UCLG COUNTRY PROFILES Federal Democratic Republic of Nepal Capital: Kathmandu Population: 29,852,700 (est.) Area: 147,181 sq. km
1. Introduction
1.1 General Information Nepal is a landlocked sovereign state in South Asia. Geographically it is located between the Ganges plains and the Himalayas, making it one of the geographically most diverse countries in the world. It is bordered by the People's Republic of China to the north, and the Republic of India to the south, east, and west. The mountainous north has eight of the world's ten tallest mountains, including the highest point on earth, Sagarmatha or Mount Everest. It consists of more than 240 peaks of over 20,000 ft (6,096 m) above sea level. The fertile and humid south is densely populated and home to approx. 60% of the population. Kathmandu is the nation's capital and the country's largest metropolis. Furthermore, Nepal is home to a multi-ethnic, lingual, and religious society.
Human Development Indicators (2010): Life expectancy: 67,5 (yrs) Adult literacy rate:
60.3 (%)
GDP:
15,701,058,166 US$
GDP per capita (PPP):
1189 US$
HDI Rank:
138
Gini:
47.3
1.2 Historic overview The country used to be divided into several small autonomous states. Between 1744 and 1769 the country was conquered and subsequently united by the first King of the Shah dynasty, Prithvi Narayan Shah from the Kingdom of Gorkha, located in the western hills. Formally the country remained an absolute monarchy until 1951, though from 1846 onwards, the Rana dynasty technically ruled the country leaving the Shah Kings reduced to mere figureheads. From 1951 until 1959 the country saw its first, though brief and highly contested democratic phase. However, the succeeding panchayat regime which was established by King Mahendra, banned political parties and reinstated the King as the absolute ruler. The first people’s movement (Janaandolan I) in 1989, led to the promulgation of a constitutional monarchy in the following year, though still with slightly limited powers for the democratic institutions. In 1996 the disillusioned and largely sidelined Maoist communists went underground in order to fight for their aims by means of violence. In 2001, the royal massacre
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brought the reign of popular King Birendra to a tragic end, marking the beginning of a tumultuous decade. Under the surviving royal, Gyanendra, the conflict with the Maoists escalated and all democratic institutions were consecutively dismantled, cumulating in the declaration of emergency by the King in 2005. The second people’s movement (Janaandolan II) was the prelude to a peace process of unprecedented dimensions among all major parties and the Maoists, forcing the King to relinquish his powers to the reinstated House of Representatives in April 2006. Two years later, an all party government finally managed to hold elections for a constituent assembly which simultaneously serves as an interim parliament. In its first session the state was formally declared a “Federal Democratic Republic” and thereby marked the end of two and half centuries of monarchy. The Nepalese Constituent Assembly is a unicameral body of 601 members, assigned with writing a new constitution, initially within 2 years; though its tenure has been extended for 3 times so far. 240 members were elected in single seat constituencies, 335 were elected through proportional representation, and the remaining 26 seats were reserved for nominated members. The Communist Party of Nepal (Maoist), or CPN (M), is the largest party in the Constituent Assembly, having won half of the constituency seats and about 30% of proportional representation seats. The Nepali Congress (NC) as the traditionally largest, oldest and most dominant political party lost significantly in the elections, becoming only the 2nd largest fraction, followed closely by the United Marxist Leninist (UML). Another unexpected outcome of the election was the relative success of the Madeshi parties, which claim representation of the largely landless settlers of the Tarai (plains), by establishing “Madeshi” as a novel political identity. Through an elaborate quota system the representation of 33% women
as well as all ethnic groups, casts and other minorities was ensured, making the CA the most inclusive body of representatives ever assembled in Nepal. 1.3 Decentralization in Nepal The concept of decentralization and participatory development has a long, though uneven history in Nepal. The first significant step in the process of decentralization was initiated with the enactment of the Decentralization Act in 1982 and the adoption of according regulations in 1984. These legal frameworks forwarded the process of deconcentration of functional responsibilities to the district level of governance. Though, in this process political or financial decentralization remained excluded. After the restoration of democracy in 1991, three separate Acts — the District Development Committee (DDC) Act, the Village Development Committee (VDC) Act, and the Municipality Act were enacted in 1992 and the respective local bodies formed in accordance with these new Acts. Till date, these Acts represent the legal foundation of the local governments of Nepal. Based on the recommendations of a High Level Decentralization Coordination Committee formed under the chairpersonship of the Prime Minister in 1996, the Local Self-Governance Act (LSGA) was enacted in 1999. This bill formed the basis for a local selfgovernance system which allocated not only significant responsibilities in service delivery to the local bodies, but also an at least partial autonomy in decision making and participation. However, its most significant weakness prevailed in form of a lack in fiscal autonomy. Hence, given the adverse political scenario around the turn of the millennium, peaking in the dissolution of the local bodies in 2002, the LSGA has never been fully implemented until now. With regard to the origins of the decentralization debate in Nepal, it is clear that the first phase was strongly influenced by the according international paradigm, II
