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Background Papers
Decentralization in Nepal: Experiences and Prospects
A Paper Prepared by the Donor Community in Nepal for purposes of the Nepal Development Forum (NDF)
April 17-19, 2000 (Paris)
Introduction:
1.1 Concept
Decentralization has no single standardized definition and one model for practice. It is modeled in accordance with a country's system of governance, resource base, administrative system and socio-cultural factors. However, universal practices show that decentralization is means of governance through which responsibilities such as planning, management, resource raising, allocation and service delivery functions of central government are transferred to lower agencies. These agencies can be field units, area based regional or functional authorities of the government or non-governmental, private sector or civil society institutions themselves.
Governance means authority vested in institutions or person to make decision over delivery of public goods and services by the use of public resources. Decentralized governance therefore refers to an arrangement in which the state through its main law or statutory provisions creates semi autonomous or autonomous local governance institutions (LGI) at lower levels. It defines their roles and functions and devolves public tasks and functions to them. In addition, state also makes provisions to protect the authority and autonomy thus granted. In democratic regimes LGIs are political institutions based on popular mandate and are accountable to people themselves. LGIs are also institutions that promote local democracy, provide access to people in governance and deliver need- based public goods and services.
The democratic constitution of the Kingdom of Nepal (1991) has recognized decentralization as a means to ensure optimum involvement of people in governance and hence provide opportunities to them to enjoy benefits of democracy. The constitution is however, silent on local governance institutions. It has simply made an arrangement (article 48) for an electorate for 25% (out of 60 members) members of the upper house of the parliament elected on regional basis or three from each development region of the country. This electorate consists of specified officials of elected bodies at village, municipal and district levels. The provision thus makes it mandatory to create local bodies at village, municipal and district levels. In Nepal, decentralization and local self-governance concerns therefore revolve around issues on the working relationship and authority of these institutions with the deconcentrated agencies of the line ministries at local level which provide most of public goods and services to people.
1.2 Evolution of Decentralization in Nepal:
Nepal' experience with democracy began in 1951. It abruptly ended in 1960 through the royal take-over. The king then directly ruled the country for thirty years through party-less Panchayat system. The popular revolution of 1990 ended the Panchayat system and, restored pluralist democracy. Yet, despite fundamental ideological differences between the Panchayat system and democracy, decentralization and local governance issues have constantly become focal concerns of both forms of regimes. In fact, one can observe continuation of Panchayat time concerns and dilemmas on decentralization and local governance in democratic context also.
The Panchayat was a monolithic system but it projected itself as a governance arrangement based on decentralization and popular participation. It constitutionally created politically mandated local governance bodies in the form of Village, municipal and District Panchayats. The Panchayats were devolved various political, administrative, development, taxation, service delivery and planning tasks to meet principally the basic requirements of decentralized local self-governance system under the guided democracy.
The main policy debate during this period revolved around two schools of thoughts. One argued in favor of high devolution of political, economic and development authority to local Panchayats at their respective levels. The other school, which consisted of bureaucrats, technicians and higher level politicians favored limited devolution of authority to local bodies and maintain administrative control over them. The persistent debate led to many positive initiatives also. They consist of policy studies, more focus on participatory development processes, integrated planning and the introduction of 1982-84 Decentralization Scheme. The scheme put the line agencies of the ministries at the districts under the umbrella of District Panchayat, promoted the concept of user committees, participatory planning and development.
Decentralization Experiences: 1990-2000.
Besides indirect constitutional provision on decentralization and local self-governance, the democratic regime made no immediate policy and program departures from the previous system. Through an ad hoc arrangement (1991), it changed the names of respective local Panchayats into Village Development Committee (VDC), Nagar Panchayat into municipality and District Panchayats into District Development Committee (DDC). In 1992, three separate acts commonly called the decentralization acts (VDC, DDC and Municipality) were promulgated. They devolved development and service functions to LGIs, designed organizational structure and election mechanisms.
The new LGI leadership instantly began to identify shortcomings of the system and pressured for appropriate correction. The DDCs formed their own association; municipalities and VDCs also followed the trend. The DDCs in particular through their association made collective pressure on the government to make changes and in response the government appointed a High Level Decentralization Coordination Committee (HLDCC) under the chairmanship of the Prime minister in 1995. The HLDCC made decentralization and local self-governance policy recommendations. The guidelines of HLDCC provided basis for the preparation of Self-governance Legislation. The parliament in March 1999 amidst intense partisan debate passed the legislation and recently, on 31 December, 1999 the government approved the local governance regulation also.
2. New Policy Shifts and Trends:
2.1 Policy:
The democratic environment has provided adequate space and mechanisms for stakeholders to debate and demand timely changes in Nepalese decentralization and local self-governance system. The emerging stakeholders and pressure groups that champion the change primarily consist of LGIs themselves, followed by emerging civil society institutions, donors and professional groups. Collectively, they are building more pressure on effective devolution of authority to LGIs, good governance, participatory planning and people centered development.
The achievements made during the last ten years can not be expected to answer all problems, however, there are some positive shifts in policies and trends. The following points, among others, substantiate it.
- There is increased recognition to the need of making direct constitutional provision for decentralization and local governance. LGIs have argued that this provision in particular is necessary to protect them from the executive arbitrariness and shifts in parliamentary equations. The HLDCC has also endorsed this concern and recommended positively. Among political parties, though mutely, this concern is receiving attention.
- Reservations on the merits of Local Self-governance Act (LSA) are natural. However, all agree that it has set an unprecedented policy shift by legally endorsing the concept of self-governance and devolution of authority to LGIs. By doing, so the act has provided legitimacy to the existence of hierarchy of political governance units based on popular mandate.
