Completion Report

Program Number: 36172 Grant Numbers: 0118/0206 August 2014

Nepal: Governance Support Program (Subprogram I)

This document is being disclosed to the public in accordance with ADB’s Public Communications Policy 2011.

CURRENCY EQUIVALENTS (As of 31 May 2014) Currency Unit – Nepalese rupee/s (NRe/NRs)

At Appraisal At Completion 30 September 2008 31 May 2014 NRe1.00 = $0.013522 $0.01054 $1.00 = NRe73.9519 NRe94.8035

ABBREVIATIONS

ADB – Asian Development Bank ASIP – annual strategic implementation plan CAC – citizen awareness center CCU – cluster coordination unit CIDA – Canadian International Development Agency CSO – civil society organization DDC – district development committee FCGO – Financial Comptroller General Office GESI – gender equality and social inclusion GSP 1 – Subprogram I of governance support program IEC – information, education, and communication JFA – joint financing arrangement LBFAR – local body financial administration regulation LBFC – Local Bodies Fiscal Commission LGAF – local governance and accountability facility LGCDP – local governance and community development program LPC – local peace committee MCPM – minimum conditions and performance measures MOF – Ministry of Finance MLD – Ministry of Local Development MOFALD – Ministry of Federal Affairs and Local Development NAC – national advisory committee NGO – nongovernment organization NPC – National Planning Commission NRM Nepal Resident Mission OAG – Office of the Auditor General of Nepal OSR – own-source revenue PEFA- – public expenditure and financial assessment and FRRAP fiduciary risk reduction action plan PCU – program coordination unit PFM – public financial management SARD South Asia Regional Department SWAP sector-wide approach TA technical assistance VDC – village development committee WCF – ward citizen forum

NOTES

(i) The fiscal year (FY) of the Government and its agencies ends on 15 July. FY before a calendar year denotes the year in which the fiscal year ends, e.g., FY2014 ends on 15 July 2014 (ii) In this report, "$" refers to US dollars.

Vice-President W. Jhang, Operations 1 Director General H. Kim, SARD Director K. Yokoyama, NRM, SARD

Team leader R. Shrestha, Senior Public Management Officer, NRM, SARD Team members S. Paudel, Associate Project Analyst, NRM, SARD S. Subba, Senior Social Development Officer (Gender), NRM, SARD

In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

CONTENTS

Page

BASIC DATA i I. PROGRAM DESCRIPTION 1 II. EVALUATION OF DESIGN AND IMPLEMENTATION 1 A. Relevance of Design and Formulation 1 B. Program Outcomess and Outputs 2 C. Program Costs 7 D. Disbursements 7 E. Program Schedule 7 F. Implementation Arrangements 8 G. Conditions and Covenants 8 H. Related Technical Assistance 8 I. Consultant Recruitment and Procurement 9 J. Performance of Borrower and the Executing Agency 9 K. Performance of the Asian Development Bank 9 III. EVALUATION OF PERFORMANCE 9 A. Relevance 9 B. Effectiveness in Achieving Outcome 10 C. Efficiency in Achieving Outcome and Outputs 11 D. Preliminary Assessment of Sustainability 12 E. Institutional Development 12 F. Impact 13 IV. OVERALL ASSESSMENT AND RECOMMENDATIONS 13 A. Overall Assessment 13 B. Lessons 14 C. Recommendations 14 APPENDIXES 1. Design and Monitoring Framework 16 2. Status of Tranche 1, Tranche 2 and Tranche 3 Policy Conditions 22 3. PEFA Risks and Mitigation Measures 26 4. Status of Program Assurances 29 5. Governance Risk Assessment and Mitigating Measures 33 6. Poject Specific Covenants (From Legal Agreements) 36 7. Program Implementation Schedule 38 8. Gender Equality and Social Inclusion Results against Action Plan 40 9. Guidelines, Manuals, Studies and Reviews in LGCDP (2008 – 2013) 45

SUPPLEMENTARY APPENDIXES 46 A. Program Outputs 47 B. Schedule of Field Activities – PCR Mission 63 C. List of Respondents 65

BASIC DATA

A. Grant Identification

1. Country Nepal 2. Grant Number 0118-NEP, 0206-NEP 3. Program Title Governance Support Program (Subprogram I) 4. Borrower Government of Nepal 5. Executing Agency Ministry of Federal Affairs and Local Development 6. Amount of ADB Grant $106.3 million 7. Amount of CIDA Grant $8.80 million 8. Program Completion Report Number PCR:NEP 1460

B. Grant Data 1. Appraisal – Date Started 31 July 2008 – Date Completed 5 August 2008

2. Grant Negotiations – Date Started 15 September 2009 – Date Completed 17 September 2009

3. Date of Board Approval ADB Grant 22 October 2008 CIDA Grant 12 April 2010

4. Date of Grant Agreement ADB Grant 15 December 2008 CIDA Grant 27 August 2010

5. Date of Grant Effectiveness – In Grant Agreement 15 March 2009 – Actual (ADB Grant) 19 December 2008 – Actual (CIDA Grant) 12 November 2010 – Number of Extensions None

6. Closing Date – In Grant Agreement 30 June 2013 – Actual (ADB and CIDA Grant) 8 April 2013 – Number of Extensions None

7. Terms of Grant – Interest Rate – Maturity (number of years) – Grace Period (number of years)

8. Terms of Relending (if any) – Interest Rate – Maturity (number of years) – Grace Period (number of years) – Second-Step Borrower

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9. Disbursements a. Dates

Initial Disbursement Final Disbursement Time Interval 14 January 2009 4 August 2011 31

Effective Date Original Closing Date Time Interval 19 December 2008 30 June 2012 43

b. Amount ($ million)

Undisbursed Tranche Date Disbursed Amount Disbursed Balance First 14 January 2009 20 86.3 Second 19 November 2009 45 41.3 Third 4 August 011 41.3 0.00 Total 106.3 0.00

10. Local Costs (Financed) - Amount ($ million) 114.81 - Percent of Local Costs 100 - Percent of Total Cost 100

C. Program Data

1. Program Cost ($ million)

Cost Appraisal Estimate Actual Foreign Exchange Cost NA NA

Local Currency Cost Borrower Financed 260.80 260.80 ADB Financed 106.30 106.30 CIDA Financed 8.80 8.51 Total 375.90 375.61

2. Financing Plan ($million)

Source Appraisal Estimate Actual Implementation Costs Borrower Financed 260.80 260.80 ADB Financed 106.30 106.30 CIDA Financed 8.80 8.51 Total ADB = Asian Development Bank, CIDA = Canadian International Development Agency. iii

3. Cost Breakdown by Program Component ($ million) Component Appraisal Estimate Actual Not Applicable Total 4. Program Schedule Item Appraisal Estimate Actual Date of contract with consultants Completion of engineering designs Civil works contract Date of award Completion of work Equipment and supplies Dates First procurement Not Applicable Last procurement Completion of equipment installation Start of operations Completion of tests and commissioning Beginning of start-up Other milestones

5. Program Performance Report Ratings Ratings

Development Implementation Implementation Period Objectives Progress Not Applicable

D. Data on Asian Development Bank Missions No. of No. of Specialization of Name of Mission Date Persons Person-Days Members

Program completion 1 May to 1 June 2013 4 24 Country director, senior public management officer, associate project analyst

I. PROGRAM DESCRIPTION

1. The Asian Development Bank (ADB) approved a grant of $106.3 million for subprogram I of a governance support program (GSP I) on 22 October 2008.1 Project preparatory TA helped design GSP I.2 ADB provided GSP I to support the implementation of Nepal’s Local Governance and Community Development Program (LGCDP) within the framework of a joint financing arrangement (JFA).3 ADB joined five other development partners in the JFA, namely the Canadian International Development Agency (CIDA), the Ministry of Foreign Affairs of Denmark, Department for International Development of the United Kingdom, the Ministry of Foreign Affairs of Norway, and the Swiss Agency for Development and Cooperation. GSP I constituted nearly 15% of the LGCDP budget ($729.81 million), making ADB the largest development partner contributor to the LGCDP. CIDA channelled its contribution of $8.8 million (Can $9 million) to the LGCDP through a cofinancing arrangement with ADB in the GSP I.4 GSP I was closed on 8 April 2013 after the release of all three tranches, but the LGCDP itself was extended by 1 year and closed on 15 July 2013.5

2. GSP I was executed by Nepal’s Ministry of Federal Affairs and Local Development (MoFALD), which had been the Ministry of Local Development (MLD) until 2013. The GSP I supported the LGCDP to achieve three main outcomes (i) to have citizens and communities actively engage with local governance bodies to enhance accountability of these bodies in public service delivery (demand side governance)6; (ii) to improve management of resources and delivery of services in an inclusive and equitable manner by capable local bodies (supply side governance); and (iii) to strengthen policy and national institutional frameworks, including legal frameworks, for decentralization, devolution, and community development (policy environment). GSP I mirrored the design of the LGCDP. The performance of GSP I is therefore based on the performance of the LGCDP in delivering these outcomes through the specific outputs that GSP I identified in its design and monitoring framework.

II. EVALUATION OF DESIGN AND IMPLEMENTATION

A. Relevance of Design and Formulation

3. Following a comprehensive peace agreement in Nepal in November 2006 after a decade-long armed civil conflict, an election was held in April 2008 for a constituent assembly to draft a new constitution.7 At that time, structural causes of the conflict were widely recognized.

1 ADB. 2008. Report and Recommendation of the President to the Board of Directors: Proposed Program Cluster and Grant for GSP I to the Federal Democratic Republic of Nepal for the Governance Support Program. Manila. The program was designed as a cluster approach, because governance reforms are long-term in orientation and a cluster approach allows for more dedicated support as the reform agendas continue and possibly shift. In this case, GSP I was followed by Strengthening Public Management Program (ADB. 2012 Strengthening Public Management Program. Manila) with a primary objective of addressing public financial management issues at local level and strengthening oversight institutions. 2 ADB. 2006. Technical Assistance to Nepal for Preparing the Governance Reforms and Decentralization Cluster Program I. Manila. 3 The LGCDP was a national program with an overarching goal of contributing to poverty reduction through inclusive, responsive, accountable local governance, as well as through participatory community-led development. The LGCDP aimed to strengthen both the demand and supply side of local governance. 4 The cofinancing arrangement was agreed upon between CIDA and ADB on 15 March 2010. Funds from CIDA were used for operational costs associated with implementation of the LGCDP. The funds were disbursed in accordance with ADB’s Loan Disbursement Handbook (2007, as amended from time to time). 5 This was one of the main reasons the preparation of the completion report was delayed. 6 The local bodies in Nepal are the country’s 75 district development committees, 58 municipalities, and 3,915 village development committees. 7 The term of the constituent assembly expired in May 2012 and an Interim Election Council of Ministers, led by the chief justice, was set up in March 2013 to hold fresh constituent assembly election which was successfully held in

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These included persistent inequality in access to public services and development opportunities and in social arrangements. This had restricted the influence and prospects of a large proportion of women, the poor and disadvantaged groups, especially at the local level. This made it critically important that the government ensure a tangible peace dividend by providing inclusive, accessible, and efficient service delivery and restoring people’s confidence in government. Against this backdrop, the government of Nepal, in consultation with its development partners, designed and introduced the LGCDP as a flagship program in 2008 with an overriding goal of social and economic transformation. Its goals were to be achieved through (i) capable and accountable government at all levels that provides effective and inclusive services, and (ii) empowering communities to engage actively with local governance bodies and hold them accountable. ADB considered it crucial to support the government's efforts in this regard. The GSP I, which supported LGCDP, was therefore relevant. Although the political transition to define the new constitution adopting federalism was ongoing during program design, the commitment of the government to state restructuring was obvious, and the LGCDP was designed in a flexible manner to accommodate any shifts that might occur in the operating environment under the future federal state political structure. The GSP I design was in conformity with the government’s three-year interim plan for 2008–2010, which aimed to achieve socially inclusive and gender-responsive service delivery, and with a good governance act of 2008 that aimed at improving transparency, accountability, and inclusive service delivery.8 It was also consistent with ADB’s country strategy and program for 2005–2009, which emphasized good governance to ensure that the development process was inclusive9.

B. Program Outcomes and Outputs

1. Outcome 1: Citizens and Communities Actively Engaged with Local Bodies and Hold Them Accountable

4. This outcome related to the demand side of governance. The aim was to increase the capacity of communities, particularly the disadvantaged groups, to articulate their needs, access resources, engage in local planning and governance processes, and hold local bodies accountable. Appendix 1 shows the status of achievement for the GSP I’s outcome and output indicators.

5. Output 1.1: Empowered communities and community-based organizations that participate in local governance processes. The program was successful in a relatively short period in achieving its intended outputs for empowering communities and community-based organizations (CBOs) through its transformational social mobilization program. This was led by ward citizen forums (WCFs) and community awareness centers (CACs) established under the LGCDP.10 The social mobilization activities were implemented in all of the country’s 75 districts and 50 municipalities. The social mobilization program engaged nearly 1 million people—more than 60% of whom were women and members of disadvantaged groups—in local planning and governance processes through 40,000 WCFs and CACs and integrated planning committees (IPCs)11. As a result, more than 90% local bodies prepared their annual plans using a

November 2013. The new constituent assembly and government have committed to promulgate the constitution by January 2015, although the contentious issues of federal structure and form of governance remain. 8 The government enacted the Good Governance Act in 2007 and followed up with regulations in 2008. 9 ADB. 2004. Country Strategy and Program: Nepal, 2005–2009. Manila. 10 The transformational approach focused on empowering community people through active participation in the CACs and WCFs to facilitate people’s concerns, claim services, and influence decisions, as well as to hold local government officials accountable for effective service delivery. 11 IPCs are responsible for prioritizing community projects demanded by people and for submitting them to village councils for approval. Members of the WCFs and CACs are represented on the IPC. 3

participatory process in FY2013, and 35% of the capital grants were spent on projects prioritized by women, disadvantaged groups, and children. This indicated community empowerment and ownership of local-level development activities. To strengthen and further empower the local communities, local bodies provided training to members of WCFs and CACs on governance, planning, social mobilization, and monitoring. Special efforts were made to accelerate social mobilization activities, based on the recommendation of the LGCDP midterm review.12 The review report cited a lack of clarity on roles and responsibilities and poor turnouts at meetings as among the reasons forums were not being as effective as expected in influencing decision making. Turnout was particularly low from disadvantaged groups due to their engagement in daily labor and/or reluctance to attend meetings that they did not consider important.

6. Output 1.2: More capable communities, including disadvantaged groups that assert their rights and hold local bodies accountable. The active participation of local community people in the CACs and WCFs has empowered the communities, particularly women and disadvantaged groups, to demand efficient public service delivery from local bodies. The participation of women and disadvantaged groups in local planning and governance processes has increased by almost 100% since FY2008, when it was almost negligible. Accountability mechanisms were also put in place to enhance the transparency and accountability of local body operations. A local governance and accountability facility (LGAF) to support local community participation was the primary tool used by the LGCDP in this regard.13 The LGAF was effective in holding local bodies accountable through public hearings, after an assessment of their performance and decision making. Various assessments, including focused evaluation by the MOFALD in 2012, indicated that the LGAF was effective in promoting downward accountability, particularly in the absence of elections for local body representatives. An information, education, and communication (IEC) campaign was another tool used in LGCDP to increase transparency and accountability.14 The IEC campaign raised public awareness of local people about the functions of local bodies, available budget for local development, and procedures to register vital events at local bodies and in obtaining citizenship certificates. Local officials are still not elected, however, and accountability remains a challenge at local level. This means that the use of other accountability mechanisms and increased engagement of communities in the local development processes remain critical.

2. Outcome 2: Better Management of Resources and Delivery of Services Inclusively and Equitably by Capable Local Bodies

7. Outcome 2 related to the supply side of governance. The objectives were to strengthen the capacity of local bodies through measures that included increasing access to fiscal resources and applying minimum conditions and performance measures for central government transfers.

8. Output 2.1: Access to greater fiscal resources for local bodies in equitable and appropriate ways. Central government grants to local bodies significantly increased under the LGCDP (See Table 1). The increase in financial resources enabled them to undertake more development and infrastructure projects that helped meet priority public service needs. Overall,

12 After the midterm review, the LGCDP increased budget for social mobilization activities, mobilized experts to support implementation, provided orientation to stakeholders, and undertook supervision and monitoring missions. 13 The LGAF is a semiautonomous mechanism established in 2009 to improve poor downward accountability in local governance. LGCDP provided grant assistance to 133 selected civil society organizations in 75 districts to assess the performance of local bodies in three areas: (i) public expenditures of grants, (ii) compliance to policies and guidelines, and (iii) community monitoring of local bodies functions. 14 Print materials and radio and television programs disseminated information based on a theme "for us” all over the country.

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more than 55,000 community infrastructure projects were built during 2009-2013, benefitting 3 million households.

Table 1: Grant Allocation to Local Bodies ($ million)

Before LGCDP After LGCDP Average Annual Grant to LBs FY2008 FY2009 FY2010 FY2011 FY2012 Increase % Government grant—DDC 15 38 25 27 37 24 Government grant—MUN 6 15 26 35 38 61 Government grant—VDC 41 87 81 86 93 23 LGCDP grant to local 0 7 29 32 19 38 bodies Total 62 146 161 180 187 32 FY = fiscal year, DDC = district development committee, MUN = municipality, VDC = village development committee. Source: Ministry of Finance, Government of Nepal

9. The introduction in 2009 of a formula-based grant allocation system across all local bodies by the MOFALD through LGCDP brought an end to the prevailing practice of allocating funds in an ad hoc manner and promoted transparency. Additionally, the performance based- grant system, which allocated funds according to agreed minimum conditions and performance measures (MCPM), created competition between local bodies to improve performance and thereby increase their funding.15 This also helped increase compliance with existing government policies, regulations, and guidelines related to the planning and operations of local bodies, which in turn strengthened transparency and improved documentation and overall organizational management. Despite these improvements, large differences in per capita grant allocation remain, and equitable distribution of grants to local bodies is still a challenge.16

10. In 2012, to address the challenges brought on by the proliferation of different sources of funding and the lack of coherence in the guidelines, the government issued and enforced new resource management and mobilization procedures for local bodies that integrated all grants and revenues into one account. This enhanced transparency and resulted in better planning. The guidelines also made a mandatory provision to allocate and spend 35% of the total capital grants of local bodies to support projects prioritized by women, children, and disadvantaged groups. Gender focal points appointed under the LGCDP in districts played an important role in maximizing the use of targeted funds for defined purposes. The MCPM were also revised to include gender equality and social inclusion (GESI) indicators to ensure that the targeted funds were used appropriately.

11. Local bodies increased own–source revenue (OSR) collection by 77% in nominal terms during 2007-2012, compared with an output target of 50%. However, the steadily increasing central government transfers seem to have reduced the incentive for these bodies to mobilize local revenues and have thus increased their dependence on central government resources. Their OSR remain too low.17 Other factors contributing to low OSR collection include the lack of

15 Generally, minimum conditions function as minimum safeguards for proper use of public resources and financial discipline, and performance measures aim to improve performance in areas that are seen as priorities. 16 In FY2012, the per capita grant allocated to Jumla DDC was NRe 229, Nawalparasi DDC NRe 27, Ramgram Municipality NRe 626, Nunthala VDC Khatang NRe 1013, Mahatgaun VDC, Jumla NRe 608, Bisnupurkatti VDC, Siraha NRe 175, Kohalpur VDC, Banke NRe 76. 17 Despite the increase of OSR in nominal terms, the percentage of OSR in the total revenues of local bodies has been declining. In FY2007, OSR was around 17.5% and fiscal transfers were around 60% of the total revenue. In FY2013, OSR decreased to 13% of the total revenue. The levels of OSR collection are extremely uneven across the local bodies—most of the OSR is collected by only a handful of them. The internal revenue of VDCs in 5

simplified administrative procedures, the fact that local bodies have little discretion in determining revenue rates or the revenue base, and poor tax enforcement.

12. Output 2.2: Appropriate measures to build capacity in all levels of the local body service delivery system. The LGCDP adopted a supply-and-demand approach to capacity development. Under the supply-driven approach, standard training and orientation on policies and guidelines were provided to all local bodies and more than 60% of local body officials (40% of whom were women).18 Under the demand-driven approach, the LGCDP provided grants to all 75 districts and 57 municipalities in the country to prepare and implement their own capacity development plans. More than 90,000 people (27% of whom were women), including staff members of local bodies and members of WCFs and CACs, were trained under these plans.19 Grants for building capacity were also provided to local body associations.20 The LGCDP developed 22 guidelines and manuals that helped streamline the program operations (Appendix 9). These now need to be revised to remain effective, relevant, and valid. In addition, capacity development planning needs to be linked to the MCPM assessment results so that capacity building efforts can be properly targeted.

13. MOFALD developed several policy frameworks and operation manuals on social and environmental safeguards and disseminated them to district development committees (DDCs) and municipalities, including their users’ groups. These show local bodies how to carry out infrastructure projects with proper environmental safeguards in line with government policies.21 As a result, MoFALD reported that more than 55% local bodies had complied with ADB’s social and environment safeguard measures by 2013, exceeding an output target of 50%.22 Despite this increase, making mitigation measures and their implementation effective remains a challenge, primarily due to a lack of human resources and technical capacity at the local levels.

14. Output 2.3: Fine-tuned local body service delivery mechanisms and processes. To make local service delivery processes more effective, MoFALD planned to pilot new approaches aimed mainly at improving public financial management (PFM) systems in local bodies. The aim was to scale up the pilot approaches once they were tested. The pilot approach to PFM systems included (i) preparation of auditing guidelines and a manual for appointing auditors in municipalities and VDCs; (ii) preparation of a PFM handbook for VDCs; (iii) introduction of accounting software, training, and simplified reporting formats in VDCs; (iv) piloting of accrual accounting in municipalities; and (v) performance audits of five DDCs and fifty VDCs by the Office of the Auditor General (OAG). While the intended output was delivered, different reviews have shown that poor PFM and fiduciary risks are still a key challenge. Budget unpredictability

Kathmandu District amounted to NRe 179 million, while the internal revenue of VDCs in Bajura District was only NRe 389,000. World Bank. Nepal: Local Service Delivery in Nepal 2014. Unpublished. 18 The training was on participatory planning, financial management, procurement management, and good governance. Orientation related to social mobilization, MCPM, gender equality and social inclusion (GESI), and resource management and mobilization guidelines. 19 Training was provided on skills development, information technology, record keeping, and accounting. Many local bodies used the grants for office automation. 20 These were the Association of district development committees (DDCs) in Nepal, the Municipality Association of Nepal, and the National Association of villae development committees in Nepal. 21 Ministry of Federal Affairs and Local Development (MOFALD) maintains a modest environmental management section, headed by an undersecretary, and an environment desk in all DDCs and municipalities to facilitate environment and safeguards measures in local bodies. A memorandum of understanding has been signed between DDCs; the Ministry of Environment, Science, and Technology; and the Alternative Energy Promotion Centre to provide technical support to DDCs. 22 The MOFALD reported that the infrastructure projects implemented under LGCDP were only category C projects. MOFALD prepared an environment checklist and a sample environment management plan for category C projects. MOFALD reported that about 80% of DDCs and municipalities were using the checklist in 2012. Each DDC and municipality received $2,700 in 2010 and $6,000 in 2011 for the implementation of the safeguard measures.

