PROVINCIAL AND LOCAL GOVERNANCE SUPPORT PROGRAME

(PLGSP)

Programme Document
(July 2019/20 - July 2022/23)

Government of Nepal
Ministry of Federal Affairs and General Administration
July 2019
 Contents
PROGRAMME SUMMARY ................................................................................................................................1
1. CHAPTER 1: BACKGROUND ......................................................................................................................4
1.1. TRANSITION TO THE FEDERAL SYSTEM ............................................................................................................ 4
1.2. PROGRAMME BACKGROUND ........................................................................................................................ 5
1.3. STRUCTURE OF PROGRAMME DOCUMENT....................................................................................................... 7
2. CHAPTER 2: SITUATIONAL ANALYSIS .......................................................................................................8
2.1. PROGRESS WITH THE TRANSITION .................................................................................................................. 8
2.1.1. Establishing Provincial and Local Governments and Inclusive Governance System ..................... 8
2.1.2. Devolving the Public Administration ............................................................................................ 9
2.1.3. Fiscal Decentralization.................................................................................................................. 9
2.1.4. Local Service Delivery Mechanism .............................................................................................. 10
2.1.5. Summary of the Main Issues ...................................................................................................... 11
2.1.6. Limitation ................................................................................................................................... 12
3. CHAPTER 3: PROGRAMME DESCRIPTION ...............................................................................................14
3.1. RATIONALE ............................................................................................................................................. 14
3.2. GOAL AND OBJECTIVES .............................................................................................................................. 14
3.2.1. Goal: ........................................................................................................................................... 14
3.2.2. Objectives: .................................................................................................................................. 15
3.3. THEORY OF CHANGE ................................................................................................................................. 15
3.3.1. Context ....................................................................................................................................... 15
3.3.2. Stakeholders ............................................................................................................................... 16
3.3.3. Inputs .......................................................................................................................................... 16
3.3.4. Final Impact ................................................................................................................................ 16
3.3.5. Programme Impact (Programme Goal) ...................................................................................... 16
3.3.6. Programme Outcomes................................................................................................................ 17
3.4. BASIC PRINCIPLES AND APPROACHES ........................................................................................................... 25
3.5. RESULTS FRAMEWORK - OVERVIEW OF MAIN THEMES AND ACTIVITIES .............................................................. 26
3.5.1. Outcome 1: Government institutions and IG mechanisms at all levels are fully functioning in
support of federal governance as per the constitution. ............................................................. 26
3.5.1.1. Output 1: Federal level institutions develop legislations and policies to support Provincial and
Local Governments in a consultative manner ............................................................................ 27
3.5.1.2. Output2: Federal level institutions develop tools and systems to support PLGs in a consultative
process ....................................................................................................................................... 28
3.5.1.3. Output 3: IG administrative mechanisms strengthened and functional..................................... 29
3.5.2. Outcome 2: Provincial and local governments have efficient, effective,inclusive and
accountable institutions ............................................................................................................. 30
3.5.2.1. Output 4: Provincial governments drafted legislation in a consultative manner ....................... 31
3.5.2.2. Output 5: Modernized PG systems enable horizontal and verticalaccountability to all citizens
and mainstream GESI ................................................................................................................. 32
3.5.2.3. Output 6: PGs manage provincial public administration functions more effectively ................. 32
3.5.2.4. Output 7: PCGGs made operational to deliver CD service .......................................................... 33
3.5.2.5. Output 8: Modernized LGs have strong administrative systems and accountablePFM system . 34
3.5.2.6. Output 9: LG systems enable horizontal and vertical accountability to allcitizens..................... 36
3.5.2.7. Output 10: LG systems mainstream GESI in their service delivery.............................................. 37
3.5.2.8. Output 11: LG systems enable citizen engagement and inclusive participation ........................ 38
3.5.2.9. Output 12: IPF is operational and transparently supporting LGs ............................................... 41
3.5.3. Outcome 3: Elected representatives and civil servants at PLG have the capacity and serve
citizens to theirsatisfaction. ........................................................................................................ 43
3.5.3.1. Output 13: Elected representatives and civil servants at the provinciallevel are incentivized and
trained for delivering high quality services ................................................................................. 43

i
 3.5.3.2. Output 14:LGs’ elected representatives and civil servants are empowered and trained for
delivering high quality services ................................................................................................... 44
3.6. IMPLEMENTATION STRATEGY ...................................................................................................................... 57
3.6.1. Framework Programme.............................................................................................................. 57
3.6.2. PrimaryFocus on Local and PGs .................................................................................................. 57
3.6.3. Targeted Support for Federal Level ............................................................................................ 58
3.6.4. Approach to CD........................................................................................................................... 58
3.6.4.1. Demand Driven CD–Local Government in the lead .................................................................... 58
3.6.4.2. Horizontal Learning .................................................................................................................... 59
3.6.4.3. Use of Mass and Electronic Media ............................................................................................. 59
3.6.4.4. Beneficiaries to Co-fund CD ........................................................................................................ 59
3.7. PROGRAMME PERIOD ............................................................................................................................... 59
4. CHAPTER 4: PROGRAMME MANAGEMENT ............................................................................................60
4.1. CONSIDERATIONS UNDERLYING THE MANAGEMENT STRUCTURE ....................................................................... 60
4.2. GOVERNANCE STRUCTURE ......................................................................................................................... 60
4.2.1. Steering Committees .................................................................................................................. 61
4.2.1.1. National Steering Committee ..................................................................................................... 61
4.2.2. Executing Agencies ..................................................................................................................... 61
4.2.2.1. National Executive Committee ................................................................................................... 61
4.2.2.1.1. Technical Assistance Sub-Committee ......................................................................................... 62
4.2.2.2. Provincial Coordination Committee ............................................................................................ 62
4.2.3. Programme Coordination Unit ................................................................................................... 63
4.2.3.1. Government - DP Interface (GDPI) .............................................................................................. 64
4.2.4. Implementing Agency: Office of the Chief Minister and Council of Ministers ............................ 64
4.2.4.1. Provincial Programme Implementation Unit .............................................................................. 64
4.2.5. Capacity Development Committee / Capacity Development Unit at Local Governments .......... 65
4.3. SERVICE PROVIDERS .................................................................................................................................. 66
4.3.1. CD Service Provider: Provincial Centre for Good Governance .................................................... 66
4.3.2. Technical Assistance Service Provider (TASP) ............................................................................. 68
4.4. MONITORING AND EVALUATION ................................................................................................................. 69
4.4.1. Monitoring .................................................................................................................................. 69
4.4.2. Programme Reporting ................................................................................................................ 70
4.4.3. Independent Monitoring and Quality Assurance ........................................................................ 70
4.4.4. Mid Term Review ........................................................................................................................ 70
4.5. RISK ASSESSMENT .................................................................................................................................... 71
5. CHAPTER 5: PROGRAMME FINANCING ..................................................................................................75
5.1. PROGRAMME BUDGET .............................................................................................................................. 75
5.2. FUNDING ARRANGEMENT .......................................................................................................................... 78
5.3. FUND FLOW ............................................................................................................................................ 78
5.4. FINANCIAL MANAGEMENT ......................................................................................................................... 81
ANNEX 1: PLGSP THEORY OF CHANGE MATRIX ..............................................................................................82
ANNEX 2: GUIDELINES ON MAINSTREAMING GESI IN GOVERNANCE .............................................................83
ANNEX 3: INDICATIVE MENU OF SERVICES FROM PROVINCIAL CENTREFOR GOOD GOVERNANCE (PCGG) ....85
ANNEX 5: TERMS OF REFERENCE NATIONAL STEERING COMMITTEE .............................................................89
ANNEX 6: TERMS OF REFERENCE FOR NATIONAL EXECUTIVE COMMITTEE ....................................................94
ANNEX 7: TERMS OF REFERENCE FOR PROVINCIAL COORDINATION COMMITTEE .........................................98
ANNEX 9: TERMS OF REFERENCE FOR THE PROGRAMME COORDINATION UNIT ......................................... 101
ANNEX 10: TERMS OF REFERENCE PROVINCIAL PROGRAMME IMPLEMENTATION UNIT ............................. 102
ANNEX 11: TERMS OF REFERENCE OF THE TECHNICAL ASSISTANCE SERVICE PROVIDER .............................. 104
ANNEX 14: NOTE ON INNOVATION PARTNERSHIP FUND ............................................................................. 108

ii
ANNEX 15: NOTE ON KEY ELEMENTS FOR THE CHARTER TO ESTABLISH THE PROVINCIAL CENTRE FOR GOOD
GOVERNANCE .............................................................................................................................................. 116
ANNEX 16: NOTE ON KEY ELEMENTS FOR THE MOU BETWEEN THE MOFAGA AND THE PROVINCIAL
GOVERNMENTS TO EXECUTE THE PLGSP ..................................................................................................... 118
ACRONYMS AND ABBREVIATIONS ............................................................................................................... 120

iii
Programme Summary

Programme Period 16 July 2019/20 -15 July 2022/23.

Executing Agency Ministry of Federal Affairs and General Administration.
Implementing Agency Provincial Governments (PGs), Rural Municipalities, Municipalities, Sub
Metropolitan Cities, Metropolitan Cities, restructured Local Development
Training Academy (LDTA) and Provincial Centre for Good Governance
(PCGG).

Geographical Coverage 7 Provinces, 6 Metropolitan Cities, 11 Sub Metropolitan Cities, 276

Municipalities and460 Rural Municipalities.
Development Partners (DP) DFID, SDC, Norway, EU, UN.
Total estimated budget US$130 million.
Financial contribution: The
Government of Nepal DPs GoN: $30 million. DPs: $100 million.
Distribution of fund Financial Support: $120 million.
Technical Assistance Support: $10million.
Use of fund for different Funding for outcomes – including TA:
outcomes and levels of
governments (including Outcome 1(Policy support and inter-governmental (IG) relations
uncommitted fund) strengthened): $8.5million (6.5%).
Outcome 2 (PG and LG institutions strengthened): $104.5 million
(80.4%).
Outcome 3 (PG and LG individuals capacity developed): $17million
(13.1%).

Funding for different levels of governments:

Federal level: $16.5 million (12.7%).

Provincial levels: $62.8 million (48.3%). ($25 million IPF will be mobilized
at LGs)
Local levels: $50.7million (39.0%).
Funding Modality Financial Support: for budget and treasury; technical assistance support:
On budget & off treasury.
Final Impact All citizens receive quality services at provincial and local level and enjoy
better local infrastructure and economic prosperity.
Programme Goal Provincial and local governments are fully functional, sustainable,
/Intermediate Impact inclusive and accountable to their citizens.
Theory of Change (ToC) 1. Supportive federal ministries and agencies with proper and
functional IG mechanisms can help institutionalize federal
governance and make Provincial and Local Governments (PLGs)
functional, sustainable, inclusive and accountable.
2. Efficient, effective, inclusive and accountable institutions will make
PLGs fully functional, sustainable, inclusive and accountable.
Supportive federal organizations, I-G mechanisms and motivated &
capacitated PLG officials will help develop such institutions.
3. Empowered, trained and incentivized elected representatives and
civil servants at PLGs will build and develop efficient, effective,
sustainable and accountable PLGs.
Programme Outcomes 1. Government institutions and IG mechanisms at all levels are fully
functioning in support of federal governance as per the Constitution.
2. Provincial and local governments have efficient, effective, inclusive
and accountable institutions.
3. Elected representatives and civil servants at provincial and local
governments have the capacity and serve citizens to their
satisfaction.
Programme Outputs Outcome 1

Page | 1
 Output 1:
Federal level institutions develop legislation and policies to support PLGs
in a consultative manner.

Output 2:
Federal level institutions develop tools and systems to support PLGs in
a consultative process.

Output 3:
IG administrative mechanisms are strengthened and are functional.

Outcome 2

Output 4:
PGs draft legislation in a consultative manner.

Output 5:
Modernized PG systems enable horizontal and vertical accountability to
all citizens and mainstream gender equality and social inclusion (GESI).

Output 6:
PGs manage provincial public administration functions more effectively.

Output 7:
PCGGs made operational to deliver capacity development (CD) service

Output 8:
Modernized LGs have strong administrative systems and accountable
public financial management (PFM) system.

Output 9:
LG systems enable horizontal and vertical accountability to all citizens.

Output 10:
LG systems mainstream GESI in their service delivery.

Output 11:
LG systems enable citizen engagement and inclusive participation.

Output 12:
Innovative Partnership Fund (IPF) is operational and transparently
supporting LGs.

Outcome 3

Output 13:
Elected representatives and civil servants at the province level are
trained for delivering high quality.

Output 14:
LGs elected representatives and civil servants are empowered and
trained for delivering high quality services.
Programme Management Federal level

 National Steering Committee (NSC) under the chair of the Hon’ble

Minister of the Ministry of Federal Affairs and General
Administration(MOFAGA)

Page | 2
 National Executive Committee (NEC) under the chair of the
MOFAGA Secretary

 National Fiduciary Risks Advisory Sub Committee under the chair

of MoFAGA Secretary

 Technical Assistance Sub Committee under the chair of the

National Programme Manager /Under Secretary MOFAGA

 Programme Coordination Unit (PCU) under the overall

management of the National Programme Director/Joint Secretary
of MOFAGA.

Provincial level

 Provincial Coordination Committees (PCC) under the chair of the

Hon’ble Chief Minister or minister designated by the Hon’ble Chief
Minister.

 Provincial Programme Implementation Units (PPIU) under the

overall management of the Provincial Programme
Director/Secretary, Governance Reform Division, Office of the
Chief Minister and Council of Ministers.

Page | 3
1. CHAPTER 1: BACKGROUND

1.1. Transition to the Federal System

Nepal adopted a new constitution in September 2015, with the intent of transforming the
country from a centralized unitary state into a federal country and to ensure economic
equality, prosperity and social justice. The new constitution marks a fundamental paradigm
shift in the system, structure and functioning of SNGs in Nepal. Three levels of government
as stipulated by the constitution includes the federal government at the centre, seven
provincial governments overseeing each respective province and the 753 local
governments in the municipalities and rural municipalities.

Basic devolution of power is guaranteed to the various levels of government by the

constitution through exclusive and concurrent powers and responsibilities as provided in
schedules five to nine of the constitution. The constitution envisages a non-hierarchic
relationship of the three levels of government based on the principles of coordination,
cooperation and coexistence. The federalism envisaged by the constitution treats the three
levels of governments as autonomous whole governments (exclusive functions)
interdependent upon each other through shared ‘Rules’ (concurrent functions). The
devolution is holistic and encompasses all sectors.

Local governments now have the full-fledged responsibility of local development and service
delivery functions in all sectors. The local governance system has gone through a complete
restructuring process to establish viable and vibrant local governments. Making the local
governments effective and fully functional is a task of immediate and critical relevance.

Based upon recommendations of the Local Level Restructuring Commission, 753 local
levels (293 municipalities and 460 rural municipalities) have been established in the seven
provinces. The successful completion of elections in 2017 for local, provincial and federal
level legislatures and government is a key achievement in the implementation of the new
constitution and institutionalizing federalism. The ‘Local Government Operations Act, 2017’
(LGOA) has been enacted to facilitate and empower the newly established local
governments and to define their powers, duties, responsibilities and the relationship of local
governments with other levels of government.

A key institution responsible for determining the principles of fiscal federalism and allocation
of resources for provincial and local levels is the National Natural Resource and Fiscal
Commission (NNRFC) which was created through the ‘NNRFC Act, 2017’. A fundamental
principle of fiscal federalism (both revenue and expenditure) has been laid out through the
‘Inter-Governmental Fiscal Management Act, 2017’ (IGFM Act). Restructuring of the federal
government and the federal ministries has been undertaken by the newly elected federal
government. Similarly, PGs have been established in all seven provinces with new
organizational structures designed with the support of the federal government. The PGs
have various sector ministries and the office of the Chief Minister and the Council of
Ministers. The federal government has also handed over various functionaries to the PGs
which were earlier aligned with the erstwhile federal ministries as their field units in

Page | 4
 development regions, zones and district headquarters. The federal civil service has been
restructured through executive decisions and the ‘Staff Adjustment Act, 2017’. A substantial
number of civil servants from various services have been deputed to both the provincial and
local governments. The organizational structures at the provincial level is still not fully
formed and the concerned agencies both at the federal and provincial levels are busy
finalizing their shape along with their scope and need of human and financial resources.

A number of federal, provincial and local legislations have already been enacted to fully
implement the constitution and ensure the delivery of services to the citizens and the
development outcomes as per the spirit of the new constitution. However, several founding
legislation are still in the pipeline as work in progress. The Financial Year (FY) 2017 budget
laid basic outlays for the federal system of governance. The new federal government has
come up with the first full federal budget in FY 2018 with a separate Grants Book for the
provincial and local governments as per the provisions of the constitution and the IGFM Act,
2017. Similarly, both the provincial and the local governments have enacted their first full
year budget to be financed by both fiscal transfers from the federal (in case of local
governments – also from the PGs) budget and from their own resources into the expenditure
headings as per the arrangements of the Constitution and as per the development policies
adopted by them (or entrusted to them by the other levels of the governments).

The move from a unitary to a federal structure of governance takes the “whole of
government” approach that requires massive reorientation of the institutions, systems, work
cultures and styles of functioning. The horizontal and vertical lines of communication
between the different levels of government have to be clarified and fully reset. After the
successful elections and the oath taking ceremonies of the new sub-national governments
(SNG), there has been a growing demand for services and development deliverables by the
constituent citizens. This has led the three levels of governments to quickly assess the need
for institutional and human capacity based upon the constituents’ assessment and has led
to the government planning and investing in the strengthening of institutions of governance,
deployment of the required human resources, enhancing and building capabilities for
planning and service delivery and aligning their strategic policies to orientate their
organizational resources towards new accountability structures befitting the federal spirit of
the constitution whilst exercising their exclusive and concurrent powers as bestowed upon
them by the constitution.

1.2. Programme Background

Over the past decade, the Local Governance and Community Development Programme
(LGCDP 2008-2016) has been the only nationwide programme on local governance. It was
designed for rebuilding the trust between the citizens and the state at a time when the
country had emerged from a period of conflict and there was no elected leadership, sense
of accountability in citizen orientated service delivery at a local level. The LGCDP was
meant to prepare the ground for institutionalized elected local governments that have
become a reality under the new constitution.

Four achievements of the LGCDP have been generally acknowledged:

Page | 5
 (1) Massive social mobilization for engagement, empowerment and participation in local
governance, particularly of the marginalized and disadvantaged groups and
communities. This has been achieved through the Ward Citizen Forum (WCF) and
Citizen Awareness Centres (CACs) which is also known as the “silent revolution”
through social mobilization;

(2) Attention to local needs and the promotion of inclusive service delivery;

(3) Capacity building at a local level (planning, implementation, monitoring and downward
accountability); and

(4) Expansion of the space for devolution.

The fact that an estimated 30-40 percent of the elected members in the local elections have
benefitted from training and awareness raising under the LGCDP is a testimony of the
credits generated by the programme. Given that under the new constitution administrative
boundaries have changed – whilst formal structures have taken over from the erstwhile
project structures – the main transferable asset of the LGCDP is the ‘human capital’ that it
has created, and people need to see how this human capital can be made to work in the
new set up. However, an analysis of GESI mainstreaming in LGCDP –II undertaken in May
2017 1 points out that GESI is limited to “representation of women and DAGs” without
substantive participation. The need for explicit mainstreaming is obvious.

The promulgation of the new federal constitution also necessitated structural changes in the
LGCDP and a faster transition to a new programme known as the “Provincial and Local
Governance Support Programme” with an aim to support the newly elected provincial and
local governments according to their needs and the spirit of federal transition and
devolution.

A transitional bridging programme known as the ‘Transition to Sub-national Governance

Programme’ was implemented in FY 2017 during the bridging period when elections to the
new levels were taking place and aimed to assist with a smooth transition towards the
federal structure and the preparatory and immediate capacity building needs. The
enactment of legislation such as the Local Government Operations Act, 2017; the Inter-
Governmental Fiscal Management Act, 2017; the National Natural Resource and Fiscal
Commission Act, 2017 and the Staff Adjustment Act, 2017 together with deliberations by
the federal parliament and the government on various Bills to legislate federalized sector
governance and optimize the federal structures to reach their greatest potential is a further
testimony to the fact that the government is busy in ensuring the quick and smooth transition
to the federal system of governance as envisaged in the constitution. A new programme
with objectives of policy support, institution building and capacity building at the provincial
and local levels of government in new strategic ways which respect to the principles of
devolution and local/provincial autonomy caters to them in accordance with their needs and
with their ownership and aims to harmonize the IG relationships in the true spirit of

1
Piccard, S, Analysis GESI Mainstreaming within LGCDP II, SDC/Swiss Embassy in Nepal, May 2017, p.9

Page | 6
 cooperative federalism. This is a highly needed framework programme in the area of federal
governance for Nepal.

