6 good governance after 1990 in nepal

RK Pandey, Mobile: 98510-86884 RK Pandey, Mobile: 98510-86884

Issues in GovernanceIssues in GovernancePresented by Dr. M RijalPresented by Dr. M RijalSupported by R PandeySupported by R Pandey


Organization of the TalkOrganization of the Talk

Common DefinitionsCommon DefinitionsDemocratic GovernanceDemocratic GovernanceThe WB IndicatorsThe WB IndicatorsHow Does Nepal Fare?How Does Nepal Fare?Global PerspectiveGlobal PerspectiveGlobal Positives & NegativesGlobal Positives & NegativesGovernance in NepalGovernance in NepalWhat Went WrongWhat Went Wrong


Common DefinitionsCommon Definitions

UNDPUNDPExercise of economic, political & Exercise of economic, political &

administrative authority to manage a administrative authority to manage a country’s affairs at all levelcountry’s affairs at all level

Comprises mechanisms, process & Comprises mechanisms, process & institutions through which citizens & institutions through which citizens & groups articulate their interests, exercise groups articulate their interests, exercise their legal rights, meet their obligations, & their legal rights, meet their obligations, & mediate their differencesmediate their differences


Common Definitions, contdCommon Definitions, contd

World BankWorld BankThree aspects of governanceThree aspects of governance

Form of political regimeForm of political regimeProcess by which authority is exercised in Process by which authority is exercised in

the management of a country’s the management of a country’s economic & social resources for economic & social resources for developmentdevelopment

Capacity of governments to design, Capacity of governments to design, formulate & implement policies & formulate & implement policies & discharge functiondischarge function



OECDOECDEncompasses the role of public authorities Encompasses the role of public authorities

in establishing the environment in which in establishing the environment in which economic operators function and in economic operators function and in determining the distribution of benefits determining the distribution of benefits as well as the nature of relationship as well as the nature of relationship between the ruler and the ruledbetween the ruler and the ruled



Institute of Governance, OttawaInstitute of Governance, OttawaSum of the many ways individuals & Sum of the many ways individuals &

institutions, public & private, manage institutions, public & private, manage their common affairstheir common affairs

Continuing process through which Continuing process through which conflicting or diverse interests may be conflicting or diverse interests may be accommodated and co-operative action accommodated and co-operative action may be takenmay be taken



Democratic Governance (UNDP)Democratic Governance (UNDP)Aims at building institutions & rules that Aims at building institutions & rules that

are not only efficient and fair, as well, are not only efficient and fair, as well, but also are developed through a but also are developed through a democratic process in which all people democratic process in which all people have a political voicehave a political voice

i.e., it incorporates into the notion f good i.e., it incorporates into the notion f good governance for development, democratic governance for development, democratic processes and institutions, and a processes and institutions, and a concern with the securing of political & concern with the securing of political & civil rights & freedoms as human rightscivil rights & freedoms as human rights


Common Definitions, contdCommon Definitions, contdMahbub ul HaqMahbub ul Haq

Good Political GovernanceGood Political GovernanceStructures & processes that support the Structures & processes that support the

creation of a participatory, responsive & creation of a participatory, responsive & accountable polityaccountable polity

Good Economic GovernanceGood Economic GovernanceCompetitive, non-discriminatory & Competitive, non-discriminatory &

equitable economyequitable economyGood Civic GovernanceGood Civic Governance

Society in which people are given the Society in which people are given the ability to self-organizeability to self-organize


Democratic Governance (UNDP)Democratic Governance (UNDP)Human rights & political freedomHuman rights & political freedomVoice in government decisionsVoice in government decisionsAccountabilityAccountabilityInclusive & fair rulesInclusive & fair rulesGender equalityGender equalityFree from discrimination (race, ethnicity, Free from discrimination (race, ethnicity,

class, gender, etc)class, gender, etc)Needs of future generationsNeeds of future generationsResponsive economic & social policiesResponsive economic & social policiesEconomic & social policies aim at poverty Economic & social policies aim at poverty

eradication & expanding choiceseradication & expanding choices


Indicators (WB Study)Indicators (WB Study)Process by which governments are selected, Process by which governments are selected,

monitored & replacedmonitored & replacedVoice & accountability, political stability & Voice & accountability, political stability &

absence of violenceabsence of violenceAbility of governments to formulate & Ability of governments to formulate &

implement sound policiesimplement sound policiesGovernment effectiveness, regulatory qualityGovernment effectiveness, regulatory quality

