation, and enhance equitable access for underprivileged and disaster affected groups.
Program Development Objective Indicators by Objectives/Outcomes
RESULT_FRAME_TBL_ PD O
Indicator Name DLI Baseline Intermediate Targets End Target

1 2 3 4
Outcome 1: To strengthen labor market relevance and quality of higher education
1. Number of labor-market
relevant programs introduced
in consultation with employers 0.00 5.00 25.00 70.00 90.00 100.00
and industries (cumulative)
(Number) (Number)
2. Number of students
completed first year in labor
0.00 90.00 450.00 3,600.00 9,000.00 13,500.00
market relevant programs
(LMRP) (cumulative) (Number)
Average % female
0.00 15.00 20.00 30.00 40.00 45.00
(Percentage)
3. Number of HEIs/ Programs

77.00 130.00 170.00 210.00 240.00 297.00
Accredited / completed peer
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RESULT_FRAME_TBL_ PD O

1 2 3 4
review for quality assurance
and accreditation (QAA)
(cumulative) (Number)
Outcome 2: To boost collaborative research and innovation
4. Number of collaborative
research projects awarded 0.00 0.00 8.00 18.00 20.00 20.00
Outcome 3: To enhance equitable access for underprivileged and disaster affected groups
5. Number of higher education

students supported from
0.00 5,000.00 10,000.00 15,000.00 20,000.00 20,000.00
bottom quintiles (Cumulative)
(Number)
% female (Percentage) 0.00 50.00 50.00 50.00 50.00 50.00
6. Share of students registered

in online/blended learning 20.00 25.00 30.00 35.00 40.00 50.00
(Percentage)
% female of the total

45.00 45.00 45.00 45.00 45.00 45.00
(Percentage)
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.
Intermediate Results Indicator by Results Areas
RESULT_FRAME_TBL_ IO

1 2 3 4
Results Area 1 - Improved Labor-market relevance, Entrepreneurship, and Collaborative Research
1. Number of HEIs which have
published graduate tracking 0.00 10.00 50.00 140.00 180.00 200.00
reports (cumulative) (Number)
2. Number of students enrolled
in labor market relevant
0.00 100.00 500.00 4,000.00 10,000.00 15,000.00
programs (cumulative)
(Number)
3. Share of female enrollment
8.00 9.00 10.00 12.00 14.00 14.00
in STEM programs (Percentage)
4. Number of faculty members
trained and academic leaders
0.00 230.00 380.00 1,000.00 1,550.00 1,600.00
sensitized (cumulative)
(Number)
4.a. Number of faculty
members trained, including
0.00 200.00 600.00 900.00 1,400.00 1,400.00
all the eligible female
faculty members (Number)
4.b. Number of academic
leaders sensitized, including
0.00 30.00 80.00 100.00 150.00 200.00
all the eligible female
academic leaders (Number)
5. Number of
students/graduates
0.00 0.00 300.00 500.00 500.00 500.00
participated in
entrepreneurship training
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1 2 3 4
% female (Percentage) 0.00 0.00 45.00 45.00 45.00 45.00
6. Number of trained
entrepreneurs received seed 0.00 0.00 15.00 30.00 50.00 50.00
fund (cumulative) (Number)
7. Number of Publications in
refereed journals (cumulative) 0.00 10.00 30.00 50.00 80.00 120.00
(Number)
Results Area 2 - Strengthening Governance and Financing of Higher Education for Quality Enhancement
8. Number of HEIs
reconstituted as Deemed
0.00 0.00 2.00 3.00 4.00 5.00
Universities (cumulative)
(Number)
9. Number of universities
completed peer review for 0.00 0.00 2.00 3.00 4.00 5.00
QAA (cumulative) (Number)
10. Number of accredited HEIs
undertook QE activities 0.00 0.00 20.00 30.00 40.00 50.00
(Number)
11. Number of HEIs received
Performance Based Grants 0.00 50.00 150.00 250.00 350.00 400.00
(PBG) (Number)
Results Area 3 - Widening Access to Quality Higher Education for Disadvantaged Students
Province 2: Total (T) - Province 2: T - 5.00%; F- Province 2: T- 7.00%, F - Province 2: T - 8.00%; F- Province 2: T-10.00%, F- Province 2: T-12.00%; F-
12. Improved Student GER 4.75%, Female (F) - 5.00%; Karnali: T - 7.00%; Karnali: T- 8.00%; Karnali: T - 10.00%; Karnali: T- 12.00%; Karnali: T-
disaggregated by gender in 4.05%; Karnali: T -8.84%; 9.00%; F- 10.00%; F- 10.00%; 11.00%; F-11.00%; 13.00%; F-13.00%; 14.00%; F-14.00% ;
Lagging Provinces (Text) F- 7.04% Sudurpaschim:T- 9.00%;Sudurpaschim: T- Sudurpacschim: T- Sudurpaschim: T- Sudurpaschim: T- Sudurpaschim: T-15.00%;
9.38%; F- 9.83% 10.00%; F -10.00% 11.00%; F- 11.00% 12.00%; F-12.00% 14.00%; F-14.00% F-15.00%
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1 2 3 4
13. Number of HEIs supported
with equity grants in lagging
and/or disaster affected 0.00 15.00 50.00 75.00 100.00 100.00
provinces/ remote regions
Results Area 4 – Extending Digitization of Higher Education
14. Share of HEIs participating
in online data feeding 25.00 30.00 40.00 50.00 60.00 70.00
(cumulative) (Percentage)
15. Number of universities
passing Rule for blended mode
of course delivery and final 0.00 2.00 3.00 5.00 7.00 8.00
examination (cumulative)
(Number)
Program Management and M&E
16. Conduction of Beneficiary Baseline survey Mid-term survey
Not Applicable Not Applicable End-line survey conducted
Satisfaction Survey (Text) conducted conducted
Students benefiting from direct
interventions to enhance 0.00 25,000.00 100,000.00 250,000.00 375,000.00 500,000.00
learning (CRI, Number)
Students benefiting from
direct interventions to
0.00 12,500.00 50,000.00 125,000.00 187,500.00 250,000.00
enhance learning - Female
(CRI, Number)
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.
Monitoring & Evaluation Plan: PDO Indicators
Methodology for Data Responsibility for Data
Indicator Name Definition/Description Frequency Datasource
Collection Collection
Number of LMRPs
1. Number of labor-market relevant introduced in HEIs
programs introduced in consultation with (cumulative): 5, 25, 70, 90 UGC Monitori
Annual Survey/ online UGC, Universities, HEIs
employers and industries (cumulative) and 100 programs in Year ng Report
(Number) 1, 2, 3, 4 and 5 respectively
as per the LMRP Guidelines
Number of students
completing first year of the
Bachelor and or Master
2. Number of students completed first levels: 90; 450; 3,600; UGC/
UGC, TU, Other
year in labor market relevant programs 9,000; and 13,500 Annual Monitoring Survey/ online
universities, HEIs
(LMRP) (cumulative) (cumulative) in year 1, 2, 3, Report
4 and 5 respectively as per
the LMRP operational
guidelines
Number of female students
completing the LMRP: UGC
UGC, TU, Other
Average % female 15%, 20%, 30%, 40% and Annual Monitoring Survey/ online
universities, HEIs
45% in year 1, 2, 3, 4 and 5 Report
respectively
Number of HEIs/ Programs
accredited/ completed
3. Number of HEIs/ Programs Accredited /
peer review of QAA UGC
completed peer review for quality Field visit/
(cumulation: 130, 170, 210, Annual Monitoring UGC QAA Division
assurance and accreditation (QAA) survey/ online
240 and 297 in year 1, 2, 3, Report
(cumulative)
4 and 5 respectively as per
the QAA Manual
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Number of awarded
collaborative research
projects: 8; 18; 20; and 20
UGC
4. Number of collaborative research projects in Year 2, 3, 4 and Desk study/ survey/
Annual Monitoring UGC Research Division
projects awarded (cumulative) 5 respectively as per the online
Reports
Guidelines with 20%
climate
adaptation/mitigation.
Number of HE students
supported from bottom
quintiles using poverty
targeted or similar
schemes (cumulative): UGC/ MOEST Steering
5. Number of higher education students UGC
5,000; 10,000; 15,000; Committee for
supported from bottom quintiles Annual Monitoring Survey/ online
20,000 and 20,000 supporting
(Cumulative) Report (UMR)
students in year 1, 2, 3, 4 underprivileged students
and 5 respectively (Male up
to two and female up to
three poorest quintiles) as
per guidelines
% female Retain 50% in all years Annual UMR UGC/ MOEST
Percentage of HE students
attending the online/
UGC
6. Share of students registered in blended learning: 25, 30,
Annual Monitoring Survey/ online UGC, TU, HEIs
online/blended learning 35, 40 and 50 in Year 1, 2,
Report (UMR)
3, 4 and 5 respectively) as
per the guidelines
% female of the total Retain 45% in all years Annual UMR Survey/ online UGC, TU, HEIs
.
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.
Monitoring & Evaluation Plan: Intermediate Results Indicators
Methodology for Data Responsibility for Data
Indicator Name Definition/Description Frequency Datasource
Collection Collection
Number of HEIs which have
published their graduate
tracking reports on their
1. Number of HEIs which have published website periodically (no UGC Monitori
Annual Survey/ online UGC, Universities, HEIs
graduate tracking reports (cumulative) double counting): 10, 50, ng Report
140, 180 and 200 HEIs in
Year 1, 2, 3, 4 and 5
respectively
Number of students
enrolled in the LMRP
(cumulative): 100; 500; UGC EMIS/
2. Number of students enrolled in labor
4,000; 10,000 and 15,000 Annual Monitoring Survey/ online UGC, Universities, HEIs
market relevant programs (cumulative)
in Year 1; 2; 3; 4 and 5 Report
respectively as per the
Guidelines
Percentage of female from
the total students enrolled UGC
3. Share of female enrollment in STEM
in STEM (cumulative): 9, Annual Monitoring Survey/ online UGC, Universities, HEIs
programs
10, 12, 14 and 14 in Year 1, Report
2, 3, 4, and 5 respectively
Number of faculties trained
and academic leaders
4. Number of faculty members trained sensitized (cumulative): UGC
Desk study/ survey/
and academic leaders sensitized 230; 380; 1,000; 1,550; Annual Monitoring UGC, Universities, HEIs
online
(cumulative) 1,600 in Year 1, 2, 3, 4 and Report
5 respectively as per the
Guidelines
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Number of faculties
including females
completed training
4.a. Number of faculty members UGC
(cumulative): 200; 600; Desk study/ survey/
trained, including all the eligible Annual Monitoring UGC, Universities, HEIs
900; 1,400 and 1,400 in online
female faculty members Report
Year 1, 2, 3, 4 and 5
respectively as per
Guideline
Number of academic
leaders including females
4.b. Number of academic leaders UGC
completed sensitization Desk study/ survey/
sensitized, including all the eligible Annual Monitoring UGC, Universities, HEIs
(cumulative): 30, 80, 100, online
female academic leaders Report
150 and 200 respectively as
per the Guidelines
Number of participation in
entrepreneurship training
5. Number of students/graduates UGC
(cumulative): 300, 500, Desk study/ survey/
participated in entrepreneurship training Annual Monitoring UGC, Universities, HEIs
500, 500 in year 2, 3, 4 and online
(cumulative) Report (UMR)
5 respectively as per
Manual
Desk study/ survey/
% female Maintained 45% in all years Annual UMR UGC, Universities, HEIs
online
Number of competitively
selected entrepreneurs
among the trained ones UGC
6. Number of trained entrepreneurs Desk study/ survey/
supported with seed fund Annual Monitoring UGC, Universities, HEIs
received seed fund (cumulative) online
(cumulative): 15, 30, 50 Report
and 50 in Year 2, 3, 4 and 5
respectively as per Manual
Number of publications in UGC
7. Number of Publications in refereed Desk studies/ survey/
refereed journals with Annual Monitoring R UGC Research Division
journals (cumulative) online
impact factors as defined in eport
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the Research Guidelines