- Political will and consensus as necessary precondition for institutionalization of decentralization and local governance is recognized in the act. Therefore, Decentralization Monitoring Committee under the chairmanship of the Prime minister himself is made. The committee also consists of leader of opposition party, representatives of political parties that have representation at the parliament, representatives of local government associations, ministers, vice-chairman and member of the National Planning Commission, line ministry secretaries and intellectuals. In order to make the committee functional a working committee consisting of professionals is also arranged. Twice a year the committee is to report its findings to the Development Committee of the parliament. Hence, this committee can be expected to work as the most powerful forum for consensus building, conflict resolution and policy formulation and simultaneously become accountable to the legislature.
- Disputes between the central and local authorities on access, management and control over revenue yielding resources generally prohibit decentralization process in general, and in particular they intensify conflicts between the deconcentrated LAs and the LGIs in particular. In order to find an outlet to this situation a Local Government Finance Commission with representation of LGI associations is proposed.
- Provision for revenue sharing between the central government and LGIs and among the LGIs (DDC/VDC/municipality) is introduced. In addition, the right of LGIs on natural resources and taxation is recognized. These provisions in the long-run are likely to reduce the financial vulnerabilities of LGIs and hence strengthen the decentralization process further. In addition LGIs are authorized to borrow loan from financial institutions. This provision can be expected to facilitate LGIs to initiate income-generating activities for their institution and finance development undertakings that can recover investment in both short and long- terms.
- LGIs council system is introduced in order to enhance accountability and transparency. The council is made the supreme policy making body. The council is to elect its own chairman to preside over the council deliberations. Provisions are made for separate committees including audit committee in line with parliamentary committees at the council.
- Provisions are made to ensure participation of women and disadvantaged groups in LGIs. Twenty- percent representation is reserved for women candidates. Hence almost 40,000 women representatives are elected into LGI institutions. In similar manner, provisions for the representation of disadvantaged groups in LGIs through nomination are made. This initiative is expected to provide access to these groups in governance and hence address their concerns.
- LGIs need to have their own management and bureaucracy to perform devolved functions. In Nepal, MLD provides professional and administrative staff to LGIs. This is a continuing tradition of administrative control of LGIs from the center. The local governance act has authorized DDC to hire its own professional staff and the regulation has defined the category of such staff. However, secretaries of all LGIs who become ex-officio chief of LGI bureaucracy and finance also, will remain government civil servants having direct accountability to the MLD. Yet, the limited provision for hiring officer level staff can contribute to enhancement of professional competence of LGI bureaucracy.
- One major policy departure made through the act is the authorization to DDCs to establish their own sectoral units. The regulation has made provisions on the processes of establishing sectoral units at DDCs. Once the sectoral units are established, the concerned line ministries are to hand-over their line agency assets to the DDC and withdraw their staff. The implementation of this provision is likely to attract resistance from the line ministries, but in the long run may facilitate experimental policy and program initiatives so that the DDCs in particular become the focal points of local governance in Nepal and also effectively assume sectoral service delivery responsibilities.
- Traditionally, MLD was the sole link ministry for LGIs in their dealings on sectoral development activities with other ministries at the local level. The new act has authorized the DDCs and municipalities to have direct link with respective ministries. This departure is expected catalyze more effective coordination between the ministries and DDCs in district level programs and planning processes.
- Legal status is granted to decentralized participatory bottom-up planning process. All development actors including LGIs, LAs, donors, INGOs and NGOs working at local level are expected to follow this process and coordinate with the LGIs in planning. Legitimacy to participatory planning process and integrated planning if made effective can contribute to reduction of overlapping and parallel activities, duplication of resources and efforts and finally streamline local planning.
- Decentralization and local governance need constant capacity building support from the government. At its absence, lower level governance units remain weak and unable to sustain their autonomy. MLD and NPC are identified as institutions to build capacity of LGIs in particular. Hence, capacity building of LGIs has become the act directed function of the HMGN.
- Classification of LGIs is proposed and the regulation has outlined the classification criteria. For DDCs classification criteria consist of road access, health, education and communication related indexes. The classification criteria can have three long- term implications. Firstly, encourage DDCs to - for all LGIs as well - aspire for better status and work accordingly. Secondly it can provide tool to government to enhance decentralization process further in advanced districts and also promote their autonomy. Thirdly, make special resource allocation and development support policies for the districts that have comparative disadvantages and hence promote equity in evelopment.
- Democratic process and civil society institutions go hand in hand. Civil society movement in Nepal is a new phenomenon. The act has recognized the role of civil society in decentralization and local governance process and therefore recommended partnership between civil society institutions and LGIs in development undertakings.
- Poverty, inequity, environmental conservation, gender and concerns of disadvantaged groups have emerged as the focal development challenges of Nepal. LGI institutions are expected to address these concerns in their planning, resource allocation and service delivery efforts. The local governance act has directed the LGIs to address concerns of women and poor by giving priorities to them in all activities. Other references in these areas are drawn through the devolved sectoral functions.
- The act has granted legal status to LGI associations and also made provisions for their representation in major policy making bodies related to them.
2.2 Trends:
Threats that can deter further institutionalization of decentralization processes are strong in Nepal. Simultaneously, however countervailing forces that propel the positive processes ahead are also becoming vocal and active. The later are expected to make more positive and forward-looking contributions. In addition, many positive trends are self-evident and they are followings.
Increasing Recognition to the Role of LGIs and Decentralization:
A: The Ninth Plan has recognized decentralized governance as a precondition to promote rural and local development. It hopes to catalyze this through extension of authority of LGIs and also build their capacities accordingly. The plan also proposes for effective resource mobilization at local level in order to promote sustained development. The stated decentralization objectives of the plan are, to increase participation of local people in resource mobilization, allocation and distribution of benefits to ensure equity; build institutional capacity of LGIs to become more accountable to people; to develop institutional arrangements so that LGIs can undertake their devolved functions effectively; increase participation of people in LGIs and motivate LGIs to economic self-reliance through effective mobilization of resources.