1.3. Structure of Programme Document

The structure of this program document is as follows:

 Chapter 2 provides a situational analysis, progress with the transition and establishing
government institutions and inclusive governance.

 Chapter 3 provides the rationale, goal, objectives, theory of change, basic principles
and approaches, results framework, implementation strategy, final impact, programme
impact, programme outcomes, intermediate outcomes, outputs, sub-outputs and
activities and risk assessments.

 Chapter 4 describes programme management including considerations underlying

management structure, governance systems, committees, programme coordination
mechanisms, technical assistance management, monitoring and evaluation.

 Chapter 5 presents the programme financing, funding arrangement, fund flow and a
tentative programme budget.

Page | 7
2. CHAPTER 2: SITUATIONAL ANALYSIS

2.1. Progress with the Transition

Nepal entered a new phase in its democratic transition after the promulgation of its new
constitution. In some areas, progress on the implementation of the constitution has been
substantial: provincial and local government structures were defined and phased elections
have been conducted for three levels of governments with 40 percent of the elected
representation at local levels being based on affirmative action for women and
disadvantaged groups. The elected government at all three levels have been formed as per
the arrangements of the new federal constitution and these governments have taken full
charge of dispensing their responsibilities including the execution of new budgets and plans
for the FY 2018 as per the arrangements of fiscal federalism in the constitution and the new
laws. With the completion of federal, provincial and local level elections, formation of the
governments at all levels and the start of executing their constitutional duties and
responsibilities, the initial transition from a unitary State to a federal State is complete.

However, progress in the implementation of the constitution has not been even across the
various dimensions of the transition. The following subsections assess the state of affairs
with respect to provincial and local government and inclusive local governance systems;
the devolution of the public administration; the introduction of fiscal decentralization (or
fiscal federalism) and the decentralization of service delivery mechanisms from the federal
government to provincial and local governments in line with the new federal dispensation.

2.1.1. Establishing Provincial and Local Governments and Inclusive Governance System

The constitution embraces the principles of republicanism, federalism and

inclusiveness in order to create society based on equity. Given such a huge
expectation it is hardly surprising that the transition to federalism has yet to be fully
commensurate with the spirit of the constitution. When expectations are high there
is always a risk of disappointment and disillusionment that needs to be mitigated to
ensure the success of the transition.

Institutions are understood as

(a) sets of rules and regulations that shape incentives to undertake specified
functions; and

(b) organizations with norms and values, culture, defined patterns of entry and
career ladder, leadership selection and financial resources associated with the
functions.

Both of these attributes in the context of SNGs are currently in the initial institution
building and stabilisation phase. Some initial rules and regulations have been
enacted while others are still at various stages of preparation drafting or legislation.
Organizational structures are still evolving and stabilizing with a risk of repeating
past structures which will result in duplicating the status quo, particularly with respect
to GESI, rather than being innovative and open to new modes.

Based upon various recommendations of preparatory committees on federal

administrative restructuring and an earlier report on Unbundling (adopted by the
Cabinet), the federal Government has restructured the federal ministries through
mergers and the streamlining of functions into 22 ministries. Similarly, federal
departments and agencies have also been restructured and realigned. Many of
these agencies are still undergoing a restructuring process. Many erstwhile field

Page | 8
 structures like regional offices, district offices and division offices of the federal
ministries have been transferred to the newly formed PGs. Many of the erstwhile
district offices have been abolished and the staff and resources have been
transferred to respective local governments. While most of the staff from the federal
civil service have reported to the local or PGs where they were deputed – there are
still many who have not reported to these SNGs. The federal government is
continuously engaged in supporting the SNGs by further deputing staff and
allocating resources to them. However, the SNGs are still in dire lack of staff,
physical infrastructure (such as buildings to house its newly assigned functionaries)
and other resources which can make them effective as governments and deliver
services to the expectation of their citizens.

There are also concerns with the inclusivity of the new institutions both in respect to
staffing and functions. The absence of local government institutions in the form of
formal channels for meaningful participation of citizens, especially of women, poor
and historically disadvantaged groups is in essence the missing link for ensuring
functional and inclusive local governance that is GESI responsive and accountable.

2.1.2. Devolving the Public Administration

The public administration is the body of staff (including offices and other required
support provisions to execute the tasks) which manages policies and programs to
ensure the functioning of the government.

Currently there are about 80,000 civil servants employed by central government and
about 20,000 posted at the local level (of which only 15.3 percent are women, mostly
in non-gazetted positions). Following the implementation of the new constitution,
these civil servants have been readjusted and re-deployed in the three levels of the
new government structure. The number of erstwhile federal civil servants to be
deployed at the provincial levels is about 21,000 (out of which 8,000 have already
been posted) and at the local levels is about 37,000 (out of which 20,000 have
already been posted).

Despite the efforts made by MOFAGA, especially after the enactment of The Staff
Adjustments Act, 2017 in deploying required personnel to the SNGs from the
erstwhile federal structures. Presently there is a limited number of qualified
management level officers available in the local and PGs. This has hindered the
SNG’s smooth functioning. The determination of local and PGs’ organizational
structures is according to their constitutional mandates and functions. The
determination of the required number of employees is based upon these functions:
it is an evolving and gradual process which may take some time to complete. This
has added challenges in acquiring an adequate number of civil servants according
to the type, competencies and qualifications that the SNGs need. Capacitating the
provincial and local governments to enable them deliver on the functions defined by
the constitution is a huge challenge. It should also be noted that the inclusive
governance demands changes in policy and regulations for promoting gender parity
and diversity in human resources of the SNGs.

2.1.3. Fiscal Decentralization

Rapid progress is being made on the fiscal aspects of the new federal system. In
fact, fiscal decentralization immediately ‘hit the ground running’ upon establishment
of the first phase of local governments. As part of the budget for FY 2018/19, 36.48
percent of total federal budget is allocated to the provincial and local governments
in the form of fiscal equalization grants to local governments (NPR 85207.5 million),

Page | 9
 conditional grants to local governments (NPR109845.6 million), fiscal equalization
grants to the PGs (NPR 50298.6 million) and conditional grants to PGs (NPR
63,135.5 million). On top of these fiscal transfers as grants from the federal budget,
the provincial and local governments will also receive an estimated amount of NPR
11, 4240 million as revenue transfer from the central accounts.

Other key elements of an IG finance system are also introduced. First, the annual
federal budget is supplemented by the publication of a sub-national Red Book, which
contains grants of various types for all provincial and local governments is an
important step of an objective, efficient, equitable and transparent IG fiscal transfer
system. Second, the SNGs are provided with budget preparation guidelines. Third,
the Ministry of Finance and the Financial Comptroller General’s Office (FCGO) have
launched SUTRA (Sub-national Treasury Regulatory Application) for financial
reporting and financial management system at sub-national levels. Fourth, the role
of the Office of the Auditor-General has been expanded to practically cover the audit
of provincial and local government accounts as required by the Constitution.

On the legislative front, the key legislative framework for IG finance system has
already been put in place. Key legislation has been enacted, including the Inter-
governmental Finance Management Act, the Federal Financial Procedures Act, and
the National Natural Resource and Fiscal Commission Act. In addition, the Local
Government Operations Act is also effective, which deals with key local government
planning and finance issues and enables them to operate and discharge their
constitutional duties and responsibilities.

Progress has been achieved in the absence of a coherent integrated IG fiscal policy
and implementation strategy. As a result, the different aspects of the implementation
of fiscal federalism could benefit from improved coordination. In particular,
refinement of the IG fiscal transfer system; separating the IG Division of Revenue
from the Federal Budget process (into separate budget processes); preparation of
more detailed budget preparation guidelines; strengthening of local-level financial
management, including Integrated Financial Management Information System
management and internal controls; and a focus on ensuring budget transparency at
all levels are issues that should be prioritized in the continued implementation of the
fiscal aspects of the constitution.

The main challenge or risk with respect to fiscal federalism should not exclusively
be seen as the fiduciary risks associated with weaker federal financial controls
during the transition per se, but rather the need to balance on the one hand, the
reputational risk to federalism if public funds are not spent (or not spent well) by
SNGs, and on the other hand, the risk of undermining the letter and the spirit of the
constitution by (intentionally or not) impinging on the fiscal discretion of SNGs by
imposing a transfer system that is too conditional in nature (either in its formulation,
or in it administration). Of significance is the fact that the Ministry of Finance has
established an inter-ministerial Gender-Responsive Budget Committee with the
mandate to design a methodology to monitor sector budget allocations and public
expenditures from a gender perspective and to assess the impact of development
policies on women and men.

2.1.4. Local Service Delivery Mechanism

Taking into account the above observations, federalism at the local level is already
operational after the elections and establishment of local governments. The grants
from the centre and the provinces have been directly disbursed to the local level.
Following the provisions of the constitution, financial resources for sector

Page | 10
 programme such as education, health, agriculture, livestock, and a variety of
infrastructures including rural roads and irrigation have also been provided to local
governments. Frontline service delivery staff, such as teachers, health workers and
agriculture extension officers has been deployed to the local levels. Sector
programmes are now being managed by local governments in line with the exclusive
and concurrent powers enshrined in the constitution and elaborated by the LGOA.

While the functions and resources have been provided to the local governments,
this has not been matched by adequate deployment and mobilization of
management-level sector functionaries from the district level to the municipalities to
perform the transferred functions. Local level functions that were previously carried
out by the Village Development Committee in the past are now generally performed
at the ward level, but there are problems in many areas.

New functions such as in education, health and other development sectors have not
been effectively handed over to the local governments although most of the financial
resources needed to perform these functions at local levels have been allocated to
them. This has created considerable confusion with respect to service delivery.
Organograms for local level governments, as well as lines of communication and
coordination between sectors, are still not fully evolved to make them capable to
handle these development sectors. It may take some time for sector top-down
accountability structures to devolve fully and stabilize at local government levels.

There are two main challenges with regards to putting in place a service delivery
system through the local governments. Firstly, the enormous challenge of alignment
of the sector ministries with the provisions of the constitution and the likely need for
harmonization of sector legislation. The second challenge is to find away for funds
to be allocated to service delivery is such a way to allow efficient and cost-effective
service delivery improvement.

2.1.5. Summary of the Main Issues

Based on the analysis, five broad constraints are identified as real and potential
obstacles in the implementation of the federal structure as envisaged in the
constitution with regard to its aim of achieving greater empowerment of the people
by putting in place an inclusive local governance system. In almost all cases, the
obstacles cut across the different dimensions of the federal and IG system, including
inclusive governance, public administration, public finance and service delivery. The
five major issues are:

1. IG coordination and implementation: There is insufficient horizontal

coordination between different federal stakeholders with respect to
implementing different aspects of the SNG’s system. Moreover, many
federal stakeholders are yet to implement important aspects of devolution
which are required of them. Similarly, federal entities have not yet been fully
restructured to conceive their new roles. The necessary enabling legislations
for sector coordination along the vertical structures of the federal system and
the organizational structures to achieve vertical coordination of the federal
(especially at sector ministries and their agencies) efforts with those at
provincial and local government entities are yet to be created.

2. Provincial and local governments’ systems and procedures: Provincial and

local governments are established but are still not well structured. Although
rapid progress is being made, much of the legislative and regulatory
framework that provides the backbone for SNG systems and procedures still

Page | 11
 needs to be put in place. The provincial and local governments lack the
appropriate legislative, regulatory and administrative guidance to effectively
operate as the ‘whole of the government’ entities. For inclusive and
accountable governance, notably procedures for inclusive participatory
planning, PFM and transparency regarding budget and budget execution are
critical. PFM systems need to integrate a gender responsive budget right
from the beginning for equitable budget allocation and expenditures.

3. Provincial and local governments’ institutional capacity: The institutional

capacity of provincial and local government in terms of the number of staff;
qualifications of those staff, both in terms of the required technical skills
given the new situation, but also in terms of mind-set working under the
oversight of a provincial or local government and last but not least, in terms
of understanding the roles and mandates of each level of government, needs
substantial improvement.

4. Capacity of local governments’ elected officials and sub-national

governments’ staff: Local elected officials are not sufficiently empowered to
perform their constitutional functions within their respective local areas. The
SNGs’ staff do not have adequate orientation, training and built-in capacity
to deliver as per their roles and responsibilities. If their capacity is not
developed well in time, there is a risk that they will fail the aspirations of their
constituencies and the general citizens. If unchecked, for ‘business as
usual’, the central (federal) government will continue making decisions for
and on behalf of the sub-national levels of governments as a default, and
thereby capture the constitutional space of the provincial and local
governments.

5. Local participation and accountability: The link between citizens and their
newly elected local governments for meaningful participation and
accountability is missing (or at least has yet to be established), which
reduces and inhibits meaningful participation and downward accountability,
thereby reducing the chance of constitutional expectations and requirements
to be fully honoured.

It is inferred that an effective inclusive SNG system requires involvement of all

government levels (federal, provincial and local) in addition to requiring active
participation and involvement of citizens and civil society. For instance, in the
absence of adequate federal or provincial legislation, guidelines and institutional
capacities, local governments cannot perform their constitutional function as
responsive and accountable governments.

2.1.6. Limitation

Given the total reversal of roles as foreseen under the new constitution, naturally the
onus of the programme would be situated at the sub-national levels, especially at
the provincial level. Yet the formal structures at the provincial levels are still nascent
and at their early evolution stage and are yet to anchor the programme fully at this
early stage.

Defining ‘a total governance programme for the federal transition’ is not only an
immense task, but also a rather futile undertaking; as such a programme would
entail almost the whole of government.

Page | 12
Given the needs as identified and the approach advocated, the PLGSP will first and
foremost focus on local governments (both executive and legislative branches that
are both essential to the nature of a local government) and predominantly the
executive branch of the PGs. The federal government will be supported only on
policy areas related to the stabilization of federal structures and IG relationships.

Given the massive need for support identified for the sub-national levels
(municipalities and provinces) the programme will mostly focus on support to the
provincial and local governments. The programme will focus on the core elements
of functional local governance, public sector service delivery, planning and decision-
making through local democratic institutions where all people have a voice.

Page | 13
3. CHAPTER 3: PROGRAMME DESCRIPTION

3.1. Rationale

The rationale of the programme derives from the provisions of the constitution that envisions
three levels of government – federal, provincial and local – that are based on the principle
of coordination, cooperation and coexistence. The schedules under the constitution provide
for exclusive and concurrent rights between the three levels of government.

The implications for the SNG are quite clear:

- new institutional structures and systems of governance have to be established and

strengthened;

- capabilities of the institutions and functionaries have to be substantially enhanced and

reoriented;

- the planning process has to be reassessed and redesigned to make it more participatory
and citizen-friendly;

- service delivery systems and mechanisms have to be made more efficient, effective and
responsive especially for the marginalized, deprived and under privileged; and

- the accountability of the elected governments to the citizens has to be improved and
reinforced.

In other words a new and functional provincial and local governance system has to be
strengthened, capacitated and inter-woven together in the spirit of cooperative federalism
which is capable of allowing people (especially the poor and vulnerable women, men,
children, youth from various castes, ethnic and sexual minority groups and differently-abled
persons who lack access to public good and services) to exercise, enjoy and fulfil the rights
and obligations provided for in the constitution.

The absence of a functional transition management plan with sequenced timings for the
devolution of functions and assignment of funds and functionaries has meant that the
transition to SNG has been far from smooth. The local level governments that have come
into being after the local elections in 2017 are at different stages of institutional growth and
adjustment to the federal transition. There is a risk that old institutional inertia and
dysfunctional structures and systems of governance may prevail again and become
entrenched if new interventions in the structures and systems of governance, attitude of
functionaries, and the style of functioning and new accountability mechanisms are not
introduced and strengthened in time. The rationale for the provincial and local governance
support programme is to facilitate and lead a process of policy support and build institutions
and CD at sub-national levels through being pro-active in inducing and responding to
demand from SNGs and addressing the needs and gaps in making devolution under
federalism functional.

3.2. Goal and Objectives

3.2.1. Goal:

The attainment of functional, sustainable, inclusive and accountable provincial and

local governance.

Page | 14
 3.2.2. Objectives:

1. Strengthen provincial and local governance systems and procedures and IG

relationships to maximize benefits of cooperative federalism for Nepali
citizenry.

2. Enhance the capacity of provincial and local governments to deliver services

and development outcomes effectively to citizens.

3.3. Theory of Change

3.3.1. Context

As discussed in Chapters 1 and 2 of this Programme Document (ProgDoc) –

Background and Situation Analysis, the creation of ‘functional, sustainable,
inclusive and accountable’ provincial and local governments depends on both
external and internal contexts. The larger picture external context includes:

- the politico/legal/administrative environments created by the constitutional

changes after the promulgation of the constitution of Nepal elections for three
levels of governments in 2017;

- formation of the majority government and stable political environment;

- federal restructuring to date;

- restructuring and adjustments in civil service; and

- the promulgation of NNRFC Act, IG Fiscal Arrangement Act and other sectoral
Acts, LGOA, Provincial Acts, Fundamental Rights Acts, Nepal Law Amendment
Acts, processing of amendments in LDTA Act, preparations on SNG level
Sustainable Development Goals (SDGs), preparations on new federal, provincial
and local plans, works on PFM reforms like use of SUTRA and IPFMRP, ongoing
works on Local Government Institutional Systems Assessment (LISA) and
capacity need assessments.

The internal contexts emerge from the learning of the former LGCDP programme
and its transitional successor programme the TSNGP. The review reports of the
LGCDP I & II and the preparatory works leading to transitional programme including
the yearlong deliberations on the concepts of a new support programme for the
provincial and local governance make the internal context of the programme. This
includes the reflections from the interactions with the stakeholders at the local,
provincial and the federal government levels about their needs and expectations.
The willingness of the DPs to support MOFAGA in its endeavours to strengthen the
provincial and local governance and thus institutionalize the federal devolution as
per the constitution for better accountability towards all citizens is also an important
internal context influencing the PLGSP design. The five major issues as discussed
in the previous chapter (intergovernmental coordination and implementation, PLG
systems and procedures, PLG’s institutional capacity, capacity of individual officials
at the PLGs and local participation and accountability) are the issues that need to
be tackled within the programme’s context to make the PLGs functional,
sustainable, inclusive and accountable.

Page | 15
3.3.2. Stakeholders

All citizens of Nepal and people living in Nepal are stakeholders in this programme
as the governance reforms at provincial and local levels will result in quality services
for them. As programme proceeds they will also enjoy better local infrastructure and
economic prosperity. The closer programme stakeholders with whom the
programme will work are the federal ministries and other federal agencies;
provincial ministries and their agencies; and local governments. Some important
ministries and agencies are: MOFAGA, Office of the Prime Minister and Council of
Ministers (OPMCM), Ministry of Finance (MOF), NNRFC, FCGO, National Planning
Commission (NPC), Line Ministries, Steering Committees and other management
committees, the Office of the Chief Minister and Council Of Ministers (OCMCM),
provincial line ministries, PCGG and branches at local governments. The key
officials at the provincial and local levels as stakeholders of this programme are
provincial ministers and members of assemblies; bureaucrats and civil servants at
provincial level; mayors; deputy mayors; chairpersons and vice-chairpersons and
civil servants at the local governments.

3.3.3. Inputs

The PLGSP as a whole is an input to achieve the programme impacts and

programme which are final outcomes as envisaged in this ProgDoc. The inputs from
the programme flows as financial support, technical assistance, knowledge support
to the various programme stakeholders. These programme stakeholders include
the federal ministries and agencies, provincial ministries and agencies, local
government and its agencies and the individuals who receive CD inputs. The inputs
result in activities, sub-outputs and outputs in the outcome areas of policy support
and IG mechanisms, institutional building (IB) support and individuals’ CD support.
Many of these inputs will flow throw demand-based mechanisms of programme
support including that through the IPF.

3.3.4. Final Impact

All Citizen Receive Quality Services at the Provincial and Local Level and Enjoy
Better Local Infrastructure and Economic Prosperity.

ToC: Sub-national good governance will bring peace and stability. Peace and
stability are a necessary condition to bring large investments and prosperity.
Accountable, sustainable and inclusive SNGs will provide quality services to all
citizens and will create better socio and physical infrastructure. Federalism and
devolution if implemented to the true spirit and letter of the constitution will bring
more opportunities and choices to the local people. Their voices will be heard by
provincial and local government leaders. This will reinforce citizens’ faith in provincial
and local governance. Good governance at the PLG levels will createa climate for
faster and higher investments in local infrastructure and economic growth. This will
reinforce peace and stability and prosperity for all.

3.3.5. Programme Impact (Programme Goal)

PROVINCIAL AND LOCAL GOVERNMENTS ARE FULLY FUNCTIONAL,

SUSTAINABLE, INCLUSIVE AND ACCOUNTABLE TO THEIR CITIZENS.