(cumulative): 10, 30, 50, 80
and 120 in Year 1, 2, 3, 4
and 5 respectively
Number of HEIs
transformed into Deemed
UGC
8. Number of HEIs reconstituted as universities: 2, 3, 4 and 5 in
Annual Monitoring Desk study UGC
Deemed Universities (cumulative) Year 2, 3, 4 and 5
Report
respectively as per their
Acts/ Regulations
Universities completed
QAA peer review: 2, 3, 4 UGC
9. Number of universities completed peer Desk study/ survey/
and 5 universities in Year 2, Annual Monitoring UGC QAA Division
review for QAA (cumulative) online
3, 4 and 5 respectively as Report
per QAA Guidelines
Accredited HEIs undertook
at least three QE activities
including one in climate
10. Number of accredited HEIs undertook response as per QE UGC Monitori Desk study/ survey/
Annual UGC QAA Division
QE activities Guidelines (cumulative, no ng Report online
double counting): 20, 30,
40 and 50 HEIs in Year 2, 3,
4 and 5 respectively
HEIs receive PBG as per the
Guideline (cumulative, UGC EMIS
11. Number of HEIs received Performance Desk study/ survey/
double counting): 50, 150, Annual Monitoring UGC, Universities, HEIs
Based Grants (PBG) online
250, 350 and 400 in year 1, Report
2, 3, 4 and 5 respectively
GER (%) disaggregated by UGC to collect
UGC
12. Improved Student GER disaggregated gender in lagging provinces enrolment data in the
Annual EMIS/ Monito UGC
by gender in Lagging Provinces increased: P2 (Total-T/ UGC EMIS Report
ring Reports
Female-F): 5, 7, 8, 10, 12); published every year,
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The World Bank
Karnali (T/ F): 9, 10, 11, 13, and additional

14); Sudurpaschim (T/ F): information as per
10, 11, 12, 14, 15) in year 1, requirement in
2, 3, 4 and 5 respectively the Monitoring Reports
HEIs supported with equity
13. Number of HEIs supported with equity grants as per Manual: 15, UGC EMIS/
Desk study/ survey/
grants in lagging and/or disaster affected 50, 75, 100, 100 in Year 1, Annual Monitoring UGC, Universities, HEIs
online
provinces/ remote regions (cumulative) 2, 3, 4 and 5 respectively Report
(no double counting)
Percentage of HEIs feeding
online data for UGC EMIS UGC
14. Share of HEIs participating in online from total HEIs of the year EMIS/ Monito Desk study/ survey/
Annual UGC, Universities, HEIs
data feeding (cumulative) (no double counting):30, ring Report online
40, 50, 60, 70 in year 1, 2, (UE/MR)
3, 4 and 5 respectively.
Universities pass the Rule
of blended mode of course
delivery and examination:
15. Number of universities passing Rule UGC
2, 3, 5, 7, 8 universities in Desk study/ survey/
for blended mode of course delivery and Annual Monitoring UGC, Universities
Year 1, 2, 3, 4 and 5 online
final examination (cumulative) Report
respectively as per the
standards and policies of
HE digitization
16. Conduction of Beneficiary Satisfaction BSS in Year 1, Year 3 and Year 1, 3
BSS Report Survey UGC
Survey Year 5 conducted and 5
Students benefiting from direct Desk study/ survey/
Annual UE/MR UGC
interventions to enhance learning online
Students benefiting from direct
Desk study/
interventions to enhance learning - Annual UE/MR UGC
survey/online
. Female
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.
ANNEX 3. DISBURSEMENT LINKED INDICATORS, DISBURSEMENT ARRANGEMENTS AND VERIFICATION PROTOCOLS
.
Disbursement Linked Indicators Matrix
DLI_TBL_MATRI X
DLI 1 DLI 1: Labor market-driven autonomous programs, faculty members' training and academic leaders' sensitization
Type of DLI Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount
Process Yes Text 11,000,000.00 16.67

Period Value Allocated Amount (USD) Formula
Baseline Standards, operational policies and guidelines for
faculty competency development and academic
leadership sensitization have not been prepared
July 16, 2021 - July 15, 2022 DLR 1.1: Standards, operational policies and 2,000,000.00 Designed and approved: 100%;
guidelines for faculty competency development Otherwise 0: Rollover: Yes
and academic leadership sensitization designed
and approved
July 16, 2022 - July 15, 2023 -- 0.00 --
July 16, 2023 - July 15, 2024 DLR 1.2: 1,600 faculty members trained and 4,000,000.00 US$ 0.5 mil for a minimum of 200
academic leaders sensitized and US$ 2,500 per teachers
trained/or leaders sensitized
thereafter; Rollover: Yes
July 16, 2024 - July 15, 2025 DLR 1.3: 100 labor market-driven autonomous 5,000,000.00 US$ 0.5 mil for a minimum of 10
programs introduced programs, and US$ 50,000 for each
additional program; Rollover: Yes
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July 16, 2025 - July 15, 2026 -- 0.00 --

DLI_TBL_MATRI X
DLI 2 DLI 2: Collaborative research and entrepreneurship program
Output Yes Text 10,000,000.00 16.67

Baseline No standards, and operational policies and
guidelines for collaborative research and
entrepreneurship programs
July 16, 2021 - July 15, 2022 DLR 2.1: Standards, operational policies and 2,000,000.00 Designed and approved; Other wise:
guidelines for collaborative research and 0; Rollover: Yes
entrepreneurship programs developed and
approved
July 16, 2022 - July 15, 2023 DLR 2.2: 20 collaborative research projects 4,000,000.00 US$ 1.0 mil for minimum of 5
awarded research projects, and US$200,000
for each additional awarded
projects thereafter; Rollover: Yes
July 16, 2023 - July 15, 2024 -- 0.00 --
July 16, 2024 - July 15, 2025 DLR 2.3: 50 entrepreneurs trained and received 4,000,000.00 US$ 1.6 mil for minimum of 20
seed funds entrepreneurs, and US$80,000 for
each additional entrepreneurs;
Rollover: Yes
July 16, 2025 - July 15, 2026 -- 0.00 --
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DLI_TBL_MATRI X
DLI 3 DLI 3: Quality Assurance and Accreditation (QAA) and Quality Enhancement (QE)
Output Yes Text 10,000,000.00 16.67

Baseline 77 HEIs/ Programs accredited/ completed peer
review for accreditation
July 16, 2021 - July 15, 2022 -- 0.00 --
July 16, 2022 - July 15, 2023 DLR 3.1: 50 accredited HEIs undertook at least 2,000,000.00 US$0.8 mil for 20 HEIs, and
three QE activities based on their institutional US$40,000 per HEI thereafter;
development plan (cumulative) Rollover: Yes
July 16, 2023 - July 15, 2024 DLR 3.2: Five HEIs reconstituted as Deemed 3,000,000.00 US$1,200,000 for a min of 2
Universities or equivalent TU Chapters universities or equivalent TU
Chapter and 600,000 per DU or
equiv TU Chapter thereafter;
Rollover: Yes
July 16, 2024 - July 15, 2025 DLR 3.3: Five Universities or Academies have 1,000,000.00 US$400,000 for a min of 2
completed peer review for QAA university/ academies and 200,000
per university/ academy thereafter;
Rollover: Yes
July 16, 2025 - July 15, 2026 DLR 3.4: Additional 220 HEIs/ Program Accredited 4,000,000.00 US$360,000 for 20 HEIs/programs
/ completed peer review for quality assurance accredited or peer review
and accreditation (cumulative 297) (Average completed, and US$18,200 per HEI/
share of accredited HEIs/ Programs to be 50% or program thereafter; Rollover: Yes
above)
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DLI_TBL_MATRI X
DLI 4 DLI 4: Performance Based Grants (PBG)
Output Yes Text 10,000,000.00 16.66

Baseline No standards, operational policies and guidelines
for performance grants
July 16, 2021 - July 15, 2022 DLR 4.1: Standards, operational policies and 2,000,000.00 Designed and approved: US$ 2.0
guidelines for performance grants with enhanced mil, otherwise:0, Rollover: Yes
performance criteria and evaluation methods is
designed and approved
July 16, 2022 - July 15, 2023 -- 0.00 --
July 16, 2023 - July 15, 2024 DLR 4.2: 400 HEIs received performance based 8,000,000.00 US$ 2.0 mil for min 100 HEIs, and @
grants US$ 0.2 mil for each 10 HEIs;
Rollover: Yes
July 16, 2024 - July 15, 2025 -- 0.00 --
July 16, 2025 - July 15, 2026 -- 0.00 --

