Nepal

Nepal is going through a far-reaching process of transformation into a federal state, with the prospect in the future of political stability and inclusive growth. Development cooperation is helping the country to reduce social inequalities, create economic opportunities and improve access to renewable energy.

Since the end of the civil war in 2006, the average per capita income in Nepal has risen steadily. An important milestone was reached in 2015 with the adoption of a new constitution. Since the elections that followed, Nepal has been going through a comprehensive process of transformation towards becoming a federal state. Nepal is set to graduate from the group of the world’s least developed countries (LDCs) in 2026 – with the goal of achieving middle-income country status by 2030.

At the same time, frequent changes of government are a characteristic of domestic politics in Nepal. This has led to dissatisfaction with the political and economic outlook amongst sections of the population – particularly among younger generations – as evidenced by the recent unrest in September 2025.

The severe earthquake in 2015 and the coronavirus pandemic hampered Nepal’s development. Furthermore, rising temperatures and the increase in extreme weather events are causing significant economic damage. The country is one of the ten countries most severely affected by climate change.

German development cooperation with Nepal

Development cooperation between Germany and Nepal is aligned with the Nepalese government’s development strategy. One particular focus is overcoming social inequalities and enabling equal participation in political, economic and social life for disenfranchised groups, especially women.

At the government negotiations in September 2024, the Federal Ministry for Economic Cooperation and Development (BMZ) committed a total of 41 million euros in support for its partner country. This comprises 20 million euros in Financial Cooperation funding and 21 million euros in Technical Cooperation funding. In addition, 10 million euros was pledged in 2023 for financial cooperation in the energy sector.

The focus of the bilateral cooperation is on the following core areas:

Core area: Sustainable economic development, training and employment
Area of intervention: private sector and financial sector development
Core area: Health, social protection and population dynamics
Area of intervention: health, pandemics and One Health
Core area: Climate and energy, just transition
Area of intervention: renewable energy and energy efficiency

Nepal has significantly reduced poverty nationwide. However, economic growth and job creation are falling short of their potential. Through development cooperation activities, Germany is therefore supporting the establishment of stable structures, the creation of an inclusive economy and the realisation of development that is sustainable in the long term.

Nepal has significantly reduced maternal and neonatal mortality, but many people – particularly women, children and vulnerable groups – still have inadequate access to healthcare and social protection. Through development cooperation activities, Germany is therefore supporting the establishment of a fair and resilient health system.

Nepal has enormous potential for renewable energy. The expansion of renewable energy and efficient grids is therefore key to economic development, climate action and access to clean energy.

Further information