Programme ToC: Supportive federal ministries and agencies with proper and
functional IG mechanisms can help institutionalize federal governance and

Page | 16
 devolution in Nepal and make PLGs functional, sustainable, inclusive and
accountable. Efficient, effective, inclusive and accountable institutions will make
provincial and local governments fully functional, sustainable, inclusive and
accountable. Supportive federal organization, IG mechanisms and empowered and
capacitated officials at PLGs will help develop such SNG institutions. Motivated,
informed and capacitated elected officials and staff build and develop efficient,
effective, sustainable and accountable PLGs. Effective institutions and supportive
federal agencies go hand in hand to achieve the goals and enrich each other.

Preconditions: There are certain pre-conditions that need to be met for the above
programme ToC to work. If these pre-conditions are not met, they will add risks to
the success of the programme. The three levels of governments should not work at
each other's cross purposes. Adequate federal legal arrangements will be needed
to support the federal governance as per the constitution and for the smooth
operations of the provincial and local governments. Federal and provincial
leaderships need to be committed to federal governance and work in tandem. The
individual officials need to optimally use their newly acquired skills and capacities.
The CD instruments need to be useful and of required quality. Adequate number of
elected officials and civil servants need to be provided with required CD inputs.

Assumptions (Enablers): There are certain assumptions of the Programme at

impact level in order to optimize the programme impact which can also be taken as
Programme enablers. Sectoral programmes are assumed to support the functioning
of federal governance and IG mechanisms national ICT/planning/ public finance
management, sectoral governance systems/standards and operational rules/civil
service are assumed to be restructured within a year (2019) to improve federal
governance and IG mechanisms. Three levels of governments are assumed to have
synergy in organization and development and institution building exercises.
Financial and other sources (including legal and human resources) need to be
adequately made available for institution building. Newly acquired capacities need
to be best used for institution building. Elected officials need to have enough
motivation to serve their citizens. Adequate number of staff needs to be
deputed/recruited at PLGs and their roles need to be made clear. Elected officials
are supposed to optimize use of their staff and civil servants to their fullest capacity.
Other resources are assumed to compliment the officials in discharging their duties.

3.3.6. Programme Outcomes

Following three are the programme outcomes and their ‘outcome level ToC’.

Outcome One: Government institutions and IG mechanisms at all levels are fully
functioning in support of federal governance as per the Constitution.
ToC: Support to provincial and local governments by federal ministries and agencies
in policy areas and functional IG mechanisms will strengthen federal governance as
per the constitution. The constitutional arrangements support the cooperative
federalism. The federal ministries have initial responsibilities to design the national
policies as per the federal principles and furnish the PLGs with adequate
legislations, directives and frameworks for their initial smooth functioning. The
federal organizations need support for that. The PLGSP will provide such support to
them to facilitate the federalization process in a smooth way. The IG mechanisms
need to be strengthened both at federal – provincial/local levels and provincial –
local levels. The Programme support through its ‘Outcome One – outputs and sub-
outputs’ will result in achieving this outcome.

Page | 17
Assumptions: The assumptions which will make this outcome possible to achieve
because of activities and the outputs related to this outcome are: other programmes
compliment the IG policy support from this governance reform programme and adopt
harmonious administrative mechanisms .Horizontal and vertical communications
need to be based upon federal governance principles. The PLGS are assumed to
cooperate with federal agencies. The IG mechanisms can only function if adequate
legal frameworks exist for that. Hence, it is assumed that adequate legal framework
will be developed for IG cooperation well in time. A pre-condition assumed for this
outcome is: MOFAGA, OPMCM, Line Ministries at federal level must work together
at initial stage (for the period of 2019) for IG cooperation and must avoid any
organizational competitions and workings at cross-purposes.

Outcome two: Provincial and local governments have efficient, effective, inclusive
and accountable institutions.

ToC: Functional and accountable institutions are needed at provincial and local
levels. Only such institutions can be supportive and collaborative to each other. The
programme outputs and sub-outputs – activities under this outcome area two – will
result into making the PLG institutions strong and efficient. The programme activities
will also transform them into inclusive and accountable institutions. The activities will
deepen institutional reforms for better provincial and local governance. The IPF will
introduce innovation in institutional and governance reforms at PLG levels. This will
generate future innovations. This will make provincial and local governments’
institutions more efficient, effective and sustainable.

Assumptions: To achieve outcome two results the above ToC can only work if
these assumptions hold true: The sectoral support programmes at PLG levels
strengthen the PLG institutions; other supports to the PLGs are conducive to their
institution building exercise and the PLGs themselves optimize their efforts to
sustain and deepen the ongoing institutional restructuring process and commit
adequate internal resources to the reform process. The pre-conditions for the
achievement of this outcome are that adequate human resources are provided to
PLGs; adequate legal and policy frameworks are extended to the PLGs by the
federal government and PLGs focus on the legal and policy frameworks required for
institution building.

Outcome three: Elected representatives and civil servants at provincial and local
governments have the capacity and serve citizens to their satisfaction.

ToC: Capacities of elected officials and PLG civil servants are important for better
service delivery, better infrastructure and good governance at provincial and local
levels. Capacitated officials can serve citizens to their satisfaction. The programme
outputs and sub-outputs/activities resulting in these outputs will build the capacities
of the individual officials (both elected officials and the civil servants working with
them) with a purpose to incentivize, empower and train them to provide better
service delivery and discharge their duties towards the citizens. The programme
outputs will equip the individuals at PLG leadership and officials with better
organizational tools, leadership skills and professional knowledge to deliver the
results at PLGs.

Assumptions: The assumptions behind the outcome three are capacities of elected
officials and civil servants at PLG levels are important for better service delivery,
better infrastructure and good governance at PLG levels. Capacitated officials can
serve citizens to their satisfaction. The trained provincial and local leaders and their
personnel are assumed to utilize their acquired knowledge to their optimum with full

Page | 18
 commitment to serve the citizens. The other motivational factors are assumed to be
present at PLGs for best use of available human resources. The precondition is that
adequate number of officials receives these CD inputs and the quality of delivery of
CD inputs is of high standards as required to serve the citizens efficiently and
effectively.

The Synergy of the three outcomes:

The three outcome areas are all inter-related to each other and can make an impact
only when work with synergy to each other and at simultaneity. The following Figure
1 on ‘Inter-related Gear Diagram’ reflects this synergy and the need of such
simultaneous efforts to get the Programme impact:

Figure 1: Impact and the Three Outcomes of the PLGSP Programme

FINAL IMPACT

ALL CITIZENS RECEIVE QUALITY SERVICES AT THE SUB NATIONAL LEVEL AND
ENJOY
BETTER LOCAL INFRSATRUCTURE AND ECONOMIC PROSPERITY

PROGRAMME GOAL (INTERMEDIATE IMPACT)

PROVINCIAL AND LOCAL GOVERNMENTS ARE FULLY

FUNCTIONAL, SUSTAINABLE, INCLUSIVE AND ACCOUNTABLE TO THEIR CITIZENS

OUTCOMES

Page | 19
 ELECTED
RESPRESENTATIVES
AND CIVIL SERVENTS
AT SUB -NATIONAL
GOVERNMENTS HAVE
THE CAPACITY AND
SERVE CITIZENS TO
THEIR SATISFACTION

GOVERNMENT
INSTITUTIONS AND
INTER-
GOVERNMENTAL
MECHANISMS AT ALL
LEVELS ARE FULLY
FUNCTIONING IN
SUPPORT OF FEDERAL
GOVERNANCE AS PER
THE CONSTITUTION
PROVINCIAL AND
LOCAL
GOVERNMENTS HAVE
EFFICIENT, EFFECTIVE,
INCLUSIVE AND
ACCOUNTABLE
INSTITUTIONS

The detailed sub-outputs (activity groups), outputs leading to different seven intermediate outcomes (sub-
outcomes) and the three outcomes resulting in the programme impact and the overall final impact along with their
underlying ‘theory of change’ and assumptions, pe-conditions, indicative (generic) indicators and the timeline to
achieve such outcomes and impact is furnished in annex 1. The summary of the ToC in diagrammatic presentation
is presented in the following Figure 2.

Page | 20
 Figure 2: PLGSP Summary Theory of Change

Outputs ToC Intermediate Outcomes ToC Intermediate Final Impact

Outcomes Impact/
Programme
Goal
1. Federal Level Capabilities for 1A. Federal 1. Government Supportive federal PROVINCIAL ALL
institutions develop federal ministries and institutions and IG ministries and
legislation and governance agencies are mechanisms at all agencies with AND CITIZEN
policies to support havecritical supporting the levels are fully proper and
provincial and local gaps at federal PLGs in policy functioning in functional IG LOCAL RECEIVE
governments. level. and institutional support of federal mechanism can
2. Federal level Capacitated spheres for governance as help institutionalize GOVERNMENTS QUALITY
institutions develop federal implementing per the federal governance SERVICES
tools and systems to agencies can federal constitution and devolution in ARE
support provincial bring change governance. Nepal and make AT THE
and local and will support PLGs functional, FULLY
governments in a SNGs and sustainable, FUNCTIONAL, PROVINCIAL
consultative federal inclusive and
process. governance. accountable SUSTAINABLE, AND
3. IG administrative Administrative 1B. IG
mechanisms are mechanisms administrative INCLUSIVE LOCAL
strengthened and are critical for mechanisms are
functional effective IG fully functional AND LEVEL
coordination.
Strengthening ACCOUNTABLE AND
these
mechanisms TO THEIR ENJOY
will enhance IG
corporation and CITIZEN BETTER
implementation
of federal LOCAL
governance.
Page | 21
 Outputs ToC Intermediate Outcomes ToC Intermediate Final Impact
Outcomes Impact/
Programme
Goal
4. PGs drafted IB support to 2A. PGs have 2. Provincial and Efficient, effective, INFRSATRUCTU
legislation. PG will head to functional, local inclusive and RE
5. Modernized PG functional inclusive and governments accountable
systems enable inclusive and accountable have efficient, institutions will AND
horizontal and accountable institutions. effective, make PLGs fully
vertical institutions at a inclusive and functional, ECONOMIC
accountability to all provincial level. accountable sustainable,
citizens and institutions. inclusive and PROSPERITY
mainstream GESI. accountable.
6. Provincial Supportive federal
Governments organisation, I-G
Manage core public mechanisms and
Administration empowered and
functions. capacitated official
7. PCGGs made at PLGs will help
operational to developing such
deliver CD services. institutions.
8. Modernized Local IB support 2B. Local
Governments have along with GESI governments
strong administrative and community have functional,
system, accountable governance sustainable,
and public financial supports to LGs inclusive and
management will lead them to accountable
system. have functional institutions.
9. Local and
Government accountable
systems enabled institutions.
horizontal and
vertical

Page | 22
 Outputs ToC Intermediate Outcomes ToC Intermediate Final Impact
Outcomes Impact/
Programme
Goal
Accountability to all
citizens.
10. Local
Governments
systems mainstream
GESI in their service
delivery.
11. Local
Governments
systems enable
citizen engagement
and inclusive
participation.
12. Innovation and IPF can 2C. Provincial
Partnership fund is enhance and and local
operational and facilitate governments
transparently innovations for promote
supporting local Good innovations and
governments Governance partnership for
innovative practices. and better inclusive
infrastructure. governance and
local
development.
13. Elected Trained and 3A. Elected 3. Elected Empowered,
Representative and motivated representatives representatives and incentivized and
Civil servants at the Provincial and civil servants civil servants at capacitated elected
province level are Governance of PGs are provincial and local officials and civil
incentivized and political leaders capacitated to governments have servants build and
trained for delivering and staff can be the capacity and develop efficient,

Page | 23
 Outputs ToC Intermediate Outcomes ToC Intermediate Final Impact
Outcomes Impact/
Programme
Goal
high quality more effective. serve citizens to serve citizens to effective,
services. They will their satisfaction. their satisfaction. sustainable and
discharge their accountable
duties in a Provincial and
better Local governments.
14. Local Trained and 3B. Citizens are
Governments’ informed LG satisfied from the
elected leadership will services of the
representative and be more capacitated
civil servants are effective and elected
empowered and efficient in representatives
trained for serving citizens. and civil servants
delivering high of local
quality services. governments.
Time Line: 2019 - 2019 – 2022 2020 - 2022 2021 - 2022
2022

Page | 24
3.4. Basic Principles and Approaches

PLGSP is primarily about putting in place a functional, effective and democratic system of
governance at provincial and local levels in the spirit of the constitution. The policy context,
both existing and emerging, are comprehensively accounted in the design and
implementation of the programme. These include on-going and planned reforms in
governance and the public sector, reforms in public finance management and the overall
legal environment that is being shaped in the process of the move towards a federal system.
PLGSP will need to be broadly aligned with GoN policies as they get fine-tuned in the
implementation of the federal constitution.

PLGSP is an umbrella framework programme. This means that the programme will provide
an overarching framework to all Sub-National Governance Programme (SNGP) in Nepal. It
will provide a common framework for binding together governance programmes at the
provincial and local levels and accommodating donor funded programme within a Joint
Funding Arrangement thus providing coherence to a common approach to SNG under a
federal system. It is a nationwide programme with access for all provincial and local
governments.

PLGSP is the sole national programme of GoN to implement governance reforms at

sub-national levels. The programme will support the implementation of governance reform
strategy at provincial and local levels as envisaged in the National Plan of Nepal.

The broad principles and approaches that underpin the PLGSP formulation are as follows:

(a) Focus on federal devolution: Commitment to the federal devolution of state

powers as provided in the schedules of the constitution and the legislations enacted
for the purpose by Parliament (including Local Government Operation Act, Inter-
governmental Fiscal Management Act, National Natural Resources and Fiscal
Commission Act)is the basis for the design of the PLGSP. Facilitating SNGs in the
exercise of devolution will remain the hallmark of PLGSP.

(b) Transparency and accountability in provincial and local governance:

Transparency and accountability will be built in the design and implementation of
the PLGSP. This means transparency in the governance process including aspects
such as decision-making, formulation and implementation of plans, programme and
budget, coordination between all agencies and benefit sharing in the concerned
areas and communities. Accountability to the citizens will be systematically built into
governance process as well as the entire programme planned and implemented
through the PLGSP.

(c) Mainstreaming GESI: GESI mainstreaming is a means and not an end to itself in
eliminating inequality and discrimination against women and DAGs. Such an
approach recognizes GESI as an objective that cuts across all aspects of
governance. Therefore, mainstreaming GESI right from the start in all governance
systems, procedures and processes and at every stage of development from
policy/law and plan development to programme/project conceptualization
implementation, monitoring/evaluation and reporting is critical. Accordingly, all
policies, programme and service delivery strategies will be both GESI sensitive and
responsive in spirit as well as in practice thus facilitating and contributing to the
transformation in social norms and behaviour. GESI will be mainstreamed in all
approaches and programme under PLGSP. GESI is essentially about addressing
unequal power relations.

Page | 25
 (d) Rights based and Participatory approach: The constitution is committed to a
rights-based approach to capacity building and service delivery. PLGSP will pursue
a rights-based, demand responsive and participatory approach to SNGs,
institutional strengthening and capacity building with the potential to reduce poverty
and empower weaker segments of the community. A participatory approach will be
used to strengthen the relation of civil society to SNG.

(e) Devolved, contextual and flexible programme design: The programme will
follow the principles of federalism, devolution, and flexibility. While the core concepts
of the programme will remain intact, enough space will be provided to allow for
context-specific adaptations and a devolved mode of operations. Major parts of the
programme will be demand-driven to allow for provincial and local level discretions
in prioritization and service delivery. Self-assessment will also be a key component
of the programme which will facilitate an in-built monitoring, feed-back and research
system.

(f) Adaptive Programming: The PLGSP is designed as an adaptive programme

based upon the ToC which allows room for innovation, structural governance
reforms, continued changes in the programme based upon monitoring, evaluation
and learning and changes in activities, sub-outputs and outputs after a mid-term
review (MTR) of the programme and review of ToC of the Programme. The
Programme will also learn from innovative practices and resultant governance
reforms emerging from investments through IPF.

3.5. Results Framework - Overview of Main Themes and Activities

The goal of the programme will be attained through the achievement of three outcomes
which will directly address the five major constraints existing at the present, namely, IG
coordination and implementation, provincial and local government system and procedures,
provincial and local government institutional capacity, empowerment of elected officials and
capacity building of the civil servants at the PLG levels and meaningful participation and
downward accountability.

PLGSP will be a national programme with activities for: policy support on federalization and
IG cooperative and coordinated relationships, institution building at provincial and local
levels and CD of individuals in political leadership or in the civil service at the provincial and
local levels. These activities will support governance and devolution at the local and
provincial levels. There will also be demand driven activities which will be co-funded by the
programme and the local and PGs.

As has been presented in the Section 3.3 ToC, the programme impact is the programme
goal of this programme. The three programme outcomes, seven sub-outcomes and the
fourteen outputs along with their major activities and groups or the sub-outputs under each
output is described below. The summarized version of these activities and outputs and
outcomes along with the result indicators and the responsible authorities has been furnished
in the results matrix in Table 1.

3.5.1. Outcome 1: Government institutions and IG mechanisms at all levels are fully
functioning in support of federal governance as per the constitution.

The constitution has mandated the federal and PGs to formulate laws necessary to
facilitate IG coordination. There are constitutional bodies, such as the NNRFC,
whose role in the IG transfer of resources is important. To ensure that the federal
ministries and constitutional bodies such as the National Women Commission,
Muslim Commission, Tharu Commission, National Dalit Commission, Madhesi

Page | 26
Commission, Adhibasi Janjati Commission and NNRFC work for the effective
functioning of provincial and local government in the spirit of the constitution, it is
necessary to support the concerned agencies in carrying out their roles and
responsibilities. The PLGSP aims to achieve effective communication, coordination
and cooperation among the various levels of governments by providing policy,
knowledge and technical supports to the federal ministries (especially the
MOFAGA), the constitutional bodies responsible for fiscal federalism and
strengthening of IG communication and coordination and other federal agencies as
LDTA. Similarly, the programme aims to achieve effective cooperation and
coordination between the provincial and local governments by providing needed
policy, knowledge and technical support to the PGs and their agencies.

Sub-Outcome 1A: Federal ministries and agencies are supporting the PLGs in policy
and institutional spheres for implementing federal governance

This sub-outcome is the intermediate outcome of the first pillar of the support – i.e.
policy support and support for IG mechanisms. The two sub-outcomes (1A and 1B)
are interrelated and interdependent. The policy support is intended to focus on
supports for the making of legislations and policies as well as for development of
tools, systems, procedures, formats and other working instruments to facilitate the
implementation of the constitution for federal governance.

3.5.1.1. Output 1: Federal level institutions develop legislations and policies to

support Provincial and Local Governments in a consultative manner

As local governments are assigned the responsibility of front-line service

provision and the PGs have been assigned with the regional level
development administration functions in almost all sectors, the role of
most federal ministries have changed considerably from national
implementing agencies to policy level coordinators of locally and
provincially provided services. However, to make this happen and
smoothen the transition, the implementation of a federal scheme of
governance needs much policy and legislative support from the federal
ministries and agencies. The federal organizations not only need
restructuring and reorientation for their internal functioning, but they also
need to facilitate and furnish policy supports to the provincial and local
governments to make them fully functional and efficient. The federal
agencies need technical and financial support for gearing up their support
process to the PLGs. This output area envisages the following major
activities, groups or sub-outputs:

- MOFAGA and line ministries need to build capacity to furnish

legislative and policy support to the provincial and local governments
as per their federal role.

- NNRFC, FCGO, Constitutional Commissions need to furnish policy

guidelines to the PLGs and for this they need to be capacitated.

- Federal ministries and agencies need to develop efficient and

effective strategic communications with the PLGs for which they
need the programme support.

- PGs need to extend policy support to the local governments within

their territory and establish strong strategic communication both with
the federal and local governments for the implementation of the

Page | 27
 provisions of the constitution. This will be supported under this output
area of the programme.

3.5.1.2. Output 2: Federal level institutions develop tools and systems to support
PLGs in a consultative process.

Federal level ministries and agencies need to develop guidelines,

manuals, procedures, processes, systems, frameworks, standards and
norms which can be used by the provincial and local governments. Mere
policy and legislative support will not be enough for new SNGs of
federalizing Nepal. The provincial and local governments will need the
technical support from the federal government in their system
development. This support goes hand in hand with policy and legislative
support mentioned in the Output One activities and they will complement
each other in order to achieve the outcome results.

The major sub-outputs and activity areas for this output are:

- The MOFAGA and federal line ministries need to provide guidelines

both for general governance and sector governance to the provincial
and local governments. They need to ensure the flow of information
(data, reports, studies) and strategic communication between the
different levels including innovative practices (for example,
integrated service delivery, local revenue generation, local economic
development) of relevance in different contexts.

- The federal ministries need to periodically assess and analyse

devolution and local development policies and provide guidelines for
policy and programme development at PLG levels.

- The federal ministries need to develop and periodically monitor and

update the framework for assessing provincial and local government
performance with respect to key devolution and development
indicators and publish performance tables which could be linked to
incentives.

- The MOFAGA needs to orientate sector federal ministries in support

of the constitutional mandates of the PLGs.