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which dominated the development/ reformatory governance debates of the early 90’s. Therefore, most reforms in that regard were initiated on the central level and implemented upon the local level. However, the armed conflict with all its complex ramifications and origins (especially a growing resentment and frustration at ‘the peripheries’ with the political establishment in Kathmandu) as well as successful setup of revolutionary “local” government structures in many Maoist controlled areas, has led to the evolution of an indigenously Nepali notion of self-governance and decentralization. As a result, if there was anything such as a ‘common denominator’ to allow for the initiation of the peace process, then it was the growing opposition towards a patronizing, highly concentrated state structure in which even the established democratic parties had ceased to play any role whatsoever. Therefore, during the run up to the CA elections all major parties openly announced their opposition to the centralist ‘constitutional’ monarchy in favor of a federal model - as the apparently logical alternative. After more than three years of wrangling for a new constitution, many difficulties and inadequacies of a federal model in the Nepalese context have become rather obvious. However, most parties, especially Maoist and Madeshi remain entangled in their promises to establish provinces on an ethnic basis. Therefore, it is to be expected that, in one way or the other, a federal setup will succeed the centralist state.
Though, the future role of the local bodies and their degree of autonomy is far from certain. So far the debates on the federal setup have overshadowed the Local Government Associations’ demand for a constitutional guarantee on local political, administrative and financial autonomy; as a balancing factor against potential ‘volatilities’ in the future ethnic provinces and in consideration of the fact that for the vast majority of the population the local level, esp. municipalities and VDCs, prevails as the only tangible access to government services and participation.
2. Territorial Organization
2.1 Governmental and administrative divisions Nepal is divided into 14 zones and 75 districts, grouped into five development regions namely eastern, central, western, mid western and far western development regions. Each district is headed by a permanent Chief District Officer (CDO) responsible for maintaining law and order and coordinating the work of field agencies of the various government ministries. Currently, there are two tiers of government in Nepal, central and local. The central government is located in the capital, Kathmandu and local governments are the District Development Committees (DDCs), Village Development Committees (VDCs) and the municipalities. Nepal had 58 municipalities, 3915 VDCs and 75 DDCs. Although, recently 41 new municipalities have been declared, the process has not yet concluded and further changes in the number of municipalities and VDCs are to be expected. There are three Local Government Associations (LGAs), the Municipal Association of Nepal (MuAN), the Association of DDCs in Nepal (ADDCN) and the National Association of VDCs in Nepal (NAVIN), representing the interests of the local bodies at the national level. Fig 1. Relation of Governmental Administrative divisions Governmental Administrative 5 Development 1 Interim Legislature Regions (601 Members), Central Government 14 Zones 75 District Development Committees 3915 Village Development Committees 58 Municipalities, (99 since July 2011)
and
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2.2 Financial indicator Nepal's gross domestic product (GDP) in 2010 was estimated 15,701,058,166 NPR ( 3,5 billion US$). In terms of employment, agriculture remains the most important sector (36,2%) providing employment to about 76% of the workforce. The service sector contributes almost 50 % to the GDP, while manufacturing a mere 14,5%. About half of the population lives below the international poverty line of $1.25 a day. The distribution of wealth among the Nepali population is more unequal as compared to most other countries; Gini 47,3 (5th most unequal country in Asia). With regard to local finances, it has to be noted that there are no comprehensive indicators on the total local expenditure. That is so, because funds are partly being allocated through different ministerial budgets or joint donor development programs. However, spending through local bodies is certainly inadequately low. The primary reasons are insufficient capacities as well as an inherent lack of accountability leading to underperformance and financial irregularities. Own revenues are mostly limited to few, especially larger municipalities. Fig 2. Financial indicators GDP by sector: Primary (agriculture): Secondary (industry): Tertiary (services):
36,18 % 14,5 % 49,77 %
Local government expenditure: Total / local exp. per capita: 8700/870 NPR (11,9 US$) Total / local exp. of GDP: 22.3% / 2,2% Total / local exp.: 10 %
2.3 The capital city Kathmandu is the capital of Nepal and with approx. one million inhabitants it is the largest municipality. The city stands at an elevation of approximately 1,400 meters (4,600 ft) in the bowl-shaped valley in central Nepal. The Kathmandu valley is home to another 4 municipalities and numerous VDCs, which have all virtually grown together into one urban conglomeration of about 3 million.