Important decentralization policies of the Plan are: financial and management capacity building of LGIs; promotion of participatory development; integration and coordination of local development programs; mobilization of civil society; access of women and disadvantaged groups in decision-making process; effective monitoring and evaluation mechanism and accountable bureaucracy to LGIs. In addition, the local development strategy proposes to make DDCs as the focal point of local development.
The plan proposes to run anti -poverty campaign in the country. For this purpose it has identified decentralization and social mobilization as mechanisms to increase additional income of rural population. In addition, it plans to expand social mobilization process and build further on its experiences for promotion of community groups, skill development, transfer of technology, savings and local capital generation.
B: Aside from the Ninth plan, many sectoral legislation and regulations focus on decentralized planning and service delivery approaches. The Forestry Act focuses on community owned and managed forests. Consequently, throughout the country more than 4000 forestry user committees have become institutionalized. They have created their own national federation and emerged as a major civil society pressure group. Drinking water and irrigation agencies adhering to the same approach have begun to institutionalize their user groups. Similar decentralized participatory group approaches are adopted in soil conservation, women development, public health and agricultural programs. Additionally, the regulations related to education, agriculture, women, and rural infrastructure and health services delivery systems involve the DDC chairmen in their policy-making committees.
These arrangements at the present moment appear perfunctory and ineffective, but they have indirectly created an environment for increased involvement of LGIs and community based institutions in decision-making processes. The provisions for involvement have already begun to empower LGIs and community institutions. They have begun to question the planning, resource allocation practices and achievements of the concerned sectoral institutions and also on the other hand demand more direct decision-making roles. Hence, the processes of decentralization through direct involvement of stakeholders and LGIs in line agency functions are likely to increase gradually.
Space for Collective Action and Bargaining: Role of Civil Society Institutions:
Open and tolerant political environment provides space for collective actions and bargaining for common interests. This environment often works in favor of weaker institutions and groups. These forces generally agree on their common interests and in order to promote them come together and form collective institutions. Such institutions at the outset undertake advocacy roles, but as they sustain they become formidable professional bodies that work to safeguard and promote collective interests. Generally, in democracy such emergent institutions take the lead role in advocacy for decentralization and good governance. The newly established LGI associations in Nepal have successfully taken up this role and become the champions of decentralized governance even at the cost of being at loggerhead with the government frequently. Under the collective leadership of their associations the LGIs are likely to emerge possibly the most powerful champions of decentralization in Nepal. In addition, along with the advocacy roles the DDC Association (ADDC/N) in particular has managed to develop distinct professional competence. Furthermore, as the members of these institutions agree to develop common agenda without partisan bias and promote them within their respective parties, they can influence the party leadership in favor of their cause, set agenda and also influence parliamentary as well as government decisions. Likewise federated commodity focused user groups and civil society institutions can be expected to contribute in similar manners for their causes. Such new forces are likely to emerge as essential stakeholders in decentralization and governance process in future and receive increased attention of the external support agencies if the present working style and efficiency of the government remains constant.
Accountability and Transparency:
There is increasing stress on accountability at all sectors including the LGIs and LAs. This is a result of growing public awareness, participatory mechanisms in planning, and service delivery related institutional arrangements. Similarly, pressure for effective coordination among the service providing institutions including the LGIs for efficient use of resources, minimization of overlapping and parallel activities and demonstrate measurable achievements is likely to increase from all sectors. In response to pressure for accountability and transparency, LGIs have begun to make their financial and executive decision public through publication and distribution. With the support of PDDP/LGP, they have also developed their information canters.
Increase Resource Flow at VDCs and Municipalities:
During the last five years resource allocation to LGIs has increased. This is particularly so in the case of VDCs. As opposed to average allocation of RS. 25,000.00 or less to VDCs in 1990-91, now they receive lumpsum grant of Rs.500, 000.00. This has helped VDCs to undertake several development and service delivery initiatives at their own. VDCs that have access to local resources such as gravel, sand and market facilities and using them they have successfully generated additional resources. For example, Dulari and Sunderpur VDCs of Morung district and Duhabi of Sunsari have generated more than RS. 25,00000.00 annually. This amount exceeds the revenue generated by DDCs such as Taplejung, Panchthar, Terathum of the eastern development region and several times more than DDCs such as Mustang, Manang, Bajhang and Bajura. In 1997-98, eighteen municipalities were able to finance their development activities and support their staff without governments' administrative support grant.
Increased Efficiency of Resource Mobilization by DDCs:
Simultaneously, the resource generating capacity of DDCs has increased substantially. Within nine year period for example the DDC Lalitpur has increased its income from Rs. 350,000.00 (1992-93) to Rs. 94,00000.00 (1997-98). DDC Rupandehi has increased its income from a few million ten years ago to almost 40 million rupees and has become the richest DDC in the country. Dhading DDC has made an income of 13 million rupees from the sale of sand, gravel and stone alone in 1999-2000. Panchthar DDC had less than Rs.100, 000.00 income (1991-92), but this amount has been increased to more than Rs.1.1 million (1998-99), which shows ten times growth over the nine year period. Kaski DDC's income from mining of gravel and sand has increased from less than Rs.400, 0000.00 in 1992-93 to near RS. 74,00000.00 in 1999. These are not exceptions but general trends observed in most of the DDCs.