DLI_TBL_MATRI X
DLI 5 DLI 5: Enrollment of disadvantaged students in lagging and/ or disaster affected provinces and regions
Output Yes Text 10,000,000.00 16.67

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The World Bank
Baseline 7,443 students supported in HERP
July 16, 2021 - July 15, 2022 -- 0.00 --
July 16, 2022 - July 15, 2023 -- 0.00 --
July 16, 2023 - July 15, 2024 -- 0.00 --
July 16, 2024 - July 15, 2025 DLR 5.1: 100 HEIs in lagging and or disaster 4,000,000.00 US$ 1.0 million for min 25 HEIs and
affected Provinces or Remote Regions received @ US$40,000 per HEI thereafter;
Equity Grants Rollover: Yes
July 16, 2025 - July 15, 2026 DLR 5.2: Additional 20,000 higher education 6,000,000.00 US$ 15,000 for min 50 students and
students supported from bottom quintiles @ US$3000 per 10 student up to
(Cumulative) 19,950 thereafter; Rollover: No
DLI_TBL_MATRI X
DLI 6 DLI 6: Online teaching, learning and digitized administration
Process Yes Text 6,000,000.00 8.33

Baseline No standards and operational policies for Higher
education digitization, connectivity, and
implementation procedures
July 16, 2021 - July 15, 2022 DLR 6.1: Standards and operational policies for 2,000,000.00 Designed and approved: US$ 1.5
Higher education digitization, connectivity, and mil, otherwise zero; Rollover: Yes
implementation procedures designed and
approved
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July 16, 2022 - July 15, 2023 DLR 6.2: Share of students registered in courses 2,000,000.00 US$ 1.2 mil for 20% increase
with online/blended teaching methods increased (cumulative 40%), and @ US$
to 50% 80,000 per 1% increase thereafter;
Rollover: Yes
July 16, 2023 - July 15, 2024 DLR 6.3: Digital learning platform and online 2,000,000.00 System established: US$1.5 mil,
administration established at UGC otherwise: 0; Rollover: Yes
July 16, 2024 - July 15, 2025 -- 0.00 --
July 16, 2025 - July 15, 2026 -- 0.00 --

.
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.
Verification Protocol Table: Disbursement Linked Indicators
DLI_TBL_VERIFICATI ON
DLI 1 DLI 1: Labor market-driven autonomous programs, faculty members' training and academic leaders' sensitization
DLR 1.1: Standards, operational policies and guidelines for faculty members competency development and academic
leadership sensitization designed and approved: This DLR is considered achieved when the following conditions are met: (i)
UGC designs and approves the standards, operational policies and guidelines (SOPG) for faculty members competency
development, including pre-service teachers preparation for prospective school teachers, and academic leadership
sensitization in consultation with universities and the World Bank; and (ii) UGC discloses the approved SOPG on its website.
The SOPG would include, among others: (a) design and implementing strategies of faculty training programs on curriculum
development, pedagogy, assessment and examination, digital content development, online/blended delivery, and
knowledge on climate change issues as per the national program; (b) promotion of collaborative academic and research
activities; (c) sensitization of academic leaders on global trends and reforms in higher education management. DLR 1.2:
1,600 faculty members trained and academic leaders sensitized: This DLR is considered achieved when the following
Description
conditions are met: (i) 1,600 faculty members trained and academic leaders sensitized, including pre-service teachers
preparation for prospective school teachers, as per the SOPG. DLR 1.3: 100 labor market-driven autonomous programs
(LMDP) introduced: This DLR is considered achieved when the following conditions are met: (i) the guideline for LMDP of
autonomous nature, including pre-service teachers preparation for prospective school teachers, is passed by the affiliating
universities; (ii) HEIs/programs have approved costed and sustainable human resource development plan; and (iii) 100
LMDP, including pre-service teachers preparation for prospective school teachers, designed and the first cohort students
enrolled as per the LMDP guideline. The guideline will include the provision for: (a) meeting global, national and
regional/local labor market needs; (b) undertaking 2-3 years cycles for program revision based on market appraisals; (c)
setting up labor market feedback system through graduate tracking; and (d) including modules on climate change issues as
per the national program.
Data source/ Agency UGC, Universities, HEIs/ programs
Verification Entity Independent Verification Agency (IVA)
(i) UGC as an implementing agency prepares the DLR achievement report as per the verificaton protocol; (ii) IVA verifies the
achievement report prepared by UGC as per the verification protocol; (iii) UGC submits the achievement and verification
Procedure
reports to the World Bank with a formal letter for reimbursement of the amount allocated for the DLRs; (iv) the World Bank
reviews and confirms the achievement and verification reports; and (v) once confirmed, the World Bank proceeds for the
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authorization for disbursement.

DLI 2 DLI 2: Collaborative research and entrepreneurship program

DLR 2.1: Standards, operational policies and guidelines for collaborative research and entrepreneurship programs
developed and approved: This DLR is considered achieved when the following conditions are met: (i) UGC prepares and
approves the SOPGs for collaborative research and entrepreneurship programs in consultation with universities/HEIs and
the World Bank; and (ii) UGC discloses the approved SOPGs on its website. Collaborative research would include a wide
range of collaborations, including collaborations with industry entities, other research entities, researchers from foreign
universities, and universities in the South Asia region. The SOPG for collaborative research will define, among others: (i)
grant selection criteria and procedure; (ii) grant release procedure; and (iii) monitoring and evaluation. The SOPG for
entrepreneurship program will include, among others: (i) design of entrepreneurial skills training, legal training, financial
education, etc.; (ii) trainee selection criteria and procedure; (iii) competitive selection procedure for seed fund support; (iv)
Description fund release procedure; (v) monitoring and evaluation; and (vi) awareness raising on climate change issues. Business
proposals in the areas of climate change adoption/mitigation shall receive preferential treatments. The SOPG will align with
the GON’s ‘start-up capital credit flow procedure for entrepreneurs’ (2020), and the self-employment program. DLR 2.2: 20
collaborative research projects awarded: This DLR is considered achieved when the following conditions are met: (i) UGC
has awarded 20 collaborative research projects selected as per the SOPG. At least 20% of the awarded projects shall be
related to climate change adaptation/mitigation. DLR 2.3: 50 entrepreneurs trained and received seed funds: This DLR is
considered achieved when the following conditions are met: (i) entrepreneurs trained in the entrepreneurship program; (ii)
trained entrepreneurs received the first tranche of the seed fund as per the SOPG; and (iii) entrepreneurs submitted the
first progress monitoring report of the use of the seed fund as per the SOPG. Entrepreneurs include students, graduates,
and faculty members who participate in the entrepreneurship training program.
Procedure The procedure will follow the same protocol for all DLIs as explained for DLI 1.
DLI 3 DLI 3: Quality Assurance and Accreditation (QAA) and Quality Enhancement (QE)
Description DLR 3.1: : 50 accredited HEIs undertook at least three QE activities: This DLR is considered achieved when the following
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conditions are met: (i) UGC prepares a QE framework/guideline for HEIs to plan and implement quality enhancement
activities; and (ii) 50 accredited HEIs implement at least three QE activities as per their plans, including at least one related
to climate change adaptation/mitigation. DLR 3.2: Five HEIs reconstituted as Deemed Universities: This DLR is considered
achieved when the following conditions are met: (i) five universities/HEIs have their acts passed by the Parliament and
regulatory provision duly approved as per the act. The establishment of TU chapter in different Provinces equivalent to
Deemed university will also be considered in this category. DLR 3.3: Five universities completed peer review for QAA: This
DLR is considered achieved when the following conditions are met: (i) five universities or equivalent institutes/academies
have completed QAA cycle as per the QAA Guidelines, which among others shall include a provision of climate adaptation/
mitigation. DLR 3.4: Additional 220 HEIs/program accredited/ completed peer review for QAA: This DLR is considered
achieved when the following conditions are met: (i) 220 HEIs/programs achieved accreditation or completion of peer review
as per the QAA Guidelines; and (ii) UGC compiles achievement reports with the HEIs/program list and status of
accreditation/ peer review. Among the HEIs/programs claimed for this DLR achievement, those still under the peer-review
completion status cannot exceed 50% (110 HEIs/ programs). There will be no double counting of HEIs/programs at the stage
of accreditation if the HEI/program has been claimed for the completion of peer review.
DLI 4 DLI 4: Performance Based Grants (PBG)

DLR 4.1: Standards, operational policies guidelines for performance based grants designed and approved: This DLR is
considered achieved when the following conditions are met: (i) UGC prepares/ updates and publishes the SOPG for PBG in
consultation with the World Bank; and (ii) UGC circulates the information to HEIs. The performance criteria among others
shall also include provision of climate adaptation/ mitigation as per the national program, and pre-service school teacher
Description preparation for prospective teachers. The performance indicators may also be related with QAA peer review completion/
accreditation and quality enhancement of HEIs. DLR 4.2: 400 HEIs received performance grants: This DLR is considered
achieved when the following conditions are met: (i) 400 HEIs received PBG as per the SOPG; and (ii) UGC compiles data of
performance indicator wise progress of individual HEIs and amount achieved by the HEIs as per the PBG SOPG. HEIs may
receive PBG multiple times in different academic years if they are qualified based on their continued improvement.
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DLI 5 DLI 5: Enrollment of disadvantaged students in lagging and/ or disaster affected provinces and regions
DLR 5.1: 100 HEIs in lagging and/ or disaster affected provinces and regions received equity grants: This DLR is considered
achieved when the following conditions are met: (i) UGC prepares the Equity Grant Manual, which among others shall also
include indicator of climate adaptation, in consultation with the World Bank; and (ii) 100 HEIs from lagging provinces and
regions received equity grants as per the Manual. The lagging and / or disaster affected provinces and regions will be
Description
defined in the Manual. DLR 5.2: Additional 20,000 higher education students supported from bottom quintiles: This DLR is
considered achieved when the following conditions are met: (i) Additional 20,000 students from bottom quintiles received
the scholarship as per the Guidelines for poverty targeting or similar scheme. Students will not be double-counted when
they receive scholarships multiple times over academic years.