- The MOFAGA needs to support federal sector ministries on a

demand-driven basis in providing guidance to PLG on sector
planning and operations.

- The federal ministries and agencies need to develop the

standardized templates, formats, standards, norms and other tools
to strengthen the administrative functions of the PLGs.

- The federal ministries need to support PLGs for effective fiscal and
financial coordination among the three levels of governments.

- The MOFAGA needs to support the local governments in developing

planning procedures and tools and revenue administration tools.

Page | 28
 - The MOFAGA, in coordination with MOF/FCGO, needs to develop
effective oversight and coordination of provincial and local
expenditure management.

- The federal ministries need to support the development of Open

Local Government Accounts for budget transparency at LG levels.

- The MOFAGA, line ministries and other federal agencies, needs to

be capacitated and reoriented to perform the above roles for effective
implementation of the federal Constitution.

Sub-Outcome 1B: IG administrative mechanisms are fully functional

As mentioned above, the legislative, policy and systems support extended from the
federal ministries to the PLGs will not be adequate unless matched by development
of new IG administrative mechanisms and ensuring their functionality. This sub-
outcome focuses on the IG mechanisms. Only strong IG mechanisms can lead to
effective IG cooperation and thus help with the implementation of the constitutional
provisions on cooperative federalism. Proper and effective administrative
mechanisms will facilitate IG horizontal and vertical communications.

3.5.1.3. Output 3: IG administrative mechanisms strengthened and functional

The coordination among the federal, province and local level is essential
for the proper functioning of the federal system. There is a provision for
the federal government to create laws that ensure coordination among
the three levels of government. Under the direction of these laws, the
province has the authority to create laws that define the process of
settling any political disputes that may arise from exercising such
coordination. Similarly, coordination will be necessary among federal,
provincial and local development plans. The constitutional provides for
federal Coordination Council and Provincial Coordination Councils for IG
cooperation and coordination. The legislation, policies and systems need
to be developed for effective IG coordination and cooperation among the
three levels of governments and between any two of them. The following
are major activity areas and sub-outputs under this output:

- MOFAGA and OPMCM have effective IG cooperation mechanisms.

The Constitutional Councils and Committees need to be supported
to make them effective and functional.

- Horizontal communication among the federal organizations needs to

be made functional on PLG issues.

- The Inter-Provincial Council Secretariat needs to be strengthened.

OPMCM and MOFAGA need to work jointly for federal coordination
among the three levels of Government. MOFAGA needs to be
supported for its strong coordination function both at horizontal and
vertical levels.

- The PGs need to be supported for their part of the responsibilities in

coordination with the local governments within their territory and for
developing IG administrative mechanisms between the local
governments and the PG.

Page | 29
 - The sector ministries and agencies need to develop various IG
mechanisms for effective sector governance and monitoring of the
activities at the PLG levels. These may be the development of sector
IG mechanisms – laws, policies, standards & norms and systems
including that related to communication and sector coordination.

3.5.2. Outcome 2: Provincial and local governments have efficient, effective,inclusive and
accountable institutions

Provincial and local governments are well into the process of creating administrative
and organizational structures with defined functions and responsibilities to
undertake the regular services and development functions. Institutions matter for
good governance. This is even more relevant for provincial and local governments
if they want better service delivery for all. The institutions need to be effective and
efficient. They also need to be made inclusive and accountable towards the general
citizens to earn their trust, especially of the citizens from disadvantaged groups. The
second pillar of the programme which is also a central pillar is hence the IB of the
provincial and local governments.

The three sub-outcomes of this central pillar as have been envisaged by the ToCare
related to IB of PGs, IB of local governments and institutionalization of the IPF. The
three level of governments need synergy in organization and development (O&D)
and the available financial or other resources need to be best used for synergic
effects of institution building at the three levels of government in order to maximize
benefits of the new federal Constitution. High level political and bureaucratic
commitments will be needed for institution building at PLG levels without which the
PLGSP programme cannot achieve impact level results. The institution building
exercise in Nepal has always been full of challenges and PLGSP will not be
exception. Hence, along with the commitments for deeper governance reforms
which percolate into better and inclusive PLG institutions, the other two pillars (IG
and CD) of the programme also need to be synergic and support needs to be
sequenced and put together to produce results as described in the ToC diagram.

Setting up administrative structures and enhancing government institutional capacity

and operations requires the enactment of enabling legislations, the adaptation of
guidelines provided by the federal government to the provincial and local context,
the development of clear organograms for effective and accountable service
delivery, clarity in the functions and procedures of functionaries and an improvement
of the staff capabilities of effectively performing defined functions.

The extent to which delivery of quality services at the local levels is accessible,
improved and reformed is the yardstick against which the functioning of the local
governments is judged by people. The systems and procedures established at the
local levels will therefore need to be directly tied to the delivery of services of all
kinds including administrative services, basic day-to-day services such as
education, health, social security as well as services related to agriculture extension
or quality and use of infrastructure created.

The PG is assigned a number of exclusive and concurrent functions in the

constitution, and as such has to fulfil its executive and legislative roles. In addition,
the province has a significant role in ensuring coordination between federal and local
government and among local governments.

While the programme will support both the provincial as well as the local government
levels in pursuing their constitutional mandates, the support of these respective

Page | 30
levels will be somewhat different in nature. The programme will provide hands-on
operational support in key areas to each of the seven provinces, whereas this will
not be possible at the local level. Furthermore, the programme focuses
disproportionately on strengthening the local level because, in addition to their much
greater number: (a) their service delivery responsibilities are more important to
achieving an inclusive public sector, and (b) the opportunity for participation and
accountability are greater at the local level. The programme will also focus on the
areas that strengthen the PG with respect to its linkages with the local governments.

Outcome Two will also be financed through the ‘Innovation Partnership Fund’ for
institutional strengthening and better results in service delivery area of the SNGs,
especially that of the local governments. This fund has been treated as a separate
sub-outcome under the outcome two in order to make it institutionalized for effective
support to innovations and innovative governance practices.

Sub-Outcome 2A: Provincial governments have functional, inclusive and

accountable institutions.

This sub-outcome is related to the institutional strengthening of the PGs and its
agencies, including the PCGG in order to make them functional, inclusive and
accountable towards their citizens. The institution building support to the PGs will
result in the overall enhancement of effectiveness of the PGs which will help to
achieve the programme impacts not only at provincial levels but also for local and
federal levels. The outputs covered under this sub-outcome are provincial legislative
strengthening, the modernization of provincial systems to enable horizontal and
vertical accountability and the mainstreaming of GESI, the strengthening of core
public administration functionsand the operationalization of PCGG for better CD
services.

3.5.2.1. Output 4: Provincial governments drafted legislation in a consultative

manner

The province needs to formulate the laws required for effective public
administration at a provincial level. The provincial assembly also needs
to legislate for effective sector services, IG mechanisms and facilitation
for the effective functioning of the local governments. These have been
mandated to them by the provisions of the constitution. This is important
for the local governments as well because they facilitate in determining
the governance system of the local levels. Providing technical support in
these areas to the provinces on a needs basis is the purpose of this
output. The following are the major activity groups and the sub-outputs
for this output:

- PGs need technical resources to draft required legislation, rules and

manuals for which the programme will furnish support.

- The programme will support the agencies of the PGs like the
OCMCM and the line ministries including the Ministry for Internal
Affairs and Law for consultations with the local governments on key
legislation.

- The provincial governments need to support the local governments

for their legislative drafting. The programme will extend support for
this to the PGs.

Page | 31
3.5.2.2. Output 5: Modernized PG systems enable horizontal and vertical
accountability to all citizens and mainstream GESI

To make the provincial administrations more effective and functional, the

organizational structure needs to be strengthened and modernized. The
PGs need to adopt and adapt the administrative systems, procedures and
policies which make them accountable to the citizens, enable effective
vertical and longitudinal communications systems and mainstream GESI
principles in their administrative structures. The PGs need to adopt best
practices for good governance, transparency and accountability. They
need to come forward with strong ‘anti-corruption’ policies and action
plans to operationalize them. They will need to develop and implement
accountability frameworks which not only make them responsible to their
electorates but also to the other two levels of governments and to general
citizens by institutionalizing effective guarantee of ‘rule of law’, ‘fairness
and equity’ and adherence to general good governance practices of
modern administration. The major activity areas and the sub-outputs
under this output are:

- The provincial coordination council will be strengthened.

- Support will be provided for strengthening provincial institutions and

organizational structures.

- Vertical protocols for sector specific development administration will

be developed such as inclusive economic growth, poverty alleviation
and SDG localization.

- Horizontal protocols for specific sectors will be developed such as

energy and power, inclusive economic growth and SDGs.

- Provincial public hearings will be supported.

- Participatory budgeting at provincial level will be supported.

- GESI audits at provincial levels will be initiated.

- Anti-corruption policies and action plans will be adopted,

implemented and monitored. Programme will furnish support for such
activities.

3.5.2.3. Output 6: PGs manage provincial public administration functions more

effectively

PGs need to manage provincial public administration functions well for

the success of federal restructuring of the country. The PGs are new
governments and the organizational structures along with various core
public administrations systems are not fully established yet. However, the
new systems and organizations in formative stages are also good
opportunities for institutionalizing best practices and systems of
contemporary public administration at provincial levels. This will also give
positive signals to the general public about the quality services that the
PGs can render to them because of use of modern systems in their
administration. The major areas where the PGs need to concentrate with
support of federal government and this programme are public finance

Page | 32
 management, planning process, data management and its use, civil
service management, sector administrations, management of interface
with public including through the use of ICT, public policy making process
and linkages with the local governments for better service delivery. Public
finance management systems need to be well established and
strengthened for economic efficiency, data integration, public
accountability and fiscal transparency in order to minimize fiduciary risks
at the provincial levels. The major activity areas and the sub-outputs
under this output are:

- PFM systems at a PG level need to be strengthened in coordination

with concerned ministries and agencies – like MOF, FCGO, NNRFC,
and provincial ministries.

- The programme will capacitate PGs to establish and strengthen

provincial planning and budgeting systems and procedures.

- The programme will capacitate PGs in strengthening their revenue

administration systems and procedures.

- The programme will furnish support to capacitate PGs in

strengthening their budget execution and expenditure management
systems and procedures; setting up audit systems and procedures.
The programme will also furnish support to establish e-governance
and modernization of the governance system by establishing an
Electronic Resource Planning eco-system at the provincial level.

- The PGs will be supported in the management of their civil service

including the support to the provincial public service commissions.

- The programme will support the creation and development of a

proper and effective ICT infrastructure at provincial levels. Overall
data management and integration for optimization of data-use will be
the focus area in IT support.

- The programme will extend support to the PGs on demand basis for
strengthening of sector administrations at the provincial levels and
their linkages to the other levels of the federal governments.

- The programme will support the public policy making process at a

provincial level with a focus on capacitating the PG institutions for
better accountability, inclusiveness and transparency in the policy
decision making process.

3.5.2.4. Output 7: PCGGs made operational to deliver CD service

The PCGG will be established by a provincial charter in each province to

serve as a service provider of the CD inputs to the individuals at both
provincial and local levels. The individuals who will receive such CD
inputs include elected leaders of the provincial and local governments
and civil servants serving in these governments. The civil servants
include not only the regular personnel and the bureaucrats under PLGs
but also the part-timers, staff recruited on contractual basis and
community organization leaders (or staff) who work with the PLGs
(especially with the LGs) under their mandate. The PCGG will also serve

Page | 33
 as a resource centre for providing knowledge inputs needed to strengthen
PLGs’ organization and administration. The PCGGs are envisaged to be
the key institutions under this programme for delivery of CD services.
Hence the success of this programme will depend upon the timely
establishment and institutionalization of the PCGGs. Quality CD services
need to be delivered from very early stage of the programme. Specific
triggers have been conceived in this ProDoc related to the establishment
and effective management of the PCGGs. The key elements that need to
be included in the charter (the provincial Act) for establishing the PCGGs
have been furnished in Annex 15. The major activity areas and sub-
outputs under this output are:

- A concept paper for the establishment of the PCGGs will be prepared

and adopted by the PGs with the support and guidelines from
MOFAGA.

- The PGs will establish PCGG under their provincial charter with
facilitation from the MoFAGA.

- The recruitments for key positions of the PCGG will be done through
a transparent and competitive process.

- The PCGG will be furnished with timely and adequate resources for
their operationalization and institutional development. PCGG must
get functional in delivering supply and demand driven trainings and
other CD inputs to their stakeholders.

- An effective monitoring system will be developed and executed to

monitor the delivery of PCGGs and to recommend any policy
measures to make them more effective during the Programme
period.

Sub-Outcome 2B: Local governments have functional, sustainable, inclusive and

accountable institutions.

This sub-outcome is related to the institutional strengthening of the local

governments and their functionaries including the sector delivery units in order to
make them functional, sustainable, inclusive and accountable towards their citizens.
The institution building support to the local governments will result in the overall
enhancement of effectiveness of the local governments which will help to achieve
the programme impacts not only at local levels but also for provincial and federal
levels. The outputs covered under this sub-outcome are the modernization of LG
systems including the administrative systems and PFM systems to make them
accountable to citizens, enabling the LG systems for horizontal and vertical
accountability, the mainstreaming of GESI in LGs’ service delivery and the enabling
of LG systems for citizen engagement and inclusive participation.

3.5.2.5. Output 8: Modernized LGs have strong administrative systems and

accountable PFM system

The activities under this output will support the development of effective
and consolidated local government administrations through the
contextual adaptation by local governments of the organization and
management guidelines provided by the responsible federal agency. This
output covers the areas of modernization of organizational structures of

Page | 34
the LGs, civil service reforms at the local levels, strengthening of sector
administrations and the sector delivery units, strengthening of PFM
systems, planning process, and institutionalizing good practices of public
administration at local levels including those focused upon transparency,
accountability, anti-corruption, inclusion and participatory decision
making process. The administrative reform support to the LGs includes
the support to the ward levels (as part of the LG structures) and support
to the District Coordination Committees (DCCs) for effectiveness in their
roles.

This output will mostly be financed by demand driven financing and the
use of financing from the IPF to be availed at the provincial level for the
benefit of the local governments within the province. The funds will be
used not only for the institutional capacity building and organizational
reforms (in structures, practices and processes), but also for improving
the capacity to deliver services to the citizens in efficient, effective and
inclusive ways.

This output mainly includes the following indicative activity areas and sub-
outputs:

- Strengthening of local PFM systems;

- Strengthening of local planning process and the institutionalization of

good M&E practices including the adoption of LISA;

- Development of fiscal policies on both revenue and expenditure

areas;

- Development and strengthening of ICT infrastructure;

- Development and effective use of best practices for local public

administration;

- Support to establish and strengthen sector services such as

agriculture, education, health and local infrastructure; and

- Strengthening of vital registration and strengthening of linkages with

provincial and federal administration.

A Brief Note on LISA:

Following their constitutional mandates, the primary entity responsible for

ensuring that a local government is an effective organization or institution
is the local government itself. As such, local governments will have to
take the initiative in assessing their organizational/institutional strengths
and weaknesses and use information from regular self-assessments to
strengthen their institutional capacities. Baseline information will be
collected for each local government. A guided LISA tool will provide local
governments with a checklist (see Annex 4) to evaluate ten thematic
sectors of local governments functioning. These include Governance
Process, Administration and Organization, Annual Budget and Plan
Formulation, Fiscal and Financial Management, Service Delivery,
Judiciary, Physical Infrastructure, Social Inclusion, Environment
Conservation and Disaster Management, Cooperation and Coordination.

Page | 35
 The PPIU will provide support and guidance to LG staff to implement and
use the LISA. LISA will be fine-tuned with time with the availability of more
reliable data, but the purpose is to initiate a system of self-assessment,
which can be tied to the identification of areas of priority attention and CD
support for LGs. LISA will be one of the bases for providing competitive
fund to LGs.

As LISA gets fine-tuned and a system is created for vetting LISA

outcomes to compare across rural and urban municipalities in the
provinces, it may eventually be possible for the LISA process to be linked
to an incentive structure for better performing LGs (as the Minimum
Conditions and Performance Measures in the old system) in the form of
top-up grants or special grants from the federal government or the PGs.

LISA outcomes can be discussed and debated in the local assembly and
disseminated through local media. This will help strengthen local
assembly oversight and accountability.

Based on the outcomes of LISA, priority areas for mentoring and

backstopping in the functioning of the LGs can be identified for demand
driven support for the LGs by the respective PPIU.

3.5.2.6. Output 9: LG systems enable horizontal and vertical accountability to all

citizens

To make the local governments more accountable and effective, the local
governments need to adopt and adapt the administrative systems,
procedures and policies which make them accountable to the citizens,
enable effective vertical and longitudinal communications systems and,
strengthen institutional practices which enhance cooperation and
coordination with provincial and federal governments. The local
governments need to adopt best practices for good governance,
transparency and accountability. They need to come forward with strong
‘anti-corruption’ policy and action plans to operationalize them. They will
need to develop and implement accountability frameworks which not only
makes them responsible to their electorates but also to the other two
levels of governments and to general citizens by institutionalizing
effective guarantee of ‘rule of law’, ‘fairness and equity’ and adherence to
general good governance practices of modern administration. The
indicative activity areas and the sub-outputs under this output are:

- Support will be provided for strengthening the LGs’ organizational

structures;

- Vertical protocols for sector specific development administration will

be developed for areas such as inclusive economic growth, poverty
alleviation and SDG localization;

- Local horizontal protocols on specific areas will be developed for

areas such as water management, water sharing, education, health,
agriculture, local infrastructure, local economic development and
local SDGs;

- Public hearing at local level will be supported. Citizens’ monitoring

will be encouraged;

Page | 36
 - Participatory budgeting at local level will be supported;

- GESI audits at local level will be supported; and

- Anti-corruption policies and action plans will be adopted,

implemented and monitored. The programme will furnish support for
such activities.

3.5.2.7. Output 10: LG systems mainstream GESI in their service delivery

The constitution as well as the provisions of the Local Government

Operation Act (Section 24(3 and 5)) makes it mandatory to ensure the
participation of women, dalits and disadvantaged groups in the planning
and implementation of development programmes. Accordingly, all
policies, programmes and service delivery strategies should be both
GESI sensitive and responsive in spirit as well as in practice thus
facilitating and contributing to transformations in social norms and
behaviour. GESI sensitivity needs to be reflected in the organizational
system of local governments, in building the leadership of elected
representatives, in the policies, plans and performance measures of local
governments and in the planning, budgeting, monitoring and decision-
making of local governments. This requires a comprehensive GESI
strategy for governance at all levels including GESI friendly policies and
guidelines at the federal level, GESI sensitive programme and
development strategies at the provincial level and similar contextual
programme development, implementation and service delivery at the
local level. There is a need for the whole of government approach to
internalize GESI friendly approaches.

The activities under this output will prioritize strategic entry points for
integrating GESI in the programme framework by utilizing avenues that
are available and which can be expanded. Other than the areas where
GESI related issues are directly referred to there are a number of areas
in the Local Government Operation Act where the implications for
orientation, training and GESI auditing in policies, laws, regulations and
in the formulation, implementation and in the assessment and benefit
sharing from programmes are called for. The thrust of GESI related
activities is to make strategic interventions to mainstream GESI so that it
provides and expands the space for addressing GESI concerns in all
aspects of local governance.

The indicative activity areas and the sub-outputs for this output are:

- GESI plans need to be mainstreamed at LG levels;

- GESI focal persons need to be supported in coordination with the

Ministry for Women, Children and Social Welfare;

- GESI tools need to be developed and implemented at LG levels;

- Support to institutionalize GESI in local government system and

structure through facilitating GESI sensitive decision-making
including laws and policies:

Page | 37
 - Each LG will be encouraged to appoint a GESI focal person who
will be facilitated to perform their functions through generic
capacity building and training. The GESI focal point which will be
a support to screen LGs programmes from a GESI perspective
and make recommendations for action. The GESI focal persons
will be supported by training in GESI tools and/or training in the
use of such tools. The LGs will be encouraged to internalize
GESI sensitive tools (such as GRB) in the planning and
prioritization of activities. Finally, the LGs will be supported to
prepare an annual GESI status report for discussion and action
by the LG executive and the assembly. The initial GESI status
of all LGs will be established as a benchmark to measure
achievements through time;

- Develop/adapt/contextualize standard training manuals on

mainstreaming GESI issues in local governance for targeted capacity
building of mayors/chairpersons and elected representatives:

- Without enhancing the capacity of elected representatives and

staff GESI issues cannot be brought to the centre stage of local
governments and enable concrete action. The training will focus
on leadership and advocacy skills for GESI mainstreaming and
elucidation through contextual examples including technical
knowledge for mainstreaming GESI in all aspects of local
governance (See Annex 2 on guidelines for mainstreaming
GESI in local governance);

- Support LGs to adapt federal GESI human resource policies:

- The activity includes promoting gender parity, diversity of staff in

terms of representation of excluded groups and code of conduct
including abuse of authority and sexual harassment. This activity
will also emphasize the creation of mechanisms to ensure child,
senior citizen and differently able person friendly governance,
and address cases of GBV and social discrimination etc. on a
prioritized basis.

