CHAPTER - 1 Overview of the Study 1. Introduction Developing societies are facing chronic poverty1 mainly due to the exclusion factor (economic/social/geographic), lack of an enabling environment (policies and jurisdiction), and democratic deficit (voice raising mechanism) (Okosun, Siwar, Hadi, & Nor, 2012; Pinstrup-Andersen, 2002). Somers & Block (2005: 265) suggest that poverty is a “triangular effect of institutional failure, poor governance, and ineffective service delivery”. These have militated against better human livelihood and the provision of ‘basic service’2 delivery. Chambers (1995: 173) further notes that poverty is grounded in “powerlessness, vulnerability, isolation, social inferiority, physical weakness, and humiliation”. Recent figures show that more than one in five of the world’s population live in extreme poverty (Dadush & Stancil, 2010: 16). Several scholars argue that poverty is a socially and economically interconnected issue in society that creates vulnerabilities in every dimension of human life (Lynch, 2005). In the community perspective, poverty remains and can be related to low levels of income, insufficient food consumption, lack of shelter, unsafe drinking water and poor sanitation, and inadequate education and health facilities (Gordon, 2003). Adejumobi (2006) remarks that 1 This is a deprived condition to meet the basic needs of food, shelter, and clothing. It is categorised into two distinct types, absolute and relative poverty. The first describes the state of severe deficiency of basic human needs such as food, shelter, drinking water and sanitation, education and health. The latter is defined by context such as economic inequality (Chambers, 1995). In Nepal, poverty has been categorised according to food sufficiency in which ultra-poor class denotes up to 3 months food sufficiency; medium poor class by more than 3 and less than 6 months; Poor class by up to 6 months; Medium class by more than 6 and less than 12 months; and more than 12 months of food sufficiency are well-off class; (Jha, Prasai, Hobley, & Bennett, 2009). 2 Basic services include basic primary education, primary health care facilities, safe drinking water supply and sanitation, and local infrastructure facilities (Mehrotra, 2006). -1- poverty obligates communities moving from development agendas such as participatory development, inclusive decision making, distribution of power, authority relations, and democratic governance to focusing on individual needs (subsistence, protection and safety). Some other authors illustrate that poverty is a social problem that affects development vision, brings decay in leadership, and develops crisis in governance (Belle, 1990; Sobhan, 1998). In South Asia, the average economic growth in the last five years is highly impressive (Devaranjan & Nabi, 2006). However, poverty figures indicate that more than 318 million people live on less than $1.25 a day (Chandy & Gertz, 2011). This indicates that poverty in South Asia is a huge problem, particularly in the rural areas inhabited by 80 to 90 percent of the population, among whom 90 percent are poor (Ravallion, 2007). Poverty there is caused by several economic, demographic and social factors. However the main factors relate to unsound governance, which adversely affects not only poorer communities, but also governmental practices and effective service delivery (Sobhan, 1998). In Nepal, the Third National Living Standard Survey (TNLSS) indicates that 25.16 percent of Nepali people still live below the poverty line (NPC, 2012), even though this is a much better situation compared to other South Asian countries3 (ADB, 2011; Naseem, 2012). Nepal has been able to reduce poverty to some extent, since the adoption of neoliberal policies in the late-1980s (NPC, 2012). However, many scholars and institutions do not agree on the current quintile estimates of poverty in Nepal. The Oxford Report 2010 indicates that poverty persists in Nepal at 65 percent, on the basis of basic services such as nutrition, electricity, food, energy, drinking water and sanitation, maternal mortality, school enrolment, livelihood and availability of property (Alkire & Santos, 2010). The Gini index increase from 34 to 41 percent in 2010, 3 Recent poverty statistics of South Asian countries remain 29.8 percent in India 2009/2010 (PC/GoI 2012: 3), 31.5 percent in Bangladesh 2010 (ADB 2011: 2), and 29 percent in Pakistan 2010 (Naseem 2012). -2- indicates that inequality is mainly higher in rural areas, regions of difficult terrain and among socially deprived and destitute groups (NPC/UNDP, 2011). To address Nepalese poverty effectively in the late 1980s, the Washington Consensus4 influenced the government in enacting the Structural Adjustment Program (SAP5) for