DLI 6 DLI 6: Online teaching, learning and digitized administration

DLR 6.1: Standards, operational policies and guidelines for higher education digitization, connectivity, and implementation
procedures designed and approved: This DLR is considered achieved when the following conditions are met: (i) UGC
prepares the SOPG for HE digitization, connectivity and implementation procedures on online/blended learning, assessment
& examination in consultation with universities and the World Bank and publishes on its website. The SOPG may include,
Description among others, the framework (a) for online content development and pedagogy to adjust the curricula; (b) to establish
educational and knowledge sharing networking in collaboration with available national research and education networks
and international educational networks; (c) to create a university/ HEIs level e-learning/ assessment platform and student e-
portfolio; and (d) for sustaining these facilities at UGC/universities and HEIs in term of regular updating of hardware and
human resources. DLR 6.2: Share of students registered in courses with online/blended teaching methods increased to 50%:
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This DLR is considered achieved when the following conditions are met: (i) the percentage of students registered in online
or blended learning methods against the overall students increased to 50%; and (ii) UGC compiles information of HEIs and
number of registered students disaggregated by gender in the online or blended learning method. Courses with blended
learning methods mean academic programs where any part of the students’ educational activities occur on online platforms
or in distance mode. DLR 6.3: Digital learning platform and online administration established at UGC: This DLR is considered
achieved when the following provisions are in place: (i) UGC has developed digital learning platform and online
administration in coordination with universities. Services may include, among others: (a) enhanced online data feeding from
HEIs; (b) sharing of TU central library e-resources and other HEIs; (c) platform for collaboration with national/ international
research and educational networks for resources sharing; and (d) platform for on-line short-term courses and e-courses on
various priority subjects including climate change and entrepreneurship.
.
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ANNEX 4. SUMMARY TECHNICAL ASSESSMENT
1. Program Description and Results Scope. The Government’s 15th Five-year plan (2019–23),
National Education, and Science, Technology and Innovation Policies 2019 have highlighted the education
as one of the contributors for human development to promote growth and attain Nepal MIC status by
2030. The NEHEP with objectives of expanding LMRP, boosting research and innovation, supporting
underprivileged and disaster affected groups, and digitizing higher education will contribute to meet these
objectives. The Program will cover 13 universities and their constituent and affiliated HEIs. The NEHEP will
comprise of Component 1 - Reforms clustered around four RAs, six DLIs and 17 DLRs (PforR); and
Component 2: Capacity Building and Program Management (IPF).
2. Strategic relevance. Nepal is in a unique situation as it currently stands and where it wants to be
in the near future: (a) around 45.6 percent are working population (ages 15–45 years) – youth bulge offers
an opportunity to reap benefits of demographic dividend, and considerable efforts are required to provide
appropriate skills and opportunities to these youth for access to higher earning jobs; (b) the GER is low
(around 14.4 percent) with its labor force participation of around 67.5 percent, while the GER of some
Asian countries are far higher; (c) higher education is insufficient to absorb the growing demand of
secondary education graduates; and barely relevant to the pressing and changing skill needs and in
technical fields; (d) research is weak due to the shortage of qualified faculty members and limited
entrepreneurship; (v) the public higher education sector is underfunded, while the non-government
sector is lacking incentives. Failure to use the window of demographic dividend with appropriate skills will
be detrimental, leading to demographic liability.
3. All these challenges pose a serious threat to the country’s aspiration of moving up to the ladder
to an MIC by 2030 and to a high-income country in 2043. As noted in the NHEP, the small and outdated
higher education sector is unable to transform the country towards a knowledge- and innovation-driven
society. The proposed Program is aligned with the NHEP and addresses major areas of concern. The
Program prioritizes a selective expansion of enrollments in critical fields; upgrading/ updating of curricula;
pedagogy and assessment; equipping of QAA and QE with new tools; and skilling of the academic staff
and leaders with the higher education emerging trends of management, delivery, and development-
oriented research culture. Positive wage-premium associated with higher education is observed in most
countries including Nepal, where the supply of graduates is still low. While the average return to higher
education is around 14.6 percent worldwide and 17.3 percent for South Asia, it is around 17 percent for
Nepal.
4. Technical soundness. Scaling up the higher education as a driving force for growth and
transformation will require reforms on several fronts advocated in the Government policy/programs:
a. Opportunities to study in high-demand productive sectors have to be broadened. University/ HEIs
restructuring will be incentivized–smaller universities for additional programs to achieve the
economy of scale (EOS) and the TU to be downsized with province-level non-affiliating TU, and
smaller colleges will be merged. This will help them better manage, recruit skilled faculty
members, and launch LMRPs including STEM. The Program will also support for more systematic
reliance on e-learning and cater to diverse students, including adults and freshmen living far from
universities/ HEIs. The UGC will facilitate universities’/ HEIs’ collaboration. The NEHEP will
facilitate for a level-playing field to promote increased burden from the non-public sector.
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b. The shortage of qualified faculty members has been a critical factor for research/ knowledge
transformation with a low proportion of PhD-level academics. Efforts will be made for increased
supply of such academics through (i) training of faculty members within HEIs strategic plans, (ii)
extension of excellence-based faculty members recruitment, (iii support to young academics for
postgraduate degrees’ (iv) collaborative research also involving PhD scholars, and (v) incentivizing
of HEIs for PhD programs. Private HEIs will also be supported in upgrading their faculty members
with modern approaches of student-centered teaching and mastering soft skills. The PBG support
will be continued as a good practice observed from the World Bank’s earlier support and
elsewhere. The Program will also encourage cognitive and communication skills including English
in the LMRPs as observed from employers’ surveys world-wide due to the
sophistication/globalization of labor markets.
c. The QAA will be strengthened to maintain/ measure the minimum level of quality performance,
and new QE indicators for transformational changes. While the seeds for such reforms have been
sowed in Nepal, they need to be better rooted institutionally and further nurtured at individual
universities/ HEIs/ programs. The continuation of the PBG will be with improved indicators
including merit-based selection of HEIs’ leadership and faculty members, student-centric teaching
and learning, student and peer evaluation of academic programs, student and faculty mobility,
academia-employer collaboration, digitization, tracking graduates employability, and research
outputs/action researches. The HEIs will also be encouraged to implement self-defined QE
indicators also learning from the global practices. Similarly, the culture of research will be
extended beyond universities to propel innovation and drive Nepal’s economy to an advanced
technological stage as recognized by the new GON Policy 2019. Learning from the earlier projects
and observing the experience of countries, the Program will incentivize collaborative research and
innovation through competitive research grants with additional focus on research
products/commercialization. The research management cells at the HEIs will be further
strengthened for academia-industry collaboration.
d. While the national higher education policy, programs necessary to amalgamate these efforts
toward common economic and social goals, are in place, the PforR will step toward its
operationalization.
5. Lessons Learned from previous World Bank projects. The lessons learned from the two World-
Bank supported projects have been considered. The SHEP (2007–14) initiated key reforms, particularly,
introduction of ‘reform grants’, extension of decentralization and introduction of autonomy,
strengthening of research and accreditation also by establishing two separate divisions at the UGC,
introduction of research grants with additional focus on publications, and poverty-targeted scholarship
support. Important achievements on reform grants were formula-based funding to HEIs against
performance indicators clustered in the areas of governance, quality, relevance, resource generation and
planning, development of strategic plan of HEIs, completion of QAA cycle and tracer studies, enrollment
expansion, student employment within six months of graduation, cost sharing rate, graduation rate,
introduction of new programs, research publication, and improved gender parity and share of
disadvantaged students. Reform grants have helped to create appetite among the key stakeholders to
promote PBG and were foundational in mainstreaming it in all education sub-sectors. The HERP (2015–
2020) initiated RBF (DLIs) and supported the national program. The HERP consolidated and extended
SHEP-initiated reforms and introduced additional reforms on academic autonomy; research publication/
collaboration, and excellence-based faculty members recruitment; gradual shift of QAA to a mandatory
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approach; and introduction of e-learning. Both projects laid the foundation for UGC capacity
strengthening. The SHEP was the first project implemented by the UGC. With the establishment of
Research and QAA Divisions, the UGC collaboration with academia and professional councils has been
expanded. The UGC EMIS section was established and the EMIS report publication was initiated and
continues.
6. Despite progress in some reforms, there are still unfinished agenda in federalism. The key areas
of NEHEP support include, inter alia: improved GER; LMRPs;
improved share of S&T and technical education; TU Fig 4.1: Organizational Structure for Implementation
restructuring; academia-industry collaboration; research,
innovation and product; promotion of indigenous knowledge/
technology; entrepreneurship; support for underprivileged
groups and regions; and climate adaptation/mitigation,
greenpower production, and sustainable development.
7. Institutional arrangements. The UGC with its
Secretariat will be the main implementing agency and the TU
Central office as a subsidiary implementing agency to
implement Tu program under UGC guidance. Other
universities/HEIs will have respective program coordinators to
facilitate implementation and coordination with UGC. The
MOEST will be the supervising entity for overall policy
guidance. The UGC will steer the implementation and its
Secretariat with different divisions/ sections: planning,
monitoring, procurement, financing, and safeguards and will Table 4.1: UGC Higher Education Budget and NEHEP: Base Year
provide overall implementation support with additional TA and Forecasts 2021–2026 (US$ mil)
Budget Head 2020/21* 2020/21-2026-26
under Component 2. Technical support units at the UGC and
Regular (Rec + Dev) 102.69 792.33
TU with additional human resources/experts will provide Recurrent 82.72 638.25
additional support. The TA component will also finance Remuneration (RM) 70.31 542.51
equipment, software, transport, and office furniture for the Development (D1) 12.41 95.74
Development (D2) 19.97 154.08
UGC and TU, and incremental operating costs. (see figure 4.1). Capital Budget (CB) 38.00 293.23
Sub-toal (D1+D2+CB) 70.38 543.04
8. Public Expenditure on Higher Education and
Total (RM+D1+D2+CB) 140.70 1,085.55
Expenditure Framework. The higher education spending as a Program 0.00 57.00
share of GDP (0.53%) or total government expenditure (1.28 Project 0.00 3.00
%) in light of the country’s ambition is low by international Sub-Total (NEHEP) 0.00 60.00
Total Program (UGC+IDA) 140.70 1,145.55
standards. Nepal’s public expenditure per students in higher PforR Boundary 70.38 600.04
education is around 24.2 percent of its GDP per capita, which Total Program 100% 100%
is less than SAR countries.39 While the Federal government has PforR Boundary 50% 52.4%
committed to increase the current share of education budget *Base year
from 10.7 percent40 to 20 percent of National budget by 2030,
the provinces are also establishing province universities with focus on technical education.
9. Budget Structure. In the Program the budget channeled from the MOEST through the UGC to
universities and HEIs is considered as a Program Framework and consists of (a) block grants for staff salary
39 https://data.worldbank.org/indicator/SE.XPD.TERT.PC.ZS. Bangladesh-29.9%, Bhutan: 50.7%, India-49.3%, Sri-Lanka-31.6%

