Decentralization can Degenerate into Fragmentation without Effective Central Government: World Bank

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Decentralization can Degenerate into Fragmentation without Effective Central Government: World Bank

November 20: Easing tensions between different levels of the government and improving capacity at the local levels would support a successful federal transition in Nepal, a new World Bank report said. 

The report titled ‘ South Asia Economic Focus’  under the theme of ‘Making (De)centralization Work’ also stated that the transition will need time to deliver better services and managing the expectation of people will be helpful for this.

The global development bank publishes this report every six months. 

Nepal has adopted federalism under which separate governments have been formed at three levels—central, provincial and local with relatively more power to the provincial and local levels compared to the past.

There are elected governments at all three levels since the elections were held of all levels in 2017.

Despite high expectations of people from the federal set up, service delivery for the sub-national governments (provincial and local) has been challenging due to their capacity constraints, according to the report.

“Three of the seven provinces spent less than half of the budgeted expenditure in the last fiscal year 2018-19 and some local government seems still dysfunctional," it said.

In order to make decentralization work, the World Bank report has suggested prioritizing both decentralization and centralization highlighting the important role of sub-national governments to ensure better service delivery and the central government’s role to create integrated market and ensuring harmonious standards. 

“The central government can set the standard for education, health care, the environment and other services,” the report says. “Without effective central government, decentralization can degenerate into fragmentation.”

Highlighting the report’s findings, Dr. Hans Timmer, chief economist for South Asia of the World Bank said that without effective central government, an integrated market for the businesses could not be created nationwide. “You can learn from the example of Pakistan where different laws and rules in different provinces are creating chaotic situation,” he said.

He however said in the case of Nepal, the sub-national governments don’t have enough power. A lot of infrastructure projects are handled by the national government. In such a situation, it is difficult to implement decentralization effectively,” he said.


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