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and delays in the release of funds have affected planning, timely completion of projects, and technical support for quality infrastructure projects.23 This has also given rise to poor PFM practices.24 Other PFM challenges in local bodies include the lack of effective monitoring and support systems, poor internal controls and reporting of expenditures, as well as weak follow-up in addressing audit observations. Public audit of the completed infrastructure projects of local bodies and an annual social audit of the local bodies’ performance in delivering services are mandatory as per the Local Self Governance Act. MOFALD also prepared strategies and guidelines on public and social audits and oriented the relevant officials on their use, but local bodies have not implemented them consistently. MOFALD initiated actions to address these weaknesses during the LGCDP midterm review in 2010. This led to the acceleration of social mobilization activities, preparation of resource management and mobilization guidelines, increased monitoring and supervision, and the development of a public expenditure and financial accountability and fiduciary risk reduction action plan (PEFA-FRRAP) in 2012 by the MOFALD. It aimed to strengthen PFM systems and improve accountability, and its implementation has continued under phrase II of the LGCDP, which was launched in 2013. It is also being supported by ADB’s ongoing Strengthening Public Management Program (SPMP) approved in 2012 (footnote 1).

3. Outcome 3: Strengthened Policy and National Institutional Framework for Devolution and Local Self-Governance

15. Activities in support of this outcome aimed to explore policies related to the national framework for federalism that was being discussed as a part of the new constituent, as well as the capacity and the relevance of the policies of national institutions for continuing to play critical roles in local development issues in the political environment at the time.

16. Output 3.1: Policy framework for decentralization to promote a more enabling environment for effective, transparent, and accountable local governance. The GSP I studied the use of a sector-wide approach (SWAP) to promote decentralization once the new constitution was promulgated. However, implementation of a SWAP was found to require substantial improvements in local governance, particularly in PFM systems, and these are being pursued through the PEFA-FRRAP. To strengthen human resources management in local bodies, the MOFALD assessed the organizational development of DDCs and municipalities, prepared sample job descriptions for local body staff members, and initiated a performance evaluation system. GESI was effectively mainstreamed in all MOFALD operations. A GESI unit headed by an undersecretary was established, and a GESI policy and strategy was adopted that required allocation of 25% of capital grants for women and disadvantaged groups and 33% representation of women in all committees (further details on GESI are in Appendix 8). The GESI unit also facilitated effective coordination on implementation of the GESI strategy between the MOFALD and all sector agencies, particularly the Ministry of Women, Children, and Social Welfare.

17. Output 3.2: Strong central government and national nongovernment institutions that provide appropriate support to local bodies. A results-based monitoring system was designed and introduced in LGCDP. This effectively monitored progress and issues related to the achievement of results.25 On the other hand, development of the devolution policy, strategy,

23 Assessment of fund flow to local bodies in FY2011 and FY2012 showed that on average only 30% funds were transferred in the first 8 months of the year, 70% were transferred in the last 4 months, and 40% were delivered in the last 2 months. 24 Practices such as advances to users committees or contractors, and moving unspent funds to a non-freezing account were adopted to avoid having to return unspent funds to the central treasury. 25 The framework included 10 indicators for VDCs, 12 for municipalities, and 10 for DDCs, 7

and regulations as planned under the GSP I could not be undertaken due to the prolonged process of drafting a new constitution and, in particular, of reaching a decision on the federal structure. The LGCDP undertook stocktaking of fiscal decentralization policies to develop a policy framework within which local bodies could function more effectively. This could eventually apply to the expected federal system of governance. Its implementation will be subject to the final shape of state restructuring and possible changes to the laws and regulations with a new constitution.

18. MOFALD officials, the OAG, and the decentralization focal units of line ministries were provided with training, orientation, and exposure visits to enhance their ability to support local governance reforms. This followed the capacity development plan prepared and implemented in all the country’s 75 DDCs and 57 municipalities. Although MOFALD drafted a national capacity development strategy, it was not finalized. This was one of the reasons for the lack of focus and coherence in the capacity development activities under the LGCDP. The midterm review report of LGCDP highlighted the facts that the capacity development activities focused mostly on training and that institutional development in terms of appropriate policies, strategies, systems, and procedures related to human resource management and organizational operations remained to be done.

C. Project Costs

19. The total budget of the government’s LGCDP was $729.81 million. The GSP I contributed $106.3 million as a grant from ADB’s Special Funds resources, or about 15% of the total budget. Other development partners contributed $80.90 million (11%) and the government, through the MOFALD, contributed $542.61 million (74%).26 The grant proceeds were expected to be used during 48 months from the date of effectiveness. The grant was provided in three tranches, with each tranche to be released upon achievement of a set of agreed policy actions aimed at delivering the outputs and outcomes of the GSP I.

D. Disbursements

20. ADB disbursed the first tranche of $20.0 million upon grant effectiveness on January 14, 2009. This was followed by the second tranche of $45.0 million on November 19, 2009, based on the satisfactory fulfillment of 11 tranche policy conditions. Disbursements for both the first and second tranches were on schedule (Appendix 2). The disbursement of the final tranche of $41.3 million was delayed by 9 months. It came on August 4, 2011 after the government’s full compliance with three of the four third tranche policy conditions and substantial compliance with the fourth (para. 24). CIDA funds were released to the government in three tranches—$3.9 million on April 22, 2010, $1.6 million on February 22, 2011, and $3.4 million on March 30, 2012.27

E. Program Schedule

21. The implementation of GSP I was completed on June 30, 2012, as envisaged at appraisal with the disbursement of all three tranches. The LGCDP, which was scheduled to be completed in July 2012, was extended for 1 year as some funding was remaining and the implementation of few activities were yet to be completed. It took a long time for the government

26 The other development partners contributions came from the Canadian International Development Agency (CAN $ 9 million), the Ministry of Foreign Affairs of Denmark ($11.1 million), Department for International Development of the United Kingdom ($16.2 million), the Ministry of Foreign Affairs of Norway ($14 million), the Swiss Agency for Development and Cooperation ($4.7 million), and the United Nations Joint Program ($25.9 million). GIZ provided additional assistance valued at $6.2 million by aligning its governance programs with the LGCDP. 27 The total disbursed is slightly higher than the cofinancing of $8.8 million (CAN $9) million due to exchange rates.

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and other development partners to reach agreements on policies and the implementation strategies, mainly for social mobilization and accountability mechanisms. This delayed the LGCDP’s full implementation.

F. Implementation Arrangements

22. The MOFALD was the executing agency of the GSP I. Implementing agencies included participating local bodies—DDCs, VDCs, and municipalities, as well as the Ministry of Peace and Reconstruction for work related to the local peace committees (LPCs).28 Civil society organizations (CSOs) and private firms implemented parts of the program that were outsourced by local bodies. A national advisory committee (NAC) was established in MOFALD for overall coordination, policy advocacy, and supervision of the GSP I supported LGCDP.29 A program coordination unit (PCU) in the MOFALD was responsible for day-to-day coordination, planning, monitoring and evaluation, and providing technical support.30 Cluster coordination units (CCUs) provided technical, monitoring and supervision, reporting, and capacity development support to local bodies.31 Local development officers in DDCs, executive officers in municipalities, and secretaries in VDCs coordinated the program. The LGCDP was managed full-time by an undersecretary of the MOFALD, acting as program manager and heading the PCU. The LGCDP program manager reported to the national program director, who reported to the MOFALD secretary and the NAC. Provisions were made for development partners that were party to the JFA to meet regularly to review the LGCDP’s financial and operational status and progress and to commit and disburse funds.

G. Conditions and Covenants

23. The policy conditions associated with the first and second tranches per the provisions in the attachments and schedules of the grant agreement were complied with fully and on schedule. The government fully complied with three of the four policy conditions for the third and final tranche and substantially complied with the remaining condition 9 months late than scheduled. Conditions satisfied under the first, second, and third tranches have been maintained. Appendix 2 details the status of the compliance with conditions.

H. Related Technical Assistance

24. ADB did not provide TA in conjunction with the GSP I, but a TA of $550,000 was later provided to support the LGCDP at the request of the MOFALD.32 It was implemented during September 22, 2009–June 31, 2011 and helped the MOFALD (i) establish environmental and social safeguards mechanisms in local infrastructure projects and train relevant stakeholders,

28 The GSP I supported the local peace committees (LPCs) through the LGCDP. The primary mandate of the LPCs was peace building and conflict resolution, and their formation provided significant opportunities to improve linkages between communities and the local bodies to help arbitrate conflicts that impeded development efforts. The LPCs comprised representatives from political parties, the private sector, and civil society organizations. Of the total ADB contribution under the GSP I, $4.5 million was earmarked to support the work of LPCs. 29 The NAC was chaired by the secretary of the MOFALD. It consisted of senior officials of the MOFALD and other ministries, as well as representatives of development partners and local body associations. The LGCDP’s program director acted as member-secretary of the NAC, which met at least twice a year, and whenever necessary 30 Within the PCU were output managers for each output of the LGCDP. The managers were selected from among the section chiefs of the MOFALD. This introduced a degree of accountability internally in the MOFALD. 31 CCUs were arms of the PCU and were established for clusters of 14–16 districts in five regions. They were headed by cluster coordinators who acted as advisors to local bodies and were supported by monitoring specialists, financial management specialists, social mobilization specialists, and support staff. 32 ADB. 2009. Technical assistance to Nepal to support local governance and community development program. Manila 9

and (ii) develop procurement guidelines and train local bodies. All the activities envisaged in the TA were accomplished, and all the planned TA outputs and outcomes were achieved.

I. Consultant Recruitment and Procurement

25. The GSP I provided program support to the LGCDP, and no procurement or consultant recruitment was undertaken.33

J. Performance of the Borrower and the Executing Agency

26. The overall performance of the borrower and the executing agency is rated satisfactory. Given that the government financed 74% of the LGCDP’s cost, its ownership and commitment to the program the GSP I aimed to support was obviously strong. The fact that the government fully complied with all but one policy condition and substantially complied with the other demonstrates a satisfactory performance (para. 23). The executing agency successfully led some important reforms, such as the introduction of formula- and performance-based grant system; the adoption of policies and mechanisms to increase public participation in local governance processes, particularly by women and disadvantaged groups; effective GESI mainstreaming; and the issuance of policies and guidelines to streamline operating procedures. Leading a national program with activities across the country and coordinating with all local bodies, community organizations, NGOs, and development partners were complex tasks. The executing agency executed these proficiently, though there were lapses with regard to communication, monitoring and supervision, and administrative and technical backstopping support to local bodies.

K. Performance of the Asian Development Bank

27. ADB’s overall performance is rated satisfactory. ADB regularly consulted all program- related government agencies and development partners during the processing and implementation of the GSP I. ADB was the key proponent of forming a JFA to support the LGCDP, although the government originally suggested a partnership with ADB alone. ADB remained strongly committed to development partner coordination, including the JFA. ADB took a lead role during the midterm review of the LGCDP in responding to emerging issues in the LGCDP by preparing and agreeing on an adequately funded, time-bound action plan. The midterm review also contributed to the implementation of a public expenditure tracking survey (PETS) and preparation of the PEFA-FRRAP (para 14), which made an important contribution to strengthening PFM systems. The GSP I was delegated to ADB’s Nepal Resident Mission in 2011 to ensure closer coordination with development partners and government on the ground. In particular, this allowed ADB to be the chair of the development partners’ group supporting the LGCDP for a year in 2011. It also enabled ADB to lead policy dialogue with the government on various programmatic issues and reform initiatives and to represent these development partners in important meetings, forums, and working committees, including the committee to design a second phase of the LGCDP. The government rated ADB’s performance through the GSP I “satisfactory”.

III. EVALUATION OF PERFORMANCE

A. Relevance

28. The GSP I is rated relevant, both at appraisal and on completion. The GSP I was designed to support the LGCDP, which was formulated when Nepal was in a unique political

33 The consulting inputs required for implementing the LGCDP were provided and administered by the United Nations Joint Program.

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transition. The GSP I was approved at a time when the country was in a post-conflict situation, had been without elected local governments since 2002, and was expected to adopt a federal system of governance upon the promulgation of a new constitution. Given that the armed civil conflict during 1995-2006 had been driven by the issues of the entrenched economic and social exclusion of poor and downtrodden communities, and inequality in society, the end of the violence and the promise of a new constitution had raised high public expectations of a peace dividend in the form of more efficient and inclusive public service delivery and increased fiscal resources to fund development needs. The government formulated the LGCDP within this context as a flagship program to provide better and more inclusive service delivery, increase fiscal transfers to local bodies, and promote downward accountability. ADB’s support for the LGCDP through the GSP I was also relevant in terms of Nepal’s long-term development needs and the strategic priorities set out in its three-year interim plan for 2008–2010, which emphasized promoting the participation and empowerment of the country’s people and socially inclusive and gender-responsive service delivery. The GSP I was also in line with ADB’s country strategy and program for Nepal for 2005–2009, which focused on transparency and accountability in public service delivery.34

29. Given that the LGCDP was largely designed by the government, it had strong government ownership in addition to the support of ADB and other development partners. The fact that the government financed 74% of the total LGCDP costs underlined this strong commitment and ownership. The LGCDP was based on diagnostic assessments, and designed in a participatory and consultative manner with a wide variety of stakeholders35. As a result, the GSP I was relevant and responsive to the development challenges and needs in the prevailing country context. The implementation arrangements were equally relevant in view of the broad participation by key stakeholders in implementation. These included the MOFALD, the local bodies, and the local communities through WCFs and CACs. Local governance reform measures such as the formula- and performance-based grant system; a transformational approach to social mobilization, public awareness and participation; and targeted funds for GESI were relevant, realistic, and effective in achieving the intended GSP I outcomes. The impacts sought by the GSP I in poverty reduction and social harmony were reflected in its design and operations. Increasing grant allocation to local bodies that showed good performance in MCPM assessments provided an incentive for local bodies to participate in governance reforms. Given its continued relevance, no changes were made to the GSP I design during implementation.

B. Effectiveness in Achieving Outcome

30. The GSP I is rated effective in achieving its outcomes. The establishment of WCFs and CACs provided essential forums for community people to learn about public services and available resources, including the funds targeted at women and disadvantaged groups; to interact with local bodies; to engage in local development processes; and to demand that targeted funds be used properly. This contributed to social change and increased social capital. The planning process, which had been largely captured by the elite in society prior to the advent of the WCFs and CACs, is reported by MOFALD to have improved under the LGCDP, with GSP I support. Many innovative and dynamic CACs are doing exemplary work and contributing to positive social changes in their communities.36 The LGCDP also helped institutionalize

34 ADB. 2004. Country Strategy and Program: Nepal, 2005–2009. Manila. 35 In 2008 and 2009, MoFALD along with ADB and other development partners assessed institutional capacity of the MOFALD and local bodies, fiscal transfers to local bodies, fiduciary risks, governance risks, and situational analysis of GESI. 36 Examples of the contribution by CACs to social changes are being compiled by ADB Nepal Resident Mission (NRM) in such areas as curbing domestic violence; replanting community forests; and training in agriculture 11

inclusiveness in service delivery and local governance processes through provisions to allocate 35% of the total capital budget for target groups and by requiring that 33% of the members of all committees formed by local bodies and the MOFALD be women and at least one woman be in a leadership position in each. Despite the delay in implementing accountability mechanisms, including the the LGAF, the effectiveness of such mechanisms in promoting downward accountability was evident from various reviews, including the focused evaluation of LGCDP in 2012, jointly undertaken by the MOFALD and development partners, including ADB.37

31. The community infrastructure projects built with the funding support from the GSP I contributed to improved public services and increased economic activities at the local level. The LGCDP experienced challenges in establishing effective PFM systems. These included the lack of internal controls and timely and predictable fund flows to local bodies that increased fiduciary risks. The PEFA-FRRAP was prepared to address these issues. The GSP I was also effective in supporting the institutionalization of the equitable and performance-based grant allocation system, which was based on a systemic, transparent formula determined through the MCPM assessment of local bodies (paras. 9). The MCPM process helped improve the performance of local bodies in planning, financial management, and governance processes.38 With GSP I support, the LGCDP succeeded in developing and revising policies and guidelines, including procedures for local bodies to manage and mobilize resources. Although some stakeholders reported shortcomings in the guidelines, particularly the one-size-fits-all approach, they generally helped streamline LGCDP operations.

C. Efficiency in Achieving Outcome and Outputs

32. The GSP I is rated efficient in achieving its outcomes and outputs. The GSP I was implemented through the existing institutional mechanism of the MOFALD and local bodies without incurring additional costs associated with new implementation structures. The intended outcomes and outputs were largely achieved. The social mobilization component of the LGCDP that it supported achieved high returns with low investment. The increased public awareness of and participation in local development and governance processes, particularly on the part of women and disadvantaged groups, were achieved with only 4% of the total LGCDP budget. Voluntary contributions of time by WCF members in local governance processes accounted for nearly $40 million per annum in monetary terms.39 In addition, only 2.3% of the total LGCDP budget was spent for TA support (supported by UN joint program), and the program management cost constituted only 3.5% (average), which underscored efficient operations of LGCDP supported by the GSP I.40

33. The expenditures by the local bodies increased from NRe13 billion in FY2008 to NRe31 billion in FY2013, and 35% of the total government capital grants were spent on projects prioritized by women, disadvantaged groups, and children. Although the significant increase in central government grants to local bodies was exposed to fiduciary risks in the absence of elected representatives and accountability mechanisms in the beginning, the risks were reduced

37 Several examples of where local bodies have been successfully held accountable have been compiled by the ADB NRM. One such example was when a chairperson of the users’ committee in Gulmi district was compelled to refund NRe100,000 that he had received as an advance for a project that was never constructed. The secretary of the Kalika VDC of Humla District used to charge NRe 5,00 to issue an identity card for a social security allowance. The secretary returned this amount to those who had paid when this issue was raised at a public hearing. 38 The MCPM scores are discussed and debated at the local level. Officials of local bodies and community people compare themselves with good MCPM performers. They question with much insight what is depressing scores, how reasonable some indicators might be, and whether indicators reflect central or local performance. 39 Calculated at the rate of about 800,000 people times 15 days times NRe300 per day. 40 In FY2012, the LGCDP program management expenditure, exclusive of social mobilization expenditure, was NRe100 million of the total expenditure of NRe2,860 million.

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through the social mobilization, the LGAF, and PEFA-FRRAP activities. In addition, an assessment by the LGAF in 2012 showed that 61% of CBOs reported that their complaints were heard by the local bodies. The annual MCPM assessments (para 9) helped to improve efficiency of local bodies as budget approvals at local level are done on time, compliances to policies and guidelines have increased, and recording and reporting systems have also improved after the introduction of MCPM.

34. The efficiency of the GSP I is demonstrated by the fact that its support for the LGCDP (i) effectively facilitated citizen engagement in local planning processes through the establishment of 40,000 WCFs and CACs all over the country; (ii) introduced some critical and innovative governance reforms, such as the equitable grant allocation system, targeted funds for disadvantaged groups, GESI mainstreaming, and participatory planning; and (iii) coordinated institutional development activities, including training and orientations for a large number of people, commissioning of studies and reviews, and preparation of 22 guidelines and policies. The coordinated and joint action by the government and development partners to promptly address issues highlighted by various reviews, such as the midterm review of the LGCDP, and the adoption of the JFA using government systems for implementation and reporting without having to report separately to donor agencies, reduced transaction costs and increased operational efficiencies of the government. Establishment of the LGCDP development partners’ coordination group and its regular meetings were an efficient mechanism for working with the government and addressing issues jointly.

D. Preliminary Assessment of Sustainability

35. The sustainability of the GSP I outcomes is rated likely. The policy reforms achieved with GSP I support have been effectively institutionalized in the MOFALD and are being continued in the second phase of the LGCDP, which is supported by several development partners, including ADB through the SPMP.41 These reforms included the mandatory allocation of 35% of capital grants for projects prioritized by women, children, and disadvantaged groups; the formula- and performance-based grant allocation system; the MCPM assessment; and the development and implementation of the PEFA-FRRAP to improve PFM at the local level. The introduction of phase II of the LGCDP in 2014, soon after the completion of phase I, demonstrated the government’s strong ownership and commitment to reform local governance policies and strengthen local institutions. The focused evaluation of LGCDP in 2012, as well as different reviews by LGCDP development partners showed that more and more people are participating in local governance processes, and that local bodies and political parties are beginning to give due recognition to WCFs and CACs. This encourages community people to support these institutions through active participation and collaboration. This has further reinforced the sustainability of the demand side of governance, which was one of the major intended outcomes of the GSP I.

E. Institutional Development

36. The institutional development achieved in LGCDP through the GSP I was significant. Despite an environment of political transition and the difficulties of coordinating program activities in all the local bodies across the country, the LGCDP undertook several institutional development initiatives mainly focused on capacity development and efficient operations through the introduction of new policies and guidelines. It established 35,800 WCFs and 4,300 CACs, and their operations have been strengthened under phase II of the LGCDP. The GSP I supported LGCDP in developing and institutionalizing 22 policies and guidelines in such areas

41 The SPMP is focusing mainly on advancing PFM reforms through the implementation of PEFA-FRRAP. 13

as GESI, grant allocation, financial management, local planning and budgeting, social mobilization, and to undertake MCPM assessment. These guidelines and policies helped local bodies carry out their service delivery and administrative functions efficiently and coherently, an improvement on the random, informal approach they had taken in the past. This has also made the supervision and monitoring functions of the MOFALD easier. Institutionalization of MCPM assessments helped make systems and procedures in local governance better. The mainstreaming of GESI policy in the MOFALD’s operations is a significant achievement in inclusive institutional development. The LGCDP supported the development of demand-driven capacity development plans in DDCs and municipalities and provided funds to implement them. It coordinated supply-driven capacity-building training and orientation on themes, policies, and guidelines to a large number of staff in local bodies, and community people. However, the LGCDP institutional development efforts did not take into account some important needs, such as those for better human resource management and the development of knowledge, skills, and office infrastructure. Meeting these needs has been incorporated into the capacity development strategy of the second phase of the LGCDP.

