The Kingdom of Bhutan has undergone significant changes in recent years, evolving from an absolute monarchy into a constitutional monarchy, while pioneering its unique development vision of Gross National Happiness. All policy, planning, programmes and legislation are guided by this concept. Whereas Bhutan has made good progress in terms of poverty reduction, one in four Bhutanese remain in income poverty. Despite declining child and maternal mortality rates, chronic malnutrition affects one in three children. In the 2014 Human Development Report, Bhutan was ranked 136 out of 187 countries. Moreover, as a least developed, mountainous and landlocked country, Bhutan’s population and ecosystems are extremely vulnerable to climate change. The human cost of extreme climate shocks and gradual climate changes include an increased risk of hunger, spread of disease, poverty, and lost livelihoods.
How We Are Helping?
UNCDF has been a partner of the Royal Government of Bhutan since 1979. From an early focus on infrastructure and agriculture, UNCDF interventions have increasingly turned toward decentralization, local governance and microfinance.
Currently UNCDF is helping Bhutan meet its development challenges through its joint Local Governance Support Programme with UNDP, a multi-sector effort to establish an effective system of local government. The programme supports the Royal Government plan to disburse annual block grants to local governments while helping to develop the capacity of local institutions. This initiative aims to make finance systems effective and transparent for local government service delivery, while strengthening the central government’s policy, regulatory, supportive and supervisory functions.
UNCDF has increased its support to help the local level respond to the growing challenges of climate change. In July 2011, the Royal Government signed an agreement with UNCDF to pilot its Local Climate Adaptive Living Facility. The facility, known as “LoCAL”, increases climate change adaptation financing while strengthening the capacity of local governments and of the local climate change adaptation planning process through a system of performance-based grants. This UNDP/UNEP-administered pilot initially targets two village groups (Gangtey and Nangkor) within two municipalities (Wangdue and Zhemgang, respectively) as well as the Phobjica valley, a critical habitat for the endangered black-necked crane.
Moreover, UNCDF is active in the inclusive finance area in Bhutan through the Least Developed Countries Fund for savings-led market leaders for inclusive finance (MicroLead), which aims to increase access to financial services for low-income populations.