40 Before 2015 Earthquake the share of education budget was around 16.5% while the government commitment was to reach 20% and continues to be the same
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(50%) and academic services (9%), (b) development grants (14%); and (c) capital grant (27%). Spending on
research is more scattered among development grants and capital grants. Universities and public HEIs
also generate internal resources. Community colleges receive GON grants on performance, while private
HEIs do not receive grants. The universities’/HEIs’ internal resources are not included for the PforR. The
resources allocated to overall UGC Program for FY 2020/21 is
Table 4.2: Expenditure Framework
US$140.7 million with salary component of USD 70.31 million Share of
and Development including capital part of USD 70.38 million Budget Heads
total, %
(PforR boundary). The annual growth of the budget is assumed A. University Teacher/Staff salary and
47.4%
Remuneration (Code:26412 A)
as 10 percent considering three factors: (a) estimated annual B. Program Cost 52.6%
national growth of around 6 percent, (b) increase of education B.1 Recurring and Development
27.0%
budget as a share of National budget to 20 percent by 2030, (Code:26412 B.1)
Academic Programs 8.5%
and (c) contribution of provinces. Based on these assumptions Research and Development 2.4%
the funding envelop of PforR boundary and expenditure Quality Assurance and Accreditation and
3.3%
framework are presented in table 4.1 and table 4.2.41 (Also see improvements
Performance Grants 2.7%
Technical Assessment). Equity and Access 3.2%
Digital Development 1.7%
10. Program’s financial sustainability and efficiency.
Others and capacity building 5.2%
The alignment of the expenditure framework with GON B.2 Civil works, Equipment (Code:26422) 25.6%
priorities is evidenced by the increasing trend of education Total Program 100.0%
budget in absolute term and policy commitment of placing higher priority on education with focus on
technical education and RDI. The federal government commitment of increasing the education
budget and provinces support to the higher education is foundational. The average growth in the last
two years before COVID was 7 percent. The GON plans to rebuild the economy also with the support
of IDA and other DPs. The economic trend and the policy commitments gives credence to the GON
priority to ramp up education as a lead factor for human capital development. With such publicity, it is
unlikely that the government will renegade this commitment, even in the case of a resource squeeze.
Indeed, fiscal consolidation remains a challenge on which public spending hinges, and the actual figures
may be revised once Federal/Province Education Acts are streamlined, but without a reversal of the
priorities.
11. The Program implementation would not pose major challenges. The MOEST builds on the PforR
in the school sector and the UGC implemented the national program. The Program will also provide TA
for capacity building. The Program also comprises of performance-based mechanism to the bulk of
allocation. Facilitating non-state HEIs will create a level-playing field for enhanced quality, and maximizing
financing for development. University-industry linkages will spur the involvement of private sector also in
applied, development-oriented research. The various reforms will incentivize universities/HEIs to
generate additional resources. The higher education is also expected to attract more donors.
12. Program Results Framework and M&E. A comprehensive Results Framework will allow the
continuous monitoring of the overall PDOs and various interventions. The set of PDO indicators,
intermediate indicators, and DLIs designed will ensure to implementation of all Program aspects. In
addition to the PAP, remedial actions will also be taken to facilitate implementation.
41 Exchange rate used is NPR117 = US$1
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ANNEX 5. SUMMARY FIDUCIARY SYSTEMS ASSESSMENT
1. An integrated Fiduciary Systems Assessment (FSA) was carried out and covers the FM,
Procurement, and fraud & anti-corruption aspects. In particular, it covers the overall country environment
at policy and implementation levels, the prevailing acts/ rules, planning and budgeting, accounting and
financial reporting, treasury management and funds flow, internal control, and external audits. The FSA
also includes the Program’s institutional arrangement at the implementing agencies such as the MOEST,
UGC, TU, and other HEIs42 (for details see a separate report). The FSA integrates findings in three areas:
a. The FMSs were assessed to determine the degree to which the relevant planning and budgeting,
fund flow, internal control, accounting, financial reporting, and auditing arrangements provide a
reasonable assurance on the appropriate use of program funds.
b. The procurement systems were assessed to determine the degree to which the procurement
planning, bidding, evaluation, contract award, and contract administration arrangements and
practices provide a reasonable assurance that the program will achieve intended results through
its procurement processes and procedures.
c. The governance systems assessed about how the risks of fraud and corruption are managed and
mitigated considering the Government’s commitments under the Guidelines on Preventing and
Combating Fraud and Corruption in PforR Financing (Anti-Corruption Guidelines or ACGs).
Summary of Fiduciary Assessment

2. The FSA assures that the fiduciary systems in Nepal, including in the implementing agencies, have
notable strengths:
a. Sound government budget process on timeliness, classification, and execution control by
Treasury. The system is further enhanced with activity-wise links with the Line Ministry Budgetary
Information System (LMBIS) and Treasury Single Accounts (TSA).
b. Transparency of the budget process with daily budget execution reports published on the
Financial Comptroller General Office’s website and timely production and publication of budget
documents and annual financial statements.
c. The FPFRA introduced better control in terms of planning and budgeting, internal control and
internal audit, fiscal transparency, and so on. Capacity enhancement and emphasis on
independence of internal audit is noteworthy.
d. Several guidelines and standards with respect to internal control, internal audit, and final audit
are in place.
e. A systematic external audit of government expenditures by the Supreme Audit Institution (SAI) –
the OAG and increased capacity of the OAG to conduct other specific audits including the
performance audit.
3. The FSA, however, denotes the following significant fiduciary risks:

a. The UGC and TU institutional arrangement to be enhanced, and FM staff capacity to be
strengthened for improved coordination with HEIs, and monitoring and reporting.
b. Weakness in the internal control framework within the UGC and the HEIs poses a risk that the
World Bank proceeds might be expensed in contradiction with the legal and regulatory
42 The FSA consultations were carried out virtually due to COVID-19 induced travel ban and restrictions for the face to face meetings
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framework. To address this, the internal control guidelines issued by the MOEST should be,
mutatis mutandis, owned up and implemented by the Project implementing agencies.
c. UGC and the HEIs have not developed adequate accounting policy and system.
d. Financial Management System (FMS) in the implementing agencies does not cover all types of
financial transactions and, does not generate general purpose financial statements. Project
financial statements were submitted with delays in the previous IDA-assisted projects.
e. Internal audit is not carried on time as required, and the follow up of its observations is weak.
f. The existing Nepal e-GP system uses opportunities for publications and opening of received bids/
proposals only.
Mitigation Measures
4. While the Program fiduciary systems are generally in line with international standards regarding
the budget process and transparency, the NEHEP PforR addresses the fiduciary risks mainly in two ways:
a. Through DLI-based financing (monetary incentives) by including the DLI on strengthening
governance, fiduciary, data, and capacity, and
b. Through the Program Action Plan (PAP) by integrating key fiduciary measures; and review of the
Financial Management Improvement Action Plan (FMIAP) on a semiannually as a medium for risk
mitigation.
5. Considering the existing weaknesses in the fiduciary systems and the time and effort required to
implement the FMIAP and the capacity-building initiatives, the residual fiduciary risk for the Project is
rated ‘Substantial’.
6. The FMIAP, as a medium for the risk mitigation, suggests the following measures as agreed with
the implementing agencies:
a. Enhancing the Program coordination mechanism among the implementing agencies by
strengthening the UGC Secretariat with the Program Support Unit.
b. The FM staff capacity to be strengthened. An FM consultant-expert shall be hired.
c. The internal control guidelines issued by the MOEST should be implemented by the MOEST and
should be owned up by the UGC and the HEIs with necessary adaptation.
d. The UGC and the HEIs will develop adequate accounting policy and system.
e. The FMS shall be enhanced to cover all types of financial transactions and generate at least
general-purpose financial statements to enable the UGC and the HEIs to submit the project
financial statements timely and reliably.
f. Internal audit shall be carried out regularly, and the its observations will be recorded and resolved
systematically.
g. The UGC and the HEIs shall update records for final audit arrears and will develop the AARAP.
h. While the UGC will have control over fund grants provided to TU and other universities but
reported back to the UGC
i. E-GP will be used for procurement cycle covering publications of procurement plans to awards.
7. Reasonable Assurance. The FSA, applicable to the Program, concludes that the present systems
together with the proposed mitigation measures will meet the requirements of the World Bank’s Policy
for PforR financing dated November 10, 2017 and would be adequate for achievement of the Program
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objectives. The FSA focused on determining whether the systems provide reasonable assurance that the
financing proceeds will be used for the intended purpose
with due attention to the principles of economy, Fig 5.1: Program Planning and Budget Approval Process
efficiency, effectiveness, transparency, and
accountability. The Program uses the country systems for
the FM, procurement, and corruption control, and will
significantly contribute to strengthen the country
systems.
8. Program boundary, expenditure framework