Potentials of Revenue Sharing:
The recently published regulation of the Local Self-governance act has proposed revenue sharing criteria between the central and local governments. The range of share of DDCs in revenue generated from the registration of land ranges from 10 to 90 percent of the total amount generated at the district. Districts where amount is less than Rs.500, 0000.00 DDC are entitled to 90%, between RS. 5 million to Rs.10 million 60% and as the amount of volume goes up, the share becomes less. In similar a way DDCs are entitled to 10 % of the revenue generated from the sale of forest products. In addition, districts where electricity power production plants are located, DDCs are entitled to 10% of the total royalty paid to the government This arrangement possibly will enhance the revenue base of resource poor DDCs and also create new opportunities in future. Presently, it is difficult to estimate the volume of additional cash flow into DDC fund from the proposed revenue sharing areas, yet one can estimate an average increase of 3 million rupees at each DDC from land registration source. Districts that have more urbanized areas with high real estate value are likely to receive more than their rural counterparts. Similarly, districts where national forest are located and have access to markets can benefit more from the forest product related revenue sharing. The hill and mountain DDCs are likely to benefit more from the electricity related revenue sharing in the long run than their counterparts at the plains. The revenue sharing concept is likely create more vigilance of LGIs on the decisions of government while deciding the revenue rate and range and also open opportunities for negotiation and expansion of the share. The process of mutual negotiations and adjustments in the long run contribute to financial strengthening of LGIs in general and DDCs in particular.
Partnership:
Partnership in development and service delivery system is an emergent trend at community, LGIs and government levels. Partnership approaches in practice include common agenda setting, resource and task sharing and sharing of benefits as well as experiences. During the last ten years partnership of LGIs with INGOs, COs and donors has increased and produced positive results. Almost 40 % DDCs of the country have formed District NGO Coordination Committee, begun practice of joint agenda setting, planning and program implementation. INGOs such as PLAN International, HELVETAS, CARE, MS DANIDA and CECI have worked through DDC. A new trend of partnership between the LGIs and COs is being developed in UNDP supported PDDP/LGP districts. In districts where PDDP/LGP programs have established Local Trust Fund and supported Village Development Program (VDP), at least 80%, households of the communities are organized into different Cos. The LGI representatives are also allowed to be the members of the Cos. The VDCs where VDP is in operation, practice of joint agenda setting by the VDCs and COs is on an increase. Similar trends are on rise where local planning is undertaken through participatory mechanism and group approaches. Among the donors, UNDP has established partnership with DDC and village level agenda setting, planning, resource allocation and community contribution. Increasing stress on participatory bottom-up planning and its incorporation into the law, itself is likely to enhance the community empowerment process further. As more resource becomes available, demand from community in this line can be expected to increase. In PDDP/LGP districts this process has begun to take institutional form through Community Organizations catalyzed by social mobilization activities.
Increased Emphasis of Donors on Decentralization:
Donor contribution to Nepal's development budget is significant and it is likely to remain so in future also. Donor supported program range from infrastructure development to delivery of essential services. Outside the large projects, most of the donor-supported programs adhere to decentralized participatory approach with special focus on the role of the community and local institutions. Donor supported programs put emphasis on democratic decisions, community participation, equity concerns, local partnership, empowerment and sustainability. These approaches and processes contribute to institutionalization of decentralization concerns and subsidiary system. In addition, the donors have also begun to work in partnership with LGIs, support their associations for programs and promote pro-decentralization policies and activities at national level. This trend is likely to continue and expedite the decentralization process further in Nepal.
Emerging Civil Society Institutions as Stakeholders:
During the last ten years, new actors in development process have emerged. They range from NGO/INGOs / CO to private sector institutions. Substantial amount of resources for development flow from these institutions. It is likely that their role will increase in future on decentralization and local governance as service providers.
Central Role of LGIs in Development Processes:
The Local Self-governance act has made LGIs as the main institutions for development and service delivery activities at their respective levels through devolution of authority. In addition to the legal provisions, the emerging practices in planning and service delivery from both formal and informal sectors have begun to recognize the central role of LGIs. The LGIs themselves have also begun to assert this role through coordination and partnership. DDCs in particular have become active in this regard.
Capacity Building: There is increased realization of the need to support management, human and resource generation capacity building of LGIs for effective decentralization process. Various programs for this purpose are launched through HMGN, UNDP, SNV, SDC, USAID supported National Democratic Institute (NDI), DASU/DANIDA, UNICEF, GTZ, Association of DDCs and other institutions. After the second election of LGIs in 1997, training of elected women representatives in governance has attracted attention of various institutions. In similar manner, majority INGO/NGO and donors supported programs have also incorporated capacity building provisions at different levels as one of the main components of their programs. It is difficult to estimate the cost, coverage and outputs of capacity building support activities In addition, the LGIs themselves have also begun to recognize management, human, technical and resource generation capacity building critical for their functioning.
Generally, capacity-building programs related to LGIs focus on short-term management and planning related training. UNDP supported PDDP/LGP programs however focuses more on long term institutional capacity building of DDCs. These programs have supported DDCs to develop information data base system, equipped them with computers, assisted to enhance management competence through recruitment of four Program Officers, streamlined the participatory planning process and also assisted in DDC HRD development. Similarly, PDDP and ADDCN in partnership have provided technical support to strategic planning of DDCs and already strategic plan of eleven DDCs is prepared. DANIDA funded DASU program has for the last several years focused on the capacity building of LGIs through governance and management training targeted to all LGIs. Recently this program has agreed to support ADDC/N, Surkhet and Doti DDCs for long term capacity building program. UNICEF under its Decentralized Participatory Child Development Program (DPCP) has begun to contribute to child and women related planning capacity building of eight selected DDCs. The analysis shows that LGI capacity building is priority concern of all sectors and will be in future too.