Respect of citizens & state for the institutions Respect of citizens & state for the institutions that govern economic & social interactions that govern economic & social interactions among themamong themRule of law, control of corruptionRule of law, control of corruption


Voice & AccountabilityVoice & Accountability

Orderly transfers of political powerOrderly transfers of political powerPolitical rightsPolitical rightsVested interestsVested interestsAccountability of public officialsAccountability of public officialsCivil liberties & Human rightsCivil liberties & Human rightsFreedom of associationFreedom of associationFreedom of pressFreedom of press


Political StabilityPolitical Stability

Armed conflictsArmed conflictsViolent demonstrationsViolent demonstrationsSocial unrest, including ethnic tensionsSocial unrest, including ethnic tensionsInternational tensions/ terrorist threatInternational tensions/ terrorist threat


Governance EffectivenessGovernance EffectivenessQuality of public service provisionQuality of public service provisionQuality of bureaucracy / institutional Quality of bureaucracy / institutional

effectivenesseffectivenessCredibility of Government’s Credibility of Government’s

commitment to policiescommitment to policiesQuality of general infrastructureQuality of general infrastructureQuality of public schoolsQuality of public schoolsPublic service vulnerability to political Public service vulnerability to political

pressurepressure


Regulatory QualityRegulatory Quality

Unfair competitive practicesUnfair competitive practicesGovernment’s attitude towards investmentGovernment’s attitude towards investmentPrice controlsPrice controlsDiscriminatory tariffsDiscriminatory tariffsExcessive protectionsExcessive protectionsDiscriminatory taxesDiscriminatory taxesExtent of dominance of SOEsExtent of dominance of SOEsRegulation of foreign tradeRegulation of foreign trade


Rule of LawRule of Law

Violent crimeViolent crimeOrganized crimeOrganized crimeFairness of judicial processFairness of judicial processEnforceability of contractsEnforceability of contractsSpeediness of judicial processSpeediness of judicial processConfiscation/expropriationConfiscation/expropriationIntellectual property rights protectionIntellectual property rights protectionPrivate property protectionPrivate property protection


Control of CorruptionControl of Corruption

Public trust in financial honesty of Public trust in financial honesty of politicianspoliticians

Corruption among public officialsCorruption among public officialsCorruption as obstacle to businessCorruption as obstacle to businessState capture, including positions of State capture, including positions of

power through patronagepower through patronage


How Does Nepal Fare?How Does Nepal Fare?The World Bank Study [2003]The World Bank Study [2003]

1996 1998 2000 20021996 1998 2000 2002Voice & AccountabilityVoice & Accountability 0.13 -0.01 -0.12 -0.52 0.13 -0.01 -0.12 -0.52Political stabilityPolitical stability 0.14 -0.43 -1.02 -1.63 0.14 -0.43 -1.02 -1.63Governance effectiveness -0.32 -0.94 -0.72 -0.51Governance effectiveness -0.32 -0.94 -0.72 -0.51Regulatory qualityRegulatory quality -0.24 -0.34 -0.30 -0.50 -0.24 -0.34 -0.30 -0.50Rule of lawRule of law -0.34 -0.25 -0.31 -0.50 -0.34 -0.25 -0.31 -0.50Control of corruptionControl of corruption -0.26 -0.59 -0.42 -0.30 -0.26 -0.59 -0.42 -0.30

(Scores range from -2.5 to 2.5)(Scores range from -2.5 to 2.5)


Global Income DisparityGlobal Income Disparity

Share, in 1990, ofShare, in 1990, of Richest 20% Poorest 20%Richest 20% Poorest 20%

GDPGDP 8686 11ExportsExports 8282 11FDIFDI 6868 11Telephone LinesTelephone Lines 7474 1.51.5Internet usersInternet users 9393 0.20.2


Forces of GlobalizationForces of Globalization

Decline in costs of 1960Decline in costs of 1960 19901990

ComputersComputers 125125 11Telephone callsTelephone calls 15 15 11Air transportAir transport 2 2 11


Declining Influence of GovernmentDeclining Influence of Government

1997 Data1997 DataTotal sales of General Motors Total sales of General Motors $164 B$164 BTotal GDP of ThailandTotal GDP of Thailand $154 B$154 BTotal sales of Hollywood movies Total sales of Hollywood movies $30 B$30 BTotal sales of movie TitanicTotal sales of movie Titanic $1.8 B$1.8 BTotal GDP of NepalTotal GDP of Nepal $4.8 B$4.8 BOf 100 largest economies in the worldOf 100 largest economies in the world

50 countries50 countries 50 MNCs50 MNCs


Rampant Poverty & Low HDIRampant Poverty & Low HDIOf 6 B people in the world,Of 6 B people in the world,