including historical data, fund flow, and reporting. The
Program expenditure as carved out of the NHEP
expenditure and has a total cost of around US$600.04
million, which will be financed by GON financing of
US$543.04 mil and IDA Credit of US$60 million, US$ 57.00
million of which will be disbursed as PforR and US$3.00
million as IPF (also refer annex 4). The Program will be
entirely funded through the GON’s national budget and
will be implemented using the GON’s systems of overall FM: budget preparation and execution, cash
management, accounting, reporting, internal controls, and external audits. The GON’s budget is a
prediction of actual expenditures. The expenditure over budget turned out more than 90 percent in the
UGC over the 3 years from FY 2017/18 to 2019/20. Additional information about the historical data was
collected from the representative universities/ HEIs largely based on their annual audit statements. The
details are presented in the FSA Report. The information collected is: (a) government funding to
universities/ HEIs, (b) income and expenditure status including their internal resources, (c) annual
expenditure over budget allocation, (d) procurement data,43 and (e) governance and anti-corruption
arrangement including CIAA involvement in curbing the corruption. The collected information in the FSA
report provides reasonable assurance that the financial proceeds will be used for the intended purpose.
9. The World Bank proceeds will be transferred to the GON’s consolidated fund maintained at the
central bank – Nepal Rashtra Bank (NRB) – and will fund the execution of the GON’s budget. The program
planning and budget approval process is shown in figure 5.1, while the organizational structure for
implementation is presented in annex 4 (figure 4.1). For details also see the TA and FSA reports.
10. Reconciliation of Program expenditure and separate budget head for the Project. At the end of
the Program, any amount exceeding the total DLI disbursed amount by the World Bank compared to the
total expenditures incurred under the PforR boundary will need to be refunded to the World Bank.
Expenditure codes 26412 B.1 (recurrent conditional grant)44 and 26422 (capital conditional grant) under
the program will be used for the purpose of Program expenditure reconciliation. Contribution of other
DPs if any and large value contract expenditure as include in the Financing Agreement will be excluded in
the reconciliation. There will be a separate budget head for the Project.
43 Procurement data include procurement size, time for bids preparation and evaluation, awards within bid validity, and length of procurement process.
44 This includes total recurring budget under Budget Code 26412 minus the university teacher/staff salary and remuneration.
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ANNEX 6. PROGRAM ACTION PLAN
Action
Description Source DLI# Responsibility Timing Completion Measurement
1.Develop and Fiduciary UGC/ TU Due Date 31-Jul-2021 (a) Both the UGC, TU
improve accounting Systems shall share these documents;
policies, internal (b) An FM Consultant
control guidelines, hired at the UGC Secretariat; (c)
improved financial Procurement staff hired at UGC
administration and TU and retained
rules, updated
audit arrears,
internal audit, FMIS
(b) Hire FM
consultant/
Procurement staffs
2. Use e-GP for Fiduciary UGC, TU Recurrent Yearly e-GP implemented and
procurement and Systems procurement plan uploaded in
upload approved the UGC and respective HEIs
annual websites
procurement plan
in the websites
3. (a) Establish a Environmental UGC Due Date 31-Jul-2021 a) The unit/ subunit will include
dedicated unit/sub- and Social two specialists (E&S) and
unit at UGC; (b) Systems adequate budget; (b UGC
develop strategy shares the strategy; and
for strengthening maintains the the above
capacity of throughout Program
beneficiary implementation
institutions for
mainstreaming E&S
aspects
4. Prepare/ Technical DLI 3 UGC Due Date 16-Aug- UGC prepares the universities
approve/ publish 2021 QAA Guidelines
Guidelines for
universities QAA
5. Upgrade/ Technical DLI 6 UGC Due Date 16-Aug- A Video Conferencing system
strengthen UGC 2021 and Learning Portal is
networking for functional at UGC
online system
support
6. Hire an Technical UGC Due Date 16-Aug- UGC hires the IVA as per the
independent DLI 2021 agreed TOR
Verification Agency
7. Develop/ Environmental UGC Due Date 30-Sep- UGC-wide guideline/
implement a and Social 2022 framework developed and
guideline / Systems approved
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framework for
managing E&S risks
in HE program
8. Prepare capacity Technical UGC Due Date 30-Sep- UGC prepares/ updates the CBP
building plan (CBP) 2021 in the AWPB annually starting
of UGC with budget FY 2021/ 22
allocation
9. Prepare various Technical UGC Due Date 30-Sep- Guidelines: PBG, Digital
guidelines for the 2021 Development; PMT based
NEHEP Operations support; Equity Grants to HEIs
10. Upgrade and Technical DLI 6 UGC Due Date 31-Dec- Web-based EMIS operational at
Implement Web- 2021 UGC
based EMIS
software
11. Prepare/ Technical DLI 3 UGC Due Date 31-Dec- UGC prepares the list and
publish a 2021 implementation framework/
framework/ guidelines of QE activities and
guidelines of QE implementation arrangement
12. Develop and Environmental UGC Due Date 31-Dec- UGC develops/ shares:
implement and Social 2021 sensitization/ awareness
programs to Systems programs, code of conducts for
address grievance UGC/ HEIs, GRM, and SEA/ SH
redressal risk mitigation measures, and
mechanism (GRM) prepares implementation
and SEA/SH risk progress every June/ December
mitigation thereafter
13. Conduct Technical UGC Other June and SC with policy makers,
stakeholder December academics, employers and
consultation (SC) every year students. UGCV publishes SC
and feedback report semi-annually review
activities on key meetings (SARM)
reforms
14. Revise and Technical UGC Other June and UGC prepares M&E flash report
implement the UGC December in SARM and a consolidated
M&E plan annually every year M&E report annually
15. Prepare the Technical UGC Due Date 31-Mar- The CRF with with
NHEP climate 2022 implementation arrangement
resilient framework in place
(CRF)
16. Complete Fiduciary UGC/ TU Other December UGC shares the Report
fiduciary reviews in Systems 2022, 2024
FYs 2022, 2024 and and July
2026 2026
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ANNEX 7. SUMMARY ENVIRONMENTAL AND SOCIAL SYSTEMS ASSESSMENT
1. The Environmental and Social Management System Assessment (ESSA) has been carried for the
Program to ensure consistency with six core principles outlined in the World Bank’s Operational Policy
9.00 - Program-for-Results Financing. The ESSA process is a multistep methodology in which the Bank
team (a) analyzed the E&S effects, including indirect and cumulative effects, of activities associated with
the defined Program; (b) analyzed the borrower’s systems for managing the identified E&S effects,
including reviewing practices and the performance track record; (c) compared the borrower’s systems—
laws, regulations, standards, procedures, and implementation performance—against the core principles
and key planning elements to identify any significant differences between them that could affect Program
performance; and (d) recommended measures to address capacity for and performance on policy issues
and specific operational aspects relevant to managing the Program risks. The ESSA process included
extensive stakeholder consultations and disclosure of the ESSA Report following the guidelines of the
World Bank’s Access to Information Policy.
2. Program activities are not expected to have significant adverse environmental footprint, if the
program activities such as minor civil works, installations of ICT equipment/tools for digitization, and so
on. and are well managed. It is envisioned that under the Program minor civil works such as annex
buildings, laboratories, and rehabilitation and upgrading of existing buildings will be supported. In
addition, support will be provided to the institutions in improving and extending digital connectivity and
purchase of digital equipment. Solid waste management is an issue in the country and there is no separate
policy on e-waste management. Impacts are also expected to be moderate since the civil works will be
confined to existing premises of the recipient institutions. These risks and impacts are expected to be site
specific, limited in number, and can be mitigated with measures that are readily identifiable.
3. The program does not entail any land acquisition, resettlement or restriction of access to
livelihoods, as all proposed activities will take place within existing structures and sites/campus premises.
Therefore, no physical or livelihood related impacts are anticipated. A risk of exclusion of vulnerable and
disadvantaged groups from the benefits and opportunities provided by the project may arise, particularly
for the socially excluded, vulnerable, and those from lagging provinces. There may be risks of students not
knowing about the Program, or not getting adequate information, and thus being excluded from the
underprivileged criteria in accessing scholarships. Vulnerabilities and risks of SEA/SH have also been
distinctly identified. Due diligence, as part of the ESSA, was done to assess the institutional capacity to
address SEA/SH related risks.
4. The ESSA concluded that, in general, the rules and regulations of environmental and social
management system of the Government applicable to the proposed PforR are consistent with the World
Bank PforR Policy and Directive, but the capacity to effectively enforce certain regulations, especially at
province and the local level of universities and HEIs should be improved. The main areas of bottlenecks
are institutional capacity building, effective monitoring and timely reporting of compliances and non-
compliances, allocation of adequate human resources and budget. With regard to OHS it was found that
Nepal lacks adequate government policies, laws, management initiative, corporate culture and eventually
willingness of employees to work safely and does not meet the World Bank’s Environmental, Health and
Safety Guidelines. Similarly, the Government ‘s laws and regulations to avoid use of child and forced labor
in the implementation of program activities exists however, its enforcement is weak mainly due to lack of
56
The World Bank
awareness among the relevant authorities on the need to protect labor and weak capacity of the federal
and sub-national governments to monitor at site.
5. Nepal lacks legal provision on e-waste in managing e-waste which will be generated from use of
ICT equipment/items and so on for digitization although it is expected to be minimal. There are legal and
policy frameworks as well as Government commitment to gender and social inclusion in the higher
education sector; however, there is still risk of exclusion due to lack of clear strategy to mainstream
gender and inclusion strategy and stakeholder engagement.
6. The assessment also identified key measures to strengthen system performance for
environmental and social management and selected actions are included in the Program Action Plan
(PAP). The key actions identified in the PAP are the following: (a) the UGC/MOEST to develop and
implement guidelines to cover the E&S aspect including gender and social inclusion, stakeholder
engagement, GRM, labor standards, and OHS and so on; (b) the UGC to establish a dedicated E&S unit
with adequate staffing and budget; and (c) the UGC to develop strategy for strengthening capacity of
beneficiary institutions for mainstreaming E&S aspects in the higher education sector. Mitigation
measures for SEA/SH such as sensitization and strengthening of existing institutional mitigation and
reporting mechanisms for all institution staffs, teachers, and management have also been included in the
PAP.
7. Extensive consultation with stakeholders was carried out during the ESSA preparation and on the
draft ESSA. Findings of the ESSA and proposed actions plans were discussed with a wide range of
stakeholders. Key concerns raised by the stakeholders were related to risk of exclusion of vulnerable
groups particularly people with disability , women and indigenous peoples community due to various
factors such as language barrier, special needs of persons with disabilities, lack of disaggregated data,
inadequate consultations with vulnerable groups, and lack of specific guidelines with the UGC for E&S
management and staffing. The ESSA has been revised to incorporate the feedback and suggestions
received through stakeholder consultations. The UGC and MOEST will be responsible for the
implementation of the PAP.
57
The World Bank
ANNEX 8. IMPLEMENTATION SUPPORT PLAN
1. The proposed implementation support plan (ISP) considers the Program-specific challenges, risks,
and the lessons learned from earlier projects implemented by the UGC under the MOEST. The ISP strategy
is based on several mechanisms that will enable enhanced and on-time support, effective monitoring of
results and guidance to the implementing agencies on technical, fiduciary, and E&S aspects and comprises
(a) technical support, (b) joint reviews, (c) regular technical meetings and field visits, (d) progress reporting
on DLI achievement, (e) M&E, and (f) harmonization among key stakeholders. The World Bank’s
implementation support will broadly consist of (a) capacity-building to strengthen the ability to implement
the Program, covering the technical, fiduciary, and social and environmental dimensions; (b) technical
advice and implementation support geared to the attainment of the PDOs, DLIs, and IRIs; (c) monitoring
of implementation progress, including regularly reviewing key outcome and intermediate indicators, and
identification of bottlenecks and mitigation measures; and (d) review and verification of DLI progress
following agreed protocols. The World Bank team will be composed of a country-based task team leader
and regional and HQ-based co-TTLs and specialist staff for cross-support, and consultants for additional
support in policy dialogue on key reforms, governance, fiduciary, and safeguard management.
Table 8.1: Main Focus of Implementation
Partner
Time Focus Skills Needed Resources Estimate
Role
Technical Reform areas: launching LMRPs; Specialist: teacher training; Will be
review/support for teacher/ leaders’ collaboration; and worked
policy dialogue and training/sensitization; research, governance/QAA/ QE; out once
First 12 months
finalization of entrepreneurship; digitization; procurement; and FM; the