Therefore, despite being the capital and largest city, there is no special administrative provision for either Kathmandu or the valley; except for Kathmandu holding the title of the sole “Metropolitan City”. 2.4 Territorial reform Currently Nepal is in a state of transition, implying a process that is beyond the arrangements of governance of the past and has yet not arrived at new ‘conclusion’. Accordingly, it is expected that the institutions, actors, tiers, roles & responsibilities as well as the territorial divisions of governance will change substantially within the years to come. As part of the constitution writing process, a Committee for the Restructuring of the State and Distribution of State Powers has been formed. On basis of its mandate (as outlined below), the committee has submitted the draft report including a concept paper on 21 January 2010 to the constituent assembly for further consideration. The structure in the federal democratic republican form of the state The principles and bases for determining the areas of the federal units Delimiting the boundaries and naming of each of the federal units Division of legislative, executive and judicial powers among the governments in various levels of federal units Determining the contents of working areas of federal units of various levels and the common subject Determination of interrelationship of legislative, executive and judicial powers among federal units Mechanism for adjudication of disputes that may arise between the federal units Other necessary matters relating to the working areas of the Committee
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Simultaneously, on the local level VDCs are converted into municipalities at a rapid rate. There were only 58 municipalities till July 2011 but with the addition of 41 new municipalities, the total number of municipalities stood at 99; though, this process is ongoing. Partly because, the fact that the new municipalities are being declared with no scientific criteria taken into consideration, has resulted in substantial controversies. The DDCs on the other hand are likely to be replaced by the future federal units.
So far, the debate on the inclusion of provisions ensuring the autonomy of the local governments in the new constitution has not lead to any tangible results. Part of the problem is, with the absence of local representatives, the local bodies are lacking a powerful lobby advocating for a far reaching provision on local autonomy. In fact, the LGAs are virtually the only actors pursuing an according agenda. F
Fig 3: Democratic structures at the local level
Municipalities: VDCs: Heads of executive, directly elected Mayor Chairman Deputy‐Mayor Vice‐Chairman VILLAGE COUNCIL MUNICIPAL COUNCIL Ward Committees Ward Committees 5 members, direct 5 members, direct election, (min. 1 woman) election, (min. 1
elect
DDCs Heads of executive DDC Chairman Vice‐Chairman 1 member per ilaka DISTRICT DEVELOPMENT COMMITTEE
Heads of Administration, appointed by the Ministry of Local Development Since the democratization in 1990/91, only two local elections have taken Executive Officer Secretary Local Development Officer place, one in 1992 and the last in (Acting Mayor since 2002) (Acting Chairman since 2002) (Acting Chairman since 2002) 1997. These elections were primarily marked by strong competition among
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3. Local Democracy 3.1Democratic system at the local level the then two major parties, NC and UML. Both parties used to have a huge base of supporters in all districts, municipalities and most VDCs. Although, personalities including their public standing and local networks did play a role, the parties themselves were extremely hierarchical and strongly interfered in local issues. Accordingly, the election results were in many ways a reflection of the national political scenario, with the NC as the clear victor in 1992, while the UML took it over in 1997. Given that the last election took place more than 14 years ago, the political parties which make up more than half of the current national parliament, have never contested in a local election. As a result, the beginning development of a local democratic culture during the 90’s has come to a grinding halt. The absence of elections as a means for political contest has left intra party competition as the only means for political participation, coming along with the common ills of nepotism, clientelism and corruption.
The Local Self-Governance Act and Regulations have devolved more responsibilities and given increased political autonomy to the local bodies. Currently there are two tiers of local government, i.e. the district government and village and municipal government. Especially in the council some provisions regarding representation of women and other backward groups offered unprecedented though still very limited opportunities for political participation since the end of the Panchayat. Since the dissolution of the local bodies, the heads of administration, which were originally appointed by the government in order to monitor the LGs compliance with according rules and regulations, serve as acting Chairmen and Mayors.