3.5.2.8. Output 11: LG systems enable citizen engagement and inclusive

participation

Activities under this output will be geared towards enhanced and effective
articulation of the voices of citizens, with emphasis on the marginalized
and underprivileged in the local governance process. This may consist of
restructuring (in the changed context) grassroots organizations to
facilitate the articulation of citizen’s voices and institutionalize social
accountability tools.

The creation of grassroots organizations such as the WCF, CAC and Tole
Lane Organizations (TLO) and their mobilization in the identification of
priority needs, their planning and implementation and the
institutionalization of social accountability tools to ensure downward
accountability were some of the milestone achievements of the LGCDP.
The restructuring of local bodies and the devolution of powers to local
governments under the new constitution has created a completely new
context for social mobilization, grassroots organizations and downward

Page | 38
accountability in terms of form, function and sustainability. The major task
is to persuade the local governments to own downward accountability
and citizen engagement processes as essential elements of good
governance. These can be included in the procedural legislations
affecting local governments.

Social Mobilization is substantially the function of local governments. LG

ward which is the lowest unit of representation has five elected
representatives, two of which represent women, dalit and the other
disadvantaged communities. In this new context LGs have to encourage
and facilitate ward members, particularly women and the DAG, to play
significant role in social mobilization. LGs can facilitate third parties to
induce the formation of non-partisan grassroots groups as channels to
voice grassroots concerns, participate in decision making debates and
discussions and in the institutionalization of social accountability tools
appropriate for the particular context. LGs can also secure outside
services for specific, thematic social mobilization that might be needed to
deal with specific issues of relevance.

The indicative and major activity areas and the sub-outputs under this
output are:

- The MOFAGA needs to develop policy for citizen engagement and

inclusive participation in the changed context. The will extend
support to MOFAGA for this activity;

- Local governments need to be incentivized to hear the voices of

citizens groups and community organizations;

- Public audits, social audits and public hearings need to be

encouraged and institutionalized within the local governance
systems;

- The local governments need to encourage communities to

participate in their decision-making process;

- The local governments need to adopt citizens’ grievances

responding mechanisms; and

- Establishing informal institutional platforms to facilitate communities

at the grassroots level need to be encouraged and supported. The
programme will encourage the LGs to take appropriate initiatives for
this.

- To facilitate communities at the grassroots level to participate in

context-specific local planning, implementation and oversight
process, LGs should facilitate, through third party engagement,
the creation or restructuring of grassroots organizations that can
involve citizen groups in inclusive planning of local development
activities and also in the articulation of citizen’s voices. Whatever
their form, such institutionalized platforms should provide the
basis and mechanism for two-way engagement with the citizens.
An incentive structure in the form of top-up fund or special grants
can be considered as part of the effort to promote good
governance and accountability practices.

Page | 39
- A guidance book will be developed for LGs to adapt for good
governance, downward accountability and citizen engagement.

- The guidance book can build on past experiences and

achievements and provide a standard template that can be
contextually adapted by local governments as part of their good
governance practice. Institutionalization and use of context-
relevant social accountability tools (such as social auditing,
public hearing, citizen report cards and other relevant tools from
national and global experience) to measure the communities,
including women, dalits and disadvantaged groups response to
specific programme/development initiatives undertaken by local
governments. Grievance redress systems that allow the citizens
to register dissatisfaction or inadequacies in the delivery of
public services can also be part of social accountability. LG
executive committee and the local assembly should consider the
results of the social accountability measures in the development
and assessment of respective programmes and initiatives and
facilitate local media and civil society organizations to access the
results of social accountability measures so these can be
broadly disseminated and discussed. For an objective
application of social accountability, the engagement of third-
party civil society groups will be needed.

- Design and implementation of multi-media awareness campaigns

will be encouraged.

- Given the number of people that need to be reached, it is

imperative to use tools of mass communication (radio, including
local radio stations, television and social media) to reach out to
people to raise their awareness on the functioning of local
governments. Under the programme suitable mechanisms will
be explored and appropriate material prepared.

- Establishment of public, user friendly Integrated Service Centre and

mobile service will be encouraged at LG levels.

- It is dedicated to the efficient provision of specified services with

designate costs and transparent minimum service standards.
This can also include e-government services that can be
provided online. This should be tied to supervision of compliance
monitoring by specific agency of local or PG.

- Institutional capacity of LGs will be developed to manage

communication at the local level.

- Concerned staff as well as civil society groups will need

orientation and training in the management of communication, in
the creation and dissemination of communication content and in
monitoring the accuracy and effectiveness of information
provided. Communication management should involve
dissemination of decisions made and laws enacted by the local
government, open dissemination of policy drafts, dissemination
of judicial committee decisions, outcomes of joint (local

Page | 40
 government and citizen groups) monitoring of project
implementation, monitoring and tracking of key public services.
In the context of federalization, the content of communication
would be both political (securing and holding on to the rights of
local governments) as well as those related to development
services (better access to quality services). Ensuring that the
constituents are correctly informed becomes extremely vital for
local governments to retain local support. This would also help
local governments to communicate effectively vertically with the
provincial and federal governments and horizontally with their
constituents.

Sub-Outcome 2C: Provincial and local governments promote innovations and

partnership for inclusive governance and local development.

The third sub-outcome of the second area on institution building is about

encouraging innovations and institutionalizing innovative practices for the continued
governance reforms at provincial and local levels. Institutional reform is the central
theme of this programme for achieving programme goals and showing impact.
However, institution building is a continued exercise and not some discrete events.
The deepening of governance reforms can materialize only when risks are taken for
introducing innovations in processes, systems and structures. Similarly SNGs also
need to experiment with new practices in executing infrastructure projects or social
sectors (like those in health or education sectors) to learn the innovative ways to
best perform these jobs and propagate same at a larger scale in the future. This
sub-outcome on IPF will aim to support innovations at provincial and local levels.
But to do so, the fund needs to be established, operationalized and institutionalized
to deliver best results through extending demand-based support to the PLGs on
partnership financing basis.

3.5.2.9. Output 12: IPF is operational and transparently supporting LGs

The PGs are new and their roles need to be established in a manner that
will further strengthen the federal spirit of the constitution. Along this line,
PLGSP proposes to establish IPF that will support innovations in service
delivery at the sub-national level. The core objective of this Fund will be
three-prong: 1) to promote innovative approaches to governance with the
focus on strengthening downward accountability, transparency,
participation, gender and social inclusion;2) to establish relationships
between the local governments and the PGs in the spirit of cooperative
federalism; and 3) to bring in innovations in service delivery particular on
local economic development.

The rationale for including IPF within the PLGS programme is to ensure
that space for innovation with regards to delivering public goods along
with strengthening good governance principles are promoted. The IPF
emphasises innovative solutions to service delivery problems at the local
level. For PLGSP the term ‘innovative’ implies new approaches to identify
and address problems that can be scaled up. It is anticipated that the IPF
will benefit from a high level of government ownership so that the
evidence from this initiative will inform future approaches to service
delivery. A point scoring system will be established where few core
criteria will be established along with scores against which each of the
proposals will be evaluated. As a broad principle objective 1 and 2
mentioned above will have higher scores points compare to objective 3

Page | 41
which is focused on local economic development. As the overall objective
of PLGSP is to strengthen governance and systems for effective service
delivery, only 30 percent of the total IPF will be earmarked for innovation
in local economic development.

The activities under service delivery reforms to be financed from the IPF
can be financed with a partnership approach for sub-projects like: use of
ICT, innovations in sectors like education, health, agriculture, livestock or
development of good governance mechanisms through cooperation
among the neighbouring local governments in order to make them viable
agencies for bigger projects. The modality of IPF and mechanism to use
its funds for the activities under this Output area has been furnished in
Annex 15.

Governance Mechanism of IPF

The PCU will provide IPF to the PPIU on annual basis. All local
governments within the particular province will be entitled to compete for
funding from IPF. The local governments shall submit proposals to the
PPIU to initiate innovative activity on: good governance such as
innovative use of ICT, participatory decision making processes, citizens’
monitoring, GESI, gender –responsive budgeting, use of environment
friendly technologies, e-governance, result oriented management
practices, etc. – and, - social sector such as primary education, primary
health, livestock development, agriculture extension, local economic
development, one stop service delivery, social inclusion, hygiene and
sanitation, etc. The funds from the IPF will not be provided for
infrastructure development.

The IPF will be a special purpose vehicle for financing innovations at SNG
levels setup at MOFAGA especially for the local governments executed
through the PGs. The IPF will be executed with a gradual approach
beginning from FY 2021/22. To use the resources from the IPF, the
aspiring local governments will need to share the costs on a pre-
determined basis. This fund will be administered by the PGs though the
PPIU under the overall guidance of the Provincial Programme Directors.
The PCC will also serve as the provincial IPF board, which will be
established under the chairpersonship of Chief Minister/minister
designated by the Chief Minister. The Committee will review the
recommendations made by the technical team to make the final awards.
The detailed modality of operationalization of the IPF will be approved by
the NSC based upon recommendations of the NEC. A template to help
the decision making on operationalization of the IPF has been furnished
in the Annex –15 to this ProgDoc.

The major activity areas and sub-outputs under this output are:

- IPF policy and its implementation strategic plan will be developed,

agreed and approved.

- The IPF will be established.

- The IPF will be operational and institutionalized to incentivize

innovations at PLGs.

Page | 42
3.5.3. Outcome 3: Elected representatives and civil servants at PLG have the capacity
and serve citizens to their satisfaction.

The elected officials of the local governments like mayors and deputy mayors of the
municipalities, chairpersons and deputy chairpersons of the rural municipalities,
ward committee chairpersons and members of the executive committees or the
councils need to be empowered, oriented and trained for the effective discharge of
their responsibilities and duties so that the local governments can deliver the
services and local development results in an effective, efficient and inclusive way to
the satisfaction of the local citizenry. Similarly, the chief executive officers,
departmental heads, mid-level managers and professional staff along with other
technical and non-technical staff need training and CD inputs in order to make them
knowledgeable about their roles and tasks in order to efficiently and effectively
deliver their services. The elected representatives, senior officials and other
professional staff of the PGs may also need induction trainings and orientations
about the new provincial organizations where they have to work and the duties they
have to discharge in PGs.

Moreover, the provincial staffs need frequent training on various good governance
practices and contemporary administrative reforms especially in federal settings.
This outcome three aims to achieve results in these areas. The PLGSP can produce
results only if there is effective policy support from the federal ministries and
agencies and strong IG mechanisms for effective cooperation exists if the PLGs
have strengthened institutions capable to respond to their citizens’ demands and if
the officials at PLGs are empowered, incentivized and trained adequately to
discharge their duties. This third pillar or the outcome area deals with the individuals’
CD for getting optimum results from the PLGSP programme. The outcome is divided
into two separate sub-outcomes for provincial and local officials respectively.

Sub-Outcome 3A: Elected representatives and civil servants of PGs are capacitated
to serve citizens to their satisfaction.

The sub-outcome deals with CD for individuals in the PGs. The assumptions for the
success of this outcome area is that the PCGG will be established, operationalized,
and institutionalized well in time for delivering CD inputs to the officials at PGs as
per their requirement. The officials at PG also need to be motivated and incentivized
to serve at their optimum levels. The PGs will need an adequate number of staff
posted to them for a continued reasonable period in order to be able to demonstrate
their abilities. They also need to be trained in good numbers to show their collective
performance. Trained and incentivized provincial officials can deliver services to the
satisfaction of the citizens.

3.5.3.1. Output 13: Elected representatives and civil servants at the provincial
level are trained for delivering high quality services

The administrative leadership in the PGs and the technical and non-
technical staff at their disposal need proper motivational orientations and
induction training in order to match with the needs of new dispensations
of the PGs. The office of the Chief Minister has a division on good
governance and federal affairs including the local government affairs.
This division needs to be strengthened in order to plan, manage and
execute CD plans for the PGs in relation to the needs of cooperation and
coordination with local governments and the federal government.

The following major activity areas and the sub-outputs define this output:

Page | 43
 - The PGs adopt a CD plan.

- Training/coaching courses are developed by the PCGG for provincial

council members and the officials of the PGs.

- Training, mentoring, knowledge seminars and motivational

workshops are conducted by the PCGG in coordination with the
OCMCM and the Provincial Assembly Secretariat as per the
demand/need of the Provincial Assembly and the line agencies of the
PGs.

- The senior bureaucratic leadership and the professional staff of the

PGs are furnished with induction training, orientation and short
courses including through knowledge sharing workshops,
experience sharing events and mentoring exercises to prepare them
for their deputations in the PGs, motivate them and make them
effective in their roles in the PG.

- The good governance divisions in the OCMCMs are supported for

preparing, managing and executing the CD plans for the PGs.

- Capacity building inputs provided to PGs also focus on building

capacity for coordination and cooperation activities in order to
support the PGs in managing their IG relationships with special focus
to coordination with local governments.

Sub-Outcome 3B: Citizens are satisfied from the services of the capacitated elected
representatives and civil servants of local governments.

This sub-outcome deals with CD for individuals at the local governments. The
assumptions for the success of this outcome area is that the PCGG will be
established, operationalized, and institutionalized well in time for delivering CD
inputs to the officials in the local governments as per their requirement. The officials
at LGs need to be empowered and trained to be able to serve their clients and
citizens in effective ways. The local governments need adequate staff posted to
them and retained for a reasonable period in order to be able to demonstrate their
abilities. They also need to be trained in good numbers to show their collective
performance. Trained and incentivized LG officials can deliver services to the
satisfaction of their citizens.

3.5.3.2. Output 14: LGs’ elected representatives and civil servants are
empowered and trained for delivering high quality services

The activities under this output will aim to raise awareness of the
functions, roles and responsibilities of key political and administrative
leadership of the local governments and build their capacity, train and
empower them so as they can effectively and in a coordinated and
collaborative manner perform the functions expected of them.

The major activity areas and sub-outputs under this output are:

- Local governments prepare their CD plans.

Page | 44
- The PCGG prepares and develops training and CD manuals,
curriculum, CD modules, courses and training materials.

- The PCGG prepares a roster of experts who can be used as resource

persons for delivering the CD inputs.

- The PCGG provides training courses, on-the-job trainings, mentoring

programmes, peer learning activities, knowledge seminars and
workshops for the LG elected leaders and civil servants of the LGs.
The PCGG provides both supply-driven and demand-driven inputs
on CD.

- The PCGG also conducts research on local governance and

furnishes feedback to the LGs.

- The capacity of LG elected leaders and civil servants are enhanced.

The LG officials are empowered and capacitated to discharge their
responsibilities in effective ways.

- Orientation/training for elected leaders and administrative officials

are conducted.

- Orientation/training on roles and responsibilities of key leaders

and administrative officials of the local governments has been or
is being provided in a selective manner. The curricula for such
training must be based on a standard template approved by
competent government authorities and the quality of training has
to be assured by the providers of such trainings so that the
message conveyed remains essentially the same. Orientation/
training may need to be followed up at the field level to compare
experience in the work environment and relevance and add on
to initial orientation/trainings. While some aspects of training for
elected officials and key administrative officers might be
conducted jointly, in other cases there will be a need to conduct
these separately.

- Human resource capacities of local government staff need to be

assessed, their CD requirements need to be determined and support
for CD need to be extended through various means.

- Local level human resource capacity needs to be assessed in

terms of skills, experience and knowledge to function effectively
in their positions and determine the nature and type of CD needs
both for the organization and the individual. Based on these
needs, CD support (training/mentoring/coaching etc) will be
provided to the local level administration. This activity should
lead to a smoother integration of staff into the local government
administration and enhance the focus on service delivery for
ensuring access to essential services especially by women,
children, youths and DAGs. This activity will also have to focus
on areas that facilitate e-governance and the development of a
competent, effective, multi-tasking and lean bureaucracy.

- Training and legal support to the Deputy Mayor/Vice Chair and

members of the Judicial Committee needs to be extended.

Page | 45
 - Under this activity deputy mayors/vice chairs of LGs who chair
the Judicial Committee of the LG and members will be provided
intensive training on the judicial and mediation functions
expected of them. Since over 95 percent of the Judicial
Committees is chaired by women this will substantially add to
their agency and also complement efforts at GESI
mainstreaming in local government activities. The decisions of
the Judicial Committee can be challenged in the district courts
and therefore it is necessary that trained legal support is
provided to aid decision making.

- Specialized demand driven CD support to LG officials will be

extended. For the purpose of developing demand driven CD inputs
to the requesting LGs, the PCGG will help them to design/select
training material and facilitating/coaching strategies for thematic
functional or technical areas for professional enhancement of
relevant local government staff.

Table 1 provides the result matrix along with the outcome and output indicators:

Table 1: Result Matrix of the Programme

Indicators Baseline Targets Means of Responsible

Verification Agency
Outcome 1: Governmentinstitutions and IG mechanisms at all levels are fully functioning in support of federal
governance as per the constitution
IG issues discussed xxx number of IG 15 IG issues identified and End OPMCM and
in IG mechanisms. agenda identified and discussed in IG mechanism evaluation OCMCM.
discussed in IG by FY 2022/23. 2023/24.
mechanisms in FY
2017/18.
Citizens who strongly Social security: 56%. Social security: 70%. End FG,PGs and
agree that they have Health: 40%. Health: 60%. evaluation LGs.
equal access to Education: 44%. Education: 60%. 2023/24.
basic services (social Water and electricity: Water and electricity: 50%. FG,PGs and
security, health, 30%. Protection from SDG Status LGs.
education, water, Protection from disaster:50% (NMGS Report by
electricity and disaster:14% (NMGS 2018). NPC. FG,PGs and
protection from 2018). LGs.
disaster). SDG 1.3.1 for social SDG Status
SDG 1.3.1 Proportion protection = 41.7. Report by FG,PGs and
of population covered NPC. LGs.
by social protection: SDG 1.3.1.1 Social
8.1 (SDG Status and Protection expenditure in SDG Status
Road Map 2016 - total budget: 12.9 %. Report by
NPC). NPC.
SDG 1.5.1.2 on persons
SDG 1.3.1.1 Social affected by disaster per
protection expenditure 100000 = 392.
in total budget: 11%.

SDG 1.5.1.2 Missing

persons, persons
affected by disaster
per 100 000 = 450.

Page | 46
Output 1: Federal level institutions develop legislation and policies to support provincial and local governments
in a consultative manner.
Federal Ministries A certain number of Related federal Ministries Nepal Federal
develop framework framework legislation enacted framework Gazette. Ministries.
legislation on all the enacted by federal legislation for local and
matters under parliament on matters PGs by 2020/21 in
schedule 9 related to schedule -9 coordination with
(concurrent list) of of the constitution MOFAGA.
the constitution. 2017/18.
Federal agencies A certain number of Related federal agencies Sectoral Federal
developed policy federal agencies developed policy guidelines policies and ministries.
guidelines for (MOE, MOH, MOA, for local and PGs by guidelines.
provincial and local MCWEC, MOUD) 2020/21 in coordination FG, PGs and
governments in developed policy with MoFAGA. SDG Status LGs.
facilitation with guidelines for local and Report by
MOFAGA (GESI PGs in FY 2017/18. SDG 1.5.4 Proportion of NPC. FG,PGs and
guidelines, disaster LGs adopting and LGs.
management and SDG 1.5.4 Proportion implementing Disaster Risk SDG Status
social security, CD of local governments reduction strategies: 30%. Report by
template, that adopt and NPC.
communication implement local SDG 13.3.2.2 number of
strategy related disaster risk reduction trained persons in climate
guidelines). strategies in line with change adaptation: 1822.
national disaster risk
reduction strategies:
none.

SDG 13.3.2.2 Number

of trained persons
(Local Partners) in
climate change
adaption: 791.

MoFAGA prepared Certain number of PGs All PGs adopted Guideline MoFAGA and
model Operational that have adopted Operational Guidelines of published by PG.
Guidelines of Operational Guidelines Provincial Coordination MoFAGA.
Provincial of Provincial Council in FY 2020/21.
Coordination Coordination Council
Council. in FY 2017/18.
Output 2: Federal level institutions develop tools and systems to support provincial and local governments in a
consultative process.
PG and LG Certain percentage of At least 75% LGs and all Revenue MoFAGA,
developed revenue PGs and LGs adopted PGs adopted revenue mobilization NNFRC, PGs
improvement revenue improvement improvement policies and strategic and LGs.
strategy and policies/guideline in guidelines in 2023/24. documents of
harmonized. 2017/18. PGs and
SDG 17.1.2 Proportion of LGs.
(Baseline will be domestic budget funded by
determined based on domestic taxes: 77.9%. Annual Plans
official record of of PGs and
MoFAGA) LGs.

