Background | Goal | Objectives | Technical Supports

Background

In the context of rapidly growing urbanization process and at the same time financial, technological and administrative deficiencies at the municipal levels, HMG/Nepal in accordance with the Development Board Act, 1956 had established Town Development Fund (TDF) in February 1988 with a view to assist the municipalities in their efforts of overall development. Realizing the very crucial and remarkable role-played by the TDF in urban development sector within eight years since its inception period, HMG/Nepal in view of developing the Board as an autonomous, self reliant, much productive and an efficient financial institution promulgated a separate Act named Town Development Fund Act, 1997. The Act has provided TDF with more autonomy, discretionary power and authority in various fields. The TDF has the following inbuilt social development features:


A.	Loan triggered urban infrastructure growth - supplemented by grants in appropriate situation.

B.	Focus on need-specific capital projects to be undertaken by municipalities compatible with their technical and commercial capabilities.

C.	Linkage with matched contributions by municipalities based on the current revenue generating capability and capacity.

D.	Upgrading of organizational capability of the municipalities through

	I	Development of long-range perspective and strategy for urban infrastructure development;

	II	Prioritization and sequencing of their competing community needs;

	II	Enhancement of their capability to identify capital projects, work out the technical and economic details and plan and execute such projects within budgetary constraints, and

	III	Optimization of the use of scarce resources through innovation and improvisation appropriate to local circumstances.

Goal

The overall goal of TDF is the alleviation of economic and social poverty in urban sectors through long term financing in social infrastructure and revenue generating projects.

Objectives

The objectives of TDF includes:


A.	the improvement of basic infrastructure and delivery of public and institutional services in the urban areas through the provision of long term financing for priority social infrastructure and revenue generating projects;

B.	strengthening the technical, managerial and financial capability of the municipalities for identification, implementation and evaluation of urban development projects as well as promoting of institutions related to urban development.

C.	The improvement of financial and managerial capacities of other institutions emerging in urban sectors and aiming for social development through the provision of long term financing.

The objectives as said above are very much relevant in view of the need for providing financial and technical support to the municipalities in the form of loans and grants. However, its objectives and Act permits for doing much more other activities and extending assistance to other emerging urban centers in Nepal not only limiting to the municipalities.

Technical Support

In its initial years of existence, TDF was financed from three sources, viz.

an equity provided by HMG/N
a credit from the International Development Association (IDA) / The World Bank
a grant from the German Agency for Technical Cooperation (GTZ) / udle project

From the so obtained funds, TDF provided loans and soft loans for social infrastructure and income-generating projects, soft loans for small income-generating projects in low-income municipalities and grants for projects in among others the sectors of sanitation, environment and education, besides for designs and studies as well as supervision of construction.

From 1995 to till date TDF has been financed from following sources viz:

•	A grant from the German Development Bank "Kreditanstalt für Wiederaufbau" for KfW I phase programme (1995-2000)

•	A grant from German Development Bank "Kreditanstalt für Wiederaufbau" for KfW II phase programme (2001- June 2005)

•	A credit from Asian Development Bank to finance Water Users and Sanitation Committees WUSCs) of Small Town Water supply and Sanitation Support Programme (STWSSSP) ( 20 years onwards from March 2001)

•	A credit from Asian Development Bank to finance Towns/Municipalities on onlending for the parts of Urban Environmental Improvement Programme (UEIP) ( 20 years onwards from June 2003 with 5 years grace period)