SUSTAINABLE DEVELOPMENT FACILITY DIRECTIVE 2057 B.S.
 

Preamble

Whereas it is necessary to create a strong and stable environment through sustainable development in the communities defined by watershed areas;

Whereas it is necessary to promote a better environment through judicious use of the natural resource base and development of alternative energy, alternative sources of income, and a reproductive natural resource base;

Whereas it is necessary to alleviate poverty through the promotion of education, health, empowerment of women and improvements in other social conditions; and

Whereas such a result can be better obtained if we provide for a decentralised framework involving participation of beneficiaries, local governments and non-governmental organisations;

Now therefore, the .....…… District Development Committee has issued this Directive for the constitution of the Sustainable Development Committee and management of the Sustainable Development Facility Fund under the authority granted to it by the District Development Committee Act 2055 B.S.

1.1 Short Title and Commencement

1. This Directive shall be called the Sustainable Development Facility Directive 2057 B.S.
    
2. This Directive shall come into force from the date specified by the DDC through official notification.

1.2 Definitions

In this directive unless and until the context otherwise requires:

1. "Facility" refers to the Sustainable Development Facility.
2. "Fund" refers to the Sustainable Development Facility Fund to be created under Section 2.1 of this Directive.
3. "Committee" refers to the Sustainable Development Committee to be created under Section 2.3 of this Directive.
4. "Chairperson" refers to the Chairperson of the Committee.
5. "Member" refers to a member of the Committee and includes the Chairperson of the Committee.
6. "Co-ordinator" refers to the Sustainable Development Co-ordinator.
7. "Directive" refers to the Sustainable Development Facility Directive, 2057 B.S.
8. "Member Secretary" refers to the member secretary appointed under Section 3.1 of this Directive.
9. "CBO" refers to a Community-Based Organisation, a group of people representing at least 80% of the households in a settlement and actively engaged in activities including community fund generation and, identification and implementation of various activities under the SCDP.
10. "Rural infrastructure" refers to drinking water supply, drainage, sanitation, tracks, roads, schools, suspension bridges, micro-hydro projects and all such other facilities which are basic to all-round development of rural communities.

2.1 Establishment of the Facility

1. A Facility named the Sustainable Development Facility shall be established.

2. The Facility shall have the following sources of funds and all expenses to be incurred by the Facility for its administration and operational costs shall be borne from the interest earned out of such funds, or the subsidies provided by any other agency:

• funds provided by His Majesty’s Government;
• funds provided by the DDC from its annual budget;
• funds provided by the VDC from its annual budget;
• funds provided by bilateral or multilateral donors by way of grant or soft loan;
• funds received by way of donations from any national or international organisations;
• funds received from any other source.

3. All funds of the Facility shall be kept in a bank as specified by the Committee.

4. The procedures for operation of any Facility account in the bank will be as specified by the Committee.

5. The main office of the Facility shall be located at the District Headquarters and the Facility may open branch offices at the VDC level.

6. The Facility shall have a secretariat of its own and the Sustainable Development Co-ordinator will be the chief of the secretariat.

2.2 Functions of the Facility

1. The functions of the Facility will be as follows:

• To engage in activities related to social mobilisation for formation of CBOs;
• To provide training and technical assistance to CBOs to plan, execute and operate savings and credit programs on a sustainable basis;
• To provide the necessary credit capital, technical guidance, skill oriented training and other support to CBOs for sustainable development;
• To monitor and evaluate the performance of the CBOs, and compliance with the terms of credit by CBOs;
• To provide assistance and training to the CBOs to plan, implement and operate and maintain local development projects;
  Explanation: Local development projects shall include, rural infrastructure development and environmental management projects.
• To provide information and assistance to CBOs for developing linkages with line agencies and procuring their services for the benefit of the CBOs.

2. The Facility shall lay down the eligibility criteria for credit assistance to the Community-based Organisations. The eligibility criteria shall include, but not be limited to, the following considerations:

• The CBO must be enlisted at the SDF office
• The CBO must prove that it has been having regular meetings, initiated saving and credit activities, and has transparency in it’s decision making process
• CBOs must have used their own community fund savings for small investments and must have developed a good record keeping system
• CBOs savings (community fund) is not sufficient to provide loans to most of its members
• Applying CBO members are citizens of Nepal and are capable of using the loan in sustainable development based productive activities and are able to pay back the loan
• Activities must be, as far as possible, low cost and not risky
• The initial amount of credit capital disbursed to a CBO must be limited to thrice the CBO savings amount.
• The loan repayment schedule and duration (which may not exceed 12 months) must be unanimously decided in a meeting when all the CBO members are present
• The CBO manager takes the responsibility to release the loan, collect the amount, and maintain a good record keeping system
• Only one member from a household shall be entitled to seek a loan even if there are two or more members from a house hold in a CBO
• All the CBO members take the collective responsibility for the loaned amount (both principal and interest) if it is not paid back to CBO by the concerned member

3. The Facility shall determine the types of activities that will be supported from the SDF credit capital fund. The terms and conditions for disbursement of loans and recovery schedules thereof shall be defined in the loan agreemet between the Facility and the CBO.