SDG 17.1.2 Proportion SDG Status

of domestic budget Report by
funded by domestic NPC.
taxes: 76%.
PG and LG annual Certain percentage of All LGs prepared annual Annual NPC/MOFAGA/
participatory planning PGs and LGs that plan and budget of FY Budget and PGs (Ministry of
and budgeting prepared annual plan 2023/24 by adopting Plan Economic
and budget in FY participatory planning & documents of Affairs and

Page | 47
 procedures policies 2017/18 by adopting budgeting procedure and PGs and Panning) and
developed. planning & budgeting tools prepared by LGs. LGs.
procedure and tools MoFAGA/NPC/LGs.
prepared by SDG Status
MoFAGA/NPC/LGs. SDG 16.6.1 Primary Report by
government expenditures NPC.
(Baselinewill be as a proportion of original
determined based on approved budget, by sector
LG capacity needs (or by budget codes or
assessment study) similar): 84.9%.

SDG 16.6.1 Primary

government
expenditures as a
proportion of original
approved budget, by
sector (or by budget
codes or similar): 76%
IT based Certain percentage of All PGs and LGs adopted LISA Report. MOFAGA and
management policy, PGs and LGs adopting IT based management LGs.
system and guideline IT based management system in FY 2023/24.
harmonized. system in FY 2017/18.

(Baselinewill be
determined based on
LG capacity needs
assessment study)
Open Local/PG OLPGA is a new OLPGA concept policy and MOFAGA MOFAGA and
Account (OLPGA) concept. guidelines approved by annual FCGO.
policy and guidelines PGs. progress
developed. report.
Output 3:IG administrative mechanisms strengthened and functional
IG policy briefs and Inter Provincial Council Inter Provincial Council OCMCM OCMCM.
position papers to set meeting not convened meeting convened at least annual
the IG agenda for the in 2017/18. once in a year regularly progress
Inter Provincial from 2019/20 onward. report
Coordination Council
developed.
Data Integration and Data integration Data Integration and FG, PGs and MOFAGA, PGs
Management system between all Management system LGs progress and LGs.
between all levels of levels of government is between all levels of report.
government new concept. government adopted from
developed. FY 2019/20.
Preparatory and Coordination meeting Coordination meeting MOFAGA OPMCM and
technical level between OPMCM, between OPMCM, federal progress MOFAGA.
meeting organized federal ministries and ministries and PGs’ focal report.
between Provincial PGs’ focal persons not persons organized on
Coordination Division organized as of FY trimester basis from FY
of OPMCM, federal 2017/18. 2019/20 onward.
ministries and
provincial focal
persons of OCMCM.
Outcome 2: Provincial and local governments have efficient, effective, inclusive and accountable institutions
Proportion of Certain percentage of Compare to baseline at End PG and LG.
population who population who believe least 30% more population evaluation
believe decision decision making is believe decision making is 2023/24.
making is inclusive inclusive and inclusive and responsive by
and responsive by responsive by sex, age sex, age and disability.
sex, age and and disability.

Page | 48
 disability (SDG ref (Baseline will be
16.7.2 ). determined based on
LG capacity needs
assessment study).
Citizens received Certain percentage of Compared to baseline at LISA Report. LG.
efficient and timely citizens received least 20% more citizens
public services from efficient and timely received efficient and timely End
local governments. public services from services from LGs in FY evaluation
LGs in FY 2018/19. 2023/24. report
2024/25.
(Baseline will be At least 10% decrease in
determined based on people’s perception on
LG capacity needs corruption as compare to
assessment study). baseline.

SDG 16.5.1.1 People’s

perception on
corruption (percentage
of people with at least
one instance in the
past 12 months that
require to give a
bribe/present).

(Corruption index
score).
Mechanism to hold Percentage of Percentage of population End PG/LG.
public office population who have who have not heard about evaluation
accountable (social not heard about social social audit: 20%. 2023/24.
audit, public hearing audit: 44%. Public hearing: 20%.
and users committee Public hearing: 37%. Users committee: 10%.
NNGS 2018) Users committee:
adopted. 22%.
OLPGA system OLPGA is a new All LGs/PGs posted MOFAGA MOFAGA and
developed. concept. expenditure statement annual FCGO.
online on trimester basis progress
from FY 2021/22. report.
Output 4: PGs drafted legislation in a consultative manner
PGs have necessary A certain number of A certain number of Acts Provincial OCMCM/PG.
Acts and Regulations Acts and Regulations and Regulations approved Gazette
to operate and passed by the by the Provincial Assembly and PG
deliver service on Provincial Assembly and published in provincial Progress
their exclusive and and published in gazette in FY 2019/20; Reports.
concurrent rights provincial gazette in 2020/21; 2021/22.
assigned by the FY 2018/19.
constitution.
Federal institution at A certain number of Related federal institution PLGSP OCMCM/PG.
provincial level fully federal institution and agencies fully annual
functional in providing support operational and providing progress
cooperation with services to PG. support services to reports.
PGs. provincial.
Provincial and local Legislative drafting by A certain number of PG/ PCGG OCMCM/PGs.
governments jointly PGs in consultation legislative drafted by PGs progress
hold consultations on with LGs is not in consultation with LGs in report.
legislative drafting. practiced in FY 2019/20 -2020/21.
2018/19.
Output 5: Modernized PG systems enable horizontal and vertical accountability to all citizens and mainstream
GESI

Page | 49
 Provincial Provincial Provincial Coordination PG reports. PG.
Coordination Council Coordination Council Council meeting took at
strengthened. meeting not organized least once in a year from
in FY 2017/18. 2019/20 onward.
PGs developed Vertical and horizontal Vertical protocol on specific PG report. PG.
vertical and accountability system sector (economic growth,
horizontal is not in place in PGs poverty alleviation, SDG
accountability in 2017/18. localization) adopted by
system. PGs from FY 2019/20
onward.

Horizontal protocol on
specific area (energy &
power, economic growth)
adopted by PGs from FY
2019/20 onward.
PGs introduced GESI audit not PGs conducted GESI audit PG report. PG.
GESI audit. practiced by PGs in FY from FY 2019/20 onward.
2017/18.
PGs use technology No such Data PGs use digital platform for PG Report. PG.
for data integration integration technologydata integration and
and information available. information sharing.
sharing.
Output 6: PGs manage provincial public administration functions more effectively
Digital database A certain number of All PGs adopted digital PG annual OCMCM/PG.
system established PGs that adopted database system in FY progress
in provincial digital database 2019/20. report.
governments. system in FY 2018/19.
Provincial Public Not applicable. Legislation to establish PGs OPMCM/PG.
Service Provincial Public Service progress
Commissions Commission passed in FY reports. OPMCM.
established and 2019/20.
functional.
Provincial Public Service
Commissions formed in all
provinces in FY 2019/20
and recruited staff as
required for PGs and LGs
from FY 2020/21 onwards.
Organizational Not Applicable. PGs ministries and PGs Annual OPMCM and
Performance departments and Report. Provincial
assessment of institutions organizational Planning
system established. performance system fully Commission.
functional FY 2021/22.
Output 7: PCGGs made operational to deliver CD services
Prepared concept Not applicable in FY PCGG concept paper PCGG MOFAGA.
paper of PCGG. 2018/19. approved by MOFAGA/ annual
PGs in FY 2018/19 progress PCGG.
report.
Operational Guidelines of PCGG.
PCGG prepared in FY PLGSP
2019/20. annual MOFAGA.
progress
Certain number of staff report OCMCM/PG.
PCGGs are in place in PCGG
2019/20 progress PCGG.
report.
Certain number of PCGGs
staff trained in various
thematic areas in FY

Page | 50
 2019/20 and refresher
training for xxx number staff
organized annually from
2020/21 onwards.

Master Plan / Strategic

Plan of PCGG developed in
FY 2019/20.

PCGG made fully functional

from FY 2020/21.

PCGG developed Roster

Management system in FY
2020/21.

PCGGs developed training

package on various
thematic areas in FY
2019/20.
Provincial Centre for Not applicable in FY PCGG established in all MOFAGA MOFAGA and
Good Governance 2018/19. provinces through official OCMCM.
(PCGG) established provincial legislation in FY record/PGs
and functional in all 2019/20. official
provinces. record.
Concept paper for Not applicable in FY NAGG concept paper NAGG MOFAGA.
National Academy 2018/19. approved by MOFAGA in annual
for Good FY 2018/19. progress NAGG.
Governance. report.
Operational Guidelines of NAGG.
NAGG prepared in FY PLGSP
2019/20. annual MOFAGA.
progress
A certainnumber of staff report MOFAGA.
NAGG are in place in /NAGG
2019/20. progress NAGG.
report.
Certainnumber of NAGG
staff trained in various
thematic areas in FY
2019/20 and refresher
training for xxx number staff
organized annually from
2020/21 onwards.

Master Plan / Strategic

Plan of NAGG developed in
FY 2019/20.

NAGG made fully functional

from FY 2020/21.

NAGG developed Roster

Management system in FY
2020/21.

NAGG developed master

level training package on
various thematic areas in
FY 2019/20.

Page | 51
Output 8: Modernized local governments have strong administrative system, accountable and public financial
management system
LGs adopted IT Digital database MOFAGA developed IT MOFAGA MOFAGA and
based system to system adopted by based socio-economic data annual LGs.
collect and analyse LGs is not uniform and collection and analysis progress
socio-economic data. standard in FY system in FY 2019/20. report. LGs.
2018/19.
All LGs adopted IT based SDG Status
SDG 16.9.1 proportion data collection and analysis Report by
of children under 5 system in FY 2020/21. NPC.
years of age whose
births have been SDG 16.9.1 proportion of
registered with a civil children under 5 years of
authority, by age: age whose births have
58.1%. been registered with a civil
authority, by age: 79%.
LGs able to demand 100% LGs have Capacity PCGG PCGG and LG.
for capacity building LGs are newly Response plan by 2019/20. report.
support based on established.
LISA report. 20% LGs demanded CD CD plans.
support from PCGGs in
2020/21 and by 40% LGs in
2021/22 and by 60% LGs in
2022/23.
LGs adopted XX percentage of LG 753 LG adopted SUTRA LGs FCGO/LG.
transparent financial adopted Sub National and made public the Financial
management Treasury Regulation income and expenditure Management
system. Application (SUTRA) statement on monthly basis Report.
and made public the
income and
expenditure statement
on monthly basis in FY
2018/19.

(Baseline will be
determined on the
basis of LG capacity
needs assessment
study).
LGs adopted LISA LISA is a new concept MOFAGA developed LISA LGs website. MOFAGA
tool. planned to introduce in tool for LGs in FY 2018/19. PCGG and LG.
LGs from FY 2019/20. LGs
75% LGs adopted LISA tool Progress
and disseminated results Reports.
through their website in FY
2019/20 and by 100% from
FY 2020/21 onwards.
Output 9: Local Government systems enable horizontal and vertical accountability to all citizens
LGs developed Vertical and horizontal Vertical protocol on specific PG report. PG.
vertical and accountability system sector (economic growth,
horizontal is not in place in PGs poverty alleviation, SDG
accountability in 2017/18. localization) adopted by
system. PGs from FY 2019/20
onward.

Horizontal protocol on
specific area (energy &
power, economic growth)
adopted by PGs from FY
2019/20 onward.

Page | 52
 Horizontal Baseline will be At least 20% LGs have LG report. LG.
cooperation determined on the horizontal cooperation
agreement between basis of CNA of LGs. agreement by FY 2022/23.
LGs on common
issues (waste
management, water
management,
environment, fire
brigade).

Vertical cooperation Baseline will be At least 20% LGs have PG and LG PG and LG.
agreement between determined on the vertical cooperation reports.
PG and LGs on local basis of CNA of LGs. agreement by FY 2022/23.
economic
development.

Output 10: Local Governments systems mainstream GESI in their service delivery
PGs and LGs GESI strategy is not 100% of PGs and LGs GESI PG and LG.
develop GESI available in federal have fully endorsed GESI strategy
strategy, oversight context. strategy. Published.
committee and GRB.
LGs adopted code of LGs do nothave code MOFAGA developed model LGs annual MOFAGA.
conduct to control of conduct to control code of conduct. progress
exploitation and sexual harassment in report. LG.
including sexual FY 2018/19. All LGs adopted code of
harassment. conduct to control sexual SDG Status
SDG 16.7.2.1 harassment from FY Report by
Proportion of decision- 2019/20. NPC.
making positions held
by women in public SDG 16.7.2.1 Proportion of
institutions: 15%. decision-making positions
held by women in public
institutions: 24.3%.

LGs adopted child, LGs do nothave child, MOFAGA developed model LGs annual MOFAGA.
senior citizen and senior and differently child, senior and differently progress
differently abled abled person friendly abled person friendly report. PCGG and LG.
person friendly governance policy in governance policy for LGs
governance policy. FY 2018/19. in FY 2019/20.

All LGs adopted child,

senior citizen and
differently abled person
friendly governance policy
from 2019/20.
Output 11: Local Government systems enable citizen engagement and inclusive participation
LGs encouraged LGs’ policy to MOFAGA/PGs with the LGs annual MOFAGA/ PGs
communities to encourage involvement of LGs progress and LGs.
participate in citizens/communities developed a policy to report.
decision making engagement in encourage participation of PCGG and LG.
process. decision making citizens/ communities in PCGG
process is not decision making process in progress
available in FY FY 2019/20. report.
2018/19.
50% LGs adopted a policy
to encourage
citizens/communities
engagement in decision
making process in FY

Page | 53
 2019/20 and by 100% LGs
from 2020/21 onwards.
LGs adopted citizens Grievances At least 50% LGs PCGG LG.
grievances responding responded on citizens progress
responding mechanism do not grievances in FY 2019/20, report.
mechanism. exist in LGs in FY by 75% in FY 2020/21 and
2018/19. by 100% in FY 2021/22 LGs annual
onwards. progress
report.
Proportion of 15% decision making 24.3% decision making End FG/PG/LG.
decision-making positions held by positions held by women in evaluation
positions held by women in public public institutions in 2023/24.
women in public institutions 2015/2016. 2022/23.
institutions (SDG
16.7).
Output 12: Innovation and Partnership Fund is operational and transparently supporting local governments
innovative practices
IPF established IPF is a new concept. IPF Operational Guidelines PGs annual MOFAGA/OCM
under OCMCMs. prepared and approved by progress CM/PG.
GoN in FY 2019/20. report.

IPF Board established in 7

provinces in FY 2020/21.

IPF operationalized IPF is a new concept. IPFs delivered $28 million PGs annual MOFAGA/OCM
to incentivize to LGs in FY 2021/22 and progress CM/PG.
innovation. $35 million in FY 2022/23 report.

A certain number of
innovative schemes
implemented by LGs in FY
2021/22 benefitting a
certain number of people.

A certain number of
innovative schemes
implemented in FY 2022/23
benefitting a certain
number of people
Innovation and IPF is new concept. Certain percentage of PG PG Annual OCMCM.
partnership Fund contribution to IPF. Report.
establish vertical
cooperation between
PGs and LGs.
Outcome 3: Elected representatives and civil servants at provincial and local governments are capacitatedto
serve citizens to their satisfaction
Proportion of 15% population fully 30% population fully End PG and LG.
population satisfied satisfied with public satisfied by FY 2023/24. evaluation.
with their last services (NNGS
experience of public 2018).
services (Ref SDG,
16.6.2).
Women and the Certain percentage of At least 25% more compare End PCGG and LG.
Citizens from budget allocated by to baseline LGs’ allocated evaluation.
disadvantaged group LGs in annual plan in budget. in annual plan in
empowered to FY 2018/19 in FY 2023/24 in response to LISA Report.
participate in response to demand of demand of citizens from
decision making citizens from disadvantaged group.
process of local discriminatory group.
government.

Page | 54
 (Baseline will be
determined based on
LG capacity needs
assessment study or
secondary source).
Output 13: Elected representative and civil servants at the province level are trained for delivering high quality
services.
PGs develop PGs do not have CD PGs prepared and adopted Annual PG.
comprehensive CD plan in FY 2018/19. CD plan in FY 2019/20 Budget and
plan. Progress
PGs allocated at least 1% report of
of total annual budget for PGs.
CD from FY 2020/21
onward
Enhanced capacity PGs are newly PCGGs organized PCGG PCGG and PG.
of PGs staff. established and CD induction training and on- progress
activities are not the- job short courses for a report.
carried out in FY certainnumber of PGs’ staff
2018/19. in FY 2021/22 and
continued in FY 2022/23
Provincial Assembly A certain percentage PCGGs organized PCGG PCGG.
members knowledge of assembly members workshop/orientation for progress
enhanced. aware of their 50% of Provincial Assembly report.
mandated roles and members on federalism
functions in FY and relevant topics
2017/18 including GESI in FY
2020/21 and for 100%
members in FY 2021/22

Output 14: Local Governments elected representative and civil servants are empowered and trained for
delivering high quality services
Elected official A certain percentage 80% of the official fully Perception PPIU/ PCGG.
(Mayor, Deputy of elected officials fully satisfied with their survey.
Mayors, Ward Chair, satisfied with their performance.
Chiefs and Deputy overall performance
Chiefs) fully satisfied .
with their (Baseline will be
performance. determined on the
basis of LG capacity
needs assessment
study)
LGs prepared CD CD needs of LGs’ staff 50% LGs prepared CD plan LGs CD LG, PCGG, and
plan. not available in FY in FY 2019/20 and 100% in plans and PCU.
2018/19. FY 2020/21. annual
progress
LGs assessed CD needs of report.
staff in every three year.
Enhanced capacity A certain number of PCGGs organized short PCGG PCU, PCGG
of elected elected term training for 30% progress and LG.
representatives of representatives of elected representatives of report.
local government. LGs’ oriented on LGs on federalism and
different aspects of related subjects in FY
federalism in FY 2020/21 and continued in
2018/19. FY 2021/22 and 2022/23.

(Baseline will be PCGGs trained annually at

determined on the least 21,000 officials of
basis of LG capacity PGs and LGs 2020/21
needs assessment onwards.
study).

Page | 55
 PCGGs deployed at least
10,000 man-days annually
of expert resource to LGs
for coaching and
mentoring.
Enhanced capacity A certain number of PCGG organized induction PCGG PCGG and LG.
of local governments LGs’ staff participated training and on- the- job progress
staff. in training programme short courses on demand report.
in FY 2018/19. for 700 LGs’ staff in FY
2021/22 and onward.
(Baseline will be
determined on the
basis of LG capacity
needs assessment
study).

Page | 56
3.6. Implementation Strategy

PLGSP, a flagship programme of the GoN and DPs will be executed by the
MOFAGA.MOFAGA will take full responsibility for delivery and achieving the results. The
steering committee will be the supreme governance body of the programme. It will act as
a supervisory board that provides guidance on the type and nature of activities to be
undertaken, amongst others by discussing and approving (annual) work-plans and by
overseeing the quality of the actual implementation.

3.6.1. Framework Programme

PLGSP is a framework programme to support the establishment of functional,

sustainable, inclusive and accountable SNGs. The DPs expressing interest in
alignment would need commitment to joint funding and joint decision – making on
the totality of the activities. The programme offers full support for those DPs that are
willing to go main-stream through the structures of the PPIU.

3.6.2. Primary Focus on Local and PGs

The primary focus of the programme is firstly, on local government because the local
governments are closest to the citizens, secondly, because, the service delivery
mechanisms (including important social services) that impact most peoples’ lives on
a daily basis lies with the local governments and thirdly, because, elected local
governments are in dire need of institutional and capacity support to get their basic
systems, procedures and structures strengthened in order to serve the citizens
efficiently and effectively to their satisfaction.

The extent to which all the 753 local governments in the country can be covered by
the programme will depend on the capability of the PPIUs and the PCGGs in terms
of manpower, staffing and the outreach they can have. In the initial stages the PPIUs
will need to develop a profile and assessment (as well as small data base with
contact details) of all the LGs in each province. These will be profiles and
assessments developed by the LGs themselves with the support of PLGSP. This
will allow an appraisal of the kind of governance issues faced by the LGs and their
prioritization. The PPIUs in the meantime will, in consultation with the PCU, develop
manuals of the essentials of a governance system in the provincial and local level
contexts for adaptation by municipalities. The PPIUs and PCGGs will also have to
develop a detailed menu of institutional and CD support services that can be
provided by them on demand as well as a roster of experts available within the
province.

Along with the local governments, the PGs will have significant influence in the
federal governance system and as intermediate regional governments linking both
the federal and local governments. Although formally the functional links between
the provinces and the local governments are limited, practices of good ‘cooperation,
coordination and coexistence’ without any hierarchical relationship can prove to be
very crucial for the effective functioning of three levels of governments.

As per the LGOA, a Provincial Coordination Council has been envisaged under the
stewardship of the Chief Minister of the provinces. The chairperson of rural
municipalities and mayors of municipalities from all local levels within the province
are its members. The PCC has to maintain coordination between the province and
local levels on issues of policy coherence in areas of provincial and local level;
strategic partnerships; guidelines in planning; assignment of concurrent functions
among the province and local levels; and utilization and sharing of natural resources.

