Local Service Delivery in Nepal in Delivery Service Local Nepal 87922-NP No. Report Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Document of the World Bank World Document ofthe South Asia Region andPublicSector(SASGP) Asia Governance South Bank World 2014 June inNepal Local ServiceDelivery Nepal Report No.87922-NP APPROXIMATE CURRENCY EQUIVALENTS & EXCHANGE RATE Exchange rate in effect at April 11, 2014 Unit of currency Nepalese Rupees US$ 1:94.73 NPR GOVERNMENT FISCAL YEAR 16 July–15 July MAIN ABBREVIATIONS AND ACRONYMS ADDCN Association of District Development Committees of Nepal APM All Party Mechanism ASIP Annual Strategic Implementation Plan AWPB Annual Work Plan and Budget BUP Bottom-up planning CA Constituent Assembly DC District Council DDC District Development Committee DEC District Education Committee DEO District Education Office DEP District Education Plan DG Director General DoE Department of Education DoLIDAR Department of Local Infrastructure Development and Agricultural Roads DoR Department of Roads DPs Development Partners (Donors) DPP District Periodic Plan DRCN District Road Core Network DTCO District Treasury & Comptroller Office DREC District Resource Estimation Committee DTMP District Transport Master Plan DTO District Technical Office EC Education Committee ECD Early Childhood Development EO Executive Officer (in municipalities) FCGO Financial Comptroller General Office FRRAP Fiduciary Risk Reduction Action Plan FY Fiscal Year GESI Gender Equality and Social Inclusion GoN Government of Nepal INLOGOS Institute of Local Government Studies IPFC Integrated Plan Formulation Committee IRAP Integrated Rural Accessibility Plan LB Local Body LDF Local Development Fee LDO Local Development Officer LGCDP Local Governance and Community Development Program LIDP Local Infrastructure Development Policy LM Line Ministry LRN Local Road Network LRUC Local Road User’s Committee LSGA Local Self Governance Act LSGR Local Self Governance Regulations i LBFAR Local Body Financial Administration Rules MC Municipal Council MC/PM Minimum Condition/Performance Measures MEC Municipal Education Committee MEP Municipal Education Plan MP Member of Parliament (CA members) MoF Ministry of Finance MoFALD Ministry of Federal Affairs and Local Development NER Net Enrolment Rate NGO Non-Governmental Organization NPC National Planning Commission NPR Nepali Rupee PCF Per Child Funding PRA Public Roads Act PTA Parent-Teacher Association OAG Office of the Auditor General OSR Own Source Revenue PIM Public Investment Management RC Resource Center (Education) RCIW Rural Community Infrastructure Works RED Regional Education Directorate RMOMG Resource Mobilization and Operation Management Guidelines RP Resource Person RTI Rural Transport Infrastructure SIP School Improvement Plan SMC School Management Committee SRN Strategic Road Network SWAp Sector-Wide Approach SWOT Strengths, Weaknesses, Opportunities and Threats UC User Committee UNDP United Nations Development Programme VC Village Council VDC Village Development Committee VEC Village Education Committee VEP Village Education Plan WB The World Bank WCF Ward Citizen Forum World Bank Vice President Phillip Le Houérou Country Director Johannes Zutt Sector Manager Alexandre Arrobbio Task Team Leader Charles Undeland ii TABLE OF CONTENTS MAIN ABBREVIATIONS AND ACRONYMS .................................................................................. i TABLE OF CONTENTS ..................................................................................................................... iii TABLES OF BOXES, FIGURES AND TABLES ............................................................................. iv ACKNOWLEDGMENTS ..................................................................................................................... v EXECUTIVE SUMMARY .................................................................................................................. vi I. INTRODUCTION ..................................................................................................................... 12 II. INSTITUTIONAL FRAMEWORK FOR LOCAL SERVICE DELIVERY ...................... 15 A. Brief History of Sub-National Government in Nepal ..................................................... 15 B. Sub-National Governance Arrangements ........................................................................ 16 Linkages between DDCs and Municipalities/VDCs ............................................................ 17 Governance and Staffing of Local Bodies............................................................................ 17 Central Government Agencies Engaged with Local Bodies ................................................ 19 Planning in Local Bodies ..................................................................................................... 20 Financial Management in Local Bodies .............................................................................. 24 C. Functional Assignments ..................................................................................................... 27 Local Bodies Functions in Practice ..................................................................................... 31 D. The Intergovernmental Fiscal Framework ...................................................................... 34 Revenue Assignments ........................................................................................................... 35 Intergovernmental Fiscal Transfers (Grants and Social Payments) ................................... 36 III. SUB-NATIONAL SERVICE DELIVERY: LOCAL ROADS AND PRIMARY EDUCATION ...................................................................................................................................... 38 A. Local Roads ........................................................................................................................ 38 Normative Institutional Framework .................................................................................... 38 Local Roads: An Overview .................................................................................................. 39 Local Roads: Planning and Implementation in Practice ..................................................... 39 Conditional Financing and Other Fund Flows for Roads ................................................... 42 Implementation Issues in Maintaining the Local Roads Network ....................................... 44 B. Primary and Lower Secondary (Basic) Education ......................................................... 45 Introduction ......................................................................................................................... 45 Institutional Framework for Basic Education ..................................................................... 46 Planning ............................................................................................................................... 48 Financing ............................................................................................................................. 48 Financial Management and Reporting ................................................................................ 52 Supervision of Schools and Schooling Outcomes ................................................................ 53 Broader Concerns in Frontline Delivery of Local Basic Education .................................... 55 IV. Conclusions and Recommendations to Improve Frontline Service Delivery....................... 57 A. Conclusions ........................................................................................................................... 57 On Local Bodies’ Role in Nepal’s Public Service Delivery Framework ............................. 57 On Service Delivery in the Local Roads Sector ................................................................... 58 On Service Delivery in the Basic Education Sector ............................................................. 59 B. Recommendations for Improving Frontline Service Delivery ....................................... 60 Long Term Institutional Considerations .............................................................................. 61 Potential Actionable Steps in the Short and Medium Term ................................................. 63 BIBLIOGRAPHY ............................................................................................................................... 66 MAP ...................................................................................................................................................... 68 iii TABLES OF BOXES, FIGURES AND TABLES TABLES: Table 1: Characteristics of LBs in Nepal .............................................................................................. 16 Table 2: LB staff positions filled by civil servants ................................................................................ 18 Table 3: Summary of de jure functional assignments for key sectors ................................................... 28 Table 4: Local roads projects in selected local bodies .......................................................................... 42 Table 5: Authorized DTO staffing positions ......................................................................................... 45 Table 6: Roles and responsibilities of DECs and VECs/MECs ...........................................................