Kathmandu, May 9 (IANS): Possibly the least urbanized country in South Asia, Nepal is also the fastest urbanizing nation in the region -- and unless the government seriously manages urbanization better, the country could fail to attain economic efficiency from the process, a new World Bank study has warned.

The findings of the study -- Urban Growth and Spatial Transition: An Initial Assessment -- which the WB disseminated, says urban population in Nepal has grown at more than 5 percent on average since the 1970s, mainly as people moved rapidly to areas of jobs and better economic opportunities.

While that has led some 20 percent of Nepal's population to presently live in urban areas, the urban areas are together generating about 65 percent of gross domestic product. Given that urban areas serve as powerhouse of economy in any country, the report says Nepal can tap the potential of its cities to leverage their comparative advantages and turn them into competitive advantages, reported Xinhua.

However, Elisa Muzzini, urban economist at the World Bank who led the study, was quoted by Wednesday's Republica daily newspaper as saying that Nepal's urban centres, particularly the Kathmandu Valley, are already facing serious challenge due to multiple factors like inadequate infrastructure, haphazard planning and poor business environment.

For instance, she said household access to piped water supply in urban Nepal has declined from 68 percent in 2003 to 58 percent in 2010. While the Kathmandu Valley suffers from unplanned construction, infrastructure bottlenecks in coming years are feared to hit the city's productivity.

While the metropolitan offices and the government have done little to manage the new expansion of the city, the Valley is receiving a mere $6 worth of per capita investment on infrastructure -- least among all sub-metros and municipalities in the country.

As a result, the valley has failed to turn its comparative advantages in areas like cultural tourism, handicrafts and agro-processing into competitive advantages, says the report.

As unmanaged urbanizing could also lead other fast growing urban centres to similar situation, it has urged the government to give immediate priority to urban planning and development.

"It is always easy and cost effective to address these issues while urbanization has just started. Once the urban centres grow into full-blown unplanned congested cities, it will be pretty difficult and costly to bring in efficiency in them," said Muzzini.

The report has strongly advocated that the government prioritize investment in infrastructure, connect cities internally and externally, and make growth inclusive in order to foster growth and sustainability of urban areas.