3.2. Citizen Participation In addition to the temporary replacement of the Chairmen and Mayors by the Heads of administration in 2002, a further arrangement for the defunct councils was agreed upon in 2006. Accordingly, all parties that contested for the CA elections from a certain constituency were requested to nominate one representative for the respective local party committees. Although, these committees have officially only a consultative function, in practice the overextended executives largely follow their recommendations. In general, this mechanism has failed to compensate for the inherent lack of accountability in the local governments. Furthermore, financial irregularities, inefficiencies and the total lack of initiative and leadership in the LGs, has severely eroded the citizen – local government relationship. However, given that in Nepal many capital investments at the local level require a contribution of the concerned communities, in combination of still largely intact village / community / neighborhood (esp. on the Ward level) structures; in many places one can ascertain that a collaborative culture of participation does exist. Therefore, a diverse assemblage of more or less active community and civil society organizations have always played a significant role in the articulation and coordinated satisfaction of specific local needs. This phenomenon also caught the attention from government and international donor agencies, in search of actors potentially capable to hold local governments accountable. Accordingly, the government went to great lengths in developing and distributing numerous guidelines and provisions in order facilitate the CSO/CBO/citizen – local government cooperation; the Local Government and Community Development Program (LGCDP) as currently the largest joint governmental/donor development program, is crucial effort in that regard. Especially for the budgeting process, various provisions which relate to transparency and social inclusive participation in the LG budgeting and VI
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auditing process have been enacted. Though, most are still in an early implementation phase. However, all these efforts are in many ways a hapless attempt to temporarily substitute for something that cannot be adequately compensated for; that is functional local democratic institutions.
4. central – local relations 4.1. General Issues The central government line agency for the local bodies is the Ministry of Local Development (MoLD). The ministry is responsible for the appointment of all heads of administration in the local governments. Furthermore, except for specific program/project or own funds, the budgets for all LGs are being disbursed trough the MLD. Likewise, all LG specific rules, regulations and guidelines are being prepared introduced and their observation supervised by the ministry. Though, all binding legal provisions have to be endorsed by the cabinet and/or the parliament. In other words the legislative powers of the local bodies are extremely limited; mostly to local development initiatives trough the budgeting process and levying of local fees and taxes. Likewise, the Interim Constitution of Nepal contains only very general provisions on local self governance; primarily stressing for the installation of (temporary) local representative bodies and in other clause once more for the fulfillment of their diverse responsibilities with and for the local communities. Fig 4. Constitutional provision for LSG
(1) Arrangements shall be made to set up local self governance bodies on the basis of principles of decentralization and devolution of power by creating a congenial atmosphere for the exercise of the people's sovereignty and thereby ensuring maximum peoples' participation in the country's governance, to provide services to the people at the local level and for the institutional development of democracy.
4.2. Supervision of Local Government The municipalities, DDCs and VDCs (through the DDCs) are supervised by the national government trough the MLD. Local government supervision is most commonly exercised through fiscal control, on basis of the existing rules and regulations. Accordingly, in financial matters the central government may investigate irregularities, order an audit and in case of conflicts suspend any officials or even dissolve the local body. Apart from the relatively autonomous local governments, various government departments and ministries have presences on the local level. In case of the municipalities, the municipal development committees are responsible for infrastructure development, urban planning and the enforcement of building codes and supervised by the Ministry of Physical Planning and Works (MPPW) through the Department of Urban Development and Building Construction (DUDBC). And although the mayors are formally the Chairmen of these committees, practically they operate completely independent of the local governments. Likewise, in each district there is a District Administration Office (DAO), which is headed by a Chief District Officer who is appointed by the Ministry of Home Affairs (MH) and serves as the highest government representative on the local level. In addition, many ministries and departments have their own sector specific offices on the local level, which are again all operated completely independently of the local governments. Since the enactment of the LSGA, these centralized parallel structures have been frequently criticized for curtailing decentralization by depriving the LGs of sector specific expertise and capacities, though to the date to no avail.
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UCLG COUNTRY PROFILES Fig.5 Central local relationship
MPPW / DUDBC, and other govt. departments a.o.
3 LGAs MuAN NAVIN
ADDCN
Municipal Development Committees
Local Ministry of Development MLD
Municipalities
DDCs
MH, MPPW, Central MHP, ME, MAC Level and others
govt. Local Central & Sector Level offices
VDCs
4.3 Protection of local self-government rights and interest The primary legal framework for local autonomy is the LSGA (1999) and the Interim Constitution. Theoretically, local governments can sue natural or judicial persons and therefore also the central government in case of breach of their rights. However, in practice this is rare, especially since the dissolution of the representative organs of the local bodies. Instead, in 1998 the three Local Government Associations have been registered under the national directive act and given a special legal status – neither governmental nor non-governmental. The LGAs represent the local bodies’ interests on the national level by commenting on and advocating for according policies as well as by providing technical and advisory support and articulating their members’ needs and perspectives. Accordingly, the LGAs are represented in all central government committees and commissions that potentially affect the interests of the local governments. In addition, the LGAs might also file cases on behalf of their members. The primary organs of the LGAs are the General Assemblies of, Mayors and Vice Mayors, DDC Chairmen and Vice Chairmen as well as VDC Chairmen respectively.
