Monitoring and Evaluation (M&E) is a structured, continuous process of gathering and analyzing data to measure the effectiveness and impact of projects, programs and policies. It involves setting clear objectives, defining key performance indicators, collecting and managing data, analyzing results, and leveraging insights for improvement. M&E ensures accountability, data-driven decision-making, operational efficiency, transparency and long-term sustainability while fostering knowledge sharing to maximize impact.

M&E helps businesses track progress, optimize performance and enhance accountability. With data-driven insights, the process enables organizations to assess effectiveness, refine strategies and allocate resources efficiently. It supports continuous improvement by identifying strengths, addressing weaknesses and ensuring transparency in decision-making. By evaluating strategies, processes and initiatives, businesses can adapt to challenges, celebrate successes and drive sustainable growth. M&E is a powerful tool for maximizing impact, improving efficiency and ensuring long-term success.

Benefits of M&E

M&E has several benefits for stakeholders of business organizations. They have been outlined below:

● Beneficiaries: M&E demonstrates a commitment to continuous improvement, leading to better program design and more efficient implementation which ultimately improves outcomes.

● Employees: It fosters transparency, boosts trust with communities and helps discover innovative solutions for greater impact.

● Executive Management: Data-driven insights enable agile decision-making thereby ensuring strategic direction is optimized for maximum effectiveness.

● Investors and other stakeholders: Reliable M&E builds trust, enhances transparency and attracts investment by demonstrating measurable impact per money spent.

M&E in Global and Local Contexts

M&E is essential for businesses to navigate today’s data-driven world as it transforms raw data into actionable insights for strategic decision-making. By continuously tracking performance and assessing outcomes, M&E enables companies to optimize strategies, mitigate risks and drive customer-centric innovation. Beyond financial metrics, businesses use M&E to measure social and environmental impact to ensure sustainable growth. With advancements in artificial intelligence (AI), big data and real-time analytics, M&E is evolving into a powerhouse tool for adaptive learning, helping businesses stay agile and future-ready.

Leading brands like Amazon and Procter & Gamble (P&G) use M&E to refine products, enhance customer experiences and maintain a competitive edge in the market. Amazon’s success is driven by its deep understanding of customer behavior. The company regularly tracks user preferences, feedback and interactions to refine its services and fuel innovation. Its powerful recommendation system, built through data analysis, anticipates customer needs which helps boost sales and engagement. By leveraging real-time insights, Amazon stays ahead in customer-centric innovation while also setting industry benchmarks. Similarly, P&G excels in data-driven decision-making by using M&E continuously to shape its business strategies. From product development to marketing, P&G relies on real-time customer insights to refine its offerings. When launching eco-friendly products, the company tracked customer feedback and sales data. This approach enabled real-time improvements, driving product success and strengthening its brand reputation.

Likewise, since 2014, Nescafé and the Rainforest Alliance have used M&E to optimize coffee farming and enhance sustainability. Their M&E system tracks progress across 12+ coffee origins, enabling Nescafe to monitor key interventions, measure impact and refine its long-term strategy. By integrating M&E insights, Nescafe strengthens its commitment to responsible sourcing and sustainable business practices on a global scale.

Nepal is the first country in Asia and the Pacific to embed M&E in its Constitution, reinforcing transparency and accountability. The M&E Act, 2024 marks a historic step in governance as this legal framework promotes evidence-based decision-making, citizen engagement and institutional accountability at federal, provincial and local levels. This has helped support Nepal’s ambitious decentralization efforts. The government has made continuous efforts to enhance its national M&E system through reforms and institutional improvements. One key initiative is the Renewable Energy for Rural Livelihood (RERL) Project, a collaboration between the Government of Nepal, UNDP and the World Bank. This project aims at improving rural livelihoods by integrating alternative energy with socioeconomic activities. M&E has played a crucial role in guiding the implementation of the project and supporting informed decision-making throughout its process.

Likewise, Nepal Rastra Bank (NRB) has introduced strict M&E measures to combat money laundering and crimes in the financial industry. Banks are required to maintain a high-risk client database, verify income sources, conduct risk-based analyses and track politically exposed persons and individuals with suspicious transactions. Banks also must comply with Anti-Money Laundering/Combating the Financing of Terrorism (AML / CFT) policies through internal audits. Although the monitoring framework has strengthened, evaluation gaps persist.

In June 2024, the Planning, Monitoring and Evaluation Division of the Ministry of Physical Infrastructure and Transportation (MoPIT) flagged concerns regarding Chongqing International Construction Corporation (CICO) and its Nepali partner Kancharam Construction (KC). These companies, part of the Rural Connectivity Improvement Project (RCIP), have been accused of poor project execution, with only 54% work completed after five years. M&E processes revealed substandard quality, highlighting the importance of effective monitoring and evaluation in identifying project inefficiencies.

The Asian Development Bank (ADB) showcased effective use of M&E through the Community-Managed Irrigated Agriculture Sector Project (CMIASP-AF), which enhances irrigation infrastructure across five provinces in Nepal. An impact assessment study measured the program’s influence on social mobilizers, focusing on leadership development, technical skill transfer, and Gender and Social Inclusion (GESI) in farming and Water User Associations (WUA). Using semi-structured interviews and case studies, the evaluation highlighted improved coordination and capacity-building efforts. CMIASP-AF stands as a model of data-driven and inclusive irrigation management, demonstrating the power of M&E in rural development.

Since 2020, the Social Welfare Council (SWC) has stopped evaluating NGO projects to avoid conflicts of interest, relying on third-party evaluators instead. This change, aimed at ensuring impartiality, helped the SWC double its annual project evaluations to 600. The SWC also removed the requirement for NGOs to allocate 60% of their budget to infrastructure, allowing more focus on awareness programs for social issues. The Chaudhary Foundation, the philanthropic arm of the Chaudhary Group, integrates M&E in its initiatives like The Model Village Project, leveraging tools such as FieldSight by UNOPS. CG Foods utilizes market analysis to track consumer preferences, ensuring data-driven product innovation. Additionally, the Chaudhary Group's Business Review Cell conducts financial performance reviews and prepares consolidated reports, highlighting a structured monitoring approach. These practices demonstrate the group's commitment to M&E across business and social initiatives, enhancing decision-making, optimizing performance and driving strategic growth.

In the same way, Unilever Nepal is deeply invested in monitoring its business operations, leveraging advanced technologies for enhanced oversight. Its B2B order platform, Shikhar, streamlines retailer transactions with GPS-tagged distribution and trained field forces. Its Digital Factory, launched in 2022 with the support of Hindustan Unilever Limited (HUL), is using real-time monitoring for agile production adjustments. However, a structured evaluation framework appears to be lacking, making systematic evaluation a key area for future development.

Many businesses have recognized the importance of M&E. However, many still lag in implementing it effectively - both in the global and Nepali landscape. If businesses conduct M&E, they often do so internally, keeping the data private and limiting public access to evaluation insights. A EvalCommunity survey revealed that conducting evaluation activities is significantly challenging for organizations, with 78% citing insufficient staff time and 53% struggling with a lack of financial resources.

Despite its numerous benefits—such as improved decision-making, efficiency and accountability, companies hesitate to implement M&E due to the time-intensive and ongoing nature of the process and the need for additional funding and specialized expertise. Understanding these challenges can help organizations unlock the full potential of M&E for sustainable growth and success.

(Niva Ranjit and Prajwal Gadtaula are analysts at Business Brainz, a research and insight firm empowering B2B sales and marketing teams globally from Nepal.)

 

(This opinion article was originally published in   March 2025   issue of New Business Age Magazine.)