2.8 B live on less than $2 a day2.8 B live on less than $2 a day1.2 B live on less than $1 a day1.2 B live on less than $1 a day

Under 5 mortalityUnder 5 mortalityIn rich countries 1 in 100 childrenIn rich countries 1 in 100 childrenIn poor countries 20 in 100 childrenIn poor countries 20 in 100 children

MalnourishmentMalnourishmentIn rich countries < 5%In rich countries < 5%In poor countries 50 %In poor countries 50 %

60 countries ended 1990s poorer60 countries ended 1990s poorer


Global PoliticsGlobal Politics

Since 1980, 81 countries democratized, Since 1980, 81 countries democratized, 47 fully functioning democracies47 fully functioning democracies

37,000 INGOs in 200037,000 INGOs in 2000Only 14% of parliamentarians women, Only 14% of parliamentarians women,

10 countries with none10 countries with noneOnly 6 vetoes cast in UN security Only 6 vetoes cast in UN security

council in the second half of 1990s (cf council in the second half of 1990s (cf average of 25 between 1946-1995)average of 25 between 1946-1995)


Global PositivesGlobal Positives

Lowering of ideological tensions since Lowering of ideological tensions since the end of the Cold Warthe end of the Cold War

Emerging consensus on the need for Emerging consensus on the need for certain economic & new political certain economic & new political reformsreforms

Heightened flows of information made Heightened flows of information made possible by the ICT technology possible by the ICT technology advancesadvances


Global Positives, contdGlobal Positives, contdExtreme povertyExtreme poverty

29% in 1990 to 23% in 199929% in 1990 to 23% in 1999In 1990s, In 1990s,

800 M people gained access to improved 800 M people gained access to improved water, & 750 to improved sanitationwater, & 750 to improved sanitation

Between 1970 & 200, Under 5 mortalityBetween 1970 & 200, Under 5 mortality96 to 56 per 1,00096 to 56 per 1,000

Primary school enrolmentPrimary school enrolment80% in 1990 to 84% in 199880% in 1990 to 84% in 1998

Death from interstate conflict down 3 times Death from interstate conflict down 3 times in 2990s from 1980sin 2990s from 1980s


Global NegativesGlobal Negatives

Declining global ODA grossly insufficient Declining global ODA grossly insufficient to meet MDGsto meet MDGs

Nearly 3.6 M killed in wars within statesNearly 3.6 M killed in wars within states50% more refugees & internally 50% more refugees & internally

displaced in 1990sdisplaced in 1990sHalf of all civilian war casualties are Half of all civilian war casualties are

childrenchildrenEstimated 300,00 child soldiers Estimated 300,00 child soldiers

worldwideworldwide


Governance in NepalGovernance in Nepal3 General Elections & 2 Local Election3 General Elections & 2 Local ElectionStrong decentralization lawStrong decentralization lawAbout 200,000 elected About 200,000 elected

representatives in local governmentrepresentatives in local governmentAbout 36,000 of them womenAbout 36,000 of them womenStrong growth of civil societyStrong growth of civil societyRevolution in mediaRevolution in media


Governance in Nepal, contdGovernance in Nepal, contd

Stronger anti-corruption regimeStronger anti-corruption regimeCIAA, Corruption control actCIAA, Corruption control act

Reforms aimed at building inclusive Reforms aimed at building inclusive societysocietyNHRC, NWC, NDC, NAIPNHRC, NWC, NDC, NAIP

Initiation of devolution of basic service Initiation of devolution of basic service to LGIsto LGIs

Initiatives for public expenditure Initiatives for public expenditure priritizationpriritization



19901990 2000 2000GDPGDP 100 100 175 175LiteracyLiteracy 40% 40% 55% 55%Life expectancyLife expectancy 40 yrs 40 yrs 62 yrs 62 yrsInfant Mortality (1,00) 102Infant Mortality (1,00) 102 64 64Child MortalityChild Mortality (1,00) 162(1,00) 162 91 91



19891989 2000 2000Social spendingSocial spending 2.2 times 2.2 timesRevenueRevenue 2.3 times 2.3 timesIndustrial productionIndustrial production 3.3 times 3.3 timesExportsExports 4.7 times 4.7 timesExports to IndiaExports to India 18.7 times 18.7 timesService exportsService exports 2.8 times 2.8 timesTourism incomeTourism income 1.6 times 1.6 timesForex reserveForex reserve 3.8 times 3.8 times