F. Impact

37. The impact of the GSP I is rated significant. The GSP I was expected to help reduce the poverty rate in Nepal from 31% in 2004 to 24% in 2012. This was achieved. As expected in the GSP I DMF, Nepal’s human development index value increased from 0.234 to 0.463. Income inequality, as measured by the Gini coefficient, declined from 0.414 in 2004 to 0.328 in 2011. The GSP I supported LGCDP to specifically target community empowerment through holistic and targeted social mobilization, which enabled communities to engage in planning, demand better services, access greater resources, and be effective in holding local bodies accountable. The institutionalization of GESI in the LGCDP effectively facilitated and promoted a leadership role for women and disadvantaged groups in community organizations, and committees. The public perception of local governance in Nepal has improved, and many citizens, including members of disadvantaged groups, are satisfied with the performance of local bodies. Increased economic activity in local communities was made possible by community infrastructure developed under LGCDP supported by the GSP I, and the funds used for skills development.42

IV. OVERALL ASSESSMENT AND RECOMMENDATIONS

A. Overall Assessment

38. The GSP I is rated successful overall, based on its ratings for relevance, effectiveness, efficiency, sustainability, institutional development, and impact. The GSP I and its support for the LGCDP was relevant in Nepal’s post-conflict environment, which was characterized by inaccessible and inequitable public services, skewed planning and project selection dominated by elite interests, and weak downward accountability by local governance bodies to the people they were supposed to serve. The GSP I support helped the LGCDP be effective in institutionalizing gender-responsive and inclusive service delivery by local bodies and in reducing inequality. The LGCDP succeeded in empowering people and enabling them to demand services from local bodies and to hold them accountable. By developing a large

42 Examples of infrastructure construction that supported economic activity include roads that facilitated efficient transport of goods and agriculture produce to market and promoted domestic tourism in many places. Rural electrification had a direct impact on economic activities. Community buildings that were built through the program have served multiple purposes as farmers’ markets, community meeting places, and health camps. The skills development training provided to community people has helped many earn a living through new income- generating activities, such as pickle making, tailoring, fishing, carpentry, and vegetable farming.

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number of small community infrastructure projects, the LGCDP was able to fulfill the immediate development needs of people. The GSP I was efficiently executed through LGCDP and helped achieve some important policy reforms, such as the equitable performance-based grant allocation system, MCPM, and results monitoring. GSP I support through the LGCDP also established a foundation to build strong and capable local body institutions through extensive capacity building and the development of policies and guidelines. Based on the LGCDP midterm review recommendations and uncertainty surrounding the political transition and restructuring in the country, a few planned studies and some policy formulation were cancelled, mainly those related to decentralization. Through its direct GSP I funding and its cofinancing arrangement with CIDA, ADB was the largest development partner contributor to the LGCDP. The LGCDP is now generally recognized by the government of Nepal and development partners as an important national program to improve local governance and fight poverty and social exclusion.

B. Lessons

39. Some of the important lessons learned from the implementation of the GSP I through the LGCDP are the following: (i) Sequencing of reforms is crucial to achieve intended outcomes that call for a long-term 43 partnership. (ii) Regular review of existing policies and guidelines is important to assess their effectiveness and relevance in a given context, and a one-size-fits-all approach in 44 policies and guidelines fails to achieve intended outcomes. (iii) Public engagement in local governance processes not only empowers people, but also promotes transparency and accountability in decision making by public authorities. (iv) Policy reforms will be effective and sustainable if they are based on the findings of reviews, the assessment of gaps and of the positive and negative impacts of such gaps on development outcomes, and adequate public consultation. (v) Capacity development is an important element of institutional strengthening. It should be linked to the findings of assessments such as the MCPM so that efforts can be properly targeted to address the weaknesses identified. (vi) An integrated approach to the key elements of policy reform, institutional strengthening, a monitoring mechanism, and capacity development is needed for effective GESI mainstreaming.

C. Recommendations

1. Program Related

40. Future monitoring. The MOFALD should continue its good coordination with development partners and local bodies and should also monitor the implementation of policy reforms achieved under the LGCDP.

41. Additional assistance. More assistance from ADB is vital to further policy reforms and the institutional development of the MOFALD and local bodies. This will be particularly needed when the country’s new constitution is promulgated.

43 For example, institutionalizing citizen engagement in local governance and instituting accountability measures before providing increased funding to local bodies reduce fiduciary risks and improve the likelihood that funds will be used properly. 44 An example of an inappropriate one-size-fits-all approach is the mobilizing of only one social mobilizer in every VDC irrespective of its size and population, even though VDC populations range from 1,000 to 80,000. The policy to use only users’ committees for infrastructure projects is another. 15

42. Further action. The following actions are recommended to enhance program benefits and to sustain the policy reforms achieved in the LGCDP:

(i) Policy frameworks. The MOFALD should review discrepancies between the local body financial administration regulation (LBFAR) and procurement regulations, and pursue key amendments in the LBFAR. The MOFALD should also consider using private contractors and not limit the implementation of infrastructure projects to users’ committees alone. Users’ committees do not have the proven capacity to implement large projects that require special skills, such as the paving of roads. In addition, the MoFALD should consult fully with the relevant stakeholders before formulating policies and guidelines, so that they are effective and user-friendly.

(ii) Institutional strengthening. The MOFALD should ensure that staffing to undertake basic functions of local bodies is in place and pursue with the relevant agencies to fill human resource gaps.45 The MOFALD should prepare an institutional development strategy that encompasses human resource management; the basic upgrading of office infrastructure; monitoring, supervision, and technical support to local bodies; and professional development that focuses on skills and knowledge. It is recommended that training programs be limited to a few core areas. For inclusive development, MoFALD should continually support meaningful participation of women and disadvantaged groups in planning and decision making by local bodies and the government’s compliance with GESI policy and guidelines.

(iii) Public financial management. To address the PFM weaknesses at the local level, the following PFM reform actions are recommended: a) The MOFALD and development partners should accelerate the effective implementation of PEFA-FRRAP. b) The MOFALD should devise a realistic mechanism to determine a timely budget ceiling in coordination with the Ministry of Finance and National Planning Commission, and send spending authorizations to local bodies before the planning begins at the local level. c) The MOFALD should develop a system of multiyear budgeting and planning at the local level, since some projects last longer than 1 year.

43. Timing of the program performance evaluation report. The program performance evaluation report should be prepared in the third quarter of 2016.

2. General

44. Continued engagement, consistent efforts, and commitment by the government of Nepal and development partners at all levels are crucial to sustain reform initiatives undertaken under the LGCDP. ADB should remain engaged in local governance reforms and focus particularly on improving PFM and accountability mechanisms. ADB’s SPMP is therefore timely and relevant, since it directly supports the implementation of PEFA-FRRAP under the LGCDP’s second phase.

45 It should prioritize the placement of an accountant and a junior technical assistant (overseer) in each VDC as core positions, as well as of an engineer or senior overseer within a cluster of VDCs.

Appendix 1 16

DESIGN AND MONITORING FRAMEWORK—PROGRESS STATUS

Design Summary Performance Targets Progress Status Impact Contribution Reduction in poverty The percentage of people below poverty line gradually decreased through the levels by 7 percentage from 43% in FY1996 to 25% in FY2011, according to the Nepal LGCDP to poverty points among DAGs living standard survey carried out by the government. reduction through across the country socially inclusive, HDI and human Nepal’s HDI value for 2012 was 0.463. This was in the low human gender-responsive, empowerment index of development category and positioned the country at 157th of 187 strong, and excluded communities countries and territories ranked. From 1980 to 2012, Nepal’s HDI accountable local increases by 10% value increased from 0.234 to 0.463, an increase of 98%, or an governance and average annual increase of about 2.2%, which equated to about participatory 9% in 4 years of program implementation. community-led Gender Development Nepal’s gender inequality index in 2012 was 0.485, which is development Index goes up to 0.556 better than targeted 0.556.

60% of DAGs and The survey was not conducted making it is difficult to measure citizens surveyed in the actual percentage. However, the Carter Center reported on selected districts say 24 February 2014 that public perception of local governance in that local public Nepal had improved and that many citizens were satisfied with service delivery has the performance of local governance bodies at both the district improved headquarters and at the village development committee level. Focused evaluation and field consultation also confirmed the improvements in local public service delivery. Leadership roles of GESI policy and local body resource management and women and mobilization procedures have made the provision of 33% disadvantaged groups representation of women in all committees mandatory. This in local governance includes one woman in a leadership position formed by MOFALD system increased as and local bodies. compared with 2007– 60% of WCF and CAC members are women. 2008 Focused evaluation, GESI assessment reports, and field visits confirmed increased leadership role of women and DAG in community-based organizations (WCFs, CACs, and users committees), through which they participate in local governance processes. Community Per the focused evaluation, 72% WCF members and 90% of CAC engagement in participants interviewed participated in the VDC decision-making participatory planning process in 2012, compared with only 33% of WCF members and in all local bodies 24% of CAC participants in 2011. improved compared with 2007–2008 Carter Center report noted that disadvantaged groups reportedly participated during the planning and implementation of local projects, although the impact of this participation remains in doubt. Furthermore, many bureaucratic mechanisms designed to increase the role of women, marginalized group representatives, and citizens in general appear to have been relatively successful in boosting local-level participation. 20% of local bodies All local bodies plan and allocate their own resources. However, plan and allocate own the level of own-source revenue in the local bodies varies resources considerably, tending to be higher in general in the local bodies located in the Terai and in urbanized areas. GESI section in MLD GESI section has been established in MOFALD and is led by an effectively functioning undersecretary supported by two section officers and support staff. The unit is very active and functional. It has been coordinating compliance with GESI policy, capacity development, and other related activities in close cooperation with designated focal persons at DDCs and municipalities. MOFALD approved and issued a GESI policy in 2010, which has been fully adopted and internalized in the Ministry of Federal Affairs and Local Development. The unit has also prepared guidelines for GESI

17 Appendix 1

Design Summary Performance Targets Progress Status audits and gender-responsive budgets for local bodies and piloted them in 10 DDCs. It has ensured inclusion of GESI sessions in training organized by the ministry, and that 33% of participants in committees formed by the ministry and local bodies are women. 60% of CBOs of Social mobilization has been instrumental in empowering women disadvantaged groups, and DAGs, but it will take more time and efforts to sustain their including women, are newly found empowerment before they can fulfill their functions better organized and without external support. They are, however, on the right path. can fulfill their MOFALD, (and in particular the GESI section) maintains that functions without awareness of these issues has increased. external support Outcomes (i) Citizens and Yearly increase in The proportion of capital grants allocated in favor of communities number of disadvantaged groups, including women, increased to 25% in actively engaged disadvantaged groups FY2012 from 10% in FY2010. All districts reported that they have with local bodies utilizing program disbursed the funds, and this can therefore be taken as a proxy and hold them resources for utilization. Additionally, according to the Carter Center report, accountable the perception of local people that money was spent on local governance projects needed in the local area has increased. As of mid-FY2013, roughly 40% of proposed projects via WCFs in FY2013 were financed by local bodies, according the annual progress report of the LGCDP of 2013. Number of formal Formal interactions between local bodies and CBOs have interactions between increased through WCFs and CACs. Focused evaluation CBOs and local bodies confirmed that 72% of WCF members and 90% of CAC members increases compared participated in VDC decision making in 2012, against only 33% of with 2007–2008 WCF and 24% of CAC members in 2011. The social mobilization study in 2013 also confirmed increased involvement of WCFs in local planning and engagement with local bodies. Decrease in number of LGAF assessment showed that 61% of CBOs affirm that their failures by local bodies complaints were heard by the local bodies, although only 38% felt to satisfactorily that the complaints were acted upon. respond to community concerns Positive attitudinal and Focused evaluation in 2012 stated that 40 % of the citizens behavioral changes in reported that the attitude and behavior of local body staff local body staff changed positively towards women and disadvantaged groups towards women and from previous years. The GESI section at MOFALD also asserted DAGs reported that the attitudes of local body staff members toward women and DAGs have improved. (ii) Better More local bodies can The provision of an allocation of 35% of budget, per the resource management of apply inclusiveness in management and mobilization procedures, and the mandatory resources and service delivery, as 33% representation of women in user's committees (including delivery of services compared with 2007– one in a key decision-making position) have facilitated inclusively and 2008 inclusiveness in service delivery. equitably by capable local Local body fund Overall, total local body expenditure has increased from NRe13 bodies utilization increases billion in FY2008 to NRe31 billion in FY2013. yearly Reduction in Interactions with local body staff, local people, and MOFALD complaints by service confirmed that complaints by service recipients are gradually recipients of the work decreasing. The WCF and CAC members are encouraged to flag of local bodies, as their complaints in public audits, public hearings, and directly to compared with 2007– local development officers at DDCs or at the ministry itself. 2008

Appendix 1 18

Design Summary Performance Targets Progress Status All local bodies in The MOFALD issued related policy frameworks and guidelines compliance with the and designated focal persons in each DDCs to support safeguard social and measures. Compliance with those policy frameworks and environmental guidelines, though relatively low, has been increasing, with the safeguards for technical support from MOEST and APEC to environment desks subprojects in DDCs.

Increased allocation in Grants to local bodies increased by 32% annually after launching block grants for the LGCDP. The proportion of the capital fund allocated in favor programs directly of disadvantaged groups, including women, increased to 25% in benefiting women and FY2012 from 10% in FY2010—10% was allocated for children. DAGs as compared with 2007–2008 (iii) Strengthened Relevant legal The constituent assembly has not yet fully completed policy and national provisions for deliberations on these provisions. institutional devolution are framework for adequately provided devolution and Perceived capacity The gaps were identified and remedial measures included in local self- gaps at MLD to ASIPs. Support from development partners also helped address governance support local the gaps. Several policies and guidelines have been developed to governance are lower efficiently and consistently supervise and monitor local bodies operations. Local body All three local bodies associations have been continuously associations are more advocating the safeguard rights and interests of all local bodies able to advocate for and creating credible pressure to hold local elections at the local bodies, as earliest possible time. A petition was filed in the supreme court to compared with 2007– this effect, and the court ruled in favor of holding election of local 2008 government at the earliest. Decentralization SWAp While the approach paper has been prepared by the MOFALD by FY2009/10 and the process initiated, the general consensus among government and development partners is that it will be difficult to have the sector-wide approach in place immediately. GESI strategy MOFALD approved the GESI policy and strategy in 2010. The operationalized in MLD MOFALD confirmed that GESI focal persons have been and GESI focal designated in all DDCs and municipalities. persons activated in 80% of DDCs and municipalities Outputs 1.1. Empowered At least 33% of the The LGCDP confirms that 35% of capital grants are spent on communities and capital expenditure projects prioritized to benefit women, disadvantaged groups, and CBOs that grants provided to local children. participate in bodies are spent on According to the local service delivery in Nepal report in 2014 by local governance projects prioritized by the World Bank, 50% of local revenues that are largely processes women and DAGs discretionary appear to provide for significant responsiveness to the local population. 90% of local bodies’ More than 90% of local bodies prepared their annual plans using annual plan prepared participatory planning processes in 2013. using participatory planning process Social mobilization in Social mobilization has been implemented in all 75 districts and in 100% of VDCs and 50% 50 municipalities (86%). of municipalities Increased number of A total of 438,332 men and 346,489 women (44% of the total women and DAGs members) have been mobilized in WCFs and 33,660 men and mobilized as compared 70,943 women (67% of the total members) mobilized in CACs in to baseline all VDCs. More women and DAGs Nearly 50,000 women (51% of the total trained) were trained in trained in local local governance and community mobilization 19 Appendix 1

Design Summary Performance Targets Progress Status governance, community mobilization, conflict resolution, coordination, leadership, etc. 1.2. More Participation of women A total of 346,489 (44%) women were mobilized in WCFs and capable and DAGs increased by 709,43 women (67% of the total) mobilized in CACs in all VDCs. communities, 50% in program 4,558 women were mobilized in WCFs (51% of the total) and including DAGs, activities as compared 8,537 women (83%) were mobilized in CACs in municipalities. that assert their with 2007–2008 These women and other DAG members in WCFs and CACs rights and hold participated directly or indirectly in program activities, which was local bodies not the case in FY 2008. So the increased participation is nearly accountable 100% in 2012. Per the social mobilization review undertaken by MOFALD in 2013, more than 74% people at the local level say they know about development budget and that social mobilization has contributed in promoting community engagement in program planning, implementation, and project monitoring. The capital grant allocation of local bodies for projects prioritized by women, children, and disadvantaged group increased from 10% in 2010 to 35% in 2012. 33% of CBOs made The concept of federations has now been dropped in the LGCDP federations or and replaced by citizen awareness centers. cooperatives At least 60% CBOs of Nearly 50,000 women (51% of the total trained) were trained in women and DAGs are local governance and community mobilization (Source: LGCDP trained in local PCU) governance, management skills, planning, leadership, etc. Greater number of The concept of federations has now been dropped in the LGCDP women federations and replaced by citizen awareness centers. strengthened compared with 2007–2008 2.1. Access to Formula-based fiscal This is in place across all local bodies. greater fiscal transfer system with resources for equalization practiced at local bodies in all local body tiers equitable and Local own-source Local OSR have increased by 77% (in nominal terms). Despite appropriate ways revenues increased by the increase of OSR in nominal terms, the percentage of OSR in 50% as compared with total local bodies’ revenue has declined in recent years. In 2006–2007 FY2007, OSR was 17.5% and fiscal transfers were about 60.0% of the total revenue. OSR collection is extremely skewed between the local bodies, and most of the OSR are collected by a handful of them. In FY2013, OSR represented only 10% of total revenue in more than 80% of the VDCs. The internal revenue of VDCs in Kathmandu district amounted to NRe179 million while the internal revenue of VDCs in Bajura district was only NRe389,000. There are also huge differences in per capita OSR among local bodies.

MCPM adopted in all MCPM have been adopted in all DDCs and municipalities, and DDCs and municipalities minimum conditions have been adopted in all VDCs. and piloted in at least 33% of VDCs MCPM revised from The MOFALD confirms that MCPM revised from a GESI GESI perspective and perspective in 2012 updated with GESI indicators GESI-responsive Gender-responsive budgeting has been piloted in 10 DDCs. budgeting

Appendix 1 20

Design Summary Performance Targets Progress Status operationalized All gender focal points in Focal persons are designated in DDCs and municipalities and are the districts performing effectively in capacity building and coordinating with strengthened and other line agencies on GESI matters. performing effectively 2.2. Appropriate 70% of DDCs self-report All DDCs report on minimum conditions of VDCs to LBFC, but measures to build on MCPM to MLD DDC's MCPM are conducted by LBFC. capacity in all At least 50% of office More than 60% of staff of local bodies are trained and oriented on levels of the local bearers of all local local good governance.(LGCDP PCU estimates) body service bodies oriented and delivery system trained on local good governance All CBOs of DAGs have All WCFs and CACs trained in empowerment, local governance, at least one opportunity resource mobilization, and such areas. to be trained in areas such as resource mobilization, empowerment, etc. All local bodies have at MOFALD confirms that all local bodies were trained in least 3 opportunities to participatory planning, MCPM, social mobilization, and financial be trained in resource management in various events. mobilization or administrative and financial management, etc. All local bodies are All local bodies are oriented on GESI Policy and strategy. trained on GESI strategy All local body All three associations confirm capacity has generally improved associations confirm when compared with the situation when the LGCDP started. capacity improvement Capacty development grants were provided to LB associations for their capacity-building activities. At least 50% of local MOFALD reported that more than 55% of local bodies complied bodies comply with with social and environment safeguards for large infrastructure social and subprojects and social, and environmental screening checklist environmental was adopted in all LGCDP subprojects implemented through safeguards for DDCs and municipalities. subprojects At least 80% of vital MOFALD confirms that more than 80% of vital events are events registered in registered in VDCs and municipalities. local bodies 2.3. Fine-tuned Use of public hearings, MOFALD issued guidelines for public audits and social audits. local body public and social audits, Public audits are mandatory for users’ committees to settle the service delivery and citizen report cards final accounts of local-body-implemented projects. It is mandatory mechanisms and institutionalized by 90% for all local bodies to conduct annual social audit. But only 50% of processes of DDCs, 75% of DDCs, 50% of municipalities, and 10% of VDCs have municipalities, and 40% institutionalized this so far. (LGCDP PCU estimates) of VDCs Conditional cash A cash transfer for scholarships was piloted in 39 VDCs of transfer piloted in 50 Kanchanpur and Dadeldhura districts. VDCs Local PEM and PFM The MOFALD prepared the PEFA-FRRAP in 2012. Its procedures fine-tuned implementation started near the end of the program period and by 2010 has been continued under the LGCDP’s phase II. VDC and municipality audit guidelines have been prepared to fine-tune PEM and PFM procedures. 3.1. Policy Decentralization SWAp While the approach paper has been prepared by MOFALD and framework for ready by FY 2009/10 the process initiated, the general consensus among government decentralization and development partners is that it will be difficult to have the to promote a sector-wide approach in place immediately. 21 Appendix 1

Design Summary Performance Targets Progress Status more enabling Roles and MOFALD prepared a sample description of local body staff jobs. environment for responsibilities of local The MOFALD confirmed that organization development effective, body staff delineated assessment was carried out in almost all DDCs and municipalities transparent, (job descriptions, and job descriptions were prepared. It is estimated that 50% accountable local performance evaluation DDCs and municipalities are implementing it, and performance governance system, etc.) evaluation system of staff is ongoing. In the case of VDCs, it has been not systematically introduced. GESI capacity GESI components have been included in the capacity development plan development plans of local bodies and the personnel policy of the prepared and MOFALD. implemented for MLD and local bodies Human resource MOFALD’s human resource policies highlight affirmative action, policies, particularly but this has not been fully implemented. those related to affirmative action, strengthened and implemented Better coordination Greater coordination has been observed between the MOFALD between central line GESI section and the Ministry of Women, Children, and Social agencies and MLD on Welfare at the central level. implementation of GESI strategy 3.2. Strong HRD plans implemented Capacity development plans were prepared and implemented in central in MLD, all DDCs, and 75 DDCs and 57 municipalities. government and 30 municipalities national HRD plans include The capacity development plans make reference to affirmative nongovernment affirmative action policy actions. institutions that Results-based The system is in place in the MOFALD. provide monitoring system in appropriate MLD support to local DMIS functional and DPMAS software was installed in 75 DDCs, and staffs of local bodies linked with DPMAS bodies were trained on DPMAS. DMIS has yet to be fully developed. Government’s This target could not be met, given the delays in the development devolution strategy of the constitution and state reconstruction process. prepared and operationalized by 2009 Updated devolution Devolution policies are not yet finalized due to delay in the policies and regulations promulgation of new constitution and the state restructuring incorporate GESI process. aspects ADB = Asian Development Bank, AEPC = Alternative Energy Promotion Center, CAC = citizen awareness center, CBO = community-based organization, DAG = disadvantaged group, DDC = district development committee, DMIS = district management information system, DPMAS = district poverty monitoring and analysis system, FY = fiscal year, GESI = gender equality and social inclusion, HDI = human development index, HRD = human resource development, LBFC = Local Bodies Fiscal Commission, LGCDP = Local Governance and Community Development Program, LGAF = local governance and accountability facility, LPC = local peace committee, MCPM = minimum conditions and performance measures, MLD = Ministry of Local Development, MOEST = Minitry of Environment, Science and Technology, MOF = Ministry of Finance, MOFALD = Ministry of Federal Affairs and Local Development, NAC = national advisory committee, O&M = operation and maintenance, OSR = own source revenue, PCU = program coordination unit, PEFA-FRRAP = public expenditure and financial accountability and fiduciary risk reduction action plan PEM = public expenditure management, PFM = public financial management, SWAp = sector- wide approach, TA = technical assistance, UN = United Nations, VDC = village development committee, WCF = ward citizens forum Sources: Asian Development Bank, Ministry of Federal Affairs and Local Development. Local Governance and Community Development Program reports and estimates. 2008-2013. Nepal.

