Nepal may finally be entering a period of political stability. A majority government now offers something the country has lacked for years of continuity.

That continuity is critical for the water and sanitation sector. Despite its importance, the sector has often struggled to remain a sustained political and investment priority. We have made notable progress over the years, particularly in expanding access and achieving open defecation free status and have performed relatively well compared to others in the region. However, moving from basic access to safely managed and system level services will require a different level of institutional and financial commitment. Current spending suggests we are not there yet. Annual investments in water and sanitation are estimated at around $300m to $450m, equivalent to only two to three percent of the national budget and still insufficient to meet safely managed service targets.

At the same time, the broader financing landscape is also beginning to shift. Globally, water and sanitation financing still remains under $100bn annually, far behind sectors like energy and transport. And as traditional funding such as ODA and grants continue to shrink, the narrative around water and sanitation is also shifting. It is increasingly being positioned within climate and economic agendas. For countries like Nepal, this opens space to look beyond the usual WASH funding channels.

The question here is not whether financing will come. It is whether we are ready to use it well when it comes to us. From where I see it, this readiness challenge in the water and sanitation sector plays out across four stages.

Sectoral need

When financing becomes available, infrastructure often becomes the immediate focus, and rightly so. But repeated findings from our sector reviews and national sanitation planning documents show that the gaps are not only in infrastructure, but equally in the softer components that enable these systems to function. The challenge is that while we acknowledge this, we do not always define or plan for these needs with the same rigor. 

As a result, planning often remains incomplete. We know what infrastructure is needed, but are often less clear on what institutional, regulatory, operational and capacity strengthening must come alongside it. These gaps then surface during implementation, often becoming the very bottlenecks that delay or weaken delivery. Before asking how much financing is needed, we must first understand the true breadth of what the sector requires.

Required capacity

Our planning processes may be delivering projects today, but the more important question is whether it is building the internal capacity and institutional memory needed for Nepal to increasingly lead this work itself over time. Large-scale water and sanitation planning is relatively new in Nepal, and much of it continues to rely on external consulting support. This is not to say planning is weak, but opportunities for domestic institutions and firms to build practical experience remain limited.

If this is to change, the way projects and loans are structured must also change. Local firms and experts need to be made an integral part of planning and design teams, not brought in only for supporting roles. This is how practical knowledge is transferred, institutional memory is built and domestic capacity is gradually strengthened to lead such projects more independently over time.

Failed execution

Even when needs are clear and projects are well-planned, execution often remains the weakest link. In Nepal, this challenge can broadly be traced to four areas.

Structure: Our constitution mandates local governments as the service providers for water and sanitation. However, in practice, the way large scale investments are structured does not always reflect this. Most major projects are still routed through the national government, which leads the design and implementation and later hands the assets over to municipalities. What this often creates is a gap. Cities receive the infrastructure, but not always the understanding, ownership or readiness needed to operate it as intended. While consultation and participatory processes may happen along the way, these are rarely enough for already stretched municipalities to engage in a truly meaningful way.

Capacity: Municipalities are expected to take ownerships, but many still do not have dedicated teams or clearly assigned roles for managing water and sanitation systems. Existing staff are already stretched across multiple responsibilities, and bringing in additional capacity is not always straightforward. As a result, new systems often get absorbed into already burdened municipal structures, without the people or institutional strengthening needed to manage them properly.

Operations: Most often infrastructure is handed over without the necessary systems in place to operate it fully. This includes clear operating procedures, financing arrangements, accountability mechanisms and practical guidance on how these systems are to be managed over time. As a result, municipalities may receive infrastructure, but not always the full operational framework required to run it sustainably.

Community: The final piece is the community itself. Long-term service delivery does not depend only on infrastructure and institutions, but also on whether people understand, accept and adapt to the systems being introduced. Yet community engagement often remains limited to short-term awareness or consultation activities during the project period. For services that rely on behaviour change and sustained uptake, this is rarely enough.

Until these gaps are addressed together, even well-planned projects will continue to struggle in execution.

Monitoring and relearning

The fourth aspect is the sector learning from its own implementation. This is only possible when we have systems which capture information in a way that remains usable, reliable, and relevant over time. With digitalization now a growing government priority, the water and sanitation sector should also be thinking more strategically about the systems it builds. Municipalities are already working with some digital platforms, but what we want to address is their use in isolation. 

What is needed is a more integrated approach, systems that can build on what already exists, connect across functions, and provide usable information for decision making. At the same time, building platforms for monitoring alone is not enough. Equal emphasis must be placed on building the capacity to interpret and use this data for planning, prioritization and investment decisions. Otherwise, we risk collecting more data without improving how decisions are made.

So, where does this leave us? Nepal now has a rare opportunity to strengthen the foundations of its water and sanitation sector while much of it is still evolving. Rather than seeing current gaps as a weakness, we should treat them as a chance to reassess our institutions, capacities, priorities and readiness before larger scale investments begin to accelerate. The goal should not simply be to secure financing when it comes, but to be ready to define our own priorities, articulate our own needs and shape the direction of the sector ourselves. Because ultimately, the future of Nepal’s water and sanitation sector will depend not on how much financing comes in, but on how prepared we are to lead and deliver it well.

The author is currently working as Deputy Chief Operating Officer at Global Water & Sanitation Center at Asian Institute of Technology, Thailand