Page | 57
 The PLGSP’s support for PGs will focus on three main components:

(i) institutionalizing and strengthening PG structures and devolution related

activities, processes and legal instruments in the provincial assemblies,
including those having bearings on the municipalities;

(ii) establishing and strengthening linkages both with the federal and local
governments; and

(iii) building capacity of the personnel of the PGs for effective discharge of their
duties and responsibilities including those related with linkages with local
governments and institutional and capacity building of the local
governments.

3.6.3. Targeted Support for Federal Level

The federal government has an important role to play in maximizing benefits for the
Nepali people from federal restructuring of the State and bringing stability and
prosperity through devolved governance. The SNGs’ scope of affairs and functional
responsibilities emancipating from the concurrent list of functions (provisioned in the
annexes of the constitution) are defined by the federal laws. The provincial and local
governments can exercise their exclusive rights in an effective way only if the federal
executive creates a conducive and enabling environment for them. The
constitutional spirit of cooperation, coordination and co-existence need to be fully
owned and integrated into the governance systems and operations of all three levels
of governments. The ministries, constitutional bodies and other federal agencies
also need policy and knowledge support from the PLGSP in order to build
cooperative IG relationships among the three levels of governments. Moreover, the
federal ministries and agencies which are directly related with the responsibilities of
coordinating, supporting and facilitating the federalization process need the
technical and programmatic support from the PLGSP programme in order to become
effective steering agencies for extending support to the provincial and local
governments in terms of their institution building and CD. In addition, the
restructured LDTA will also need initial institution building support and programmatic
support in order to become a national agency for supporting strategic thinking on
devolution and IG relationships. MOFAGA will also need support for policy
development and strategic communication regarding federal matters as well as
support to implement the national level activities of the programme.

3.6.4. Approach to CD

The transition to federalism fundamentally changes the way public service delivery
management is organized. As such, it impacts on CD needs and the ways in which
they are addressed. CD is a generic term often used as a panacea for all ailments.
Yet local government capacity (or lack thereof) is an extremely broad term that
includes many different aspects. As far as CD at the provincial and local levels is
concerned, the focus is on organizational and functional capacities to make the
PLGs fully functional and effective. It is largely about management and leadership
skills.

3.6.4.1. Demand Driven CD–Local Government in the lead

The local governments are expected to be both the beneficiary and the
driver of the demand led CD support. They will have to indicate their

Page | 58
 needs (even if needs assessments can be facilitated) and they will have
to request for it. PPIUs and the PCGGs will prepare a draft CD menu of
what they can offer (see Annex 3 for initial tentative CD menu).
For services that are basic, generic and/or are demanded by many LGs,
the PCGGs may develop/adapt the curricula and outsource it to service
providers by ensuring the quality of training/mentoring.

3.6.4.2. Horizontal Learning

Next to skill transfer through interactive workshops, mentoring, coaching

and backstopping, and in addition to the demand and supply training
events, peer-to-peer leaning could be an important mechanism to impart
skills and ideas. The PCGGs will pay particular attention to facilitating
peer-to-peer learning, which can take the shape of inter municipal visits
(for which they may not have large budgetand which may have to be
funded on cost-sharing basis), but could also be done whilst making use
of social media and other means of electronic communication.

3.6.4.3. Use of Mass and Electronic Media

Innovative use of mass and electronic media can be most effective not
only in driving home the message but also in elucidating the innovative
uses to which it can be put in the day-to-day work environment context.
Many of the concerns of service delivery at the local level such as
reporting, monitoring, feed-back, networking and dissemination, can be
effectively addressed through the use of smart communication.
Awareness raising amongst the public in general as well as for the 36,000
plus elected municipal assembly members through channels of modern
mass communication (radio, television and social media), may need to be
used, given the logistic challenges and the costs of training huge number
of people in a classroom setting.

3.6.4.4. Beneficiaries to Co-fund CD

In order to avoid both the dependency syndrome and ‘free rides’, whilst
making sure the benefiting SNGs appreciate the value of CD they will, for
classroom based training session, be requested to fund at least 50
percent of the direct costs of the participants (lodging, food and transport).
Other CD provided under the programme will be subsidized. A tentative
brief on Programme’s subsidy policy has been annexed in Annex -13. The
NSC and the PCCs will have to agree on such subsidy policy.

3.7. Programme Period

The programme will have duration of four years (July 2019 – July 2022).

Page | 59
4. CHAPTER 4: PROGRAMME MANAGEMENT

4.1. Considerations Underlying the Management Structure

The PLGSP is to be implemented at a time of transition. The old institutional arrangements

are giving way to new federal and provincial structures in line with the provision of
constitution.

In such a context it is important for PLGSP to reflect the importance of the paradigm shift
that federal restructuring of the State represents. In that context, there are three
considerations underlying the proposed management structure.

First, in the federal system, the management structure for local governance support has to
be decentralized with built in contextual flexibility to the content of that support whilst
allowing ample space for the discretion of local governments for them to decide, collectively
and individually, what type of support they want.

Second, a major purpose of the PLGSP is to support institutional development of provincial

and local governments which should be the primary stakeholders. Local governments
should therefore be the primary stakeholders of the institutions designed to support and
capacitate them. The ownership of the relevant federal ministry has to be ensured through
the role it plays in coordinating federal support, providing monitoring and supervision
guidance, undertaking relevant policy analysis and reform initiatives, and facilitating the
overall implementation of the programme at the national level.

Given the above, the third consideration is that provincial institutions and resource centres
for CD have to be created. There is a need to restructure existing regional training centres
of LDTA as autonomous provincial training institutes and PCGGs.

The transition from the centrally planned, centrally designed, bureaucracy led reform mode
to the locally planned, locally designed and elected local leader led mode is in itself not
easy. Leaving behind the legacy and moving on can be difficult in some situations but this
is the constitutional way of moving on.

4.2. Governance Structure

There are six governing bodies for PLGSP, being:

• The National Steering Committee at federal level;

• The National Executive Committee at federal level

• The National Advisory Fiduciary Risk Management Sub Committee at federal level

• The Technical Assistance Sub-Committee (TASC) at federal level

• The Programme Coordination Committee in each province;

• The Programme Coordination Unit at federal level in MoFAGA;

• The Provincial Programme Implementation Unit in each province in OCMCMs.

Page | 60
4.2.1. Steering Committees

The steering committee is the supreme governance body of the programme at a

federal level. It acts as a supervisory board that provides guidance on the type and
nature of activities to be undertaken, amongst others, by discussing and approving
(annual) work-plans and by overseeing the quality of the actual implementation
(amongst others by reviewing and discussing activity reports). The steering
committee would deal with overall programme objectives and also oversee the
functioning of the PPIUs, with the acknowledgement that each PPIU has the liberty
to develop its own action plan within the PLGSP framework.

4.2.1.1. National Steering Committee

The NSC at the federal level will provide guidance and oversee PLGSP
implementation. The Hon’ble Minister of the Ministry of Federal Affairs
and General Administration will chair the NSC, whilst the National
Programme Director/Joint Secretary will serve as member secretary. The
Hon’ble Member of the National Planning Commission, Secretaries of
MOFAGA,OPMCM, MOF, FCGO, representatives of the PCCs as
designated by the Hon’ble Chief Minister (7), Mayor (2) Deputy Mayor (2),
Chair (2) and Deputy Chair (2) of Rural Municipality with at least four
women members as designated by Hon’ble Minister of MOFAGA in
consultation with local government representative organizations will
serve as members. The steering committee may invite other officials and
focal points of DPs as and when required. The committee will meet twice
a year.

Table 2: Composition and Functions of the National Steering Committee

Composition Function
Chair: Hon’ble Minister of MOFAGA  Provide strategic direction to PCU
 Provide policy guidelines
Members: Hon’ble Member of NPC, Secretaries  Promote IG coordination
of MOFAGA, OPMCM, MoF, MWCSC  Create enabling environment in
Representatives of the Provincial Coordination SNGs
Committees as designated by Hon’ble Chief  Approve Annual Strategic
Minister(7)Mayor (2) Deputy Mayor (2), Chair (2) Implementation Plan(ASIP),
and Deputy Chair (2) of Rural Municipality with at directives and programme
least 4 women members as designated by guidelines
Hon’ble Minister of MOFAGA in consultation with
local government representative organizations
Member Secretary: NPD/Joint Secretary,
MOFAGA

4.2.2. Executing Agencies

The Ministry of Federal Affairs and General Administration will be the executive
agency of the programme. The ministry will coordinate and facilitate in the overall
implementation of the programme as well as in undertaking relevant policy and
reform initiatives.

4.2.2.1. National Executive Committee

1. The NEC will be formed under the chair of Secretary of MoFAGA with representatives
from OPMCM, NPC, MOF, FCGO, MOUD, MOEST, MOHP, MOALD, MWCSC and

Page | 61
NNRFC at Joint Secretary level and the Chair/Convener of the participating
Development Partners Group as its members. The NEC will agree upon the PLGSP
annual plan/ASIP and recommend it to the NSC for approval. NEC will review progress
status, issues and challenges observed during the implementation of PLGSP and will
provide overall guidance to the PCU for implementation of PLGSP.

It will provide overall guidance to the PCU for implementation of PLGSP.

Table 4: Composition and Functions of the National Executive Committee

Composition Function
Chair: Secretary MOFAGA Agree upon PLGSP annual strategic plan
and recommend it to NSC for approval
Member: Joint Secretaries of OPMCM, NPC,
MoF, FCGO, MOUD, NNRFC, MOEST, MOHP, Oversee overall programme
MOALD, MWCSC implementation

Chair/Convener of the participating DPs’ group,

all participating DPs and LG Associations Appointment of TA Service Provider

Member Secretary: NPD/Joint Secretary,

MoFAGA

4.2.2.1.1. Technical Assistance Sub-Committee

The Technical Assistance Sub- Committee (TASC) will be formed to

steer, facilitate and decide over the matters pertaining to planning,
execution and monitoring the services under the technical assistance
(TA) of the Programme. Though the Technical Assistance will be
executed under ‘Direct Execution’ method by the TASP, the recruitment
and procurements under the TA will be reported and supervised by the
TASC. The demands for any experts, consultants or equipment will be
channelized by this Sub-Committee and PCU will work as the secretariat
of the Sub-Committee. The Sub-Committee will be chaired by the
National Programme Manager. It will have relevant Under Secretaries of
MoFAGA, DPs’ group chair and TA, participating DP representatives as
its members. The PCCs may form such TASCs as well under the chair of
Provincial Programme Manager (under Good Governance Division,
OCMCM) with representation from national TASC, relevant DP
representatives and other relevant officials for the purpose of TA
utilization at the provincial levels. PPIUs will serve as their secretariat.

4.2.2.2. Provincial Coordination Committee

The Provincial Coordination Committee (PCC) will be formed under the

chair of Hon’ble Chief Minister or minister designated by the Chief
Minister and it will have Principal Secretary, Secretaries of Provincial
Ministries for Economic Affairs and Planning, Internal Affairs, Social
Development, Infrastructure Development (MEAP, MIA, MSD,
MID),Provincial Financial Comptroller General and National Programme
Director/National Programme Manager of PLGSP. The PCC will also
have Mayor (2), Chair (2), Deputy Mayor (2 women), Deputy Chair (2
women) of local government as designated by the OCMCM in
consultation with local government representative organizations at
province level as members. The PCC will also have representatives of

Page | 62
 provincial chapters of the LGAs (including Municipal Association of Nepal
(MuAN) and National Association of Rural Municipalities of Nepal
(NARMIN)) as its members. The Secretary in the Governance Reform
Division of the OCMCM will be member secretary. It will be responsible
for establishing and strengthening coordination between provincial and
local governments’ agencies. It will approve provincial annual strategic
plan, oversee overall programme implementation and provide necessary
support to the PPIU and PCGG.

Table 5: Composition and Functions of the PCC

Composition Function
Chair: Hon’ble Chief Minister or minister Provide strategic guidance to the PPIU
designated by the Chief Minister and PCGG in terms of policy, contents and
activities
Member:
Principal Secretary, Secretaries of MEAP, MIA, Endorse PLGSP provincial plans &
MSD, MID, Provincial Financial Comptroller budgets
General, National Programme Director/National Provide oversight on quality and scope of
Programme Manager of PLGSP CD activities

Mayor (2), Chair (2), Deputy Mayor (2 women), Approve provincial guidelines and
Deputy Chair (2 women) of local government as frameworks under the overall guidance of
designated by OCMCM in consultation with local the NSC
government representatives organization at
province level Coordinate among the PG and LG
agencies
Representatives from provincial chapters of local
government representatives

Member Secretary: PPD/ Secretary, Governance

Reform Division, OCMCM

4.2.3. Programme Coordination Unit

The Programme Coordination Unit (PCU) will be headed by Joint Secretary,

Capacity Development Division of MOFAGA. The PCU will have dual tasks to (i)
provide TA, on demand basis, to federal agencies like MoF, FCGO, NNRFC, and (ii)
to serve as federal anchor point to guide, backstop and mentor the PPIUs. The Joint
Secretary of MoFAGA will serve as the National Programme Director (NPD). The
National Programme Manager/Under Secretary will coordinate the day to day
management of programme under the guidance of NPD. The National Programme
Director/ National Programme Manager will be responsible for overall results of the
programme. The PCU would have lean but highly qualified professionals who will
work under the direction of NPD/NPM. The GoN will assign the National Programme
Director and National Programme Manager at least for a period 3 years and any
change in the post of NPD and NPM will take place only in consultation with the
NSC. The PCU will have following specialist and support staff:
 Federal Governance Expert cum Development Partner Coordinator ( stationed
at DP- Cell)
 Coordination and Monitoring Specialist ( stationed at DP- Cell)
 Public Financial Management Specialist (1, s/he will support PCU and FCGO)
 GESI Specialist (1)
 Information Technology Specialist (1)
 Programme Associate (1)

Page | 63
  Admin and Finance Associate (1)
 Driver (3)

4.2.3.1. Government - DP Interface (GDPI)

Modelled after the DP-Cell under LGCDP- II, the establishment of a

Government - DP Interface is foreseen for technical guidance to PPIUs’
professionals and to facilitate communication and coordination. The DP
– Cell will have Federal Governance Expert cum Development Partner
Coordinator (1 international) and Coordination and Monitoring Specialist
(1) office secretary (1) and driver (1) and will be stationed at PCU as an
integral part of PCU. The Federal Governance Expert cum Development
Partner Coordinator and Coordination and Monitoring Specialist will
coordinate and liaise between GoN and DPs.

4.2.4. Implementing Agency: Office of the Chief Minister and Council of Ministers

The Office of Chief Minister and Council of Minister will be responsible for
implementation of PLGSP at province level. The Provincial Programme Director
(PPD) / Provincial Programme Manager (PPM) will be responsible for overall
implementation of PLGSP at province level. The policy, institution and system
support will be provided through PPIU to concerned agencies.

4.2.4.1. Provincial Programme Implementation Unit

The PPIU will be established in the Office of Chief Minister and Council
of Ministers. It will operate under the guidance and direction of the PCC.
The Provincial Programme Director/ Provincial Programme Manager will
report on the status of the programme to the PCC as well as to the PCU.
The PPIUs will develop their annual work plan, execute and deliver
results according to their identified needs and gaps within the PLGSP
framework and guidance from PCU. PPIUs will provide technical support
to PG and local governments within the respective province. Each PPIU
will consist of a core staff of highly qualified and energetic professionals
that will provide CD support to local governments in a demand driven
manner. All the experts of PPIU will work under the guidance of Provincial
Programme Director/Manager who will be posted at least for a period of
3 year. The PPIU will provide guidance support to PCGG for institutional
development and training delivery to the staff and elected representatives
of local and PGs. The PPIU will be responsible for proper execution of
the IPF at the provincial levels.

The annual work plan of the PPIU will be approved by the PCC. It will be
the responsibility of the Provincial Programme Director to provide a copy
of the approved annual work plan to the MOFAGA/PCU. The
MOFAGA/PCU will provide annual plan and budget formulation directives
to the PPIUs.

A Memorandum of Understanding (MoU) will be signed between

MOFAGA and Office of Chief Minister and Council of Minister (OCMCM)
to implement the programme through the PPIU. The terms and conditions
including report, fund delivery and audit requirement will be mentioned in
the MoU. A note on main elements to be covered under such MoU has
been furnished in Annex 16.

Page | 64
 Each PPIU will have following expert and support staff:

 Governance cum Legal Expert (1)

 Innovative Partnership Fund Expert (1)
 Monitoring and Reporting Expert (1)
 Public Financial Management Expert (1)
 Information Technology Expert (1)
 Admin and Finance Assistant (1)
 Driver (1)

Given the number of units they have to serve, each PPIU is expected to
explore innovative ways of communicating with local governments, while
making use of modern ways of electronic communication. They could, for
example, create closed facebook groups for different categories of LG
officials (e.g. one for mayors and deputy mayors, one for assembly
members, one for planning and budgeting, one for PFM etc.), which can
be used for communicating and discussing between staff of local
governments, but also for dissemination of technical messages or
reminders (‘Has the annual reporting been submitted to the assembly?
Next week is the deadline for scoring points in LISA).

It is considered important for the programme to make flexible provision

for support to the provinces. The PPIUs will work closely with the
provincial administration. Working with both local governments and the
province will allow the PPIUs, to facilitate collaboration between the
province and local governments.

The success of the PPIU will depend on their capability, on one hand, to
get away from a top down approach and to position themselves as
serving the local governments on the one hand, and their creativity to find
ways to reach a large number of local governments in a manner that
serves an overall agenda of putting place systems and procedures that
are fundamentally uniform, on the other hand. The group of experts,
working in the seven PPIUs, should have a very good knowledge of the
meaning and rational of federal systems and believe in its virtues.

A Terms of Reference (ToR) and description of tasks and qualifications

of staff for the PPIU is provided in Annex 9.

4.2.5. Capacity Development Committee / Capacity Development Unit at Local

Governments

The local governments may create their own ‘Capacity Development Committees
(CDC)’ or ‘Capacity Development Unit (CDU)’ to deal with all CD issues of the
concerned municipalities or rural municipalities. These Committees or the Units may
be given responsibilities to find gaps, do need assessments, make plans and
execute them for institution building or CD purposes. There may not be financial
resources available with the Programme to support the activities of these
Committees or the Units, they may be financed from the internal resources of the
LGs. These Committees or the Units may become very useful instrument for the
programme as a supplementary management structure located at the LG levels in
making need assessments, LISA operationalization at the LG level, demand
analysis and preparation of proposals for the demand driven projects or for the

Page | 65
 projects to be funded from the IPF of the programme. This structure will provide an
interface at the municipal level for the programme.

Following table 6 presents the three outcomes, levels of governments benefitting from the
Programme and the management structure of the programme as have been discussed in
above paragraphs:

Table - 6: Operationalizing PLGSP Outcomes, Management Structure and Level of

governments benefitting from the Programme
Levels of Government Management Structure Outcome

Federal Government - NSC Outcome 1:

- NEC
- TASC Policy harmonization and IG
- PCU relations strengthened

Seven PGs PCC Outcome 1:

PPIU
Policy harmonization and IG
PCGG relations strengthened

Outcome 2:

PG institutions strengthened

Outcome 3:

Elected PG and LG officials

empowered and their staff are
capacitated
753 Local Governments Local governments may have Outcome 2:
their own CD units or committees
LG institutions strengthened

Outcome 3:

Elected LG officials
empowered and their staff are
capacitated

4.3. Service Providers

The Provincial Center for Good Governance (PCGG) will be established, developed and
institutionalized by the PGs in each province with the support available under the PLGSP
and the federal government, especially MOFAGA as the CD service provider in provinces.
A ‘TASP’ will be appointed under this programme to avail experts and other technical
assistances required to achieve results of the PLGSP.

4.3.1. CD Service Provider: Provincial Centre for Good Governance

The GoN has realized the need to restructure the existing Regional Training Centres
of the LDTA to develop as centres of good governance at provincial levels and to
act as a service provider for CD to the provincial agencies and the local governments
within the province. This Centre can also work as a coordinator for all training
providers in the public sector within the province to avoid duplication and overlap in
the changed context. The national restructured LDTA will ensure quality control and

Page | 66
standardization of all the CD efforts across the country. Accordingly, a committee
has been formed under the chair of Secretary of MOFAGA to restructure Regional
Training Centres of LDTA as PCGG. The PCGG will be established as semi-
autonomous institutions under the PGs through a charter (Act) passed by the
Provincial Assembly. A note on major elements that need to be included in such
Charter has been furnished in Annex 16. The PCGG will also serve as back stopper
and resource pool, whilst offering coaching and mentoring services to provincial
agencies and local governments, along with the provision of both demand-driven as
well as supply driven trainings.