Appendix 2 22

STATUS OF TRANCHE 1, TRANCHE 2, AND TRANCHE 3 POLICY CONDITIONS

Table 1: Tranche 1 Policy Actions and Their Status

Tranche 1 Policy Conditions Current Status (Upon grant effectiveness) Condition 1: MLD to issue a public audit Remains complied with. and social audit guidelines for local All local bodies are required to conduct such audits at least once a year. bodies on the delivery of services and This is monitored through MCPM assessments (undertaking of the ensuring transparency in local audits is one of the criteria of the MCPM). governance Condition 2: MLD to complete a Remains complied with. methodology for collecting baseline Baseline data was collected and compiled with by the MOFALD in information on various performance August 2010. benchmarks related to local governance and community development Condition 3: MLD to issue a common Remains complied with. physical reporting system, including Local bodies use the reporting system in conjunction with the format standardized reporting formats, for required by the National Planning Commission, which is incorporated in block grant allocations as per the the JFA. MCPM assessors use the reports to ascertain compliance with district management information system guidelines. Condition 4: MLD to approve a manual Remains complied with. for assessing minimum conditions and The manual was reviewed and revised in June 2010 and again in 2012. performance measures for DDCs Condition 5: MLD to approve a Remains complied with. framework of social and environmental The framework is in place, and training has been provided to selected safeguards for use by local bodies local body officials. To strengthen implementation arrangements, ADB provided technical assistance to support the MOFALD environment division— $0.60 million was provided in FY2009, $0.54 million in FY2010, $0.97 million in FY2011, and $1.00 million in FY2012 for the environmental and social assessments. Condition 6: MLD to approve gender Remains complied with. budget audit guidelines These guidelines have been issued and have been in operation in local bodies. The resource management and mobilization procedures and MCPM manuals have been updated to incorporate the social inclusion component, in line with gender-responsive budget principles. The gender-responsive budgeting has been piloted in 10 DDCs. Condition 7: Government to reconstitute Remains complied with. an all-party mechanism for local After the end of the armed conflict, civil servants assumed all functions government of the local bodies, and the informal role of political parties was secured with the official promulgation of the all-party mechanism in 2009. By 2012, beset by controversies over decision making, corruption, nepotism, and political party favoritism, the APM was dissolved by the MOFALD, which received an official directive from the CIAA.

Condition 8: Government to complete Remains complied with. an assessment of the work of existing Pursuant to this assessment, LPC operational guidelines were drafted local peace committees and and finalized. LPCs have been established in 67 districts, but are not recommend follow-up actions fully operational in all of them. The Ministry of Peace and Reconstruction organized five regional interaction workshops for LPC members with ministry officials. The outcomes from the workshops were incorporated by the ministry while reviewing its approach to making LPCs more functional and effective. ADB = Asian Development Bank, APM = all-party mechanism, COC = code of conduct, CIAA = Commission for the Investigation of Abuse of Authority, DDC = district development committee, FY = fiscal year, JFA = joint financing arrangement, LPC = local peace committee, MCPM = minimum conditions and performance measures, MLD = Ministry of Local Development, MOFALD = Ministry of Federal Affairs and Local Development, VDC = village development committee. Sources: Asian Development Bank, Ministry of Federal Affairs and Local Development. Local Governance and Community Development Program reports. 2008-2013. Nepal

23 Appendix 2

Table 2: Tranche 2 Policy Actions and Their Status

Tranche 2 Policy Condition Current Status (subject to finalization of JFA) Condition 1: Government to endorse Remains complied with. the LGCDP document As several important activities of the LGCDP could not be completed on the originally planned closing date (July 2012), the program was extended to July 2013. To continue and sustain the reforms made under the LGCDP, the government, together with development partners and other stakeholders, designed phase II of the LGCDP and started implementing it soon after the closure of phase I, beginning in January 2014. Condition 2: MLD to prepare the local Remains complied with. governance and community The preparation, endorsement by JFA partners, and implementation of development annual strategic ASIP in accordance with the objectives and performance targets of the implementation plan for FY2010 in LGCDP were duly undertaken for all financial years of the program period accordance with the objectives and (2009 to 2013). This has also been continued in phase II. ASIP forms the performance targets of the LGCDP, base of program monitoring. and have it endorsed by JFA development partners, including ADB Condition 3: NPC and the Ministry of Remains complied with. Finance to approve the annual work Both the MOF and the NPC approved the work plan and budget for all the plan and budget for FY2010 for the financial years of the program period and continue resourcing the LGCDP LGCDP’s phase II. Condition 4: MLD to approve a social Remains complied with. mobilization strategy, including a Social mobilization, identified as the principal means of empowering detailed action plan with budget communities and increasing accountability, largely succeeded in allocation that is relevant to achieving its objectives. LGCDP phase II is hence continuing with the disadvantaged groups same strategic framework of social mobilization, with an improved approach and revised guidelines based on the learning from phase I. The revised guidelines also target disadvantaged groups and call for effective use of targeted funds— 35% of the capital budget allocation to local bodies. Activities related to social mobilization are included in the ASIP, with the required funds allocated for their implementation. Recognizing the importance of effective social mobilization in empowering community and increasing accountability, the social mobilization budget has been increased in LGCDP phase II. Condition 5: MLD to approve a Remains complied with. gender equality and social inclusion The GESI strategy remains in place and continues in phase II. Since the strategy, including detailed approval of the GESI strategy in July 2009, several steps were taken to implementation arrangements with mainstream GESI into the program. This includes establishment of the budget allocation GESI unit headed by an undersecretary, revision of all LGCDP guidelines to incorporate GESI component, GESI orientations and training in local bodies, and preparation of gender responsive budget and gender audit guidelines. It also includes affirmative actions in favor of women and disadvantaged groups to maximize their participation and decision making, such as 25% budget allocation for projects prioritized by women and disadvantaged groups, and 33% mandatory representation of women in committees, including one in leadership position. In addition, the MOFALD has been applying this strategy in all the programs and projects it executes. Condition 6: MLD to establish a LGAF Remains complied with. aimed at ensuring that local bodies The LGAF was established in late 2009. The LGAF national committeea are held accountable for service was formed in early 2010, but implementation did not start until January delivery 2011 due to unexpected complications in procuring the NSP responsible for the overall management of the LGAF. Activities under the LGAF were implemented smoothly after the issues were settled. Independent reviews undertaken by the QAM and focused evaluation confirmed that the LGAF is an effective mechanism to promote accountability in the absence of locally elected representatives. The government plans to continue the mechanism in phase II with a few operational changes based on the

Appendix 2 24

Tranche 2 Policy Condition Current Status (subject to finalization of JFA) learning from phase I. The guideline for the mechanism is being prepared.

Condition 7: MLD to approve Remains complied with. allocation criteria and a rollout plan The allocation criteria for additional block grants were approved by the for additional block grants government in 2009 and were subsequently rolled out to local bodies. The allocation criteria required that VDCs meet MCs and DDCs and municipalities meet both MCs and PMs to be eligible for topping-up grants. The number of local bodies complying with the MCPM criteria has increased since 2008. MCPM have been revised to reflect the feedback made by local bodies. The revised MCPM include PM indicators for VDCs as well, have fewer and more relevant indicators, and are results-oriented. MCPM assessments continue in the LGCDP’s phase II. Condition 8: MLD to issue guidelines Remains complied with. to local bodies regarding local own- These guidelines continue to be in place. The collection and mobilization source revenue collection of own-source revenue in local bodies is very poor, with the share of internal revenue accounting for less than 15% of the total local body revenue. A training module has been prepared, and training on generating local revenue is in line with the Local Self Governance Act. The training has been conducted in few DDCs and will be continued in phase II. Condition 9: MLD to issue guidelines Remains complied with. on topping-up grants to local bodies To streamline the expenditure mechanism, the government issued and has enforced the Resource Management Act since FY2012, which requires all grants and revenues of local bodies to be integrated into a single grant and its expenditures to be guided by one guideline—the Local Bodies Resource Management and Mobilization Procedures, 2012. The topping-up grant has hence been integrated with other grants, which enhanced the transparency and efficiency of its utilization. Condition 10: NAC to approve an Remains complied with. action plan on how to improve MLD’s The action plan has been in place since it was approved, and the capacity to coordinate programs on MOFALDa has used the plan extensively to build its own capacity. One local governance and community provision of the action plan was to rely on consulting expertise, national development as well as international, to the extent needed. One international and more than 20 national consultants were hired, including those placed in the five cluster coordination units. District facilitators in DDCs and municipalities were also hired, particularly to support social mobilization activities. Condition 11: MLD to complete a Remains complied with. fiduciary risk assessment of The detailed FRA was completed and shared with all the development intergovernmental fiscal transfers partners, and its recommendations were incorporated in PEFA-FRRAP, which is being implemented in LGCDP II. Further, ADB fielded missions in June 2010 and December 2010 to review the fiduciary risks, which confirmed the FRA findings and highlighted other issues. These included (i) lack of coherence in guidelines attached to up to 20 various grants to local bodies; (ii) delays in fund flow and financial reporting by local bodies; and (iii) the high degree of fragmentation in the authorization system, resulting in unreliable plans and budgets and thus inefficient project implementation. The reviews provided short- and long-term mitigation measures, which were also incorporated in PEFA-FRRAP. ADB = Asian Development Bank, ASIP = annual strategic implementation plan, DDC = district development committee, FRA = fiduciary risk assessment, GESI = gender equality and social inclusion, JFA = joint financing arrangement, LGAF = local governance and accountability facility, LGCDP = Local Governance and Community Development Program, MCPM = minimum conditions and performance measures, MLD = Ministry of Local Development, MOF = Ministry of Finance, NAC = National Advisory Committee, NPC = National Planning Commission, NSP = national service provider, PEFA-FRRAP = public expenditure financial accountability and fiduciary risk reduction action plan, QAM = quality assurance mechanism , VDC = village development committee. a MLD became MOFALD – Ministry of Federal Affairs and Local Development after the signing of comprehensive peace agreement in 2009, Sources: Asian Development Bank, Ministry of Federal Affairs and Local Development. Local Governance and Community Development Program reports. 2008-2013. Nepal. . 25 Appendix 2

Table 3: Tranche 3 Policy Actions and Their Status

Tranche 3 Policy Conditions Current Status (12 months after the release of second tranche) Condition 1: MLD to prepare the local Remains complied with. governance and community development The preparation of ASIP for the respective fiscal year in accordance ASIP for FY2011 in accordance with the to the objectives and performance targets is continued in the second objectives and performance targets of the phase of LGCDP. The ASIP is endorsed by JFA development LGCDP, and have it endorsed by JFA partners. development partners, including ADB

Condition 2: MLD to achieve, in a manner Remains complied with. acceptable to ADB, the performance The performance targets achieved are being sustained. LGCDP targets set in the ASIP for FY2010 phase II has adopted a results-based monitoring system to track progress on outputs that is based on an annual monitoring and evaluation plan and provides details of targeted outputs, indicators, and activities as planned and approved in the ASIP. Progress is reviewed every trimester, and findings are discussed in the monthly national advisory sub committee meetings, which comprises MOFALD officials and representatives of development partners and local bodies.

Condition 3: MLD to approve a time-bound Remains complied with. action plan with resource allocation on the The action plan was prepared, and most of the actions have been implementation of the recommendations of undertaken. Some of those pending have been put under the the midterm review of the LGCDP LGCDP phase II. Examples include the setting up of a compliance unit in the MOFALD, internal audit of VDCs on a trimester basis, effective linking of learning from implementation to policy development.

Condition 4: MLD to prepare an approach Remains complied with. paper on how to continue the reform The approach paper remains valid to date. However, due to the agenda on local governance and prevailing uncertainty about the federal structure, no further action community development, including the has been taken in this regard. possibility of using a sector-wide approach ADB = Asian Development Bank, APM = all-party mechanism, COC = code of conduct, DDC = district development committee, JFA = joint financing arrangement, LPC = local peace committee, MCPM = minimum conditions and performance measures, MLD = Ministry of Local Development, VDC = village development committee. Sources: Asian Development Bank, Ministry of Federal Affairs and Local Development. Local Governance and Community Development Program reports. 2008-2013. Nepal.

Appendix 3 26

PUBLIC EXPENDITURES AND FINANCIAL ACCOUNTABILITY RISKS AND MITIGATION MEASURES

PEFA Area Key Issue Proposed Mitigation Current Status

Key Off-budget funded Full alignment with Government The LGCDP budget fully aligned with crosscutting activities not under systems (treasury model) government treasury system issues FCGO and OAG (PI-7) Allocation of EBG is formula Block grants to local bodies are Lack of transparency in based and fully transparent allocated based on the formula, and intergovernmental fiscal (allocations are publicized in results of MCPM assessment. The relations (PI-8) national and local media) allocation is published in MOFALD's website.

Budget cycle Top-down approach to Unconditional nature of EBG Bottom-up planning process adopted budget formulation allows for bottom-up planning by more than 87% of the LBs for (i) Budget process needs to be Prioritization of EBG done their annual planning and budgeting preparation replaced by bottom-up through bottom-up participatory and approach (PI-11) planning process formulation

(ii) Budget Unpredictability in Allocations under the LGCDP Unpredictability of funds continue to credibility availability of funds for including development partner be a challenge, as evident from committed expenditure funds, agreed in annual work these examples: (PI-16) plans and ensured under the JFA (i) Local bodies receive spending authorizations throughout the year instead of once a year, (e.g., Lalitpur DDC received spending authorities for DDC grant on August 12, 2011 and February 22, 2012, for LGCDP social mobilization grant on September 12, 2011 and December 4, 2011, and for CD grant on November 8, 2011. (ii) Approved budget of grant of three DDCs (Khotang, Nawalparasi and Lalitpur) in FY2011 was NRe151 million, whereas the spending authority received by the DDCs was for NRe161 million, but only NRe98 million was received. Likewise, in FY2011, budget of three municipalities (Lalitpur, Ramgram, and Siraha), was NRe32 million, spending authority received was for NRe62 million, and only NRe59 million was disbursed.

(iii) Concerns about LBFAR amended to reflect Procurement regulations have been Procurement competition, VFM, and requirements in Procurement amended (e.g., threshold of NRe6 controls in procurement Act including threshold values million for work through users (PI-19) committees) but they are not reflected in LBFAR. (It has a threshold of NRe3 million). This has created confusion among local bodies. Due to the uncertainty with regard to state restructuring, the amendment of LBFAR has been postponed.

27 Appendix 3

PEFA Area Key Issue Proposed Mitigation Current Status

(iv) Concerns about the Funds to local bodies will be LGCDP grants to local bodies were Expenditure effectiveness of internal released in three tranches, on disbursed in three tranches upon control and controls for non-salary the basis of proper reporting on receipt of satisfactory physical and cash flow and expenditure (PI-20) the previous period financial progress reports of the releases previous tranches.

Assessment of fund flow to local bodies showed that, on average, only 30% funds were transferred in the first 8months, 70% in the last 4 months, and 40% in the last 2 months. The delays made it very challenging for local bodies to use funds efficiently and follow financial management rules. This also gave rise to poor practices, such as transfer of unspent funds to non- freezing accounts and advances to users committees, and increased fiduciary risks.

MOFALD developed PEFA-FRRAP in 2012 to strengthen PFM systems, maintain fiscal discipline, improve the transparency and accountability of public expenditures, and reduce fiduciary risks.

(v) Internal Concerns about the Local bodies that do not have Internal audit sections have been audit effectiveness of internal functioning internal audit sections established in almost all DDCs, but audit (PI-21) are ineligible to receive funds in they are understaffed and not LGCDP functioning well.

Only a few municipalities, including one of the four visited by the PCR review mission, had established internal audit sections with the required level of staff.

(vi) Accounting Concerns about the Requirement under LBFAR Bank reconciliation is mandatory for timeliness and regularity all local bodies, however timeliness of account reconciliations Local bodies that do not submit and regularity remain challenging, (PI-22) final statement of accounts from particularly in VDCs. previous fiscal year but one for final audit are ineligible to receive Many DDCs and municipalities, funds including four out of the five visited by the PCR review mission were found to be using accounting software. VDCs are not using any accounting softwares.

(vii) Financial Concerns about quality Requirement under LBFAR Timely financial reporting is included reporting and timeliness of annual in the MCPM of DDCs and financial statements (PI- Local bodies that have not been municipalities. Yet quality and 25) able to prepare the annual timeliness of annual financial statement of income and reporting are found to be poor, expenditures of the EBG and particularly in VDCs. District Development Fund are ineligible to receive funds Different and complex reporting formats prescribed in LBFAR and

Appendix 3 28

PEFA Area Key Issue Proposed Mitigation Current Status

grant operation guidelines have created confusion in local bodies.

(viii) External Concerns about scope, Support to OAG pledged in Capacity development support audit nature, and follow-up of LGCDP provided to OAG external audit (PI-26) Follow-up required under LBFAR With some exceptions, external audit of DDCs is carried out timely by Local bodies that have not OAG. A registered auditor is followed up on audit reports are appointed by a DDC to carry out ineligible to receive funds VDC external audits. Municipalities appoint external auditors themselves.

OAG conducted performance audits of 5 DDCs and 50 VDCs in 2011, which were effective in identifying structural issues related to poor performance and financial mismanagement. It plans to carry out the audits in other DDCs and VDCs.

Delay in auditing and poor follow-up on audit observations were found at all levels, including at the MOFALD.

Donor Concerns about (i) Funding levels indicated in Government of Nepal procedures Practices predictability of budget December and committed in April are adopted in programming, support, (ii) financial budgeting, fund flow system, and information provided by Full alignment with Government reporting requirements. development partners, systems and procedures and (iii) use of national Per the JFA, committed budgets procedures (D1-3) from development partners are released to LGCDP.

Due to the delay in funds released from development partners, the LGDCP budget couldn't release fund to local bodies in time.

Except UN Joint Program, external audit of LGCDP fund is carried out by the OAG DDC = district development committee, EBG = extended block grant, FCGO = Financial Comptroller General’s Office, JFA = joint financing arrangement, LBFC = Local Bodies Fiscal Commission, MLD = Ministry of Local Development, MOFALD = Ministry of Federal Affairs and Local Development, LBFAR = local bodies financial administration regulations, LDO = local development officer, LSGA = Local Self-Governance Act, LSGR = local self-governance regulations, OAG = Office of the Auditor General, PEFA = public expenditure and financial accountability, PEFA-FRRAP = public expenditure financial accountability and fiduciary risk reduction action plan, MCPM = minimum conditions and performance measures, VFM = value for money, FY = fiscal year, LB = local body, VDC = village development committee, DTCO = district treasury control office, UN = United Nations Sources: Asian Development Bank program completion mission estimates, Ministry of Federal Affairs and Local Development. Local Governance and Community Development Program reports. 2008-2013. Nepal. 29 Appendix 4

STATUS OF PROGRAM ASSURANCES

No. Program Assurance Status 1 The government will ensure that counterpart funds in The government’s contribution to the LGCDP local currency generated from the proceeds of the ADB stood at almost 75%. The MOFALD maintained grant will be used to meet the financial requirements two separate accounts for LGCDP: (i) FCA No. associated with the implementation of the LGCDP; for 153449, (with account name Sthaniya shasan that purpose, the government will establish a special tatha shamudayak bikash karyakram); and (ii) account at Nepal Rastra Bank immediately after grant local currency account (no. 153232; Group Kha effectiveness. Throughout program implementation, 5A), under the same account name. Development adequate allocation of counterpart funds will be made, partners’ funds were deposited in FCA accounts approved, and released in a timely manner to ensure and MOFALD transferred required funds from the proper implementation of the LGCDP. FCA to local currency account to be transferred to local bodies through the FCGO. While fund allocation was generally timely, disbursements were often delayed. Reasons included late budget approval and lack of substantiating evidence from local bodies. 2. Schedule II, Para 4 (a) (From the Grant Agreement): The equivalent in local currency Prior to submitting the first application to ADB for (NRe1,562,000,000) of ADB's first tranche withdrawal from the Grant Account, the Recipient shall contribution of $20 million was credited to the open an account (the Deposit Account) at Nepal Rastra account on January 15, 2009. Bank into which the proceeds from the First Tranche shall be deposited. For the Second Tranche and Third Funds from development partners were deposited Tranche, the pooled Foreign Exchange Account, which in FCA accounts and MOFALD transferred shall be established under the LGCDP and shall be held required funds from the FCA to the local currency by MLD at the Nepal Rastra Bank, shall function as the account based on the trimester expenditures, Deposit Account. The Deposit Account shall be which were shared with all development partners. established, managed and liquidated in accordance with The FCGO generally releases program funds to terms and conditions satisfactory to ADB. the districts in a timely manner. FCGO has field offices (district treasury offices) in all districts, which release funds to DDCs and municipalities. DDCs transfer funds to VDCs.