decentralising power and functions of state into alternative structures under the neoliberal framework (Frankel, 2009). Under this framework, Nepal adopted an ‘open market economy’6 and attempted to deliver services through the private sector, NGOs and other non- governmental actors. In 1990, the government focused on a ‘people-centred bottom-up’ development model which focused on decentralising power and functions. Previously the development performance of the country had been extremely poor, the economy being mobilised by a donors’ fund, while the country was continuously ruled by a compartmentalised political and bureaucratic system (Bienen, Kapur, Parks, & Riedinger, 1990). However, all of these restructuring programs and policies brought no substantial change in service delivery system, and appeared inept to generate employment for direct benefit of communities. Rankin (2001) suggests that a number of factors caused the failure of meeting intended goals. These were: malfunctioning of governance, conditional support of donor agencies, weak central-local relationships, non-legitimised civic engagement, clientelist policies, denial of resources to marginal or voiceless groups, and unstable political and economic performance 4 In 1989, John Williamson introduced the term Washington Consensus to describe Washington, D.C. based institutions (also known as Bretton Woods Institutions) such as the World Bank, the International Monetary Fund (IMF), and the US Treasury Department. These institutions developed economic policies and prescriptions to reform and promote crisis-racked developing countries, particularly in Latin America, Africa and South and South-east Asia (Frankel, 2009). 5 The Structural Adjustment Program is a neoliberal policy, developed by the International Monetary Fund (IMF) and World Bank, to recover their loans and debt from the developing countries. Some authors believe that it is the politics of Bretton Woods Institutions to enforce market mechanism (privatisation and deregulation), increasing the dependency syndrome by imposing loans on developing countries. However, the concept has highlighted the economic reform of the developing countries through trade and high economic production (Kingston, Christina Kingston, Irikana, & Dienye, 2011). 6 Open market economy is a late development of neoliberalism in relation with decentralisation. In this system, economic system moves from control to free market activity (Aareleid & Brenner, 2002). -3- of the state. In addition, denial of community participation, pathological confusion in public organisations, social exclusion and controlled devolution render service delivery inefficient and ineffective (Shrestha, 2000). Experience indicates that while the government had formulated a number of policies and regulations to (re)distribute power and functions for addressing poverty, these policies and regulations were upwardly accountable, and unable to adequately address the problems of social and economic exclusion at the grassroots. In general, these heteronymous actions of the state caused fragmentation of public services, where state mechanisms were not able to deal with communities (Dahal, 2004). The paradigm shift shows that no single player was able to reach the full range of services for society (O'Flynn, 2007). Locally constituted CBOs and civil society, which are closer to the communities, can play a complementary role in working with the poor or disadvantaged at the grassroots (Sarker, 2005). Thus in developing countries, the third sector (civil society including CBOs and local NGOs) emerged as a key contributor in governance in making service delivery effective at the grassroots (Asaduzzaman, 2009). Bowles & Gintis (2002) argue that the involvement of community institutions in community governance and the decision making process, has ensured functional collaboration between service actors, a bottom-up approach in action, legitimacy of institutional functioning, and innovation in the organisational system. This makes imperative the process in strengthening governance through a range of issues in CBOs in local affairs (Osmani, 2000). However, considerable support is required to reinforce governmental and non-governmental participation, and/or citizens capacity and the working environment (Streeck & Schmitter, 1985). It is evident in Nepal that the informally constituted CBOs were closely involved in the development of governance at the grassroots (Bhattachan, 2002). Shields & Rappleye (2008) illustrate that formal governance practice at the community level in Nepal was initiated in the mid-1950s through the managing of primary education. However, genuine effective -4- community level governance began with the eighth Five Year Plan (Pandit, Wagley, Neupane,