standards, guidelines; governance, QAA/ QE; improving economist (each 4 weeks); E&S; interested
fiduciary and poverty targeting system; supporting M&E (each 3 weeks); TTLs/ co- partners
safeguards training and HEIs in lagging regions; improving TTLs (20 weeks); policy dialogue join for
supervision; other fiduciary and safeguard (15 weeks); operation support
supports according to management; strengthening UGC coordination/ support (10
needs EMIS, M&E, and reporting weeks)
Technical review/ Technical; M&E; procurement; FM; Specialist for review and MTR:
support for policy institutional; and E&S teacher training (6 weeks);
dialogue and updating collaboration (6 weeks);
of standards, Governance/QAA/QE (12
12-48 months
guidelines; fiduciary weeks); M&E (12 weeks);

and safeguards procurement and FM (16 weeks
training, supervision; each); E&S (12 weeks each);
MTR, evaluations; and economist (18 weeks); TTLs/ co-
other support TTLs (108 weeks); Policy
dialogue (30 weeks); Operation
coordination/support (10
weeks)
Table8.2: Task Team Skills Mix Requirements for Implementation Support

Number of Staff Number of
Skills Needed Comments
Weeks Trips
TTL/ Co-TTLs, education specialist, M&E, Reform Governance and Two trips
Management specialist; FM/ Procurement Specialist; safeguard 306 120 per son per
specialists year for 5
Administrative Support 100 10 years
58
The World Bank
ANNEX 9. INVESTMENT PROJECT FINANCING COMPONENT
1. The IPF component of the NEHEP will support program management and M&E activities, and
provide key capacity building of the higher education stakeholders. The IPF component will have a
budget allocation of US$3 million and finance the costs of project activities including, but not limited to,
the following.
Table 9.1: Program Management and Capacity Development Activities under the IPF Component
Activities Indicative Description

Costs
Hiring of technical US$1.00 The UGC and subsidiary implementing agencies will hire an adequate number of
specialists, assistants and million technical specialists/ other assistants based on the needs to (a) strengthen the existing
staff under non-consulting program implementation/monitoring capacity and (b) provide necessary technical
services capacity for the achievement of program results. International specialists may be
sourced to bring in international expertise.
Technical specialists may include, among others, procurement/FM specialists, E&S
safeguard specialist, M&E specialist, ICT/EMIS specialist, HR specialist, QAA/QE
specialist, program management and coordination specialist, entrepreneurship
specialist, and other needs-based specialists including under non-consulting services.
Recruitment of an US$0.50 The UGC will recruit an IVA for third party verification and reporting of DLI
Independent Verification million achievements
Agency (IVA)
Purchase of goods and US$0.50 The UGC and the subsidiary implementing agency will purchase necessary goods and
services for the operation million services to ensure the smooth operation of the offices. Goods and services to be
of the UGC Secretariat and procured would include, but not be limited to, (a) office equipment and
TU Central Office furniture/fixture for the implementing agencies office support, (b) internet
connectivity and devices, and (c) other consumables.
Surveys, evaluation US$0.50 The UGC will commission various surveys, evaluation studies, and needs assessments
studies, and needs million for the effective implementation and evaluation of the reform actions as explained in
assessments the PAP and according to needs which will be further agreed upon in subsequent
review missions and MTR. Three rounds of beneficiary feedback surveys will be
commissioned.
Knowledge sharing, US$0.50 The UGC will organize knowledge sharing sessions and consultation workshops to
regional and international million gather knowledge and disseminate good practices to higher education stakeholders.
exposures Regional and international exposure visits will be organized in consultation with the
World Bank and with the Ministry of Finance concurrence to gain knowledge about
current good practices and technologies in other countries in the region and beyond.
2. Implementation arrangements. The UGC will be the main implementing agency for the IPF. The
UGC will provide project management and M&E support to strengthen the capacity of TU and other HEIs.
The UGC will also be responsible for the fiduciary, safeguard, and other requirements of the IPF.
59
The World Bank
3. FM. The major risks are the lack of adequate coordination among implementing agencies,
financial management (FM) staff capacity, internal control framework within the UGC, and accounting
policy and system. The FMS does not generate general purpose financial statements. It is noted from the
earlier experience that the project financial statements are not submitted timely. Internal audit is delayed
for FY 2019/20. The UGC has not maintained adequate records for final audit arrears and the audit
observations are not adequately addressed. Development of a FMIAP and its review at regular intervals
will further help strengthen the fiduciary system. The FM staff capacity will be strengthened, and the
internal control guidelines will be developed for the UGC. To upgrade the accounting system, the UGC will
develop adequate accounting policy and system. Interim Unaudited Financial Reports (IUFRs) shall be
submitted to the World Bank on a quadrimester basis within 45 days from the end of the respective
quadrimester. The UGC shall coordinate with all sub-implementing agencies for collecting, consolidating,
and submitting IUFRs.
4. Fund flow and disbursement arrangement. The GON fund flow will be channelized from the
District Treasurer Comptroller Office to the UGC. The UGC will arrange the fund flow to TU (subsidiary
implementing agency) as grants. The reimbursement will be based on SOE. The borrower will utilize part
of the Project expenditure for the implementation preparation and capacity building starting January 2021
as a retroactive financing.
5. Procurement. The procurement for consulting services, works, goods, and non-consulting
services under IPF component of the program will follow the Procurement Regulations for Borrowers (July
2016, revised November 2017). The UGC has prepared procurement activities/ strategy using a simplified
form of the Project Procurement Strategy for Development (PPSD) and also an initial procurement plan of
first 18 months.
6. Audit. It is agreed that internal audit will be carried out regularly. There is no outstanding external
audit for the implementing agencies. The external audit of the Project carried out by the OAG shall be
submitted within nine months from the end of the fiscal year. The audit observations both of internal and
external audits will be recorded and resolved through AARAP.
Environmental and Social Safeguard
7. Four of the World Bank’s ESS (ESS1, ESS2, ESS3, and ESS4)45 are relevant in managing E&S risks and
impacts of the project. The E&S risks and impacts from the IPF component are rated low mainly due to:
low amount of e-waste from the use of ICT equipment, risk of community being affected due to COVID-
19 and health and safety issues related to workers, contracted workers, and workers hired by project
suppliers and possibility of exclusion of individuals and businesses with low IT literacy.
8. To integrate the E&S risks within the TA design, before initiation of any TA-supported procurement
and/or activity, the borrower shall conduct an ESA: prepare E&S screening checklists before
implementation in accordance with the World Bank’s ESS1, ESS3, and any corresponding national
legislation. The TA activities with potential E&S risks and impacts identified during screening, will be
included in the terms of reference of the activity and addressed in the activity output and management
measures, including stakeholder engagement and consultations. Any risks or vulnerabilities identified
during screening related to GBV, SEA/SH, and VAW will be addressed through mitigation measures.
45ESS1Assessment and Management of Environmental and Social Risks and Impacts, ESS2 Labor and Working Conditions, ESS3 Resource Efficiency and Pollution
Prevention and Management and ESS4 Community Health and Safety.
60
The World Bank
9. A Stakeholder Engagement Plan has been developed to promote broad, inclusive stakeholder
engagement and participation at all critical phases of the TA. Labor Management Procedures for direct
workers is embedded in the E&S Commitment Plan, which has also been prepared by the implementing
agencies.
61
The World Bank
ANNEX 10. SUMMARY CLIMATE CO-BENEFITS
Vulnerability Context
1. Nepal is periodically affected by heavy monsoon rains resulting
in landslides, debris flows, seasonal floods, and flash floods. This causes Table 10.1: Climate related fatalities &
casualties and economic loss every year (table 10.1).46 Nepal also lies losses (2017/18)
in a highly seismic-prone zone and still recovering from the magnitude Disasters
Deaths US$,
7.8 earthquake in April 2015 and its aftermath tremors. Regular ground (people) (millions)a
shaking makes the hill slopes less stable and more prone to landslides Flood 183 0.52
during monsoons. Rampant excavation at the hill slopes for road tracks Landslide 161 1.64
Lightning 160 0.13
and supply of construction materials from riverbeds, and hills, have Fire 150 55.00
further increased the vulnerability of landslides. These have also Heavy rainfall 30 0.76
resulted in drying out natural water sources for the local people. Windstorm 19 0.44
Frequent landslides block the mountain rivers contributing to Landslide Total 703 58.40
Note a. Exchange rate: NPR 117 = US$1.
Dam Outburst Flood (LDOF), and also the Glacial Lake Outburst Flood
(GLOF) hazard47 resulting from glacier melting due to global warming.
Landslides and floods also result in epidemics and interruption of the supply chain of essential
commodities and services such as food, water supply, and sanitation system every year. Closure of schools
and colleges resulting in learning loss also bring long-term negative impact on human capital
development.
2. Around 70 percent of Nepalis rely on subsistence level agriculture and livestock farming and most
of them use traditional energy sources such as firewood, animal dung, and crop residual as energy sources
for cooking. This has serious environment and health risks,
Table 10.2: Green Power Production Baseline and targets
especially for women and children, and is a major challenge Baseline, Target,
for rural poverty reduction strategies (PRS). The smallholder Category Unit
2019 2030
farmers are also significantly affected due to climate change Hydropower MW 1,128 5,000.0
such as flood, landslides, thunderbolt, fire, cold wave, and Wind energy MW NA 10.0
Solar energy MW NA 13.0
heavy rainfall etc.48
Micro-hydro MW NA 125.4
HH
Specific Intent Biogas plant Biogas
3. The GON has established a National Disaster Risk Plant NA 200,000.0
Reduction and Management Authority (NDRRMA) under the Improved cooking Numbe
stoves r NA 500,000.0
Ministry of Home Affairs (MOHA) as per the Disaster Risk Establish 500 larger
Reduction and Management Act, 2017 (DRRMA), the biogas plants for Metric
National Policy for Disaster Risk Reduction 2018 (NPDRR), liquid petroleum Ton NA 40,000.0
and DRR National Strategic Plan of Action (DRRSPA) 2018– gas production
2030 with focus on four key priority areas: (a) understanding
disaster risk; (b) strengthening disaster risk governance at federal, province, and local levels; (c) promoting
comprehensive risk-informed private and public investments for resilience; and (d) enhancing
preparedness for effective response and to “build back better”.49 The MOHA has been publishing the
46 http://drrportal.gov.np/uploads/document/1594.pdf
47https://www.nepjol.info/index.php/AV/article/view/12360
48 http://drrportal.gov.np/uploads/document/1594.pdf
49 Recovery, Rehabilitation and Reconstruction
62
The World Bank
Nepal Disaster Report (NDR) annually and the 2019 report informs, among others, (a) disaster impacts
and responses: damage, loss, and recovery status due to various types of disasters; (b) DRM initiatives:
(i) DRM legislations and policy development, (ii) sectoral impacts and recent key results achieved, (iii)
preparedness in terms of resources and capacity as a three-level responsibilities in federal set up; and (c)
Nepal’s international commitments. ‘Green power for prosperity’ is also one of the priorities of the
Government in the 15th five-year plan (table 10.2).
4. The program will address the above-noted climate-related issues through climate adaptation and
mitigation actions across RAs.
Table 10.3: DLI with Climate Action Matrix

