Federalism here we come

  • Wading into uncharted waters, we might see new ways of ensuring good governance

Jan 12, 2018-

Following the completion of local, provincial and federal elections, there are now 761 governments in the country with full authority to govern as per the constitution. In a way, we now have 761 labs that will be testing different policies and governance practices. Each rural municipality, municipality and provincial government has the authority to ensure rule of law, develop quality public infrastructure, design the syllabus up to the secondary level, maintain sanitary facilities, improve service delivery and upgrade the quality of life of local citizens. Each government is free to develop systems that facilitate the process of paying local taxes and guarantee optimal utilisation of local resources. 

The Local Government Operation Act, 2017 allows local governments to develop and implement short-, medium- and long-term plans. This means we will be experimenting with different kinds of governance mechanisms, organic ways of ensuring rule of law and different modalities of tax collection. The bright side is that we might see new and innovative ways of ensuring good governance. The traditional modality of adopting one homogenous way of governance will come to an end. Local governments are in close contact with the people which will force them to be more accountable. There will be no space for big talk and zero delivery. Take, for example, the way locals started breathing down the mayor’s neck when he took steps that would damage the archaeological integrity of Rani Pokhari, an ancient pond in central Kathmandu. This applies to other local governments too. Local leaders who fail to perform will be voted out in the next election.

Unequal distribution

The federal states were clearly not demarcated on the basis of financial and natural resources. There are some local governments which are richer in terms of finance, natural resources, public infrastructure and human resources than other local governments. Likewise, it is easier to develop connectivity infrastructure in the plains than in the hills and mountains. This means that there are some unavoidable constraints for local governments in the highlands. They will have to be more creative and come up with better ways of development, something their plains counterparts will not have to confront. This will give us a clear picture of local governments evolving through this transition uniquely in the mountains, hills and plains. 

It will be challenging for both local and provincial governments to secure funds for infrastructure projects that are critical for their growth. The central government itself will be hard-pressed to disburse money to local and provincial governments for more than fulfilling basic needs. But the good part of this system is that it creates an environment of competition among local governments to attract more resources. Like every Nepali, elected local government representatives and officials are new to the system. The way is unfamiliar to everybody. They need resources to build their capabilities and spend on public infrastructure. Local governments are responsible for developing and implementing short-, medium- and long-term plans. The challenge is 

that not all local governments are capable of developing such plans, nor do they have the funds to outsource these tasks. 

Localised plans are key

There isn’t one single sample that can be replicated in all the local units. There should be contextualised and customised plans and projects for each local unit. No local government will be able to make optimal utilisation of resources and develop its area without a clear vision and sound plans. The question is who will come forward to help them at this stage when the central government is struggling with its own problems. There is also the danger of local governments trying to get funds and implement some remotely developed projects that have no connection with the ground realities, and waste limited resources on them. This is not what we aspired for when we dismantled the unitary system to create local governments. The purpose is to design and implement plans and projects that make complete sense to locals. Local governments should focus on priority areas and the unique features of local lifestyles and 


This is where development partners, especially the World Bank, Asian Development Bank and Asian Infrastructure Investment Bank can support local governments through the Urban Planning Development Centre (UPDC), a planning wing of the Department of Urban Development and Building Construction under the Ministry of Urban Development. Meanwhile, the UPDC will also be institutionalised as a wing to help local and provincial governments develop plans and strategies for urban development. 

That can be beneficial for both development partners and the government since no donor can directly extend financial resources to local governments. 

It is important to highlight the fact that local governments need technical assistance to develop a bank of periodic plans and projects before they start pouring money into any infrastructure project. We have to ensure that all these 761 ‘laboratories’ have the required instruments and knowledge to help them become successful examples. The efforts and best practices that we will be developing in all these local units over the years will shape the future of Nepal as a whole. There is, of course, the challenge of managing financial resources to institutionalise the federal system that we have just embarked upon. But that shouldn’t discourage us from supporting local governments to adopt and implement best practices. We are trying to establish a federal system under the principles of cooperation and collaboration. This requires all stakeholders to be equally responsible for both failures and successes. 


Poudel is a consultant economist at the Nepal Resident Mission/Asian Development Bank 

Published: 12-01-2018 07:51

User's Feedback

Click here for your comments

Comment via Facebook

Don't have facebook account? Use this form to comment