Leadership Quality, Linkage and Access Building:
There an increase of educated and younger generation seeking offices at LGIs. Around 70% DDC chairmen are college graduates and some have post-graduate degrees. The percentage of educated young officials at VDC level has also increased. Many LGI representatives come form teaching background and have effective communication skills and confidence. Considering their age and educational background many among them will have long-term political career and upward mobility. During the last national election, 22 members elected at the House of Representatives had LGI background. Educational background and communication skills of representatives have facilitated LGIs capacity to build linkage and access with various donor and resource providing agencies. Therefore, DDCs such as Kabhre, Lalitpur, Kaski, Accham and Morung have influenced external agencies to invest in their development activities. This aspect is an important trend in the making.
Improvement in Planning Practices:
Participatory decentralized planning process has contributed to improvement in planning processes. In PDDP/ LGP districts, DDCs have begun to use information database, GIS maps for plan prioritization. Various stages of joint planning exercises from pre-planning workshops to Ilaka level meetings and DDC sub-committee decisions ensure increased involvement, interaction and consensus building processes among LGI representatives and other stakeholders including LAs. This process has also contributed to joint project undertaking and partnership building. Consequently, the DDC have begun to exert pressure on higher agencies not to alter the local priorities and accordingly increase development budget allocations. The joint planning exercises have increased more direct communication between the LAs and the LGIs and LAs accountability to LGIs as well as the communities. These qualitative changes can be observed in planning practices between PDDP/LGP and non-PDDP districts and VDCs. Simultaneously the differences between the two sets of districts are found in their management and HRD areas also. Hence, challenge to institutionalize this process and practice is self-evident.
Positive Responses to Social, Human and Equity Concerns:
The tendency of LGIs to identify physical infrastructure as development is changing. DDCs have started to allocate resources to programs related HIV/AIDS, gender sensitization, children related programs, public health services and literacy/ education. VDCs have begun to pay for the teacher's salary out of their RS. 500,000.00 grant. VDCs with resources have also begun to run skill development and income generation programs for women, poor and disadvantaged groups.
If properly facilitated, ADDCN/PDDP experiences from district strategic planning facilitation shows the LGIs give high priority to social, human and equity concerns than physical infrastructure development. Except Mustang district, LGI identified three main priorities consisted of productivity increase, poverty reduction and improvement in social sectors. Hence, LGIs can be expected to address social, human and equity concerns more effectively if proper sensitization is provided to them.
Consensus Building on Development Decisions:
Good governance is based on agreement and adjustment of contending political, partisan and sectoral forces. LGIs are elected through partisan contests and therefore often suspected to take partisan decisions. However, at DDC level increasing trend of adjustment of partisan interest and consensus building on development decisions are observed. This is a positive development and calls for further strengthening. At the VDCs where COs are formed through social mobilization process this practice was found on an increase. Communities informed that they were able to set aside the partisan interest and affiliations in favor of common agenda and development concerns. The DDC and VDC leaders also informed that they could no more take fully partisan stand on development concerns.
Poverty Reduction and Decentralization:
The Ninth Plan document admits the failure of centrally run and target focused anti-poverty program of the government. Therefore, it recognizes the need for decentralized effort to reach the poor successfully. Similarly LGI acts direct them to work towards poverty reduction. Poverty alleviation through decentralization requires high degree social mobilization, grass-root empowerment and resource mobilization. And LGIs can be expected to play as key role in this regard.
3. Constraints:
Decentralization and local governance process despite positive trends face several challenges and constraints. They range from policy issues, coordination problems, resource mobilization, capacity to service delivery concerns at local level.
3.1 Policy Level:
Decentralization and local governance issues are essentially political decisions. Their approaches, systems and targets need to be fully agreed among political forces. otherwise decentralization process becomes experimental and local institutions constantly become vulnerable to partisan whims, central bureaucratic control and abuse. They can be denied resources, opportunities to learn and make mistakes. Safeguard provision for decentralization and local governance therefore need to be incorporated in the constitution of the country. Constitutional guarantee for decentralization and local governance is not fully provisioned in Nepal. Therefore, all decentralization related decisions and practices are susceptible to shifts in political equation and expediency.
Decentralization needs to be an overarching mechanism to avoid parallel and duplication of roles, functions and sectoral interests of the governance as well as bureaucratic institutions. For this purpose decentralization, issues are generally coordinated by the head of the government and safeguarded through legislative mechanism such as parliamentary committee and hearings. At the present stage in Nepal, it is not specific who is actually responsible to look after decentralization and local governance concerns. The Ministry of Local Development ( MLD) that looks after the local government and decentralization issues is one of the sectoral ministries without any mandate to demand compliance from other sectoral ministries. The National Planning Commission (NPC) is simply a policy recommendation body without authority to make abiding decisions on decentralization issues. Hence, all decentralization related decisions tend to be interpreted by different sectoral ministries within their own institutional framework and mandate. Absence of a specific and effective mechanism can always weaken the decentralization process in favor of strong sectoral and personal interests.
The High Decentralization Monitoring Committee formed under the Prime Minister which can address these problems is yet to be operational. Despite good intention for making such a body, the DMC runs the risk of being confined simply to ritualistic role. This can happen due to the decision of the Prime minister himself, his disinterestedness, sectoral interest of MLD and others and finally non-compliance to its decision by ministries.
Political consensus building at both vertical (policy/party leaders) and horizontal (local leaders/ workers/ LGI representatives) levels are essential to institutionalize decentralization and local governance processes. No such deliberate efforts have been made at leadership level. Therefore, decentralization and local governance issues and practices remain subject to partisan interpretation at individual party level. Therefore, the lower levels also governance decentralization runs risk of partisan interference, program discontinuity, clientele creation and conflict as and when strategic decisions are made at higher levels of the parties.