19891989 2000 2000Energy consumptionEnergy consumption 1.4 times 1.4 timesHydro-power generationHydro-power generation 3.0 times 3.0 timesRoadRoad 2.3 times 2.3 timesTelephonesTelephones 6.9 times 6.9 timesSchool enrolmentSchool enrolment 1.5 times 1.5 timesSchoolsSchools 1.6 times 1.6 timesHealth centersHealth centers 4.1 times 4.1 times


What Went WrongWhat Went Wrong12 Governments in 13 years12 Governments in 13 yearsStagnant agricultureStagnant agriculture

grew only 1.5 times in 11 yearsgrew only 1.5 times in 11 yearsExport trade benefited almost Export trade benefited almost

exclusively Kathmandu valley and exclusively Kathmandu valley and few major townsfew major towns

Export trade with no significant Export trade with no significant backward or forward linkagebackward or forward linkage


What Went Wrong, contdWhat Went Wrong, contd

Delay in banking & financial sector Delay in banking & financial sector reform much needed with economic reform much needed with economic liberalizationliberalization

Inadequate bank supervision and the Inadequate bank supervision and the resultant in large non performing resultant in large non performing assetsassets

Organized interest groups reaping Organized interest groups reaping economic benefiting from the economic benefiting from the political patronagepolitical patronage



Lack of transparency in political party Lack of transparency in political party financing opening room of political financing opening room of political graft & corruptiongraft & corruption

Sense of supremacy over law Sense of supremacy over law reinforcing political graft & corruptionreinforcing political graft & corruption

Continued petty corruption leading to Continued petty corruption leading to further alienation & powerlessnessfurther alienation & powerlessness



Tendency for graft & corruption Tendency for graft & corruption reinforced byreinforced byWeak institutional capacity to combat Weak institutional capacity to combat

corruptioncorruptionWeak government fund disbursement Weak government fund disbursement

procedure, & auditingprocedure, & auditingFaulty public procurement rulesFaulty public procurement rulesRevenue leakageRevenue leakage


What Went Wrong, contdWhat Went Wrong, contdPolitical patronage leading to inefficiency, Political patronage leading to inefficiency,

irresponsiveness in civil serviceirresponsiveness in civil serviceLack of appropriate pay & other incentives Lack of appropriate pay & other incentives

resulting in a civil service incapable of resulting in a civil service incapable of leading economic growth & private sector leading economic growth & private sector developmentdevelopment

Bias in public expenditure towards urban & Bias in public expenditure towards urban & modern sector of the economymodern sector of the economy

Centralized political system failing to deliver Centralized political system failing to deliver services to poor, inaccessible & remote services to poor, inaccessible & remote areasareas

Lack of effective public programs to mitigate Lack of effective public programs to mitigate the adverse effects of transition toward the adverse effects of transition toward market economymarket economy


What Went Wrong, contdWhat Went Wrong, contdExcessive burden of recurrent expenditures, Excessive burden of recurrent expenditures,

and inefficient & wasteful SOEs and inefficient & wasteful SOEs constraining much desired public constraining much desired public investment in rural economic and social investment in rural economic and social infrastructure developmentinfrastructure development

Disproportionate share of increased social Disproportionate share of increased social sector spending to urban economy & sector spending to urban economy & richer populationricher population

Due to centralization, social sector spending Due to centralization, social sector spending could not benefit interior & backward could not benefit interior & backward regionsregions

Inability to reach out to poor, marginalized Inability to reach out to poor, marginalized and vulnerableand vulnerable


What Went Wrong, contdWhat Went Wrong, contdLack of hard budget constraint leading to Lack of hard budget constraint leading to

a lack of prioritization in public a lack of prioritization in public expendituresexpenditures

Lack of resources & poor capacity of LGIsLack of resources & poor capacity of LGIsPublic expenditures onPublic expenditures on

primary vs tertiary educationprimary vs tertiary educationprimary vs hospital health careprimary vs hospital health careRural vs urban drinking water and sanitationRural vs urban drinking water and sanitation



Increased public awareness, expectation, Increased public awareness, expectation, not matched by economic growth, not matched by economic growth, opportunities leading to widespread opportunities leading to widespread frustration in the rural areas providing frustration in the rural areas providing breeding ground for Maoist insurgencybreeding ground for Maoist insurgency

Break down, near collapse of government in Break down, near collapse of government in rural areas outside district headquartersrural areas outside district headquarters

Existing violent conflict between pro & anti Existing violent conflict between pro & anti 2047 constitution complicated by new 2047 constitution complicated by new triangular conflicttriangular conflict

6 good governance after 1990 in nepal

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