With only 20% of its 26.6 million population living in urban areas, Nepal is the least urbanised country in South Asia. But with an urban population growth estimated at more than 5% every year on average since the 1970s, it is also one of the fastest urbanising countries of the region says a new World Bank study.
The study 'Nepal: Urban Growth and Spatial Transition: An Initial Assessment' found the country has undergone major structural shifts over past few decades from an agricultural economy to a service-based one.
It says urban areas, which are growing faster than the rural ones and where incidence of poverty more than halved between 1995-96 to 2010-11, are the centres of this transformation. "Nepal's cities have the potential to drive economic growth to benefit the entire country. Managing rapid urbanization is essential for improving growth, creating jobs and reducing poverty," says Tahseen Sayed, World Bank country manager for Nepal.
The study calls for tapping into the potential of Nepal's cities to leverage their competitive advantage in strategic sectors like tourism, crafts and agro-processing.
But there's a negative side as well. Rapid population growth is overtaking capacities of existing institutions to manage urbanisation.
Land patterns are rapidly changing but urban development planning lags behind actual growth. Besides growing infrastructure deficits and unplanned growth has increased vulnerability to disasters.