Records from FCGO and MOFALD also show that ADB’s second tranche contribution of $45 million was credited to the FCA on November 19, 2009. The third tranche of $41.3 million was credited to the FCA on August 8, 2011. 3. Schedule IV, para 3 of the Grant Agreement: The (i) The objectives, policies, and actions prior to Recipient shall: (i) ensure that the objectives achieved, the grant agreement continued to be in full policies adopted, and actions taken prior to the date of force and effect through the program period. this Grant Agreement, as set forth in the Policy Letter, (ii) Policy actions associated with tranche one shall continue to be in full force and effect for the and tranche two were carried out on time, duration of the Program period and subsequently; (ii) while some of the actions related to tranche carry out the policies and actions in accordance with the three were delayed by few months. The policy schedule of policy reforms contained in the Policy actions achieved during program period have Matrix and ensure sustainability of the reforms beyond been sustained beyond the program period. the Program period; (iii) carry out all of its obligations as (iii) All the obligations have been carried out. stipulated under this Schedule and the Grant Agreement, in a timely manner 4. Schedule IV, para 4 of the Grant Agreement The The MOFALD kept ADB informed of the issues Recipient shall keep ADB informed of, and the and the policy reforms. ADB, MOFALD, and MOF Recipient and ADB shall from time to time exchange engaged in policy dialogues at different times to views on, sector issues, policy reforms and additional discuss these. ADB also actively participated in reforms during the Program Period that may be different meetings and forums organized by considered necessary or desirable, including the MOFALD and development partners and provided progress made in carrying out the Program. its views and comments on the issues and policy actions. 5. Schedule IV, para 5 of the Grant Agreement The MOFALD, MOF, and ADB together with other Recipient shall engage in policy dialogue with ADB, in a development partners engaged in policy dialogue timely manner, on problems and constraints from time to time to discuss policy reforms. encountered during Program implementation and on MOFALD, ADB, and other development partners

Appendix 4 30

No. Program Assurance Status desirable changes to overcome or mitigate such met regularly and discussed problems and agreed problems and constraints. on solutions. They also went on field mission together and interacted with local body officials. 6. Schedule IV, para 6 of the Grant Agreement The Other multilateral and bilateral agencies Recipient and ADB shall keep each other mutually supporting LGCDP were included in the policy informed of policy discussions with other multilateral or discussions that took place with MOFALD and bilateral agencies that have implications for MOF. ADB informed other development partners implementation of the Program, and shall provide each of any discussions it had with the government on other with an opportunity to comment on any resulting ADB’s tranche release policy conditions during policy proposals. The Recipient and ADB shall take monthly meetings. each other’s views into consideration before finalizing and implementing any such proposals.

7. Schedule IV, Para 7 (a) (Grant Agreement): MOFALD had a total treasury account in Nepal Immediately after the Effective Date, the Recipient shall Rastra Bank, from which they transferred the establish, in a manner satisfactory to ADB, a Special counterpart funds to consolidated account for Account at Nepal Rastra Bank for the specific purpose LGCDP in FCGO. Funds from development of depositing and utilizing the Counterpart Funds. partners were also transferred to the consolidated Whenever the Recipient withdraws proceeds of the account from FCA before disbursement to local Grant from the Grant Account, the Recipient shall bodies. promptly deposit into the Special Account the Rupees amount equivalent to the amount of the proceeds so withdrawn. 8. Schedule IV, para 8 of the Grant Agreement The The government’s share of the total program Recipient shall ensure that the Counterpart Funds shall costs was the largest in the LGCDP, at 75%. It be used exclusively for the implementation of the was exclusively used for the program Recipient’s LGCDP. Except as ADB may otherwise implementation. This was evident from the agree, the Counterpart Funds shall be utilized not later trimester financial reports that MOFALD sent, than 31 December 2012. which were certified by FCGO. As LGCDP was extended for 1 year until July 15, 2013, government funding was used until then. 9. (Schedule IV, Para 9; Grant Agreement): Of the total $0.92 million from the first tranche, $1.95 million ADB contribution, the government will earmark in equal from the second-tranche, and $1.63 million from amounts from each tranche and for the program period the final tranche were made available for the work (i) $4.5 million to support the work of LPCs; and (ii) $1.8 of LPCs (confirmed by the Ministry of Peace and million to support the capacity of local bodies and MLD Reconstruction). For environmental and social to conduct environmental and social assessments and safeguards, $0.60 million was provided in manage related safeguard review, monitoring, and FY2009, $0.54 million in FY2010, $0.97 million in reporting activities. FY2011, and $1 million in FY2012. ADB’s TA contributed significantly to improving the capacity of MOFALD and local bodies with regard to environment and social safeguards. 10. Schedule IV, Para 10: Grant Agreement) Within 1 Local Body Financial Administration Rules, 2007, month of grant effectiveness, MLD will have established clearly stipulate that monthly and annual budget a budget tracking system to track the use of counterpart and expenditure statements must be prepared funds generated by the grant on a 4-monthly basis until and submitted within 7 days of the end of each such a time that a JFA is in place in support of the month. The same reporting system has been LGCDP, at which time the provisions of the JFA will simplified in the Local Bodies Resource apply. Management and Mobilization Procedures, 2012, with standard formats. The guidelines call for releasing capital grants only when local bodies submit the budget and expenditure tracking reports. In April 2011, all JFA provisions on budget tracking were in place (confirmed by the JFA development partners). MOFALD provided financial monitoring reports to development partners every trimester, which included the consolidated statement of expenditures of all DDCs and those incurred at the center under the program. 31 Appendix 4

No. Program Assurance Status 11. Schedule IV, para 16 of the Grant Agreement In the The JFA became effective on September 2009, event the JFA has not become effective by March 2009, after a delay of 6 months. Regular meeting ADB and MLD shall jointly conduct a review of the between ADB, the government, and other program. development partners took place to finalize the JFA. 12. Schedule IV, para 17 of the Grant Agreement: At the A performance monitoring system per the latest by the time of the signing of the JFA, MLD as well reporting requirement of the NPC was established as the Program implementation unit at the Ministry of in both MOFALD and the Ministry of Peace and Peace and Reconstruction, shall have established a Reconstruction. performance monitoring system for the LGCDP and for the activities of the local peace committees respectively. 13. MLD will ensure that all local bodies, as and when they Inadequate staffs in local bodies, particularly in are included under the LGCDP, will be adequately VDCs, continue to be an issue. More than 10% of staffed and provided with the necessary financial, VDCs are still without VDC secretaries. The technical, and other resources (including equipment) to mandate for staffing goes beyond MOFALD. perform their functions under the program. Hence, the human resource gap in DDCs and municipalities was filled by mobilizing short-term consultants as district and municipal facilitators to support program implementation. In addition, five CCUs with core staff were established to provide technical and capacity development support to local bodies. CCUs also supported the MOFALD in performance monitoring of local bodies and reporting. 14. MLD will ensure the timely and effective implementation A GESI section has been established in the of the GESI action plan agreed between ADB and MLD, MOFALD. It is headed by an undersecretary and as well as the GESI strategy and guidelines to be comprises two section officers and one approved for the LGCDP. administrative staff member. It has a clear mandate, structure, and role, as well as earmarked budget for section capacity building. Notable progress has been made in mainstreaming GESI: (i) establishment of GESI implementation committees in DDCs to ensure implementation of GESI-related activities; (ii) increased allocation of capital grants projects prioritized by women, children, and socially excluded groups from 30% in 2010 to 35% in 2011; (iii) mandatory 33% representation of women in user's committees (including one in a key decision-making position); and (iv) guidelines prepared for gender responsive budgeting and auditing. 15. MLD will ensure the implementation of the LGCDP in The LGCDP issued detailed environmental and accordance with the provisions of the social and social safeguard guidelines to local bodies, which environmental safeguards framework for the LGCDP to were translated into the Nepali language. With ensure compliance with ADB's environmental associated TA support from ADB, the relevant unit assessment and applicable government environmental within the MOFALD provided training to local body requirements, as well as ADB’s requirements on officials on the application of the guidelines. There involuntary resettlement and indigenous peoples has been an encouraging rise in the number of development plans. local bodies preparing environmental assessment checklists (as required) before executing infrastructure projects. Environment desks have been established in all districts and municipalities, and focal persons have been assigned to facilitate compliance. The MLD confirmed that there are no category B projects. An environment checklist has been developed for category C projects. About 80% of DDCs and municipalities have been using the checklist. Each DDC and municipality received NRe250,000 in FY2010 and NRe550,000 in FY2011 for the implementation of the safeguard

Appendix 4 32

No. Program Assurance Status measures. The MOFALD signed a memorandum of understanding with Tribhuvan University to engage qualified master’s degree students for environmental monitoring, and NRe1.5 million was allocated for this purpose. Four students were engaged in 2011 and 2011 in 2012. 16. MLD will ensure the provision of allocated financial LGCDP allocated the following amounts for LGAF resources for the LGAF throughout the program operations: (i) FY2010—$1.668 million; (ii) implementation period. FY2011—$1.364 million; and FY2012—$4.993 million. The sharp increase in FY2012 was due to expansion of LGAF activities across the country. 17. The baseline dataset for the program will be continually The M&E section of the LGCDP PCU completed updated to ensure the proper application of results- compilation of baseline data for LGCDP. based management. 18. MLD will ensure to review the program budget This took place on a regular basis, particularly assumptions at the end of the inception phase of the after the midterm review recommendations were LGCDP; MLD will make necessary reallocations across issued in late 2010. The ASIPs reflected the budget line items in keeping with the agreed strategies, changed resource allocation assumptions as a action plans, and program approaches that will have result of the various assessments and reviews. been developed by then. ADB = Asian Development Bank, ASIP = annual strategic implementation plan, DDC = district development committee, FCA = foreign currency account, FCGO = Financial Comptroller General’s Office, GESI = gender equality and social inclusion, JFA = joint financing arrangement, LGCDP = Local Governance and Community Development Program, LGAF = Local Governance and Accountability Facility, LPC = local peace committee, M&E = monitoring and evaluation, MLD = Ministry of Local Development, PCU = program coordination unit, VDC = village development committee. Sources: Asian Development Bank program completion mission estimates, Ministry of Federal Affairs and Local Development. Local Governance and Community Development Program reports. 2008-2013. Nepal. 33 Appendix 5

GOVERNANCE RISK ASSESSMENT AND MITIGATING MEASURES

Vector of Types of Risk Risks Type 1 Measures Type 2 Measures Vector 1. Weak LSGA LSGA approved in 1999 remains Legislative key policy document for local and policy Absence of governance, despite framework Local contradictory and overlapping (Government) policies in relation to other sector Service Act policies. The revision of LSGA has been planned under LGCDP phase II.

Local (Government) Service Act has not been prepared yet mainly due to the uncertainty with regard to the type of federal structure Nepal will adopt. Vector 2. Weak Capacity development Weak midlevel Capacity development plans of Institutional capacity of activities of MOFALD were agencies and local bodies included capacity dimensions MLD undertaken, including associated development needs of orientations, training institutions community organizations as well. Weak local programs, and a study tour. In addition, the LGAF also bodies National and international contributed to capacity consultants were also development of NGOs and mobilized to support CBOs. MOFALD in undertaking policy reform activities and advising the ministry on program implementation

Capacity development plans were prepared for all local bodies based on their specific needs and priorities, and funds were allocated to implement those plans. Standard training programs and orientations on the policies and guidelines were also provided to local body officials. District and municipal facilitators were also provided to support DDCs and municipalities in program implementation. Vector 3. Lack of clarity Clarity on mandates, Weakness The new Procurement Act and Government on mandates, authorities, and areas of related to Regulations allowed for strong business authority, and responsibilities were clarified government actions in the case of processes sphere of through the issuance of business noncompliance, but these are not control guidelines and strategies. For process, e.g., forcefully applied. among example, the social on The procurement manual for different mobilization guidelines procurement local bodies was developed, and agencies provide clear delineation of relevant officials were trained. responsibilities between local MOFALD staff members were bodies, service providers, also provided with training on social mobilizers, and procurement. community groups. A procurement specialist was recruited in the PCU. The MCPM assess performance of local bodies on procurement. Vector 4. Absence of The establishment of WCFs Vestiges of Local pressure was created

Appendix 5 34

Vector of Types of Risk Risks Type 1 Measures Type 2 Measures Accountabilit voice for and CACs under the social opaqueness in through the social mobilization y and marginalized mobilization program local body component of the LGCDP. A transparency populations provided important forums for work number of other measures were marginalized populations to also put in place, including Fiduciary participate in local planning mandatory public audits of all risks in fund and governance processes infrastructure projects. Public flow and and demand public services hearings were conducted in local usage that benefit them directly, bodies through the LGAF, which including appropriate was effective in promoting expenditures of targeted transparency and holding local funds bodies accountable for their decisions and performance. The preparation and implementation of PEFA- FRRAP has contributed to improving PFM systems and reducing fiduciary risks. Fund flow delays have generally declined, particularly from FCGO to district treasury offices when all paperwork is in place.

Local body audit guidelines were developed and relevant people were trained

Fund flow mechanism and PFM system, including internal audit, are included in MCPM assessment, which has provided incentives to local bodies to comply with policy requirements and improve the system.

Vector 5. Unclear or The reporting system in the Public By increasingly allocating capital Program dense LGCDP was streamlined in expectations grants, including the targeted related reporting line with the reporting not managed funds (35% of capital grant to protocols in requirement of the National properly women, children and DAGs) to LGCDP Planning Commission. A fund projects prioritized by local monitoring and evaluation Weak people, local bodies were able to specialist (national expert) implementation manage public expectations to a provided technical and arrangements large extent. advisory support to the MOFALD and local bodies in Level of fund The implementation arrangement recording and reporting transfers was strengthened, with the physical and financial diminishes senior joint secretary leading the progress. program as program director, an undersecretary (program An output-based monitoring manager) managing and system was also developed coordinating it, and department later in the program heads (output managers) implementation. This system providing specialized inputs to is being efficiently used in program implementation and LGCDP phase II. integrating program activities in MOFALD operations. The MOFALD team was supported by technical experts (national and international) at the national 35 Appendix 5

Vector of Types of Risk Risks Type 1 Measures Type 2 Measures (PCU) and local level (CCUs).

The fund transfers to local bodies increased with the government’s additional block grant allocation. ADB = Asian Development Bank, CAC = citizen awareness centers, CCU = cluster coordination unit, DAG = disadvantaged group, DDC = district development committee, FCGO = Financial Comptroller General’s Office, JFA = joint financing arrangement, LGAF = Local Governance and Accountability Facility, LGCDP = Local Governance and Community Development Program, LSGA = Local Self-Governance Act, MCPM = minimum conditions performance measures, MLD = Ministry of Local Development, MOFALD = Ministry of Federal Affairs and Local Development, PCU = program coordination unit, PFM = public financial management, PEFA-FRRAP = public expenditure financial accountability and fiduciary risk reduction action plan, VDC = village development committee, WCF = ward citizen forum. Sources: Asian Development Bank project completion mission estimates, Ministry of Federal Affairs and Local Development. Local Governance and Community Development Program reports. 2008-2013. Nepal.

ADDITIONAL IMPLEMENTATION RISKS AND MITIGATING MEASURES Staff instability in local This continued to be an issue. The MOFALD sought to address this through a governments capacity development strategy that is being developed under LGCDP’s phase II. Development partners prove The program adopted a flexible approach to accommodate different modalities. For reluctant to align themselves example, the United Nations was not a part of the JFA but worked closely with the within a single framework of government and JFA development partners in program implementation. support for decentralization. The MOFALD took increased leadership in the LGCDP and development partner coordination. Negative environmental impact The local environment policy and other environment-related guidelines were of local body projects prepared, but implementation was not as consistent as expected due to capacity constraints. An environment specialist was recruited in the MOFALD. An environment desk and focal person were also assigned in all DDCs and municipalities. Orientation on environment and social safeguards was provided to all local body focal persons and facilitators. LGCDP grants supported only small-scale projects that had limited adverse environmental impacts. Local bodies were advised to use a checklist to ensure that projects did not violate the relevant national environmental guidelines and laws. DDC = district development committee, JFA = joint financing arrangement, LGCDP = Local Governance and Community Development Program, MOFALD = Ministry of Federal Affairs and Local Development Sources: Asian Development Bank project completion mission estimates, Ministry of Federal Affairs and Local Development. Local Governance and Community Development Program reports. 2008-2013. Nepal.

Appendix 6 36

PROJECT SPECIFIC COVENANTS (FROM LEGAL AGREEMENTS)

No Description Type Status 1 MLD to issue a common physical Financials Reporting system was established in line with the reporting system, including reporting requirements of NPC standardized reporting formats, for block grant allocations as per the district management information system (DMIS) 2 Established, Staffed, and Operating Others The PCU was adequately staffed with technical PMU experts and support staff and financially and logistically resourced to support program implementation. The PCU operation was financially supported by technical assistance from the UNDP. 3 MLD to approve gender budget Financials Done and remains complied with audit guidelines 4 Government to endorse the LGCDP Others Done document 5 MLD to approve a social and Safeguards Done and remains complied with environmental safeguards framework for use by local bodies 6 MLD to issue public audit and social Social The guidelines were issued and approved by the audit guidelines for local bodies in MOFALD, and relevant officials at local level were the delivery of services and oriented on their applications. ensuring transparency in local governance 7 MLD to approve a GESI strategy, Social MOFALD approved and issued GESI policy and including detailed implementation strategy in 2010. A fully staffed GESI unit has arrangements with budget allocation been established in MOFALD. It is led by a GESI output manager, an undersecretary, and supported by two section officers and GESI advisor to mainstream GESI in MOFALD operations. 8 MLD to approve a social Social The social mobilization strategy was focused on mobilization strategy, including a facilitating public participation, particularly of detailed action plan with budget women and disadvantaged groups, in the local allocation, that is relevant to governance processes. The strategy was disadvantaged groups approved by MOFALD and included in the annual strategic implementation plan of LGCDP, with adequate funding for implementation. 9 MLD to achieve, in a manner Others This was one of the four policy conditions of the acceptable to ADB, the performance final tranche release, which was substantially targets set in the ASIP for FY2010 complied with, because some of the performance targets set in the ASIP for FY2010 were dropped based on the recommendations of the midterm review. 10 MLD to approve a time-bound Others A time-bound action plan with resource allocation action plan with resource allocation was prepared and implemented. on the implementation of the recommendations of the midterm review of the LGCDP 11 MLD to prepare an approach paper Others The approach paper was prepared but not on how to continue the reform implemented due to the uncertainty about the agenda on local governance and federal structure. community development, including the possibility of using a sector-wide approach 12 MLD to prepare the local Others ASIPs for FY2011 as well as for FY2012, and governance and community FY2013 were prepared and endorsed by JFA development ASIP for FY2011 in development partners, including ADB. 37 Appendix 6

accordance with the objectives and performance targets of the LGCDP, and have it endorsed by JFA development partners, including ADB 13 Established, Staffed, and Operating Others The LGCDP PCU was established soon after the PMU or PIU program was approved, adequately staffed, led by the joint secretary (program director), coordinated by an undersecretary (program manager), and supported by specialists. 14 Fielding of Consultants Others Consultants were hired for the PCU and five cluster coordination offices to provide technical advisory support. Each cluster office supported a batch of 14–17 DDCs. 15 MLD to complete a methodology to Others Baseline information was collected by MOFALD. collect baseline information on various performance benchmarks related to local governance and community development 16 MLD to approve a manual for Others Manuals for assessing minimum conditions and assessing minimum conditions and performance measures for DDCs, municipalities, performance measures for DDCs and VDCs were prepared. 17 MLD to establish a local governance Others LGAF was established midway through the and accountability facility aimed at program implementation. ensuring that local bodies are held accountable for service delivery 18 MLD to prepare the local Others ASIP for FY2010 in accordance with the governance and community objectives and performance targets of the LGCDP development annual strategic was prepared and endorsed by JFA development implementation plan (ASIP) for partners, including ADB. FY2010 in accordance with the objectives and performance targets of the LGCDP, and have it endorsed by JFA development partners, including ADB 19 NPC and MOF to approve the Financials The annual work plans and budgets for FY2010, annual work plan and budget for FY2011, FY2012 and FY2013 were approved by FY2010 for the LGCDP NPC and MOF.

ADB = Asian Development Bank, ASIP = annual strategic implementation plan, CAC = citizen awareness centers, CCU = cluster coordination unit, DAG = disadvantaged group, DDC = district development committee, FCGO = Financial Comptroller General’s Office, FY = fiscal year, GESI = gender equality and social inclusion, JFA = joint financing arrangement, LGAF = local governance and accountability facility, LGCDP = local governance and community development program, MOF = Ministry of Finance, MCPM = minimum conditions performance measures, MLD = Ministry of Local Development, MOFALD = Ministry of Federal Affairs and Local Development, NPC = National Planning Commission, PCU = program coordination unit, UNDP = United Nations Development Program, VDC = village development committee, WCF = ward citizen forum. Sources: Asian Development Bank project completion mission estimates, Ministry of Federal Affairs and Local Development. Local Governance and Community Development Program reports. 2008-2013. Nepal

Appendix 7 38

PROGRAM IMPLEMENTATION SCHEDULE

39 Appendix 7

Appendix 8 40

GENDER EQUALITY AND SOCIAL INCLUSION RESULTS

I. Narrative Analysis

1. The premise of the gender equality and social inclusion (GESI) action plan was that the Governance Support Program (GSP I), which helped the Government of Nepal’s Local Governance and Community Development Program (LGCDP), had strong potential to have differential impact on women and disadvantaged groups. The GESI action was prepared to adequately address the demands and needs of the women and disadvantaged groups. The GESI aimed to begin remedying the problem of the inequitable access to resources and opportunities provided to women and disadvantaged groups (dalit community, ethnic minorities, Muslims, Madhesis, elderly people, and people with disabilities) in the country. The component aimed to focus on strengthening the demand side for this access through policy reforms, capacity development, social mobilization, and institutional strengthening. In general, the LGCDP sought to (i) maximize meaningful participation of women and disadvantaged groups in local governance decision making, (ii) increase their access to state and non-state resources and opportunities, and (iii) increase their engagement in leading and managing community-based organizations.

2. The LGCDP’s design was highly relevant to the country’s prevailing practical and strategic gender needs. More specifically, it was relevant to the need to ensure meaningful participation by women and disadvantaged groups in local governance and to create efficient mechanisms through which local governance bodies could be accountable to these previously excluded groups.