4. The interest rate on credit capital shall be equivalent to the prevailing bank rate at the time of loan disbursement. Out of the interest, 2 percent shall go to the CBO Manager responsible for administering the loan (loan release, collection and record keeping) as per the CBO rules. The remaining interest will be divided as follows: the CBO receiving the credit is entitled to deposit 25% of the interest into its community fund, while the remaining 75% of the interest plus the principal amount has to be returned back to the Facility (see the example below).

2.3 The Sustainable Development Committee

1. The DDC shall constitute the Sustainable Development Committee to guide and manage the Sustainable Development Facility. The Committee shall consist of the following members (position indicated in rounded parenthesis):

• DDC chairperson (Chairperson)
• VDC representative [elected] (Member)
• Local Development Officer (Member)
• District Forest Officer (Member)
• Soil and Water Conservation Officer (Member)
• CBO Representative [elected](Member)
• Sustainable Development Coordinator (Member Secretary)

* Note: at least one member of the SDC should be female.

2.4 Procedure for Election of Elected SDC Members

1. The Co-ordinator shall be the election officer for the CBO and VDC representative elections. The Co-ordinator shall determine the time, place and procedure for the elections.
    
2. The elected members of the SDC, the VDC representative and the CBO representative shall each be elected for two years at a time.

2.5 Allowances and Benefits

Allowances or any other benefits for the Chairperson and members of the Committee will be as specified by the DDC.

2.6 Powers and Functions of the Committee

The powers and functions of the Committee shall be as follows:

1. to formulate, approve and monitor policy decisions on any matter concerning administration of the Fund;
    
2. to monitor the present programs and approve the future programs of the Facility;
    
3. to review and approve the annual budget of the Facility;
    
4. to approve the operation plan and implementation manual of the Facility;
    
5. to approve the credit capital demands of CBOs as per the eligibility criteria;
    
6. to appoint and dismiss the Sustainable Development Co-ordinator and other staff members;
    
7. to enter into agreement with the SO/SDF for the field activities of SCDP and to make a performance evaluation of the SO activities at the field level.
    
8. to appoint an independent, registered commercial auditor to carry out an annual financial audit of the Facility’s financial operations and review the resulting audit report;
    
9. to make quarterly and annual reports on the performance of the Facility for the DDC.

2.7 Meeting of the Committee

1. Ordinarily a meeting of the Committee shall be held at least once a month.
    
2. The Member Secretary shall call a meeting of the Committee on the following conditions:

• if the Chairperson directs the Member Secretary to call a meeting of the Committee;
• if any three members demand a meeting of the Committee to be held; and
• if the Member Secretary feels that an urgent matter has come up that needs to be decided by the Committee.

3. Notwithstanding anything in number (2) above, the Chairperson of the Committee shall have the right and duty to call a meeting of the Committee on his/her own in the absence of the Member Secretary.
    
4. Notification of a meeting shall be communicated to members of the Committee in advance. Notification shall include the agenda for the meeting.
    
5. The quorum for the Committee meeting shall be four members.
    
6. Decisions of the Committee shall be made by the majority of the Committee members, and in the case of a tie the chairperson shall exercise his casting vote.
    
7. The Committee meeting shall be chaired by the Chairperson of the Committee. In the absence of the Chairperson, the Committee meeting shall be chaired by the Local Development Officer.
    
8. The Committee may invite any person or expert to participate in a Committee meeting as a special invitee. A special invitee, however, shall have no right to participate in voting on a decision.
    
9. The Member Secretary shall record all decisions of the Committee in a minute book and shall have them authenticated by the chairperson of the meeting.
    
10. The procedures of the Committee meeting on any other matter not mentioned shall be as decided by the Committee itself.

III: Provisions on Employees of the Facility

3.1 Appointment and Salary of the Sustainable Development Co-ordinator

1. The Sustainable Development Committee (SDC) shall appoint the Sustainable Development Co-ordinator (Co-ordinator).
    
2. Minimum qualifications for the position of Co-ordinator shall be:

• s/he must be a citizen of Nepal;
• s/he must be at least a graduate degree holder, preferably in natural resource management;
• s/he must have work experience natural resource management and community mobilisation for savings and credit programs;
• s/he must not be a member of any political party

3. The terms and conditions of service, including salary, of the Sustainable Development Co-ordinator will be as specified by the Committee.