Heavy deconcentration of duplicating and parallel authority along individual sectoral ministries and their line offices at local level pose serious problems in inter institutional coordination for resource mobilization, planning, monitoring and delivery of services. For example, the task of sanitation at community level becomes concern of LGIs, drinking water and health offices. Similarly river training program at local level falls within the jurisdiction of LGIs, soil conservation, irrigation, roads offices and it can be initiated with direct support of central government. Such a situation mainly emanates from absence of clear division of roles and functions among the uncoordinated deconcentrated offices of LAs on the one hand and clear devolution of authority to local bodies. Thus the net result is the unmonitored flow of resources, uncoordinated planning and service delivery.
Sectoral targets and planning at local level often weaken the partnership and collective initiative based on decentralized participatory planning processes. In particular the deconcentrated LAs find it difficult because their targets are set from the top and local level flexibility is rarely granted. Therefore despite policy statements partnership among the Las, LGIs and other development institutions becomes difficult at the local level. Another factor contributing to lack of institutional coordination at local level is the absence of mechanism to facilitate local level policy formulation, need based resource allocation and timely budget allocation processes.
3.2 Weak Decentralized Participatory Planning Processes:
The concept of participatory planning has been promoted in Nepal since 1984. All agencies of the government and LGIs are legally instructed to develop their programs on participatory manner specified by their respective acts and institutional instructions. MLD and NPC have been promoting decentralized participatory planning at district levels through PDDP/LPG programs. Yet several constraints continue to weaken the institutionalization of participatory planning processes. The constraints are; weak information base at local level, practice of the center to set target, resource allocation inconsistency, change of local priority from the center, political intervention on project selection, weak coordination, no earmarking of budget allocation of resources.
3.3 Weak Resource Mobilization at Local Level:
The LGIs have remained weak in mobilization of resources from the authority they have been vested by the act. They are found more willing to mobilize resources from the exploitation of natural resources, indirect service fee and taxation than from direct taxation. The following constraints are evident at resource mobilization:
3.4 Inadequate Strategy and Program on Capacity Building:
Outside policy commitments for capacity building of LGIs, there is no defined and long term strategy of the government. It is also applicable with governments' field and central level institutions as well. The LGIs have yet to allocate their resources for capacity building. The central level agencies are not managerially, professionally and conceptually equipped to address the decentralization related capacity building models. NPC and MLD themselves have inadequate institutional capacity to effectively implement decentralization process in the country.
3.5 Limitations of Transparency and Accountability:
Transparency and accountability issues have become the major concern in governance in Nepal at all levels. In fact understanding of these issues remains weak at LGIs. Practices of regularity of meeting, posting decisions and resources at public places, auditing and reporting not fully institutionalized at LGIs especially at VDC level.
3.6 Social Capital Formation, Empowerment and Poverty Reduction:
The recognition to the fact that social capital formation and community empowerment can be effective decentralized approach to poverty reduction is in its formative process in Nepal. Therefore, there is no common or uniform approach to address these concerns at field level. Social capital formation is generally defined among LAs as creation of commodity groups having common production, service priorities / objectives. Donor and NGOs focus more on facilitating communities to be self-organized, governed and work cohesively for social and developmental activities. They also promote their access to formal institutions and resources and simultaneously encourage creation as well as use of capital via saving, credit and institutional development. PDDP/LGP supported VDP programs directly make an attempt to address poverty reduction concerns through decentralized governance institutions. The program encompasses both strengthening of LGIs and community through social mobilization. It is estimated that that this process will organize nearly half a million people by the year 2000. It is also evident at the field level the social mobilization process has contributed significant amount of resource mobilization through group savings and credit. Community-LGI partnerships are on an increase. However, the major constraints despite these positive achievements remain to be addressed consist of:
- Commitment of government to expand the program at national level.
- Lack of strategy to expand and improve the program on a long term basis,
- No commitment to increase allocation to the program from the government and LGI sides.
- Absence of mechanisms to deal with the rising expectations of the group.
- Lack of collective effort.
3.7 Gender and Equity Concerns:
Legal and program requirements demand considerations for gender and equity concerns at local planning and service delivery processes. Representation of women and disadvantaged groups in all processes is also required. Yet, constraints in these areas remain the followings:
- Inadequate understanding of gender and equity concerns at local level;
- Role of elected women representatives at LGIs remains weak.
- Women and DAG are not fully empowered to voice their concerns.
4. The Role of Donors:
4.1 Catalytic and Knowledge Building: Donors support to decentralized delivery of services and planning began in response to the Decentralization Scheme of 1982. UNDP, World Bank, ADB, SDC, ODA, USAID and GTZ took lead in this regard. However, the line ministries implemented all these programs through their institutional networks and the LGIs had no direct stakes. Most of the decentralization programs were either implemented through Integrated Rural Development Programs in which the line agencies participated. One common theme developed in decentralization context at that phase was to work through User Committees and involve the LGIs as and when needed. Therefore, decentralization related programs until 1990 lacked the governance component.
UNDP lead made departure from this practice through Decentralization Support Program which focused on planning capacity building of LGIs and particularly that of the DDCs. In its next phase the program expanded further in the form of PDDP and LGP. These are the largest donor supported local governance programs in the country. Recently following the UNDP approach SNV has launched DPP program in Karnali Zone and three districts of Mechi zone. GTZ supported Primary Health Care Project (PHCP) is working in partnership with Dhading and Siraha DDCs. Recently, following the PDDP/LGP approach, UNICEF has introduced DPCP program in selected districts. DANIDA supported DASU program has recently made commitment to work through DDCs in Doti and Surkeht districts.
SDC another major bilateral donor agency that has long experiences in Nepals' rural development has also recently changed its strategy. It has selected six districts for rural road construction and DDCs are made partners. In addition, SDC in addition has launched an alternative service delivery program in Kabhre district in partnership with DDC and VDCs. World Bank has made partnership with selected DDCs for rural infrastructure development. FINIDA, EU and DFID supported projects have started to stress focus on partnership with LGIs.