3. The LGCDP supported by GSP I was successful in achieving most of the GESI targets set in GSP I and LGCDP. An intended output in the original LGCDP related to forming, strengthening, and federating community based organizations (CBOs) led by women and disadvantaged groups was replaced by the establishment of ward citizen forums (WCFs) and citizen awareness centers (CACs). The LGCDP was effective in helping formulate GESI strategy, policy, and guidelines that focused on mainstreaming GESI in the program and project operations of the Ministry of Federal Affairs and Local Development (MOFALD) through effective and efficient institutional arrangements, capacity development, social mobilization, and mechanisms to monitor compliance of the policies. The LGCDP capacity development and provision of targeted funds and activities have created a well-informed critical mass of women and disadvantaged groups in Nepal. This has helped significantly to increase access to resources and opportunities at the national as well as local levels. The MOFALD reported that access of women and disadvantaged groups to state resources have increased to 46% of the total capital budget in 2011 from 38% of the budget in 2010. Mandatory allocation of 35% capital budget to fund projects prioritized by women and disadvantaged groups is a significant achievement and effectively integrates GESI in the local development process. The utilization of such targeted funds increased from 10% in FY2010 to 35% in FY2012. The achievements show that women and disadvantaged groups have reached the level of access on the steps of the empowerment ladder and are progressing toward the next steps of control and ownership. Consistent efforts by the MOFALD, local bodies and development partners, including effective monitoring of compliance with policies and guidelines and training, are important to reach the next steps.

41 Appendix 8

II. Gender Equality and Social Inclusion Achievements

4. The LGCDP has proven successful in mainstreaming GESI in governance and community development by providing the fundamentals that can be replicated in other governance programs. Following are some of the GESI achievements: (i) The MOFALD approved and issued a GESI policy in 2010 with a strong focus on GESI mainstreaming, capacity development, and institutional strengthening at all governance levels. The policy has been backed by a GESI strategy to ensure effective and efficient implementation. GESI guidelines to support implementation of policies and strategies and a training manual have also been prepared and disseminated widely. This has supported the mainstreaming of GESI in other policies and guidelines, including social mobilization guidelines and a local body resource mobilization guideline. A few GESI- related indicators were included in the minimum conditions and performance measures (MCPM) framework recently in its second amendment, but a focused evaluation of LGCDP by the MoFALD along with the development partners in 2012 indicated that the weightage of the indicators related to GESI in MCPM are insufficient to ensure adequate local body responsive to women and disadvantaged groups. (ii) A fully staffed GESI unit at the MOFALD has been established to lead the mainstreaming process. The GESI output manager, an undersecretary, leads the unit with two section officers and support staff. A GESI advisor works closely with the output manager to support the GESI unit. The unit is fully equipped and has the necessary logistics support. The unit is mandated to coordinate and manage GESI mainstreaming processes at all levels. A GESI committee has been formed in all district development committees (DDCs). Each is led by a local development officer and is responsible for coordinating, managing, and monitoring all GESI-related activities. All DDCs have appointed GESI focal persons to coordinate the implementation process. (iii) The mandatory provision of including 33% women in all committees formed by the MoFALD and local bodies has been found to be a relevant and successful strategy to promote inclusion in development processes. This provision has helped to increase the access of women and disadvantaged groups to local bodies and their resources by giving them collective strength and a credible voice, improving their leadership skills, and sensitizing all stakeholders. Women made up 44% of the participants in WCFs in 2012, demonstrating the growth of their influence in community-based organizations. Membership of more women (67% of the total members) and disadvantaged groups in community awareness centers has helped identify and address issues that affect their lives. The focused evaluation in 2012 and social mobilization review of LGCDP by MOFALD in 2013 confirmed that significantly higher number of women and DAGs are participating in local governance processes through WCFs and CACs than in 2008. (iv) Nearly 49% of the social mobilizers hired to facilitate the social mobilization activities were women, and 10% were dalits. (v) A critical group of trainers has been formed at the regional level to deliver relevant training in districts. All GESI focal persons at district and municipal level have been oriented on GESI policy, strategy, and guidelines. The GESI section at the MOFALD reported in 2013 that the attitude of local body staff members had become increasingly positive toward women and disadvantaged groups. This had made local bodies more responsive to their particular needs, but further improvement in this area is needed.

5. The focused evaluation in 2012 indicated that GESI budget auditing could be an effective tool in tracking the degree to which overall budgets, programs, and priorities of local bodies are gender-sensitive. Most local bodies have not applied this tool, largely due to capacity gaps and the lack of expert support needed to get the process underway. In FY2011, only 58%

Appendix 8 42

of the country’s districts conducted GESI budget auditing, although funding was allocated for this purpose. The GESI unit of MOFALD has been making attempts to integrate gender-responsive budgeting (GRB) and auditing in local governance processes.

III. Lessons Learned

6. Some of the lessons learned from the implementation of GSP I supported LGCDP are as follows: (i) Policy reforms, institutional strengthening, and capacity development aimed at affirmative action in favor of women and disadvantaged groups are key requirements for effective gender mainstreaming. Increased participation of women and disadvantaged groups in planning and decision making, providing greater access for them to resources and information, compliance with GESI policy and guidelines, and supervision and monitoring are fundamentals and need to be continued to sustain the achievements made through the LGCDP. (ii) Increased presence of women and disadvantaged groups in meetings and committees is an achievement but not enough to fully empower women and disadvantaged groups. Skills development, including public speaking, analytical thinking, and increased access to information are important to sustain the achievements made, and to take the empowerment efforts of women and disadvantaged groups to the next level. (iii) Effective use of funds targeted to implement projects prioritized by women and disadvantaged groups could be ensured through increased compliance with GESI policy and robust monitoring and efficient utilization tracking by by MOFALD, and WCFs and CACs.

IV. Conclusion

7. Further need still exists in Nepal to enhance the capacity of women and excluded groups to exercise oversight on budgetary allocation and disbursements and to enable them to fully benefit from inclusive policies. The GESI policy framework developed by LGCDP mostly focuses on quantitative measures, such as percentage of the membership of women and disadvantaged groups in WCFs and CACs, and number of women participating in meetings, than on qualitative ones and results. These are important measures, but they need to be supplemented with information that reveals whether substantive and sustainable changes are occurring in the way marginalized groups are meaningfully involved in the political process. Formulating and implementing GESI policy at the national level will give the impetus to bring GESI into the mainstream of development. Conceptual clarity and sensitization in the line ministries other than the MOFALD and for stakeholders are needed to ensure full state ownership. It is important now to provide non-training capacity-building inputs, such as on-site coaching and exposure to successful programs and mutual sharing of success, as well to localize GESI sensitivity for gender-responsive planning and budgeting.

V. Gender Equality and Social Inclusion Achievement Matrix Outcome 1: Citizens and Communities Actively Engaged with Local Bodies and Hold Them Accountable Features and Targets/Indicators Achievement at Program Completion Year-on-year increase in the number of disadvantaged Grants to local bodies increased at the rate of 32% groups that utilize program resources to empower annually after the launching of LGCDP. Proportion of the themselves capital fund allocated in favor of disadvantaged groups increased to 35% in 2012 from 10% in 2010 Increased number of social mobilizers; at least 60% 50% of the total social mobilizers hired were women and women and DAGs mobilized 10% of them were from dalit community CBOs of women and DAGs able to set agenda, While there is no established benchmark data, 43 Appendix 8

prioritize programs, and plan and monitor response to participation of women and DAGs in local-level planning concerns of DAGs as compared with 2008 has increased substantially through WCFs and CACs At least 60% participation by women and DAGs in A total of 34,6489 women (44% of the total members) decision making and planning processes mobilized in WCF and 70,943 women (67% of the total members) mobilized in CACs in all VDCs. 4,558 women (51% of the total members) mobilized in WCFs and 8,537 women (83% of the total) in CACs in municipalities. Decrease in number of failures by local bodies to WCFs are acting to satisfy community concerns through satisfactorily respond to concerns of women and DAGs the LB's decision-making and implementation system. Public hearings and other accountability tools promoted by LGAF allow them to voice community concerns to the LBs. Number of women and DAG organization engaging with Different reviews, including the focused evaluation of local bodies to voice their agenda increasing, compared LGCDP 2012 confirmed that increasing number of with 2008 Women and DAGs are participating in local planning and engaging with local bodies through WCFs and CACs. Outcome 2: Increased Capacity of Local Bodies to Manage Resources and Deliver Basic Services Inclusively and Equitably At least 70% of local body staff and officials are Gender focal persons and members of GESI committee sensitized and oriented on GESI are oriented in GESI policy and strategies in all 75 districts Participation of women and DAGs in program activities A total of 346,489 (44%) women were mobilized in WCFs increased by 50% over 2008 base line and 709,43 women (67% of the total) mobilized in CACs in all VDCs. 4,558 women were mobilized in WCFs (51% of the total) and 8,537 women (83%) were mobilized in CACs in municipalities. These women and other DAG members in WCFs and CACs participated directly or indirectly in program activities, which was not the case in FY 2008. So the increased participation is nearly 100% in 2012. Per the social mobilization review undertaken by MOFALD in 2013, more than 74% people at the local level say they know about development budget and that social mobilization has contributed in promoting community engagement in program planning, implementation, and project monitoring. The capital grant allocation of local bodies for projects prioritized by women, children, and disadvantaged group increased from 10% in 2010 to 35% in 2012. 33% of CBOs of DAGs turned into federations and The concept of federations has been dropped in the cooperatives and linked to local bodies LGCDP and replaced by citizen awareness centers. At least 33% of the capital expenditure grant provided The LGCDP confirms that 35% of capital grants are to municipalities and VDCs to be spent on prioritized spent on projects prioritized to benefit women, program by women and DAGs disadvantaged groups, and children. According to the local service delivery in Nepal report in 2014 by the World Bank, 50% of local revenues that are largely discretionary appear to provide for significant responsiveness to the local population. Inclusive integrated planning committee functional in all Integrated planning committees have been formed with local bodies at least one woman representative from each WCF and CAC and are functional in most VDCs 33% of CBOs turned into federations and cooperatives The concept of federations has been dropped in the LGCDP and replaced by citizen awareness centers. Public hearings, public and social audits, citizen report Public audit and social audit guidelines are formulated cards, are institutionalized by all local bodies and are operationalized in all local bodies. Public audit is mandatory for all users’ committees to settle the payments on completion of projects that are funded by local bodies. Provision of social audit on yearly basis is made mandatory for all VDCs. LGAF promoted use of various accountability tools

Appendix 8 44

(including social audit and public audit) to institutionalize at local bodes Increased number of local bodies can demonstrate Field observations and interactions by MOFALD and application of inclusiveness in service delivery as development partners confirmed that most local bodies compared with 2008 were gradually becoming responsive to the need to apply inclusive service delivery. All gender focal points in the districts made capable and Gender focal persons from all local bodies attended effectively performing orientation on GESI policy and strategies and are performing accordingly. Outcome 3: Strengthened Policy and National Institutional Framework for Local Self-Governance Human resource policies related to local staffing Issue of affirmative action addressed in GESI strategy strengthened, particularly related to affirmative actions and policy More inclusive local body staff composition compared Information not available with 2008 All central and local budgeting processes have GESI Gender-responsive budgeting and planning is indicators integrated in them, and gender-responsive operationalized in 38% of DDCs. budgeting is implemented by all local bodies GESI section at MOFALD strengthened, compared with GESI section of MOFALD was made stronger than in 2008 2008 by (i) designating an undersecretary to lead the section with adequate support staff, and (ii) fully equipping it with necessary office equipment and logistic arrangements Increased capacity of Women Office to monitor GESI This information was not available. compliance by local bodies All gender focal points in central line agencies will have An orientation on GESI policy and strategy was participated in at least one training workshop to organized for all GESI focal persons in central line strengthen their skills and are in better coordination with agencies and this strengthened their skill in GESI. MOFALD Improved coordination of MOFALD on GESI issues with Coordination of MOFALD with other line agencies on government line agencies, local bodies, and civil society GESI issues is gradually improving. organizations

45 Appendix 9

GUIDELINES, MANUALS, STUDIES, AND REVIEWS OF LOCAL GOVERNANCE AND COMMUNITY DEVELOPMENT PROGRAM, 2008-2013

A. Guidelines and Manuals

1. PEFA-FRRAP, 2012 2. Local Bodies Resource Management and Mobilization Procedures, 2012 3. Management and Operations’ Manual 4. Annual Planning (DDC and Municipality) Formulation Manual 5. VDC Planning and Budgeting Guideline 6. Revised Local Bodies Planning Guidelines incorporating Poverty and Environment 7. Social Mobilization Guideline Social Mobilization Operational Manual for Municipality 8. Social Mobilization Operational Manual for VDC 9. IEC Messages on Children’s & Women’s Rights plus GESI 10. Local Institutions, GESI Budgeting and Auditing Guideline 11. Scheme Implementation by Users’ Committee Guideline 12. Auditing Guidelines for Municipality 13. Auditing Guidelines for VDC 14. Auditing Operational Manual for Municipality 15. Auditing Operational Manual for VDC 16. Pro-poor Environment Friendly Development Activities 17. Operational Manual on Impact Evaluation Large Projects for Local Bodies 18. Gender Equality and Social Inclusion Operational Manual 19. Developing IEC Messages 20. IEC Strategies 21. Comprehensive Manual on Environment Friendly Local Infrastructure 22. WCF Info Booklet

B. Studies and Reviews

1. Focused Evaluation of LGCDP, 2012 2. Review of MCPM system 3. Stock taking of Fiscal Decentralization Policies: Consolidated report 4. LGCDP Status report 5. Performance Audit of Local Bodies 6. PETS 7. Fiduciary Risks and LGCDP Funding Arrangement: Findings and recommendations 8. Mid Term Review of LGCDP 9. Fiduciary risk management plan—special review by ADB 10. Technical Review of LGCDP 11. GESI Policy 12. Assessment of Social Mobilization Implementation Status 13. Review and Refinement of Fiscal Transfer Mechanism for Local Bodies 14. Review Revenue Generation from Natural Resources for Local Bodies 15. Analysis of MCPM system 16. Revenue Potentiality and Expenditure Needs of Himali districts 17. Review and Refinement of Capacity Development Strategy 18. Review of Implementation of Accounting Systems in DDCs and VDCs 19. Study Report on Pilot Sector Conditional Grant 20. Study on Options for SWAp 21. Economic Analysis of Local Government Investment in Rural Roads 22. Analysis of Decentralization Policy from a GESI perspective ------DDC = district development committee, IEC = Information, Education & Communications, GESI = gender equality and social inclusion, LGCDP = local governance and community development program, MCPM = minimum conditions performance measures, PEFA-FRRAP = public expenditure and financial assessment and fiduciary risk reduction action plan, PETS = public expenditure tracking survey, SWAp = Sector Wide Approach, VDC = village development committee, WCF = ward citizens forum, Sources: Ministry of Federal Affairs and Local Development

46

Supplementary Appendixes

47

A. PROGRAM OUTPUTS

Table 1: Number of Community Infrastructure Projects Constructed, 2009–2013

Distribution of projects Total % SN Type of Project 2009 2010 2011 2012 2013 (2009–2013) (2009-2013) 1 Roads (kms) 442 2,793 3,303 9,117 5,591 21,246 27.12 2 Drinking water (no) 252 2,594 2,095 4,543 4,043 13,527 17.27 3 Irrigation (hectares) - 839 638 2,802 1,119 5.398 6.89 4 Economic activity (no) - 377 610 2,927 1,761 5,675 7.25 5 Environment (no) - 289 68 891 526 1,774 2.27 6 Education (no) 180 2,788 2,621 4,954 3,410 13,953 17.80 7 Social activity (no) 668 1,447 1,475 3,790 2,612 9,992 12.75 8 Health (no) - 694 678 2,626 1,034 5,032 6.42 9 Rural electrification (no) 16 511 812 - 178 1,519 1.93 10 Others 233 - - - - 233 0.29 Total 1,791 12,332 12,300 31,650 20,274 78,349 100 Kms = kilometers, no = number Source: Ministry of Federal Affairs and Local Development

48

Table 2: Grant Allocation to Local Bodies NRe in million Average Annual Local Increase Bodies Grant Headings FY2008 FY2009 FY2010 FY2011 FY2012 % DDC recurrent grant 780 920 950 1,304 1,311 14 DDC DDC capital grant 354 380 1,130 1,130 2,300 60 VDC recurrent grant 783 1,566 1,566 1,566 1,566 19 VDC VDC capital grant 3,132 6,264 6,264 6,264 7,692 25 Municipality recurrent grant 56 56 56 111 110 19 Municipality capital grant 245 269 295 589 1,590 60 Municipality Local development fee– recurrent 900 400 400 -33 Local development fee – capital 2,000 1,100 1,764 1,900 -2 Recurrent grant 81 635 1,221 1,573 169 LGCDP Capital grant 920 2,687 3,281 1,460 17 Total 5,349 12,455 15,581 17,630 19,902 39 DDC = district development committee, FY = fiscal year, LGCDP = local governance and community development program, VDC = village development committee Sources: Ministry of Federal Affairs and Local Development, Financial Comptroller General Office, Ministry of Finance.

Table 3: Grant Expenditure in Local Bodies NRe in million Average Annual Local Increase Bodies Grant Headings FY2008 FY2009 FY2010 FY2011 FY2012 % DDC recurrent grant 838 1,002 1,215 1,336 1,605 18 DDC DDC capital grant 550 2,383 1,063 1,096 1,711 33 VDC recurrent grant 783 1,566 1,566 1,579 1,566 19 VDC VDC capital grant 2,923 6,227 5,711 6,181 6,837 24 Municipality recurrent grant 55 56 65 111 111 19 Municipality capital grant 450 306 297 582 1,151 26 Municipality Local development fee– recurrent 369 400 399 4 Local development fee– capital 980 1,629 2,099 1,737 21 Recurrent grant 52 260 759 949 163 LGCDP Capital grant 595 2,355 2,103 765 9 Total 5,599 13,167 14,530 16,245 16,830 32 DDC = district development committee, FY = fiscal year, LGCDP = local governance and community development program, VDC = village development committee Sources: Ministry of Federal Affairs and Local Development, Financial Comptroller General Office, Ministry of Finance

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Table 4: Per Capita Grant Allocation to Local Bodies

Capital Grant Allocation Per Capita Grant Local Bodies 2012 (NRe) Population 2012 (NRe) District Development Committees Khotang 38,346,000 206,312 186 Nawalparasi 17,111,000 643,508 27 Jumla 24,993,000 108,921 229 Lalitpur 30,592,204 468,132 65 Siraha 637,328 Failed in MCPM Municipalities Lahan 15,330,000 33,927 452 Ramgram 18,133,000 28,973 626 Lalitpur 73,089,000 226,728 322 Siraha 16,209,000 28,831 562 Village Development Committees Nunthala, Khotang 1,616,043 1,596 1,013 Kohalpur, Banke 2,751,500 36,019 76 Devagawa, Nawalparasi 1,507,000 5,359 281 Buipa, Khotang 2,031,000 4,538 448 Bisnupurkatti, Siraha 2,020,845 11,554 175 Lagadi Gadiyani, Siraha 1,543,245 5,729 269 Naya Belhani, Nawalparasi 2,748,000 12,288 224 Depalgaun, Jumla 2,055,000 2,398 857 Mahatgaun, Jumla 2,204,000 3,625 608 Lele, Lalitpur 2,286,000 8,411 272 MCPM = minimum conditions and performance measures Sources: Ministry of Federal Affairs and Local Development, Financial Comptroller General Office, Ministry of Finance, Central Bureau of Statistics. National Population and Housing Census. 2011. Nepal

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Table 5: Own-Source Revenue of Local Bodies

Own-Source Revenue OSR Growth Per Capita FY2007 FY2012 % Population OSR Local Bodies (NRe) (NRe) (2007 to 2012) 2012 FY2012 District Development Committee Khotang 140,706 1,893,669 1246 206,312 9 Siraha 5,780,369 18,360,544 218 637,328 29 Nawanparasi 15,177,808 55,615,249 266 643,508 86 Lalitpur 72,750,734 60,228,082 -17 468,132 129 Jumla 1,686,950 3,756,095 123 108,921 34 Total DDCs 95,536,567 13,985,3639 46 2,064,201 68 Municipality Lahan 4,382,579 13,359,328 205 33,927 394 Siraha 341,147 963,647 182 28,831 33 Ramgram 3,586,602 6,056,748 69 28,973 209 Lalitpur 90,721,258 181,348,156 100 226,728 800 Total Municipalities 99,031,586 201,727,879 104 318,459 633 Village Development Committee Kohalpur, Banke 435,657 2,842,262 552 36,019 79 Mahatgaun, Jumla 16,544 61,965 275 3,625 17 Depalgaun, Jumla 463 26,735 5,674 2,398 11 Naya Belhani, Nawalparasi 210,470 735,736 250 12,288 60 Devagawa, Nawalparasi 246,985 500,650 103 5,359 93 Nunthala, Khotang 995 1,050 6 1,596 1 Bisnupurkatti, Siraha NA 12,148 11,554 1 Lagadi Gadiyani, Siraha NA 6,252 5,729 1 Buipa, Khotang NA 18,000 4,538 4 Lele, Lalitpur 1,953,969 8,411 232 Total VDCs 911,114 4,168,398 358 91,517 46 Total Local Bodies 195,479,267 345,749,916 77 DDC = district development committee, FY = fiscal year, NA = not available, OSR = own-source revenue, VDC = village development committee Sources: Asian Development Bank program completion mission estimates, Ministry of Federal Affairs and Local Development, Financial Comptroller General Office, Ministry of Finance 51

