Asian Development Bank

The Nepal Digital Transformation Project (Project) aims to improve delivery and increase the use of inclusive and high-impact services for citizens and businesses by strengthening digital public infrastructure (DPI) and modernizing priority government services. The Project will enhance trust, resilience, and interoperability of Nepal's digital ecosystem through investments in secure data infrastructure, core DPI, and the digitalization of high-impact services. The Project, led by the World Bank under the Full Mutual Reliance Framework (FMRF), will be cofinanced by the World Bank and the Asian Development Bank (ADB) [as trail lender] and will be the first FMRF project in Nepal. The total Project is estimated to cost $90 million, of which a loan of $50 million will be financed by the World Bank and a loan of $40 million will be financed from ADB's concessional ordinary capital resources. The World Bank's extensive experience in Nepal's digital sector makes this collaboration with World Bank as lead and ADB as trail lender particularly valuable for the digital development in the country, as it would enhance coordination and strengthen policy dialogue among the many stakeholders involved. This Project is aligned with the Reforms to Accelerate Investment and Scale Employment (RAISE) Program, an FMRF project in which ADB is the lead lender, which is in advanced preparation for Board consideration in 2026. The RAISE Program includes targeted support for strengthening the country's cybersecurity and data protection legislative and regulatory frameworks and capabilities that directly complement and reinforce this Project's objectives.

Subprogram 2 builds on the reforms under subprogram 1 and supports Nepal's national and subnational public financial management (PFM) reforms. The overarching objective is strengthening fiscal sustainability and fiscal federalism in line with the Government of Nepal's 16th five-year plan. The program targets two main reform areas: (i) public expenditure and debt management at the national level to rationalize public spending and improve capital budget absorption and (ii) resource planning and management at the subnational level to improve the delivery of public services that were devolved to subnational governments under the 2015 constitution.

The project consists of activities relating to the provision of life preserving services for communities affected by the following natural disaster: 2024 Floods and Landslides. The Grant proceeds will be used for: (a) provision of emergency rescue equipment, (b) provision of medical kits, food, and drinking water, (c) purchase of water purification and sanitation systems, (d) provision of transtional shelter, (e) provision of personal hygiene kits, (f) debris shifting, (g) site clearance, (h) safe disposal of useless rubble, (i) provision of medical care-related goods and equipment, and (j) bulk purchase of aviation fuel.

GRID is a novel homegrown approach to development that holistically addresses the set of overlapping and reinforcing crises, including climate-induced hazards, to ensure development activities are more greener, more resilient, and more inclusive. The GRID approach enables Nepal to meet its commitments on climate adaptation, resilience, and disaster risk management, as set out in its nationally determined contribution and national adaptation plan. The government, ADB and 15 other development partners have jointly adopted the GRID approach. The proposed PBL will support the government in operationalizing the GRID approach by unlocking policy, regulatory, and institutional bottlenecks to promote sustainable investment opportunities across sectors.

The transaction involves the administration by the Asian Development Bank (ADB) of an equity investment of up to $4,000,000 or its Nepalese rupee equivalentwith an initial investment of up to $1,500,000 or its Nepalese rupee equivalentin InnoCSR Co. Ltd. (InnoCSR), a company headquartered in Seoul, Republic of Korea. The investment is to be provided by the ADB Ventures Investment Fund 1 under the ADB Ventures Financing Partnership Facility. The balance of the approved amount may be invested as equity or quasi-equity in subsequent fundraising rounds that InnoCSR is expected to undertake. Consistent with the established fund documents, ADB will not invest its own capital alongside the fund.

- Senior loan up to $30,000,000 (including B Loans of up to $10,000,000) to support financing for small and medium-sized enterprises (SMEs) in Nepal. - Grant of $1,300,000 under ADF-PSW's blended finance solution to address affordability issues for disadvantaged women-owned SMEs (WSMEs) (i.e., interest concessions for onward lending to WSMEs) - Contingent grant of up to $1,000,000, through an unfunded risk transfer arrangement, under ADF-PSW's loan guarantee solution, to cover a portion of the bank's portfolio of uncollateralized loans to WSMEs. - Technical assistance (TA) from an existing TA of up to $250,000 to support the bank's digitization initiatives.