UNPD's approach to work in partnership with NPC/MLD Vis a Vis with LGIs and improve the latter's institutional management, planning and resource generation capabilities have resulted in value added benefits in decentralization and local governance processes. The benefits are identified as followings:
- emergence of LGIs in general and DDCs in particular as the central institution of development and governance as has been proposed in the Ninth Plan;
- the demand of the DDCs to replicate and expand of the program throughout the country;
- increased number of bilateral and multilateral donors to establish partnership with DDCs and support the process of joint agenda setting, resource sharing, planning.
- Assist DDCs with innovative measures.
- Initiation of partnership process among LGIs, COs and the private sector
- Joint resource mobilization and local ownership of the programs.
- Networking and sharing experiences among the LGIs themselves.
- Dialogue between central level government agencies and LGIs in planning and resource allocation.
- Recognition to decentralization and governance issues as priority sectors by the donors.
4.2 Policy and Advocacy:
Generally donor support to decentralization policy and advocacy are governed by factors such as optimization of efficiency of investment and services through promotion of involvement of local stakeholders; promotion of equity through creation of access and opportunities for the weaker sections; enhancement of local ownership and ensure sustainability through partnership mechanisms and capacity building, minimize bureaucratic graft and delay, creation of new knowledge. Promotion of decentralized approach even within the service delivery system of the government largely has always been a response to donor demand rather than spontaneous initiative of the governmental institutions.
DANIDA, UNDP and SDC in particular have played direct role in Nepal in decentralization advocacy and policy input. They have extended support for formulation of decentralization and local governance policies and legislation in different ways. They range from direct policy input through expert consultation, exposition to achievements at the field level, publication, and support to advocacy groups for their professional developments. The credit for the emergence of ADDCN in particular goes primarily to DANIDA and UNDP.
4.3 Support with Resources: Technical, Financial and Human:
There is conspicuous dependence of government on donors for decentralization and local governance programs. This is commonly found in PDDP/LGP, DASU, Mechi, KLDP, PCRW, MCPW, RADP, SADP, PHCP, RIDP, Community Forestry, Irrigation Credit and similar other programs. At an absence of donor support, continuity and sustainability of these programs can be doubtful.
4.4 Innovation:
There is no common strategy among the donors in their support policy to decentralization related areas. However, they have become innovative in their own ways. PDDP/LGP in particular begun an innovation through their VDP programs for poverty reduction, community empowerment and partnership. The social mobilization process while observed at the field level demonstrate that the positive outcomes can be adopted into national policy and strategy. Likewise, the support to DDCs in their planning and institutional building has contributed to the possibility of LGIs assuming sectoral functions. The major innovative contributions of the donor supported programs are:
- local institutions are capable and willing to undertake their development .
- significant resources for development can be generated locally.
- Communities can learn and progress substantially if proper support is provided.
- Participation increases if communities are fully involved.
- Service delivery becomes more efficient and better managed.
- cost of services can be significantly reduced.
- Technological and backstopping support need to be supplied on regular basis.
- Equity and poverty concerns can not be addressed without community involvement and allocation of resources at local level.
5. Linkages between Decentralization and Poverty Reduction
5.1 Perspectives on Poverty and Empowerment
Poverty in traditional way is measured in terms of income level, basic human needs and food energy intake. On this basis, NPC estimated in 1996 that 45 percent of Nepalese population lived below poverty line. However in the same year UNDP estimated 53 percent of the population was below poverty line based on purchasing power parity (PPP) $ 1 a day per person. CBS Living Standard Survey (1996/97) showed that 73 percent households in Nepal perceived their income inadequate for subsistence.
Poverty assessment based on Human Development Index (HDI)- longivity, knowledge and a decent standard of living- Nepal ranked 154 out of 175 nations in 1997. There is no agreement on poverty percentage in Nepal, yet it is believed that half of the Nepali population lives in absolute poverty, and the total number of the poor is rising rather than falling over the last decade. In addition, the poor suffer from further deprivation because of their inadequate access to services such as health, education and sanitation and also to resources, credit, employment and entry into the organizational culture.
The economic strategies to reduce poverty emphasize growth, enhanced role of market, privatization, structural adjustment, infrastructure development and technological input. Government assumes that such forces propel productivity increase, generate employment, activate market led forces, and promote poverty focussed small-scale public works, credit and subsidy. In addition, it argues that if all these efforts go well they create space for CO, private sector and NGOs to contribute to poverty reduction. These assumptions are yet to be tested for their merit.
5.2 Decentralization and Poverty Reduction Linkages:
Target-oriented poverty reductions programs such as RADP, SADP, RIDP, IRDP have not been successful to effectively address the poverty reduction. The Ninth Plan has recognized flaws of target -oriented programs particularly in the context of their failure to identify the target groups, lack of access to community, lack of adequate efforts to reach the target groups and inadequate macro-micro linkages. Hence, at policy levels it is realized that poverty reduction efforts need to be linked with decentralization processes, activities should have local origin and ownership. In addition, poverty reduction requires resource and information backed LGI and community mobilization Concurrently, local level resource mobilization should go hand in hand with national effort. Hence, the link between decentralization and poverty reduction is established.
ADDCN conducted study at Kaski, Morung, Panchthar, Kapilbastu and Humla show that PDDP/LGP with appropriate technical and resource support to LGIs and communities can undertake poverty reduction activities at their own. LGIs and communities together generate resources and seek for opportunities. It is also found that communities themselves can identify the poor among themselves and take appropriate decisions. It was also found that poverty reduction requires concentrated effort through community mobilization and participation of all sectors including donors is essential. The field level findings also show that poverty reduction through social mobilization should be long term undertakings and with preparedness to lead the community to new heights with input, opportunities and technology. Otherwise, chances of community frustration can be high. In the context of resource, it was observed that consolidation of dispersed resources that go for poverty reduction through various programs in itself would contribute significantly.