Table 6: LGCDP Grant Allocation and Disbursement in District Development Committees NRe in million Grant Disbursement DDC Budget Heading FY Allocation Disbursement % 2011 15.13 7.21 48 LGCDP recurrent grant 2012 16.06 13.60 85 2011 42.88 21.87 51 LGCDP capital grant Khotang 2012 0.97 0.97 100 2011 Government capital grant 2012 38.35 28.58 75 Total 113.38 72.23 64 2011 16.86 11.29 67 LGCDP recurrent grant 2012 15.57 13.16 85 2011 61.78 41.22 67 LGCDP capital grant Nawalparasi 2012 17.59 14.12 80 2011 Government capital grant 2012 17.11 15.18 89 Total 128.92 94.97 74 2011 9.65 8.39 87 LGCDP recurrent grant 2012 8.70 8.64 99 2011 15.06 7.68 51 LGCDP capital grant Lalitpur 2012 2.26 2.26 100 2011 Government capital grant 2012 30.59 26.69 87 Total 66.26 53.66 81 2011 21.42 12.34 58 LGCDP recurrent grant 2012 21.97 19.86 90 2011 21.48 10.96 51 LGCDP capital grant Siraha 2012 0.00 0.00 2011 Government capital grant 2012 Total 64.87 43.16 67 2011 8.40 5.73 68 LGCDP recurrent grant 2012 6.87 6.72 98 22.09 11.27 51 LGCDP capital grant 2011 Jumla 2012 9.96 9.96 100 2011 Government capital grant 2012 24.99 18.99 76 Total 72.30 52.66 73 2011 71.45 44.97 63 LGCDP recurrent grant 2012 69.16 61.97 90 2011 163.30 92.99 57 LGCDP capital grant Total of Five 2012 30.78 27.31 89 DDCs 2011 Government capital grant 2012 111.04 89.45 81 Total 445.73 316.67 71 DDC = district development committee, FY = fiscal year, LGCDP = local governance and community development program, VDC = village development committee Sources: Ministry of Federal Affairs and Local Development, Financial Comptroller General Office, Ministry of Finance, Distritct Development Committees (Khotang, Nawalparasi, Lalitpur, Siraha, Jumla)

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Table 7: Allocated Amount and Disbursement in Municipalities

NRe in million

Disbursement % Municipalities Budget headings FY Allocation Disbursement 1.69 0.86 51 2011 LGCDP recurrent grant 2.64 1.45 55 2012 7.52 7.52 100 2011 LGCDP capital grant 0.00 0.00 Lahan 2012

2011 Government capital grant 15.33 11.55 75 2012 27.17 21.38 79 Total 2.89 1.47 51 2011 LGCDP recurrent grant 2.46 2.30 94 2012 7.19 7.19 100 2011 LGCDP capital grant 0.00 0.00 Siraha 2012

2011 Government capital grant 16.21 12.16 75 2012 28.75 23.13 80 Total 2.95 1.84 62 2011 LGCDP recurrent grant 3.21 3.12 97 2012 8.06 8.06 100 2011 LGCDP capital grant 0.00 0.00 Ramgram 2012

2011 Government capital grant 18.13 12.50 69 2012 32.36 25.52 79 Total 2.37 1.21 51 2011 LGCDP recurrent grant 1.12 1.12 100 2012 38.75 38.75 100 2011 LGCDP capital grant 0.00 0.00 Lalitpur 2012

2011 Government capital grant 73.09 51.62 71 2012 115.34 92.71 80 Total 9.90 5.39 54 2011 LGCDP recurrent grant 9.43 8.00 85 2012 61.52 61.52 100 2011 LGCDP capital grant Total of the municipalities 2012

2011 Government capital grant 122.76 87.84 72 2012 203.61 162.75 80 Total FY = LGCDP = local governance and community development program Sources: Ministry of Federal Affairs and Local Development, Financial Comptroller General Office, Ministry of Finance, Municipalities (Lahan, Ramgram, Lalitpur) 53

Table 8: Budget Allocation, Spending Authority Received and Actual Expenditure in District Development Committees Khotang District NRe in million FY2010 FY2011 FY2012 Revised Fund Approved Revised Spending Fund Approved Revised Spending Fund Item Budget received Budget Budget Authorization received Budget Budget Authorization received Government recurrent grant 15.60 20.43 20.00 20.70 NA 20.22 19.36 18.78 30.63 30.63 LGCDP recurrent grant 2.98 2.51 3.50 15.13 15.13 7.21 17.50 17.03 16.06 13.60 Subtotal 18.57 22.94 23.50 35.82 NA 27.43 36.86 35.81 46.69 44.23 Government capital grant 14.69 14.69 13.64 15.07 15.07 15.07 12.59 38.35 38.35 28.58 LGCDP capital grant 44.90 44.87 50.00 42.88 42.88 21.87 17.50 0.00 0.97 0.97 Subtotal 59.59 59.57 63.64 57.95 57.95 36.94 30.09 38.35 39.32 29.55 VDC recurrent grant 31.70 31.70 31.70 31.70 31.70 31.70 32.16 31.70 31.70 31.70 VDC capital grant 129.48 129.48 129.48 129.48 129.48 129.48 129.48 155.97 142.74 142.74 Subtotal 161.18 161.18 161.18 161.18 161.18 161.18 161.63 187.68 174.44 174.44 DDC = district development committee, FY = fiscal year, LGCDP = local governance and community development program, NA = not available, VDC = village development committee Sources: Ministry of Federal Affairs and Local Development, Financial Comptroller General Office, Ministry of Finance, Khotang District Development Committee

Nawalparasi DDC FY2010 FY2011 FY2012 Revised Fund Approved Revised Spending Fund Approved Revised Spending Fund Item Budget received Budget Budget Authorization received Budget Budget Authorization received Government recurrent grant 17.50 16.83 19.25 18.99 NA 20.35 20.89 20.72 24.71 24.71 LGCDP recurrent grant 3.35 2.43 3.68 16.84 16.86 11.29 0.00 16.84 15.57 13.16 Subtotal 20.85 19.25 22.93 35.83 NA 31.64 20.89 37.56 40.28 37.87 Government capital grant 21.42 21.14 23.00 26.60 26.64 26.60 57.40 17.11 17.11 15.18 LGCDP capital grant 3.35 55.26 66.29 61.70 61.78 41.22 0.00 17.58 17.59 14.12 Subtotal 24.77 76.40 89.29 88.30 88.43 67.82 57.40 34.69 34.71 29.30 VDC recurrent grant 28.91 28.91 28.91 28.91 28.91 28.91 31.80 28.91 28.91 28.91 VDC capital grant 115.16 99.78 115.16 115.16 118.08 115.16 250.00 147.87 147.87 132.31 Subtotal 144.07 128.68 144.07 144.07 146.99 144.07 281.80 176.77 176.77 161.22 DDC = district development committee, FY = fiscal year, LGCDP = local governance and community development program, NA = not available, VDC = village development committee Sources: Ministry of Federal Affairs and Local Development, Financial Comptroller General Office, Ministry of Finance, Nawalparasi District Development Committee

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Lalitpur DDC FY2010 FY2011 FY2012 Actual Actual Revised Fund Approved Revised Spending Fund Approved Revised Spending Fund Statement Budget received Budget Budget Authorization received Budget Budget Authorization received Government recurrent grant 13.06 16.08 15.00 16.54 NA 18.75 17.00 18.35 20.93 20.93 LGCDP recurrent grant 2.36 2.97 3.00 9.65 9.65 8.39 4.00 8.70 8.70 8.64 Subtotal 15.41 19.04 18.00 26.19 NA 27.14 21.00 27.06 29.63 29.56 Government capital grant 8.71 26.49 9.00 4.99 4.00 3.99 9.00 16.47 30.59 26.69 LGCDP capital grant 25.08 25.08 25.00 25.00 15.06 7.68 25.00 2.27 2.26 2.26 Subtotal 33.80 51.57 34.00 29.99 NA 11.67 34.00 18.75 32.85 28.95 VDC recurrent grant 16.20 16.20 16.20 16.20 16.20 16.20 16.20 16.20 16.20 16.20 VDC capital grant 62.55 62.55 62.55 62.55 62.55 60.72 62.55 62.55 30.59 26.69 Subtotal 78.75 78.75 78.75 78.75 78.75 76.92 78.75 78.75 46.79 42.89 DDC = district development committee, FY = fiscal year, LGCDP = local governance and community development program, NA = not available, VDC = village development committee Sources: Ministry of Federal Affairs and Local Development, Financial Comptroller General Office, Ministry of Finance, Lalitpur District Development Committee

Siraha DDC FY2010 FY2011 FY2012 Revised Fund Approved Revised Spending Fund Approved Revised Spending Fund Statement Budget received Budget Budget Authorization received Budget Budget Authorization received Government recurrent grant NA NA NA 28.50 NA 24.08 28.50 25.24 NA NA LGCDP recurrent grant 5.13 2.44 NA 6.00 21.42 12.34 6.00 21.97 21.97 19.86 Subtotal 5.13 2.44 NA 34.50 NA 36.42 34.50 47.21 NA NA Government capital grant NA NA NA 5.60 NA 5.06 7.50 4.00 NA NA LGCDP capital grant 43.53 39.21 NA 43.53 21.48 10.96 43.53 0.00 0.00 0.00 Subtotal 43.53 39.21 NA 49.13 NA 16.01 51.03 4.00 NA NA VDC recurrent grant NA NA NA 38.99 NA 38.99 38.99 38.99 38.99 38.99 VDC capital grant NA NA NA 137.62 NA 119.03 137.62 137.58 137.58 136.98 Subtotal 0.00 0.00 NA 176.61 NA 158.02 176.61 176.58 176.58 175.97 DDC = district development committee, FY = fiscal year, LGCDP = local governance and community development program, NA = not available, VDC = village development committee Sources: Ministry of Federal Affairs and Local Development, Financial Comptroller General Office, Ministry of Finance, Siraha District Development Committee 55

Jumla DDC FY2010 FY2011 FY2012

Actual Actual Revised Fund Approved Revised Spending Fund Approved Revised Spending Fund Statement Budget received Budget Budget Authorization received Budget Budget Authorization received Government recurrent grant 17.01 17.00 NA 14.98 NA 15.59 27.38 15.76 22.43 22.43 LGCDP recurrent grant 2.45 0.96 NA 8.40 8.40 5.73 6.87 6.87 6.87 6.72 Subtotal 19.46 17.96 NA 23.38 NA 21.32 34.24 22.63 29.30 29.15 Government capital grant 13.35 13.35 NA 11.71 11.71 11.70 30.21 24.99 24.99 18.99 LGCDP capital grant 24.92 21.63 NA 22.09 22.09 11.27 9.96 9.96 9.96 9.96 Subtotal 38.27 34.98 NA 33.80 33.80 22.97 40.17 34.95 34.95 28.95 VDC recurrent grant 12.64 12.63 NA 12.64 12.64 12.64 12.64 12.64 12.64 12.64 VDC capital grant 61.12 58.10 NA 61.12 61.12 60.22 74.00 73.79 73.79 67.44 Subtotal 73.75 70.73 NA 73.75 73.75 72.85 86.63 86.42 86.42 80.08 DDC = district development committee, FY = fiscal year, LGCDP = local governance and community development program, NA = not available VDC = village development committee Sources: Ministry of Federal Affairs and Local Development, Financial Comptroller General Office, Ministry of Finance, Jumla District Development Committee

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Table 9: Fund Disbursement to District Development Committees NRe in million FY2011 FY2012 Within 11th In last 15 Within 11th In last Within to 1st 15 days of Within Within 9 to 1st 15 15 days Grant first 8 Within 9 to days of 12th 12th first 8 to 10 days of of 12th DDC Heading months 10 months month Month Total months months 12th month Month Total LGCDP grant 24.82 0.00 0.00 4.26 29.09 9.40 0.00 5.35 0.00 14.75 Government Khotang grant 17.92 10.66 0.00 0.00 28.58 Total 24.82 0.00 0.00 4.26 29.09 27.32 10.66 5.35 0.00 43.33 % 85 0 0 15 100 63 25 12 0 100 LGCDP grant 41.10 0.00 20.68 0.00 61.78 22.19 5.78 0.00 0.00 27.97 Government Nawalparasi grant 10.40 4.78 0.00 0.00 15.18 Total 41.10 0.00 20.68 0.00 61.78 32.59 10.55 0.00 0.00 43.15 % 67 0 33 0 100 76 24 0 0 100 LGCDP grant 0.40 12.20 0.00 3.47 16.07 8.06 0.00 2.90 0.00 10.96 Government Lalitpur grant 23.01 0.00 7.65 0.00 30.66 Total 0.40 12.20 0.00 3.47 16.07 31.07 0.00 10.55 0.00 41.62 % 2 76 0 22 100 75 0 25 0 100 LGCDP grant 0.89 0.00 6.25 5.20 12.34 6.40 5.47 3.25 4.74 19.86 Government Siraha grant Total 0.89 0.00 6.25 5.20 12.34 6.40 5.47 3.25 4.74 19.86 % 7 0 51 42 100 32 28 16 24 100 LGCDP grant 11.00 4.78 1.04 0.00 16.82 Government Jumla grant 1.39 9.28 8.32 0.00 18.99 Total 12.39 14.06 9.37 0.00 35.82 % 35 39 26 0 100 LGCDP grant 67.21 12.20 26.93 12.94 119.28 57.05 16.03 12.55 4.74 90.36 Government Total of Five grant 52.72 24.72 15.98 0.00 93.42 DDCs Total 67.21 12.20 26.93 12.94 119.28 109.77 40.75 28.52 4.74 183.78 % 56 10 23 11 100 60 22 16 3 100 DDC = district development committee, FY = fiscal year, LGCDP = local governance and community development program Sources: Ministry of Federal Affairs and Local Development, Financial Comptroller General Office, Ministry of Finance, Distritct Development Committees (Khotang, Nawalparasi, Lalitpur, Siraha, Jumla) .

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Table 10: Municipality Budget Allocation, Spending Authority Received, and Actual Expenditure Lahan Municipality NRe in million FY2011 FY2012 Approved Revised Approved Budget by Budget by Spending Budget by Revised Spending the the Authorization the Budget by the Authorization Statement Municipality Municipality Received Disbursement Municipality Municipality Received Disbursement Government recurrent NA 1.95 1.95 1.95 NA NA 1.93 1.93 grant LGCDP recurrent grant NA 1.69 1.69 0.86 NA NA 2.64 1.45 Subtotal NA 3.64 3.64 2.81 NA NA 2.64 1.45 Government capital NA 6.40 6.40 5.11 NA NA 15.33 11.55 grant LGCDP capital grant NA 7.37 7.52 7.52 NA NA 0.00 0.00 Subtotal NA 13.76 13.91 12.63 NA NA 15.33 11.55 Total Municipality NA 17.40 17.55 15.44 NA NA 17.97 13.01 FY = fiscal year, LGCDP = local governance and community development program, NA = not available Sources: Ministry of Federal Affairs and Local Development, Financial Comptroller General Office, Ministry of Finance, Lahan Municipality

Siraha Municipality FY2011 FY2012 Approved Revised Approved Revised Budget by Budget by Spending Budget by Budget by Spending the the Authorization the the Authorization Statement Municipality Municipality Received Disbursement Municipality Municipality Received Disbursement Government recurrent NA 1.45 1.45 1.45 2.00 1.50 1.43 1.43 grant LGCDP recurrent grant NA 1.47 2.89 1.47 2.50 2.50 2.46 2.30 Subtotal NA 2.92 4.34 2.92 4.50 4.00 3.89 3.74 Government capital NA 6.25 6.25 6.25 7.00 6.10 16.21 12.16 grant LGCDP capital grant NA 7.59 7.19 7.19 7.50 6.10 0.00 0.00 Subtotal NA 13.84 13.44 13.44 14.50 12.20 16.21 12.16 Total Municipality NA 16.76 17.78 16.36 19.00 16.20 20.10 15.90 FY = fiscal year, LGCDP = local governance and community development program, NA = not available Sources: Ministry of Federal Affairs and Local Development, Financial Comptroller General Office, Ministry of Finance, Siraha Municipality

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Ramgram Municipality

FY2011 FY2012 Approved Revised Approved Revised Budget by Budget by Spending Budget by Budget by Spending the the Authorization the the Authorization Statement Municipality Municipality Received Disbursement Municipality Municipality Received Disbursement Government recurrent 1.50 1.95 1.95 1.95 1.95 1.93 1.93 1.93 grant LGCDP recurrent grant 2.20 2.95 2.95 1.84 2.95 3.21 3.21 3.12 Subtotal 3.70 4.90 4.90 3.79 4.90 5.15 5.15 5.06 Government capital 5.30 6.65 6.65 6.65 6.65 6.55 18.13 12.50 grant LGCDP capital grant 6.00 7.91 8.06 8.06 7.91 6.95 0.00 0.00 Subtotal 11.30 14.56 14.71 14.71 14.56 13.50 18.13 12.50 Total Municipality 15.00 19.46 19.61 18.50 19.46 18.64 23.28 17.56 FY = fiscal year, LGCDP = local governance and community development program Sources: Ministry of Federal Affairs and Local Development, Financial Comptroller General Office, Ministry of Finance, Ramgram Municipality

Lalitpur Municipality FY2011 FY2012 Approved Revised Approved Revised Budget by Budget by Spending Budget by Budget by Spending the the Authorization the the Authorization Statement Municipality Municipality Received Disbursement Municipality Municipality Received Disbursement Government recurrent 6.50 0.00 2.10 2.10 0.00 0.00 2.08 2.08 grant LGCDP recurrent grant 1.40 0.00 2.37 1.21 0.00 0.00 1.12 1.12 Subtotal 7.90 0.00 4.47 3.31 0.00 0.00 3.20 3.20 Government capital 0.00 0.00 20.80 20.80 20.80 19.43 73.09 51.62 grant LGCDP capital grant 13.60 0.00 38.75 38.75 38.60 32.20 0.00 0.00 Subtotal 13.60 0.00 59.55 59.55 59.40 51.63 73.09 51.62 Total Municipality 21.50 0.00 64.03 62.86 59.40 51.63 76.29 54.83 FY = fiscal year, LGCDP = local governance and community development program, Sources: Ministry of Federal Affairs and Local Development, Financial Comptroller General Office, Ministry of Finance, Lalitpur Municipality 59

Table 11: Fund Disbursement to Municipalities

FY2011 FY2012 Within Within Within Within 8th to 10th to In last Within 8th 10th to first 8 10th 11.5 15 Within first to 10th 11.5 In last 15 Municipality Heading months month months days Total 8 months month months days Total Lahan LGCDP grant 0.00 3.02 5.06 0.30 8.38 0.79 0.79 0.00 0.00 1.57 Government grant 6.42 0.00 5.14 0.00 11.55 Total 0.00 3.02 5.06 0.30 8.38 7.20 0.79 5.14 0.00 13.13 % 0 36 60 4 100 55 6 39 0 100 Ramgram LGCDP grant 3.64 3.54 2.79 0.00 9.96 2.30 0.00 0.82 0.00 3.12 Government grant 9.77 3.73 0.00 0.00 13.50 Total 3.64 3.54 2.79 0.00 9.96 12.07 3.73 0.82 0.00 16.62 % 37 35 28 0 100 73 22 5 0 100 Lalitpur LGCDP grant 0.00 19.69 15.59 3.47 38.75 Government grant 0 0 51.62 0.00 51.62 Total 0.00 19.69 15.59 3.47 38.75 0.00 0.00 51.62 0.00 51.62 % 0 51 40 9 100 0 0 100 0 100 LGCDP grant 3.64 26.24 23.44 3.77 57.09 3.09 0.79 0.82 0.00 4.70 Total of Three Munis Government grant 0.00 0.00 0.00 0.00 0.00 16.19 3.73 56.76 0.00 76.68 Total 3.64 26.24 23.44 3.77 57.09 19.28 4.51 57.58 0.00 81.37 % 6 46 41 7 100 24 6 71 0 100 FY = fiscal year, LGCDP = local governance and community development program, Sources: Ministry of Federal Affairs and Local Development, Financial Comptroller General Office, Ministry of Finance, Municipalities (Lahan, Ramgram, Lalitpur)

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Table 12: Grant Disbursement to Village Development Committees NRe Million FY2011 FY2012 Within Within 9 Within 11th to In last 15 Within Within 11th to In last 15 first 8 to 10 1st 15 days of days of first 8 Within 9 to 1st 15 days of days of VDC Headings months months 12th month 12th month Total months 10 months 12th month 12th month Total VDC grant capital 0.00 0.38 0.38 0.38 1.15 0.00 0.67 0.67 0.67 2.02 Bisnupurkatti, Additional grant 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Siraha Total 0.00 0.38 0.38 0.38 1.15 0.00 0.67 0.67 0.67 2.02 % 0 33 33 33 100 0 33 33 33 100 VDC grant capital 0.00 0.38 0.38 0.34 1.11 0.51 0.00 0.51 0.51 1.54 Lagadi Additional grant 0.00 0.00 0.11 0.11 0.23 0.00 0.00 0.00 0.00 0.00 Gadiyani, Total 0.00 0.38 0.50 0.46 1.34 0.51 0.00 0.51 0.51 1.54 Siraha % 0 29 37 34 100 33 0 33 33 100 VDC grant capital 0.67 0.67 0.66 0.00 1.99 1.58 0.80 0.00 0.00 2.37 Naya Belhani, Additional grant 0.00 0.34 0.00 0.00 0.34 0.31 0.00 0.00 0.00 0.31 Nawalparasi Total 0.67 1.00 0.66 0.00 2.33 1.89 0.80 0.00 0.00 2.69 % 29 43 28 0 100 70 30 0 0 100 VDC grant capital 0.38 0.00 0.38 0.37 1.12 0.00 0.50 0.38 0.46 1.34 Devagawa, Additional grant 0.17 0.00 0.00 0.00 0.17 0.00 0.00 0.00 0.00 0.00 Nawalparasi Total 0.55 0.00 0.38 0.37 1.29 0.00 0.50 0.38 0.46 1.34 % 42 0 29 29 100 0 37 29 34 100 VDC grant capital 0.66 0.66 0.62 0.00 1.95 0.67 0.66 0.00 0.76 2.10 Mahatgaun, Additional grant 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Jumla Total 0.66 0.66 0.62 0.00 1.95 0.67 0.66 0.00 0.76 2.10 % 34 34 32 0 100 32 32 0 36 100 VDC grant capital 0.57 0.00 1.11 0.00 1.67 0.80 0.57 0.49 0.00 1.87 Depalgaun, Additional grant 0.00 0.15 0.00 0.00 0.15 0.00 0.00 0.00 0.00 0.00 Jumla Total 0.57 0.15 1.11 0.00 1.82 0.80 0.57 0.49 0.00 1.87 % 31 8 61 0 100 43 31 26 0 100 VDC grant capital 0.00 0.00 0.00 0.00 0.00 0.00 0.76 0.57 0.67 2.00 Lele, Lalitpur Additional grant 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Total 0.00 0.00 0.00 0.00 0.00 0.00 0.76 0.57 0.67 2.00 % 0 38 29 33 100 VDC grant capital 2.27 2.10 3.53 1.10 9.00 3.56 3.96 2.64 3.08 13.24 Total of Seven Additional grant 0.17 0.49 0.11 0.11 0.89 0.31 0.00 0.00 0.00 0.31 VDCs Total 2.44 2.59 3.65 1.21 9.89 3.88 3.96 2.64 3.08 13.55 % 25 26 37 12 10 29 29 19 23 100 FY = fiscal year, LGCDP = local governance and community development program, VDC = village development committee Sources: Ministry of Federal Affairs and Local Development, Financial Comptroller General Office, Ministry of Finance, Village Development Committees (Bisnupurkatti, Lagadi Gadiyani, Naya Belhani, Devagawa, Mahatgaun, Depalgaun, Lele) 61