Disbursement Climate Actions
Linked Indicator
DLR 1.1 Mitigation. The faculty development and leadership sensitization program will include
(US$2 million) contents on climate change mitigation (such as energy conservation, campus activities to
reduce greenhouse gas emissions) in the training material and guidelines.
DLR 1.2 Adaptation: The faculty development and leadership sensitization program will include
(US$4 million) contents on climate change adaptation in the training material and guidelines.
The program will also train faculty members on protocols to prepare for and cope with
climate-induced disasters, such as floods and landslides.
DLR 1.3 Mitigation. All market-relevant programs will include contents on climate change mitigation,
(US$5 million) such as causes of climate change, activities to reduce greenhouse gas emissions, and energy
conservation techniques.
Adaptation. All market-relevant programs will include contents on climate change adaptation,
such as local impacts of climate change and flood responses.
DLR 2.1 Mitigation. Collaborative research projects will possibly address: (a) researches on sustainable
(US$2 million) energy, including renewable energy or energy efficiency technologies, or low-carbon
technologies; (b) climate change research on solutions for reducing greenhouse gas emissions,
DLR 2.2 low-carbon transport, afforestation, and bio-engineering; and (c) environmental analysis for
(US$4 million) reducing greenhouse gas emissions, sustainable eco-tourism, and so on.
Adaptation. Collaborative researches will possibly address researches to reduce the
vulnerabilities to increased risk of flooding and landslides, including sustainable water
management, sustainable agriculture management, and eco-friendly tourism management.
The guideline will define that at least 20% of supported research grants will be for collaborative
researches for climate mitigation and adaptation and assign greater scores to such research
topics in the selection criteria to promote researches for the above-mentioned climate
mitigation and adaptation technologies.
DLR 2.3 Mitigation. The entrepreneurship seed funds will promote the business start-up and
(US$4 million) commercialization of technologies and services for climate mitigation: (a) engineering solutions
to reduce greenhouse gas; (b) renewable energy such as solar, biofuel, wind power; (c)
agricultural technologies and bio-engineering for capturing greenhouse gas; (d) sustainable eco-
tourism; and (e) information technologies for energy efficiency.
Adaptation. The entrepreneurship training will include climate adaptation contents to address
climate vulnerability and enhance the resilience and continuity of business practices for
entrepreneurs.
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The World Bank
Disbursement Climate Actions

Linked Indicator
DLR 3.1 Mitigation and adaptation. QAA and QE guidelines and implementation will include KPIs for
(US$2 million) enhancing climate mitigation and adaptation actions at HEIs: (a) installation of renewable
DLR 3.3 energy facilities and energy efficiency improvement (for example, solar panels, recycling depot,
(US$1 million) and rain harvesting and so on); (b) environmental audits of campus facilities; (c) share of courses
that teach climate mitigation and adaptation contents (impacts and causes of climate change,
DLR 3.4 energy conservation techniques, disaster preparedness, and so on); and (d) community
(US$4 million) awareness raising for climate change issues.
DLR 4.1 Mitigation and adaptation. PBG guidelines and implementation will include performance
(US$2 million) assessment criteria to enhance climate mitigation and adaptation at HEIs: (a) climate-resilient
DLR 4.2 and energy-efficient campus facilities (for example, increase in the use of solar panels, recycle
(US$8 million) system, and so on) (b) share of courses that teach climate mitigation and adaptation contents
(impacts and causes of climate change, energy conservation techniques, disaster preparedness,
and so on); and (c) the number of researches on climate mitigation and adaptation methods
and environmental technologies.
DLR 5.1 Adaptation. HEIs in lagging regions supported with equity grants will include action for climate
(US$4 million) change adaptation as a mandatory activity in their program (for example, conducting energy
audit, climate-induced disaster risk assessment of campus, preparation of evacuation protocol
for emergencies, community awareness raising activities to raise disaster preparedness,
landslide control and prevention, and so on)
DLR 5.2 Adaptation. Beneficiary students of poverty-targeted scholarship programs will receive a
(US$6 million) sensitization information package and leaflets on climate adaptation during the selection
process (for example, local impacts of climate change, energy conservation, and flood/landslide
responses).
DLR 6.1 Adaptation: The digitization guidelines will promote the adoption of resilience technologies (for
(US$2.0 million) example, hosting on the secure integrated national data center* or private cloud/online
services) for management systems and online learning platforms to ensure continuity of
DLR 6.2 information services and online/blended learning during disaster events.
(US$2 million) Universities/HEIs will use the secure integrated national data center or private cloud-based
services to establish online learning platforms to ensure the continuity of online/blended
education services during climate-induced disasters.
*The Government Integrated Data Center established with data recovery capacity
DLR 6.3 Adaptation. The UGC will strengthen the data recovery and backup systems of EMIS on the
(US$2.0 million) secure national data center to prevent data loss in the event of disasters
64

Nepal Nurturing Excellence in Higher Education Program For Results Project

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INTERNATIONAL DEVELOPMENT ASSOCIATION

PROGRAM APPRAISAL DOCUMENT

IN THE AMOUNT OF SDR 41.8 MILLION

NURTURING EXELLENCE IN HIGHER EDUCATION PROGRAM-FOR-RESULTS

May 21, 2021

Education Global Practice

(Exchange Rate Effective April 30, 2021})

Currency Unit = Nepalese Rupees (NPR)

NPR 118.00 = US$ 1

US$ 1.43 = SDR 1

ABBREVIATIONS AND ACRONYMS

AARAP Audit Arrears Resolving Action Plan

Regional Vice President: Hartwig Schafer

Country Director: Faris H. Hadad-Zervos

Regional Director: Lynne D. Sherburne-Benz

Practice Manager: Mario Cristian Aedo Inostroza

Nepal Nurturing Excellence in Higher Education Program for Results

Does this operation have Environmental and Social Risk

Financing & Implementation Modalities

[ ] Contingent Emergency Response Component (CERC) [ ] Fragile within a non-fragile Country

[ ] Alternate Procurement Arrangements (APA) [ ] Responding to Natural or Man-made Disaster

[ ] Hands-on Enhanced Implementation Support (HEIS)

Expected Project Approval Date Expected Closing Date

Proposed Program Development Objective(s)

Implementing Agency : Ministry of Education, Science and Technology

Contact: The Secretary, Ministry of Education, Science and Technology

COST & FINANCING

Government program Cost 1,145.55

Financing (USD Millions)

International Development Association (IDA) 60.00

IDA Credit 60.00

IDA Resources (in US$, Millions)

Credit Amount Grant Amount Total Amount

Nepal 60.00 0.00 60.00

National PBA 60.00 0.00 60.00

Expected Disbursements (USD Millions)

Climate Change and Disaster Screening

SYSTEMATIC OPERATIONS RISK-RATING TOOL (SORT)

Risk Category Rating

Does the program require any waivers of Bank policies?

Legal Operational Policies

Projects in Disputed Areas OP 7.60 No

E & S Standards Relevance

Stakeholder Engagement and Information Disclosure Relevant

Labor and Working Conditions Relevant

Resource Efficiency and Pollution Prevention and Management Relevant

Community Health and Safety Relevant

Biodiversity Conservation and Sustainable Management of Living Natural

Financial Intermediaries Not Currently Relevant

Sections and Description

Sections and Description

Sections and Description

Sections and Description

1 Central Bureau of Statistics, 2011

B. Sectoral (or Multi-Sectoral) and Institutional Context

13 Based on UGC EMIS 2018/19

C. Relationship to the CPF and Rationale for Use of Instrument

II. PROGRAM DESCRIPTION

Key Challenges Operation Interventions Intermediate Outcomes PDO Outcomes Long-Term

C. Program for Results (PforR) Program Scope