Field study show that one of the biggest barriers to generate local response to poverty reduction including that of the LGIs is an absence of strategy and mechanism to educate communities and LGIs on poverty related issues. Poverty is perceived at this level only in the context of income and employment but not associated with human development concerns and basic services. When LGIs and communities are informed the relationship of poverty with health, education, immunization, sanitation and empowerment, they show willingness to address these issues with commitment and contribute resources. As long as efforts and strategies lack in these directions, poverty reduction through decentralization becomes difficult.
Poverty reduction and decentralization are linked through the process of building social capital and empowerment. This requires supportive policy, program and capacity building infrastructure at each level. In particular social capital formation and empowerment demand creation of supportive environment for collective action, self-help group promotion and partnership among civil society institutions and service providing institutions. In other words, this calls for reorientation of state institutions and the citizenry. The PDDP/LGP experiences from Kaski and other four districts show the possibility of building further on such partnership experiences. Additional examples can be taken from forestry groups, DWS groups and several community institutions supported by the government, INGO and donor programs. Hence, the need of the day is to build a common and replicable long-term poverty reduction approach for poverty reduction through decentralization
6. Lessons and Suggestions:
Experiences and practices contribute to learning. Positive learning help to build future perspectives so that the mistakes are corrected and risks are minimized. Based on this universally accepted knowledge the following lessons are identified and suggestions made.
6.1 To promote decentralization and local self-governance democracy is a pre-condition. Without local democracy and community empowerment, decentralization processes remain inadequate. Without this, even the LGIs do not follow decentralization processes they tend to remain as the domain of the local elite who support and cooperate with vested interests.
Hence, support decentralization process that promotes subsidiary relationship among the service providers, communities, civil society and LGIs.
6.2 Decentralization is a political decision. It requires political agreement at the highest level. If it is not done, the chances of decentralization and local governance efforts can remain showpieces.
Hence facilitate political and policy dialogues to reach consensus in order to ensure smooth functioning of the decentralization processes.
6.3 At an absence of space for civil society institutions and collective institutions, decentralization process does not gain momentum.. Decentralization process should be demand driven so that those who demand it can create its safety mechanism.
Empower and support the civil society and collective institutions of LGIs to become professional and push the process forward.
6.4 LGIs and communities are willing and capable to generate their own resource to an extent. This can reduce the burden of the government. Increased resources at LGIs can help the government to invest its resources on more productive areas.
Introduce policies to encourage LGIs and communities to generate their own resources also hand them resource-generating sources through resource sharing concepts..
6.5 LGIs are reluctant to use direct taxation and service fees for their revenue generation. They like to exploit indirect taxation and natural resources as far as possible.
Encourage LGIs to collect revenue from direct taxation. Help them to link direct taxation with development and service delivery so that they can understand the relationship and practice it too.
6.6 All stakeholders including LGIs respond positively to decentralized planning process.. For this, they need appropriate orientation and support.
Promote this practice in all sectors. Build local capacity with appropriate tools and techniques.
6.7 Pluralist representation and participatory planning process enhance accountability and transparency at LGIs. Involvement of civil society in local governance process expedites this process further.
Promote political pluralism at LGIs, encourage dissemination of all information and make all decisions public.
6.8 For decentralization capacity building is required at all levels. In particular capacity building of LGIs and civil society, institutions are critical.
Support capacity building of LGIs on long term basis and particularly focus on their institutional capacity building. Build further on the lessons learned form PDDP/LGP. Make it into a national strategy.
6.9 LGIs leaders are vulnerable to politicization, yet they try to remain secular and work through consensus building.
Promote consensus building through supportive literature, training, dialogue and appropriate planing techniques such as strategic/ periodic planning.
6.10 Heavy deconcentration of authority and uncoordinated sectoral commands cause duplication of efforts and parallel activities. In addition, they cause wastage of resources and weaken decentralization processes.
Develop uniform policies and practices. Strengthen monitoring system. In particular make the Decentralization Monitoring Committee functional and regular so that decentralization related decisions could be abiding at all levels.
6.11 Budget flow from multiple sectors at the district makes resource counting difficult. Untimely budget allocations make development undertakings difficult. Similarly, curtailment of budget reduces the efficiency of the work.
At district level make all budget to move through DDCs. Make budget allocations on time or at least earmark the possible budget for the next year. Release the budget on time.
6.12 Numerical representation of women and disadvantage groups in LGIs does not necessarily ensure their qualitative involvement in decision making process.
Support programs that promote qualitative involvement.
6.13 PDDP/LGP experiences show that social capital formation at large scale is possible. Alliance between the LGIs and community institutions can be build.
Build further on the experience gained and adopt it in the national policy.
6.14 Partnership building leads to enabling process, sustainability of the programs, promotes effective resource mobilization and local innovation.
Encourage the process further.
6.15 Donors are willing to invest for strengthening decentralization. They also prefer to build partnership with LGIs and civil society institutions. They find it difficult to do so at an absence of standardized national policy.
Develop national policy and guidelines so that the process can be promoted, monitored and lessons can be learned in their proper context.
6.16 Poverty reduction can not be dealt properly unless partnership of all stakeholders is established. Nor can it be addressed with short term and sectoral approach. Massive social mobilization effort is necessary for this purpose and the program should be national rather than experimental.
Make national policy for this purpose, mobilize donors, generate local resources, and consolidate sectoral resources. Launch social mobilization as an anti-poverty campaign as has been proposed at the Ninth Plan
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