Table 13: Number of Participants in Training (Supply Side)

2010 2011 2012 2013 Total Grand Training M F M F M F M F M F total Social Mobilization Social mobilization (basic SM, LLP, ReFLECT & Civic 78 24 507 71 25217 24079 21907 17205 47709 41379 89088 oversight) ToT on SM basic to (LSP, D/MFs, AD/MFs, DDC and 0 0 850 196 0 0 0 0 850 196 1046 municipal staffs) ToT on ReFLECT to (LSP, D/MFs, AD/MFs, DDC and 0 0 0 0 850 184 0 0 850 184 1034 municipal staffs) ToT on local level planning to (LSP, D/MFs, AD/MFs, 0 0 0 0 852 183 0 0 852 183 1035 DDC and municipal staffs) livelihood improvement planning (LSP, D/MFs, 0 0 0 0 0 0 802 329 802 329 1131 DDC/municipal staffs and SM) Training to VDC staffs 0 0 0 0 0 0 0 0 0 0 0 New VDC secretary 0 0 0 0 622 53 310 28 932 81 1013 VDC accounting software 0 0 0 0 149 9 293 20 442 29 471 (VDC Sec & Assistant) VDC financial management (VDC Ass. and external 18 10 40 1 170 15 57 11 285 37 322 auditor) VDC Subtechnicians 0 0 0 0 97 9 165 8 262 17 279 CFLG 0 0 0 0 418 178 557 160 975 338 1313 GESI 0 0 0 0 381 534 7561 4243 7942 4777 12719 Training to IPC members 0 0 0 0 32 5 1338 260 1370 265 1635 on planning ( GIZ support) Orientation to DDC Staffs (LGCDP, Resource Management and 44 8 41 3 0 0 0 0 85 11 96 Mobilization Procedures, planning) Orient. on capacity 186 20 0 0 0 0 0 0 186 20 206 development planning MCPM orientation 130 8 224 15 0 0 0 0 354 23 377 Orientation on block grant 0 0 951 71 0 0 0 0 951 71 1022 guideline DPAMS software 0 0 129 16 282 81 85 12 496 109 605 Procurement management Interaction program on Environmental effect and 0 0 285 41 0 0 0 0 285 41 326 sustainable management of natural resources Community development 0 0 28 1 33 0 56 7 117 8 125 Workshop on assessing effectiveness of environment checklist and 41 5 0 0 44 2 96 2 181 9 190 environment management plan Environment sensitization 0 0 32 3 0 0 54 4 86 7 93 training

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2010 2011 2012 2013 Total Grand Trainings M F M F M F M F M F total

M F M F M F M F M F 86

Arc view GIS 0 0 0 0 105 4 0 0 105 4 109 Consultative experience 0 0 371 99 245 42 160 14 776 155 931 sharing meeting Building code 0 0 0 0 53 6 0 0 53 6 59 General orientation 103 14 219 39 18 3 0 0 340 56 396 MUN accrual accounting 0 0 0 0 16 3 0 0 16 3 19 system Total 600 89 3,677 556 29,703 25,412 33498 22,305 67,341 48,344 115,840 Year wise Total 689 4,233 55,115 55,803 115,840

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B. SCHEDULE OF FIELD ACTIVITIES—PROGRAM COMPLETION REVIEW MISSION

Date Activities 1 May 2013 Travel to Khotang by air up to Janakpur and by car up to Diktel via Halesi of Khotang 2 May 2013 Meeting at Khotang DDC, Diktel VDC and project visit. Meeting with social mobilizers, local service providers and VDC secretaries Meeting with user's committee 3 May 2013 Meeting at Nunthala & Buipa VDC, project visit Meeting with user's committee Visited WCF and CAC 4 May 2013 Travel to Siraha from Khotang 5 May 2013 Meeting at Bishnupur Katti VDC, visited WCF, CAC Meeting with user's committee Project visit Meeting Siraha DDC Meeting with social mobilizers Meeting with VDC secretaries Meeting with local service providers Project visit 6 May 2013 Meeting at Lahan municipality Meeting at Siraha municipality Meeting with social mobilizers Meeting with local service providers Project visit Meeting with user's committee 7 May 2013 Visit Ladahi Gadiyani VDC, Siraha, Visit project activities, WCF Travel to Sauraha 8 May 2013 Meeting at Naya Belhani VDC Visit to WCF, CAC Meeting at Nawalparasi DDC Meeting with social mobilizers Meeting with local service providers Meeting with VDC secretaries Project visit 9 May 2013 Meeting at Ramgram municipality Project visit Meeting at Deogaon VDC Visit to WCF and CAC Travel to Kathmandu by air in the evening 16 May 2013 Meeting at Lalitpur sub metro Project visit 17 May 2013 Meeting at DDC Lalitpur Meeting with VDC secretaries 18 May 2013 Travel to Nepalgunj by air on the way to Jumla 19 May 2013 Observation of the training to social mobilizers at Nepalgunj Travel to Jumla by air

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Date Activities Meeting at Jumla DDC Meeting with VDC secretaries Meeting with social mobilizers Meeting with local service providers Project visit at Chandannath VDC 20 May 2013 Meeting at Dewalgaon VDC Visit to WCF, CAC Project visit at Mahatgawan VDC Meeting with user's committee 21 May 2013 Meeting at Mahatgaon VDC Travel to Nepalgunj on the way to Kathmandu Project visit at Mahadevpuri VDC 22 May 2013 Meeting at Kohalpur VDC Project visit Meeting with user's committee Meeting at cluster coordination unit Travel to Kathmandu by air in the evening 27 May 2013 Observation of the training to social mobilizers Meeting with local service providers Meeting at Lele VDC, Lalitpur VDC Project visit 29 May 2013 Travel to Pokhara in the evening by rented car after cancellation of flight at 6 pm 30 May 2013 Consultation workshop 31 May 2013 Observed LGAF review meeting Project visit 1 June 2013 Travel back to Kathmandu in the morning CAC = citizen awareness centers, CCU = cluster coordination unit, DDC = district development committee, LGAF = Local Governance and Accountability Facility, LGCDP = Local Governance and Community Development Program, VDC = village development committee, WCF = ward citizen forum. Source: Asian Development Bank.

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C. LIST OF RESPONDENTS—PROGRAM COMPLETION REVIEW MISSION

1. Special Event Organized: Consultation Workshop a. Local development officers of Kaski, Baglung, Parbet, Lamjung, Syangja b. Executive officers of Pokhara Sub Metro, Byas, Putalibazar c. District technical officers of Palpa, Gorkha d. Coordinators of Cluster Coordination Unit – Pokhara, Nepalgunj, Dhangadi, Hetaunda, Biratnagar 2. Special Events Attended and Observed a. Periodic Refresher Training to Social Mobilizers, Nepalgunj, Banke b. Periodic Refresher Training to Social Mobilizers, Lalitpur c. Regular Meeting of the VDC Secretaries, Lalitupur d. Regular Meeting of the VDC Secretaries, Siraha e. Review Meeting of the LGAF Partner Civil Society Organizations, Pokhara 3. Government Officials at Central Level a. Bodh Raj Niraula, Program Director, LGCDP b. Purusottam Nepal, Program Manager, LGCDP c. Shyam Raj Adhikari, Output Manager, d. Gopi Krishna Khanal, Joint Secretary, MOFALD 4. Local Governance and Community Development Program Specialists a. Raghu Nath Shrestha, Monitoring & Evaluation b. S.P. Shrestha, Social Mobilization c. Khem Lal Devkota, Finance Specialist, LBFC d. Bishow Basula, Finance Specialist, LGCDP 5. District Development Committee Officials a. Yuvaraj Adhikari, LDO, Khotang DDC b. Hari Guragain, Planning Officer, Khotang DDC c. Moha Dutta Bhatta, District Engineer, Khotang DDC d. Dhurba Rai, Social Development Officer, Khotang DDC e. Mohan Bhattarai, Internal Auditor, Khotang DDC f. Narayan Khawas, Planning Section, Khotang, DDC g. Rajendra Joshi, Social Security Section, Khotang, DDC h. Madhav Acharya, Accountant, DDC Khotang i. Durga Bahadur Rai, Social Development Officer, Khotang DDC j. Bijaya Raj Suvedi, Local Development Officer, Siraha DDC k. Mahammad Sultan Rahi, Program Officer, Siraha, DDC l. Arun Saha, Social Development Officer, Siraha, DDC m. Jay Kumar Katuwal, Account Officer, Siraha, DDC n. Navin Kumar Yadav, Assistant 1st (Na.Su.) Siraha DDC o. Ramasis Shah, Sub Engineer, DTO, Siraha p. Bhuwan Narayan Karna, Assistant Accountant, Siraha DDC q. Nirmal Pykurel, DTO (Act LDO), Nawal Parasi DDC r. Mohan Raj Chapagain, Social Development Officer, DDC, Nawal Parasi DDC s. M. B Khadga, Information Officer, DDC, Nawal Parasi DDC t. Suman Marasini, Account Officer, Nawanparasi DDC u. Pashupati Pokharel, Local Development Officer, DDC, Lalitpur v. Eak Raj Acharaya, Accountant, DDC, Lalitpur w. Ram Bahadur Mahat, Planning Officer, DDC, Lalitpur x. Bidhya Karki, Finance Officer, DDC, Lalitpur y. Arjun Kumar Thapa, Local Development Officer, DDC, Jumla

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z. Bisnu Prashad Pathak, Engineer, RCIW, DDC JumlaMr Laxmi Chandra Naupane, Assistant 2nd (Kharidar) Jumla DDC aa. Narayani Acharya, Assistant (Kharidar) Jumla DDC bb. Jhun Bahadur Rawal, Accountant, Jumla DDC cc. Ram Datt Pandey, Accountant, Jumla DDC dd. Harish Chandra Giri, Assistant 1st (Na.Su.), Jumla DDC 6. Municipality Officials a. Ram Kumar Mahato, Executive Officer, Lahan Municipality, Siraha b. Satrughna Chaudhari, Engineer, Lahan Municipality c. Mayanath Acharya, Accountant Officer, Lahan Municipality d. Beldev Karki, Assistant 1st, Lahan Municipality e. Sita Karki, Accountant, Lanan Municipality f. Tej Narayan Yadav, Executive Officer, Siraha Municipality g. Lalit Kumar Das, Sub Engineer, Siraha Municipality h. Sunil Kumar Yadav, Accountant, Siraha Municipality i. Krishna Prasad Panthi, Executive Officer, Ramgram Municipality, Nawal Parasi j. Sanjay Kumar Sharma, Asst Accountant (also Social Mobilization Facilitator), Ramgram Municipality, Nawalparasi k. Kundan Kumar Chaudhary, Chief Accountant, Ramgram Municipality, Nawal Parasi l. Satish Kumar Gupta, Engineer, Ramgram Municipality, Nawal Parasi m. Bhagawati Yadav, Technician, Ramgram Municipality, Nawal Parasi n. Mohan Nath Maskey, Executive Officer, Lalitput Sub Metropolitan o. Surya Tamrakar, Finance Officer, Lalitpur, Sub Metro p. Pravin Kumar Shrestha, Engineer, Lalitpur q. Babu Raja Maharjan, Administrative Officer, Lalitpur r. Ashok Shrestha, Social Welfare Officer, Lalitupur 7. Local Body Associations a. Dor Mani Poudel, President, MuAN b. Hem Raj Lamichanne, Executive Secretary, ADDCN c. Kala Nidhi Devkota, Executive Secretary, MuAN d. Pramod Aryal, Administration and Finance Officer, MuAN e. Parasu Ram Sharma, Executive Secretary, NAVIN f. Laxman Pandey, Planning and Program Officer, NAVIN 8. Village Development Committee Secretaries a. Yadu Nath Bhatta, Khotang b. Krishna Acharaya, Khotang c. Dol Nath Acharaya, Khotang d. Bhima Timsena, Khotang e. Rajendra Nath Bhurtel, Khotang f. Raghu Nath Acharaya g. Nani Maya Acharaya, Khotang h. Mohan Acharaya, Buipa VDC, Khotang i. Indra Bahadur Shrestha, Nunthala VDC, Khotang j. Manoj Kumar Karki, Bishnupur Katti VDC, Siraha k. Dev Narayan Vadav, Lagadi Gadiyani VDC, Siraha l. Ram Bilas Mahato, Govindapur, Siraha m. Dev Saran Pandit, Naraha, Siraha n. Dilip Kumar Yadav, Laxmaniya, Siraha o. Satya Narayan Chaudhary, Siraha p. Pabitra Chaudhary, Hansapur, Siraha 67

q. Raj Kumar Mehata, Ghotua, Siraha r. Dhurba Prasad Gautam, Fulbariya, Siraha s. Paras Kumar Barma, Nawal Parasi t. Tanka Kumar, Nawal Parasi u. Prem Narayan Pangeni, Nawal Parasi v. Buddhi Sagar Suvedi, Devgaon, Nawal Parasi w. Buddhi Sagar Subedi, Devgawn VDC, Nawalparasi x. Om Bahadur Chidi, Naya Belhani VDC, Nawalparasi y. Amar Raj Khatry, Kohalpur VDC, Banke z. Bisnu Bahadur Mahat, Develgawn VDC, Jumla aa. Rajendra Mahat, Mahatgawn VDC, Jumla bb. Jana Mahatara, VDC Secretary, Jumla cc. Amar Khatri, VDC Secretary, Kohalpur, Banke dd. Narmada Rawal, Accountant, Kohalpur VDC, Banke ee. Punya Prasad Nepal, Lele VDC, Lalitpur ff. Bal Krishna Silwal, Assistant, Lele VDC , Lalitppur 9. Cluster Coordination Unit Officials a. Binesh Roy, Monitoring and Reporting Officer, Eastern Cluster b. Jeevan Dhital, Capacity Development Specialist and Coordinator, Eastern Cluster 10. Social Mobilizers a. Roshan Poudel, Khotang b. Gopal Prasad Koirala, Khotang c. Gayatri Tamang, Khotang d. Sarita Luitel, Khotang e. Muna Khadga, Khotang f. Mr. Nabin Kumar Rai, Khotang g. Ms. Sita Banjara, Khotang h. Ms. Rupa Shrestha, Khotang i. Indra Shrestha, Nunthala, Khotang j. Bhim Rai, Diktel, Khotang k. Shubhananda Chaudhary, Lahan Municipality, Siraha l. Pralhad Kumar Shaha, Lahan Municipality, Siraha m. Uthit Narayan Chaudhary, Lahan Municipality, Siraha n. Bhakti Kumari Chaudhary, Lahan Municipality, Siraha o. Usha Chaudhary, Lahan Municipality, Siraha p. Anjana Kumari Singh, Lahan Municipality, Siraha q. Jyoti Kumari Shaha, Lahan Municipality, Siraha r. Bandana Sinha, Lahan Municipality, Siraha s. Binku Mandal, Lahan Municipality, Siraha t. Sirjana Sapkota, Lahan Municipality, Siraha u. Deep Raj Rai, Nunthala, Khotang v. Parbati Pandey, Dhangadi, Siraha w. Jibesh Prasad Safi, Hanumannagar, Siraha x. Shankar Paswan, Ayadhyanagar, Siraha y. Sanjaya Chaudhary, Fulkha Katti, Siraha z. Jageshwor Yadav, Bishnupur Katti, Siraha aa. Manju Yadav, Lahan Municipality, Siraha bb. Asha Yadav, Siraha Municipality cc. Basanti Kunwar, Naya Belhani, Nawal Parasi dd. Suresh Yadav, Nawal Parasi

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ee. Dilip Kumar Gupta, Nawal Parasi ff. Binod Dharigar, Nawal Parasi gg. Chanda Yadav, Ramgram Municipality, Nawal Parasi hh. Deep Narayan Gupta, Devgaon VDC, Nawal Parasi ii. Parvati Sijapati, Lele VDC, Lalitpur jj. Usha Budha, Jumla kk. Amrita Bohora, Jumla ll. Jagmi Prashad Dhital, Jumla mm. Bhani Bahadur Rawat, Jumla 11. Ward Citizen Forum Members a. Ramavatar Sharma, Lahan Municipality b. Hari Narayan Yadav, Lahan Municipality c. Sailendra Kumar Yadav, Lahan Municipality d. Siyaram Yadav, Lahan Municipality e. Amira Khatun, Lahan Municipality f. Murmi Didi, Lahan Municipality g. Renu Devi Yadav, Lahan Municipality h. Dhana Kumar Tamang, Nunthala, Khotang i. Makar Chandra Rai, Numthala, Khotang j. Santosh Rai, Buipa, Khotang k. Surya Kumar Rai, Buipa, Khotang l. Diwakar Prasad Yadav, Siraha Municipality m. Mahesh Kumar Bhsal, WCF Coord, Naya Belhani VDC Ward 2, Nawal Parasi n. Dhana Bahadur Chaudhary, WCF, Naya Belhani VDC Ward 2, Nawal Parasi o. Purnima Pangeni, WCF (Child Representative) p. Jib Lall Kharel, Local Politician, Naya Belhani VDC Ward 2, Nawal Parasi q. Prem Narayan Pandey, Local Politician, Naya Belhani VDC Ward 2, Nawal Parasi r. Shanti Kafle, WCF (FCHV), Naya Belhani VDC Ward 2, Nawal Parasi s. Geeta Gautam, WCF, Naya Belhani VDC Ward 2, Nawal Parasi t. Ram Bhawani Yadav WCF Coordinator, Ramgram Municipality, Nawal Parasi 12. District/Municipal Facilitator a. Sanjaya Kumar Yadav, DF, Khotang b. Mahommad Masum Ali, DF, Siraha c. Sunil Kumar Yadav, Municipal Facilitator, Siraha Municipality d. Sunil Kumar, DF, Nawalparasi e. Hem Raj Shahi, DF,Lalitpur f. Akal Bahadur Mahat, DF..Jumla, 13. Citizen Awareness Center Participants a. Tara Devi Tamang, Nunthala Khotang (Chair) b. Ram Avatar Manda, Siraha Municipality c. Til Maya Magar, Naya Belihani VDC, Nawalparasi d. Rachana Singh, Coordinator, Ramgram Municipality 14. Local Service Provider Representatives a. Shurba Shrestha, Jana Sewa Sanstha, Khotang b. Bimala Rai, Sagarmatha, Khotang c. Kumar Dahal, Halisi Bikas, Khotang d. Narayan Joshi, Himali Club, Khotang e. Deep Narayan Rijal, Bal Sewa Samaj also a CSO (LGAF), Khotang f. Santosh Kumar Rai, Local Development Fund, Khotang g. Sunil Kumar Shaha, Samagra Jana Uttahan Kendra, Siraha 69

h. Gopi Prasad Singh, HURCODEC, Siraha i. Dinesh Yadav, CIRCOD, Siraha j. Dhaneshwor Yadav, Chandra Narayan Memorial Sangha, Siraha k. Raj Kumar Jha, Samudayik Bikas Samiti, Siraha l. Jageshwor Shaha, Manav Adhikar Tatha Bikas Sangh, Siraha m. Bijaya Kumar Yadav, Nepal Red Cross Society, Siraha n. Pratham Lall Chaudhary, BEST, Siraha o. Naini Lall Ram, Dalit Samaj Sewa Sanstha, Siraha p. Kiran Danuwar, Siraha q. Batuk Shamsher Shrestha, Sirjana Club, Siraha r. G. L. Patel, MMDT, Nawal Parasi s. Manoj Singh, RMDP, Nawal Parasi t. Badri Suvedi, Indreni, Nawal Parasi u. Dil Maya Rimal, Nawal Parasi v. Kailash Thakur, MSDS, Nawal Parasi w. Sita Ram Yadav, NAREP, Ramgram Municipality, Nawal Parasi 15. Development Partners a. Anjali Pradhan, Child Participation Specialist- UNICEF b. Saroj Nepal, Program Officer, Embassy of Denmark c. Prakash Regmi, Program Officer, Swiss Development Cooperation d. Rojee Joshi, Program Officer, UNCDF e. Asbjorn Lovbraek, Counsellor, Embassy of Finland f. Bhola Dahal, Program Officer, Embassy of Finland g. Arun Regmi, Senior Program Manager, GIZ, SuNAG h. Jayadeep Biswas, Governance Advisor, DfID i. Talak Hayu, M&E Specialist, Swiss Development Cooperation 16. User's Committee Members and Local Politicians a. Ganesh Shakya, Key Informant, Local Politician Buipa VDC, Khotang b. Chitra Bahadur Tamang, UC Chair, Village Electrification Project, Nunthala, Khotang c. Deepak Rai, User's Committee, Village Electrification Project, Formar VDC Chair and WCF Member, Nunthala, Khotang d. Indira Acharaya, User and Teacher, Bal Bikas Samiti (Early Childhood Development), Diktel VDC e. Sunil Rai, Play ground Construction and Road Project, Buipa, Khotang f. Tharendra Rai, Bishnupur Katti – Ambash Motor Road Improvement User's Committee, Bishnupur Katti, Siraha g. Baleshwor Chaudhary, Fish Farming Pond User's Committee, Lahan Municipality h. Ram Chandra Chaudhary, User's Committee Member and Local Politican, Lahan Municipality i. Mani Lall Shaha, Drainage Construction User's Committee, Lahan Municipality j. Bisheshwor Mahato, Drainage Construction User's Committee, Lahan Municipality k. Brahma Dev Shaha, Chair, Siraha Bazar Pakki Sadak Nirman Yojana UC, Siraha Municipality, Siraha l. Mahommad Siddaque, Member Siraha Bazar Pakki Sadak Nirman Yojana UC, Siraha Municipality, Siraha m. Jyoti Shaha, Vice Chair, Siraha Bazar Pakki Sadak Nirman Yojana UC, Lahan Municipality

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n. Narayan Prasad Bhattarai, UC Chair, Road Construction Project, Naya Belhani VDC, Nawal Parasi o. Haider Ali, UC Chair and Former VDC Chair, Madarsha Building Construction Project, 8, Devgaon Ward, Nawal Parasi p. Puskar Mahat, Nepali Congress, Lele, Lalitpur q. Rajendra Silwal, United Maoist, Lele, Lalitpurd Maoist, Lele, Lalitpur