3.2 Powers and Functions of the Co-ordinator

1. The powers and functions of the Sustainable Development Co-ordinator shall be as follows:

• to act as a member secretary of the Committee and carry out day-to-day administration of the Facility;
• to implement policy decisions of the Committee;
• to recommend to the Committee the appointment and dismissal of the staff working under him/her;
• to make job allocations for the SDF employees and evaluate their performance;
• to monitor the activities of the Support Organisation (implementing agency/SDF/NGO at the village level) and make a report for the Committee about its performance; and
• to carry out any other executive functions of the Facility.

2. The Co-ordinator shall exercise his/her powers in accordance with this directive and the policy decisions of the Committee.

3. The Co-ordinator may delegate any of his/her specific authority to any staff designated by him/her.

3.3 Term of Office of the Co-ordinator

1. The term of office of the Co-ordinator shall be three years from the date of his/her appointment. The Committee, however, may dismiss the Co-ordinator before the expiry of his/her term if, upon investigation, s/he is found to be incompetent, negligent or engaged in corruption. Investigation of charges against the Co-ordinator shall be carried out by an independent investigation committee to be constituted for the said purpose by the Committee. The Co-ordinator shall be given full hearing before any decision is taken by the Committee. The Co-ordinator shall not take part in the Committee meeting at the time of deliberating disciplinary action against him/her.
    
2. A person may be eligible for reappointment as Co-ordinator if the Committee finds his/her performance to be satisfactory.
    
3. Notwithstanding anything to the contrary of this directive, the Local Development Officer shall function as an ad hoc Co-ordinator in the absence of the Co-ordinator, or prior to the appointment of the Co-ordinator.

3.4 Conditions of Service

The terms and conditions of services of the employees of the Facility, shall be as specified by the Committee.

3.5 Prohibition to Employees of the Facility

The employees of the Facility shall not benefit from any financial transaction in which the Facility or a Facility supported organisation is a party.

3.6 Role of the Support Organisation

1. The support organisation (the SDF) shall be responsible for:

• mobilising villagers into CBOs, training them in savings and credit management, and providing information on and orientation to resource management and income generation.
• monitoring the activities of the CBOs at the field level and assisting and guiding them as necessary.
• acting as a liasion between the line agencies and the CBOs in all respects.
• reporting the field level activities to the SDF through the Co-ordinator.
• liasing with other line agencies for resource mobilisation to help CBOs implement their community programmes.
• reviewing the CBO loan applications (on the basis of eligibility criteria) and making recommendations for loan approval.

4.1 Accounts, Auditing and Bookkeeping

1. The Fund shall be divided into four separate funds, which are to be maintained in separate bank accounts. The four funds are:

• the Credit Capital Fund (CCF)
• the Seed Grant Fund (SGF)
• the Human Resources Development Fund (HRDF)
• the Operational Cost Account.

2. The Credit Capital Fund shall be used to advance credit to the CBOs. This account shall be operated by the joint signature of the LDO and the Co-ordinator. This will be a revolving fund.
    
3. The Seed Grant Fund shall be used to provide grant assistance to the CBOs for implementation of rural development and environmental protection activities. This account shall be operated by the joint signature of the LDO and the Co-ordinator.
    
4. The Human Resources Development Fund shall be used to finance training, orientation, exposure visits and other activities related to human resource development. This account shall be operated by the joint signature of the LDO and the Co-ordinator.
    
5. The Operational Cost Account shall be used to meet the operational costs of the SDF. This includes the cost of daily administration, salaries of the staff and allowances of the Committee members. This account shall be operated by the joint signature of the LDO and the Co-ordinator.
    
6. Funds received from various sources for use as credit capital and the principal amount returned from the CBOs shall be kept in the Credit Capital Fund Account. Funds received from the annual budget of the DDC/VDC, or any other source for grant assistance for community projects shall be kept in the Seed Grant Fund Account. Interest earned from the savings accounts in the bank, a share of the interest earned from the CBO loans, and the subsidies provided by DDC or any other agency, shall be kept in the Operational Cost Account.
    
7. The accounts of the Fund shall be audited regularly, according to nationally accepted auditing standards through an independently registered commercial auditing firm.
    
8. The accounts of the Fund may be inspected by the DDC, the donor or His Majesty’s Government at any time.

4.2 Continuity of the SDF Fund

The accounts of the Fund shall be used strictly for the purposes specified in this directive and shall not be used for any other purpose.