Road development is fundamental to boosting economic activity in Nepal and is a key element for strengthening growth and social inclusion. To improve road capacity along Nepal's trade routes, the Asian Development Bank (ADB) has undertaken the Subregional Transport Enhancement Project. The project, committed in 2011, also connects major roads to rural communities in northeastern Nepal.

This case study, undertaken by ADB and published on the ADB website, looks at how the transport project is improving access to goods and services, facilitating trade and cooperation, creating opportunities for small business owners, and empowering women in rural communities.

Roads Enhance Connectivity and Create Opportunities in Isolated Hills in Nepal

"Now that my once sleepy village has turned into a bustling town, I wish I could be young again," says 71-year-old Narendra Mani Shrestha, a resident of Chainpur municipality in northeast Nepal.

Mr. Shrestha, the owner of a small shop of ready-made garments and other daily essentials, recalls his childhood years when Dharan, a town in eastern Nepal, used to be the nearest and only major market center that offered health and other services. "We had to travel on foot for 3-4 days to reach Dharan where we would purchase our daily essentials. Now that journey can be covered in about 5 hours," says Mr. Shrestha.

Providing access to goods and services

For landlocked Nepal, roads are a critical lifeline that transports 90% of passengers and goods. Poor road connectivity limits access of remote communities to markets, economic opportunities, and social services.

"Maintaining and improving roads is crucial to give people quick access to goods and services," says Bhupendra Bhatta, ADB’s senior transport officer for Nepal. "Investments in improving road and related infrastructure have been an important part of the Asian Development Bank’s (ADB) strategy in Nepal to reduce poverty and support economic growth."

Promoting trade and cooperation

For example, ADB has supported the government in upgrading about 310 kilometers (km) of roads under the Subregional Transport Enhancement Project (STEP). The project provided $49-million support ($24.5 million loan and $24.5 million grant) in 2010 and was completed in June 2017. It has expanded road capacity of major trade routes and provided rural communities in the northeast with a north–south link to the east–west highway, one of Nepal's main trade corridor routes. The north–south link has also become a major transit route connecting India to the People's Republic of China (PRC).

The upgraded road—43.5 km from Chainpur to Khadwari and the road that goes from Khadwari all the way to the PRC border, Kimathanka village, located in the rural municipality of Bhotekhola—has provided new opportunities for the locals.

"The northeast of the country has great potential for increased production and exports of herbs, spices, garments, and vegetables, but was long held back by dilapidated roads and overburdened border customs posts. STEP has supported economic development in the remote northeastern hills of the country and helped increase trade along major corridor routes, says Mr. Bhatta.

Creating opportunities and improving lives

Chhatra Kumari Shreshtha and her family, originally from the neighboring district Bhojpur, started living in Chainpur in 1989 as her husband was working at the Land Revenue Office in Chainpur.

"My family decided to relocate to Chainpur after the road was constructed, and we purchased a plot of land to construct our house," says Shrestha who owns and manages a lodge and hotel as well as a small retail store. Chainpur, with its pleasant weather and moderate elevation of 1,275 meters above sea level, is a preferred destination for tourists from the hot plains of Nepal and adjacent Indian towns seeking a weekend or holiday getaway. Initially running a tea shop, she later expanded her business to include a lodge and hotel, taking advantage of the newly established roads that led to an increase in overnight visitors, including those from neighboring India and the PRC. Although the COVID-19 pandemic had a negative impact on her business, she remains optimistic that things will soon return to normal.

Now, Chainpur is vibrant and bustling with people, shops, and bazaars. It is also popular for large and black cardamom farming, which are sold to exporters.

Nepal's deepest valley and largest tar (butte) begins after crossing the Sabhakhola bridge. A loaded truck moved from Itahari, Sunsari, arrives at Chhatrepati, Khadbari, in the morning. The 45-year-old truck driver Narsingh Rai has been driving heavy vehicles for the last 15 years in this route. He said that he spent 2 days at least when the road was unpaved. "Since road quality has been enhanced, the tires of my truck last longer compared to before, and require less frequent repairs of other parts."

A survey carried out by the Department of Roads shows that road crashes have dropped substantially, travel time has been reduced by 40%, cost of travel and vehicle operation reduced by 20%, and availability of vehicles increased by 16%.

In the nearby Khadbari town, Nabin Kumar Gauli has been running a tourist-standard hotel for the last 4 decades. He shared that the producers of cash crops like woodenbegar, Himalayan nettle, large cardamom, and others have better access to the markets now. Similarly, producers of milk, fruit and vegetables, poultry and other products generate income by selling their products locally to hotels, restaurants, and merchants. The guests in his hotel come for a trek to Makalu base camp and to buy local products.

Kumar Shrestha, owner of Sudikshya Traders, has a warehouse in Khadbari for storing cardamon that he purchases from the local producers and then sells it to an exporting firm located in the nearby town of Birtamod, Jhapa. He says with improved road accessibility, farmers can now reach out to exporting firms directly and obtain better prices, if they want. Farmers have become conscious that superior quality results in higher profits for their produce, which is why the quality of large cardamom has improved in recent years and export has increased substantially.

Empowering women and facilitating growth

Women engaged in the production and processing of cash crops such as Rudrakhsa or woodenbagar are earning good income. This has helped them contribute more to the education and health of their children and family members.

Prakash Chandra Shrestha, a resident of Khadbari-9, said that his daughter is studying to become a health assistant. "With the construction and enhancement of the roads, our children can commute to surrounding places to study technical subjects. Qualified teachers are also available due to connectivity."

"STEP has brought about transformative changes in the rural areas of Nepal by increasing access to major highways and trade routes, markets and services, making it easier for small farmers to transport their products to buyers, and providing more opportunities for generating income," said Sushil Babu Dhakal, project director, Department of Roads.

"Roads are vital to economic activity, growth, social inclusion, and poverty reduction, especially in a landlocked country like Nepal," said Arnaud Cauchois, ADB country director for Nepal. "Improved capacity and better connectivity between cities and nations boost trade and creates economic opportunities, help reduce poverty and improve quality of life in remote places. ADB will continue to support Nepal in promoting safe, accessible, sustainable and green transport infrastructure and services."