Nepal - Let’s talk about digitization

Stakeholder consultation to move forward Social Security Allowance e-payments

A consultative workshop held at Summit Hotel brought together stakeholders to discuss a proposed Social Security e-Payments Strategy in Nepal. The workshop served as a platform for stakeholders to share their input on the proposed strategy and implementation plan, before it is finalized and tabled for approval by the Government of Nepal. The workshop was organized by the Department of Civil Registration (DOCR) working under the Ministry of Federal Affairs and Local Development and in collaboration with the World Bank, United Nations Capital Development Fund (UNCDF), Mobile Money for the Poor and Local Governance and Community Development Programme Phase II.

The Government of Nepal has been providing social assistance to its citizens for more than 15 years. The annual number of beneficiaries now exceeds 2 million, and the types of social security allowances (SSAs) currently include a Senior Citizen Allowance, Single Woman Allowance, Disability Allowance, Endangered Ethnicity Allowance and Child Protection Grant. These grants are currently delivered manually to beneficiaries in cash through a complex institutional framework. The manual process to deliver SSA payments, which comes at an annual cost of Nr1.327 billion (~US$13 million),[1] presents some serious disadvantages, such as errors in recordkeeping due to ghost beneficiaries and system leakages.

DOCR plans to transition from manual to electronic payments, championing a vision for the country where efficient SSA distribution ensures the right amount to the right person at the right time.

The transition aligns with a government directive to transfer all SSA payments through bank accounts. In this context, the World Bank and UNCDF are providing technical assistance to DOCR to develop and implement an e-payments strategy.

The consultative workshop brought together representatives from the Ministry of Finance, Nepal Rastra Bank (the country’s central bank), Financial Comptroller General Office and financial institutions, among others. It kicked off with a presentation of a draft strategy agenda that touched upon the scope of the e-payments strategy in building institutional capacities and partnerships to create an ecosystem with the infrastructure to support widespread cashless payments to SSA beneficiaries and ultimately to work towards a less cash-dependent society. Stakeholders raised questions about banking interventions that are necessary for building such a system. They also identified banked and unbanked areas in each region of the country in order to map out potential hubs to support agents located in various branches, branchless banks and payment service providers.

The workshop came to an end with closing remarks from the DOCR Director General:
“Digitization of social security allowance[s] in Nepal is going to re-structure our payment system. The questions and issues raised by our stakeholders today will not go unnoticed; they will be further discussed in our Steering Committee meeting. I thank UNCDF for organizing this meeting and for their support and guidance towards this project.” With this, the hope of establishing an effective, efficient, transparent and centralized SSA payment mechanism has been set in motion.

June 2017. Copyright © UN Capital Development Fund. All rights reserved.

The views expressed in this publication are those of the author(s) and do not necessarily represent those of the United Nations, including UNCDF, or their Member States.

[1] Conversion rate: Nr1 = US$0.00968921 (Source: www.xe.com, 23 June 2017).