5. Local government responsibilities 5.1 Local functions The functions and responsibilities of the local bodies saw the most substantial evolution as compared to the political and fiscal dimensions of decentralization. Especially during the Panchayat regime, the local bodies became the primary agents for implementing the central government development agenda and related services. Furthermore, since the 1990’s the local bodies became increasingly involved in providing participatory mechanisms at the local, Ward and community level, primarily for setting the local development agenda and according priorities (especially through the budgeting process) as well as for local conflict resolution. Accordingly, the functions and duties of the local bodies (which are mostly outlined in the LSGA) are extremely diverse. However, due to the adverse conditions that evolved during the end 90’s at the local level, the local governments have remained rather weak in performing their prescribed duties sufficiently. In fact, since the adoption of the LSGA neither the capacities nor the resource bases have ever been adequately upgraded. Therefore, the LGs largely continue to provide especially the rather common and essential services, while having to neglect the more
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specific/sophisticated functions. Currently, the most common functions of the LGs are basic infrastructure development, such as roads & drains, solid waste management, water and sanitation or basic health services. In addition, they provide services such as schools, libraries, police and fire
departments. Another function of the local governments is to provide and enforce laws.
Fig 6. Primary functions, duties and powers of LGs according to LSGA
Municipality
DDC
VDC
- Finance - Physical Development - Water resources, Environment and Sanitation - Education and Sports Development - Culture - Works and Transport - Health Service - Social Welfare - Industry and Tourism - Miscellaneous - Optional Functions
- Agriculture - Rural Drinking Water and Habitation Development - Hydropower - Works and Transport - Land Reforms and Land Management - Development of Women and Helpless People - Forest and Environment - Wages for Labour - Irrigation and Soil-erosion and River Control - Information and Communications - Language and Culture - Cottage Industry - Health Service - Tourism - Miscellaneous
- Agriculture - Rural Drinking Water - Works and Transport - Education and Sports - Irrigation and Soil-erosion and River Control - Physical Development - Health Service - Forests and Environment - Language and Culture - Tourism and Cottage Industries - Miscellaneous
6. Finances locales
6.1 Local government incomes In local government finance, there is a trend towards a relative increase in grants as compared to own revenues. However, in the municipalities for example, the own revenues (taxes and fees) continue to be the most significant source of income (Local Taxes 45,1%, Grants 22,5%). The scenario is similar in the DDCs and VDCs, though most of the figures currently available are vastly outdated. 6.2 Primary sources of LG income Municipality The municipality receives budgetary transfers from the central government / DDC as grants or from revenues collected by the central government / DDC for/from the municipality. The municipality may impose taxes on housing and land, rents, enterprises, vehicles, properties entertainment, commercial video and advertisement.
The municipality may impose service charges and fees in various areas. DDC The DDC receives budgetary transfers from the central government as grants or from revenues collected by the central government for/from the district. The DDC may impose taxes on routes of transport (roads, trails, waterways, etc.) and certain indigenous (natural) goods. The revenue will have to be shared with the VDCs and municipalities of a district. The DDC may impose service charges and fees in various areas. VDC The VDC receives budgetary transfers from the central government / DDC as grants or from revenues collected by the central government / DDC for/from the VDC. The VDC may impose taxes on housing and land, rents, markets, businesses, vehicles, commercial video and natural resources. The VDC may impose service charges and fees in various areas.
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6.2 local personnel and management All executives are deputed by the MLD. The rest of the officials, section chiefs and staff are hired by the local governments. All positions, according remuneration, required qualification, selection process, etc. is defined by the central government through the Local Self Governance Regulations. Except for project specific / temporary positions, all staff members are employed under civil service rules and regulations. All regular duties and functions are carried out by LG civil service employees. Only project specific tasks and services are being forwarded to private contractors and consultants.
References: Local Self Governance Act, 1999 Local Self Governance Regulations, 1999 Interim Constitution of Nepal, 2007 Local government finance in Nepal Current situation, challenges and future policy. udle, 2008 Local Governance in Nepal, Democracy at Grassroots. Rabindra Khanal Three Year Interim Plan, 2007 Human Development Report. UNDP, 2010 Economic Survey. Government of Nepal, 2010
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