The proposed PCGG will have four sections being (i) Curriculum and Materials
Development Section, (ii) Institutional Capacity Assessment Section, iii) Training,
Research, Coaching and Mentoring Section and iv) Administration and Finance
Section. Each section will be headed by highly qualified Director who will be
recruited through open competition as specified by law and PLGSP will provide the
salary of Directors for two year. The PCGG will be headed by Executive Director,
who will be recruited through open competition for a period of three year. A
performance contract will be signed between PPIU and the Executive Director.

The PCGG will be responsible for delivering training, orientation and CD activities to
provincial and local government representatives as well as staff.

All the professional staff of PCGG will be provided with an opportunity to develop
their carrier by working closely with specialists of PPIU as well as through higher
study and short-term courses in their respective areas. Specialists working in PPIUs
will help to transfer knowledge to PCGG professionals so that they will be able to
operate CD activities independently within two year.

The programme will support the PCGG to enhance its capacity to organize high
quality training on different aspects of local governance. The programme will support
to develop standard training manuals, resource books, handouts and course
contents/syllabus as common templates for all institutions including I/NGOs and
consulting firms engaged in CD of SNGs, so that the message conveyed remains
essentially the same throughout the country. Any public entities working on sub-
national CD will collaborate and coordinate through PCGG. This will assist in
streamlining a coherent CD support at the provincial level. Additionally, PCGG will
help to develop and maintain a roster of certified trainers on different thematic areas.
The roster of certified trainers as well as coaching and mentoring resource persons
will be prepared in coordination and collaboration with I/NGOs and consulting firms
engaged in CD of SNGs as well as through public calls.

PCGG is envisaged to be the centre of excellence with a strong presence in the field
of management training right from its inception. One of its thrust activities being
management training for corporate, co-operative, government, developmental and
other agencies in areas like organizational behaviour, personality development,
managerial effectiveness, project management, apart from programmes in
functional management.

Each PCGG will consist of a core staff of highly qualified and energetic professionals
that will provide CD support to local governments in a demand driven manner. All
the experts will be posted at least for a period of three years.

Each PCGG will have following expert and support staff:

 Local Governance Expert(1),

Page | 67
  Capacity Development Expert(1)
 Curriculum Development Expert (1)
 Infrastructure Development Expert (1, s/he will also support OCMCM)
 GESI Expert (1)
 Programme Assistant (1)
 Driver (1)

Next to the full-time technical staff, each PCGG will have a roster of certified
consultants specialising in the core areas and specific technical topics. All LGs within
the province can request the PCGG for specific support. Each province will get a
budget for such consultancy services pro rata the number of LGs.

It is considered important for the programme to make flexible provision for support
to the provinces.

The group of experts, working in the seven PCGGs, should have a very good
knowledge of the meaning and rational of federal systems and believe in its virtues.
Ideally, they will become a group of knowledgeable ambassadors of federalism at
the local level, which are capable of helping local governments to make the
expectations of the new constitution a reality for people on the ground.

Given the importance of this group of people, PLGSP will invest in their technical
capabilities by engaging a service provider (university and/or specialized firm) to
regularly backstop and/or train the teams on issues of devolution and federalism and
decentralized and integrated service delivery.

PCGG will be involved in designing and providing high quality training programmes
in the areas of general management, functional management, strategic
management, entrepreneurship development, corporate governance, ISO
certification and micro enterprise development. It is envisaged that all these
programmes will be jointly co-sponsored by international/national agencies,
federal/state government departments and LGIs.

4.3.2. Technical Assistance Service Provider (TASP)

The Ministry of Federal Affairs and General Administration in consultation with the
Ministry of Finance will recommend the name of TASP for the consideration of DPs.
Accordingly, the NSC will appoint TASP for technical support especially for recruiting
experts/consultants/advisors and support staff for PCU, PPIUs and the PCGGs. The
TASP, under the supervision of the NSC, will be responsible for recruitment of
experts (national and international) and support staff as well as for managing the
operational budgets for the PCU and PPIUs. The ToR of Technical Assistance
Provider is attached in annex 11.

As the quality of the staff in the PCU and PPIUs will be crucial to the success of
PLGSP, they should be a creative, innovative and hard-working group with the right
mindset that can help push the transition from below. For that reason, the
programme will also invest in improving the quality of the professional staff and
budget provision is made to have the professional staff periodically backstopped and
trained by a renown academic institution or consultancy firm with a long track record
in the field of decentralization, local government strengthening and institutional
change.

Page | 68
 The total cost of the TA will not exceed the maximum of 10 percent of the DPs’
contribution and this will be part of the same basket fund. The GoN will do a direct
cost-sharing agreement with the TA service provider based on a joint agreement
between parties. The regular reimbursable modality for donor financing under JFA
will not be applicable to the TA Fund. The participating donors (of TA) will deposit
required funds for the first year in advance into a separate ‘TA Fund ForeignCurrent
Account (FCA)’ with the Government. The donors will replenish every six months
the required amount into the FCA from second year of the Programme. The TA Fund
will be ‘on budget – off treasury’ and will be treated in the Red Book as expenses
under direct payment system. Funds from this FCA will be advanced to the TA
service provider on a half-yearly basis. The subsequent release will be subjected to
submitting both financial and progress report by the TA service provider to the NSC.

The TA service provider will enter into a MOU with MOFAGA to provide the required
TA that are planned in the Annual Strategic Implementation Plan, which is approved
by the respective Provincial Coordination Committee (PCC) and by the NSC. The
TA service provider will directly execute the technical assistance on behalf of the
Government of Nepal based on the approved ASIP. The TA service provider will
report directly to National Programme Director on trimester basis.

The TASC will be formed under the chairpersonship of National Programme

Manager. Under Secretaries of the Federal Affairs Section, Planning Section and
Administration Section of MOFAGA, as well as the concern Under Secretaries of the
Office of the Chief Minister and Council of Ministers will be represented in the TASC.
Participating donors may be invited in the TASC meetings. The TA service provider
will not be member of this committee but will report to this committee on the progress
related to the TA implementation.

The technical assistance part of PLGSP will follow the relevant guidelines approved
by the NSC for its execution. It shall follow the internal audit guidelines as per the
agreed provisions in the agreement between GoN and TA Service Provider. The
disbursements from the TA Fund and its use will be audited by the Office of the
Auditor General (OAG) of Nepal.

4.4. Monitoring and Evaluation

4.4.1. Monitoring

Programme monitoring will be guided by reference to the performance indicators in

the programme’s result matrix and in its monitoring and evaluation framework. The
following monitoring arrangements will be used to support the management of
PLGSP.

M&E Framework will provide the foundation for programme monitoring and a system
of online reporting will be developed.

The M&E framework will be developed and reviewed on a regular basis to determine
its utility as a tool for decision making processes.

A baseline survey will be undertaken at the start of PLGSP. After completion of the
programme, an end-of-programme evaluation will be undertaken against the
baseline indicators in order to evaluate the achievement of programme results.

An independentMTE of PLGSP will be undertaken during the first quarter of the third
year of the programme.

Page | 69
 Annual Monitoring and Evaluation Plan will be the basis for regular monitoring.

Internal and third-party monitoring, peer review, independent evaluation, joint field
visits and external quality assurance teams will be used to provide robust monitoring
and evaluation for the programme.

4.4.2. Programme Reporting

The progress being made against ASIP targets will be reported on at least every
trimester. The activities to be implemented to achieve PLGSP’s results will be
detailed in a Strategic Action Plan.

Financial reports and updates against annual work plan must be prepared and
submitted on trimester basis to the NSC and the DPs. A comprehensive annual
report will be prepared which will include a detailed financial report and a line-by-
line report on expenditure against line budget items.

Detailed reporting requirements outlining tables of content, preparation

responsibilities, reporting frequencies and roll-up modalities will be prepared.

MOFAGA and DPs will jointly review the progress on regular basis. At provincial
level PPIUs will be responsible for collecting, analysing, monitoring and reporting
the progress of PLGSP on trimester basis. The PPIUs will have to submit the
financial reports, result monitoring reports and any other M&E reports to the NEC
and federal PCU as designated to them. The MOU between the MOFAGA and the
PGs will specifically mention the M&E requirements from the PPIUs, the CD service
provider - the PCGG, and other sub-national agency using funds from the
Programme. Failure to report may result in suspension of fund release to the PG
from the federal budget.

4.4.3. Independent Monitoring and Quality Assurance

The quality assurance of tasks performed under the programme will be undertaken
by a third-party independent service provider who will also get task for independent
monitoring of the programme. The National Planning Commission may do its own
exercise of quality assurance and monitoring of the programme. The NECwill
appoint service provider for quality assurance and independent monitoring. The
service provider will submit the quality assurance report to the NEC which will take
necessary policy measures based on the recommendations.

4.4.4. Mid Term Review

A MTR of the Programme will be done at the end of Programme Year 2 (late 2020)
to take stock of the progress of the Programme implementation and achievement of
results as per the Result Matrix of this ProgDoc. The MTR will cover the following
areas:

1. Review of ToC – specially the ToC for intermediate outcomes, programme

outcomes and intermediate impacts,
2. Review of activities, sub-outputs and outputs with evaluation of their likeliness
to contribute towards meeting the programme results,
3. Effectiveness of IPF,
4. Effectiveness of the demand-based activities,
5. Need in change of ToC and programme activities, sub-outputs and outputs,

Page | 70
 6. Recommend the needful for changes in programme – funding levels,
implementation modalities, or, any other programme structure and
7. Review and recommend a revised ‘Monitoring, Evaluation and Learning’
framework for the remaining period of the Programme.

The NSC will hire a team of reviewers for conducting the MTR in late 2020. The
budget for this activity will be covered from the dedicated funds for MTR from the
M&E budget.

4.5. Risks Assessment

Nepal’s transition towards federalism is resulting in a complete restructuring of the

structures of governance. PLGSP presumes that the political, institutional, administrative
and fiduciary pre-conditions necessary for anchoring and implementation of the programme
at the federal, provincial and local levels are in place. Indeed, the purpose of many elements
of the programme is essentially to build on conditions that are already present and create
conditions where these might not exist. Unlike any other nation-wide programme PLGSP
has to build on assumptions that will be contingent on the evolving political economy.
Namely, that,

• there would be unhesitating commitment on the part of political actors towards the
devolution of powers to the provincial and local levels;
• there would be adequate in-built motivation and incentive for the federal
bureaucracy to support the devolution process;
• that a large proportion of the staff adjusted to the provincial and local levels would
be motivated and incentivized to own and operate under the new administrative and
development leadership framework;
• that the elected leadership and executives at the provincial and local levels would
be allies and champions of devolution, to own the programme and find the incentive
to prioritize strengthening governance at sub-national levels; and
• that the PLGSP creates enough passion and excitement towards a demand driven
approach to governance with considerable discretionary space for SNGs.

There are many risks attached to these assumptions. The primary risk is that PLGSP is not
a prescriptive programme. Agencies, political and administrative actors used to instructions
and guidelines from ‘above’ will need time to take advantage of their discretion and
autonomy. The awareness of roles and responsibilities that the programme is able to create
and the synergy it will be able to build will determine the extent to which the risks can be
mitigated.

At the outset five major bottlenecks to devolution were identified. Each of these bottlenecks
(IG coordination, SNG systems, institutional capacity, empowerment of leadership, and
systems for local participation and accountability) are also potential risks in the
implementation of the PLGSP.

PLGSP is a completely new programme in its conceptualization. But as a successor to

LGCDP the programme comes with certain expectations. MOFAGA may expect to play the
central role as it was tasked to play for the LGCDP. PLGSP is a programme that allows
space to grow and learn which the essence of federal dispensation is. On the other hand,
the limited ownership with the federal ministry may deprive the programme of the much
needed drive and leadership to steer it to the right directions.

PLGSP expects spontaneous moves from local governments in terms of social mobilization
and enthusiasm for quality service delivery and intends to create a system to facilitate the
development in general but does not offer the infrastructure development grants other than

Page | 71
granting some social infrastructures with IPF that were part of the LGCDP. It instead
encourages a partnership in capacity building on a cost-sharing basis. This means that the
delivery of governance systems and procedures must be their own reward for incentivizing
the local government and the citizens, particularly the women and disadvantaged groups,
in their support for PLGSP.

Other major risks associated with PLGSP are:

• PLGSP outputs focus on the organizational and technical aspects of programme

delivery. Very often in the context of transition it is not the technical but the
environment of the political economy that determines whether the outputs can be
realized. This environment can change from one local unit or the province to the
other. The political actors and leadership at the local, provincial level need to be
enthused with programme outcomes. This may not always be under the control of
the PPIUs that implement the programme.

• The assumption of the PLGSP is that the programme will by and large be
implemented under a JFA (basket fund) with few or no aligned programmes. DPs
might be reluctant to align themselves under such a framework. GoN’s ability to
bring the DPs under JFA can therefore be a significant determining factor.

• Fiduciary risks associated with weak financial management of the programme itself
may be there but can be brought under control with timely technical assistance. The
larger fiduciary risk might be the inability of the PLGs to institutionalize a robust
public finance management system (with adequately trained human resources,
procurement system and internal audit) in place.

• The spine of the PLGSP is the PPIU, located in the provincial OCMCM office and
the management and staff that make it functional, pro-active and innovative. PLGSP
provides a framework, directions and process for programme delivery. Because of
the flexibility built into the programme many of the contextual programme
implementation issues will have to be addressed at the level of the PPIU. This
requires a level of organizational, management and innovative competency that
might be difficult to attract at the provincial level. Attracting high calibre human
resources with required expertise may become a major challenge of the programme.

• The ToC description has dealt with some pre-conditions for the success of the
Programme at impact, outcome or output levels (please see the Annex 1 for detailed
matrix on ToC including the description of the pre-conditions). If these pre-conditions
are not met, the programme cannot achieve intended outcome results or impacts.
These pre-conditions are also a statement of risks associated with this programme
which need to be taken care of. Similarly, the assumptions of the ToC are enablers
for the success of the programme. If these assumptions will not hold true or the ToC
itself will not hold true, the programme results will not be achieved. During the MTR
and during ASIP preparation exercise, a review of the ToC also need to be carried
out in light of available data or information on evidences which may be relevant to
review the ToC.

The risks, summarized in the Table 7 below, are at the threshold of a historic process of
change and progress in governance. Not taking the risks is not an option because the
federalism enterprise is built on the aspirations of millions willing to overcome the risks, and
the risks are well worth taking. The unique historic opportunity that the country has today
has to be consciously seized.

Page | 72
 Table 7: Risk assessment and mitigation measures
Item Risk Probability Impact Mitigation strategy
1. Variable political • Increased awareness and
environment not motivation on the role of political
Low to
conducive to High. leadership at all levels to make
Medium.
achievement of devolution a success.
outputs.
2. Cultural norms and Medium to Medium • Increased awareness on roles and
political, high. to High. responsibilities of key stakeholders.
bureaucratic mind-
sets/habits may not • Strengthening and
change. institutionalization of mechanisms
for accountability to the grassroots
and DAGs.
3. DPs reluctant to Medium. Medium. • Better coordination of MOF and
align within the MOFAGA with DPs through a
PLGSP for Joint regular dialogue process. Flexible
Funding programme approach to allow DPs
Arrangements. to operate within the PLGSP
framework.
4. Weak financial Medium to Medium • Strengthened PFM system at all
management in High. to High. levels. Increased awareness of the
PLGs. importance of robust PFM amongst
leadership at sub-national levels.

• Increased support for strengthening

OAG, FCGO capacity (software,
training/mentoring, human
resource).
5. Weak local Low to High. • Motivate local governments to
participation Medium. institutionalize local participation
particularly of the and grass-roots accountability
excluded groups and through civil society organizations.
poor grass-roots • Provision of discretionary incentives
accountability. to pursue good governance
practices.
6. Weak voice of local Low. Low to • Recognize the LGAs as fora for
governments (lack of medium. local governments for collective
the recognition of consultations and representation at
local government provincial and federal levels.
associations -LGAs).
7. Programme Medium. High. • Institutionalize cost sharing mode of
activities cannot be capacity building in SNGs.
sustained when the
programme ends. • Team up with provincial universities
and private research
establishments/firms so they build
the capacity to undertake
substantive programme functions.

• Encourage PGs to set up

observatories for local development
in partnership with other agencies.

• Develop and institutionalize PCGG

as centres of excellence at
provincial levels in a self-sustained
way.

Page | 73
Additional Measures for Fiduciary Risk control: Following additional measures will be taken
to further control the fiduciary risks. The detailed mapping of risks and further measures will
be worked out separately under a M&E framework exercise for the Programme in its initial
period (early 2019).

1. Funding for the Programme will be on the reimbursable basis. The DPs will reimburse
GoN following receipt of financial reports and approved progress reports by NEC. The
third trimester payment will be made upon receiving signed T3-FMR along with
approved annual progress report by NSC.

2. Fund reimbursement will be based upon the expenditure in the project and not based
upon advances given to the Provincial Consolidated Funds.

3. Any expenditure which is ‘ineligible’ and any advances which have not been
settled/accounted for, will not be considered as reimbursable by the DPs.

4. No funds from the Programme will be transferred to local governments or DCCs except
under IPF or demand-based activities co-funded by the LGs. All expenses under IPF
or demand-based activities (sub-projects) will be the responsibility of PCU, PPIU and
PCGG.

5. A separate set of risk mitigation measures will be designed specifically for the
disbursements from the IPF and demand based co-funded activities – which will
involve funding/fund transfers to the local governments.

Page | 74
5. CHAPTER 5: PROGRAMME FINANCING

5.1. Programme Budget

The estimated total budget of PLGSP is $130 million. Of the total fund ($130 million), the
GoN will contribute $30 million and DPs will contribute $100 million. A significant portion of
the fund amounting to $ 104.5 million (80.3%) will be used for strengthening sub-national
institutions (outcome 2). Of the total fund 48.3 % and 39% will be spent for provincial and
local governments while 12.7% will be spent for federal government.

A portion of the demand based institution building and capacity development amounting to
$25 million will be used as IPF from the second year of the programme to support innovative
good governance practices along with innovative projects like: participatory planning, use
of ICT, citizens’ monitoring, GESI, PFM and accountability mechanisms or on innovative
practices to bring qualitative reforms in service delivery in the social sectors. The provincial
and local governments will need to co-fund the demand-based projects.

The IPF size is expected to increase significantly in late years of the programme through
additional financing by the DPs and the GoN once the IPF is institutionalized at provincial
levels and start delivering results on innovative practices as expected from it.

About 7.7 percent of the total budget will be used for technical assistance. The rest of the
funds will be used for policy support, grants for institution building, general grants for CD
(supply driven), initial infrastructure investments in the PCGGs and administrative and other
programme costs including the M&E expenses. The following tables 8, 9, 10depict the
proposed contributions from PLGSP partners, modalities of funding and recipients
(beneficiaries) of PLGSP funding:

Table 8: Proposed contribution of fund from PLGSP partners

Agency $ in million

GoN 30,00
DPs:
DFID 28,00
SDC 10,00
Norway 20,00
EU 40,00
UN agency 2,00
Sub – Total of DPs: 100,00

Total 130,00

Page | 75
 Table 9: Allocation of Budget by Levels of Government
Levels of Major Areas/Activities Budget (US$) Million Implementing Remarks
Gov. Programm Technical Agency
e Budget Assistance
Federal Policy , strategy, guidelines and framework 2 MoFAGA
development

Public Financial Management (PFM) : 9 MoFAGA/FCG

Implementation of SUTRA and Local PFM O
0.5 MoFAGA
Support to restructured LDTA
MoFAGA
Strengthening intergovernmental 1.2
administrative mechanism
0.3 3.5 MoFAGA
IPF system development
- MoFAGA
PCU operation cost

Sub total 13 3.5

Province Provincial policy, strategy, guidelines and 5 OCMCM/

framework development Sectoral
ministries
Capacity Dev. Program 17 PCGG
Province & Local level
PPIU
Capacity Dev. of PPIU staff. 1
PPIU
Modernized systems for PG: GRB,GESI, 1.3
MTEF, IT, database &reporting system PCGG

Renovation of LDTA (Provincial Center for 7 PPIU and PCGG

Good Governance )
6.5
Innovative Partnership Fund (To be 25
mobilized at local level)

PPIU and PCGG operation cost -

Sub total 56.3 6.5

Local Local policy , strategy, guidelines, 37
framework &institutional development.

Local Government Institutional Self

Assessment (LISA) 3 Local level

Strengthening Planning, MTEF& IT based

adm. system 8

GESI, GRB and Accountability tools 2.7

Sub total 50.7
Grand total 120 10

Page | 76
Following Table 10 furnishes the estimates of the budget according to the outcome areas
including the TA. As can be seen in the table, Outcome One on policy support and IG
mechanisms has 9.5 percent of the funds, Outcome Two on institution building - IB (this
includes the institution building of PCGG and the IPF) has 52.3 percent of the funds while
the Outcome Three on capacity CD of individuals has 33.9 percent of the estimated funds.

Table – 10: PLGSP Allocations in the Three Outcome Areas

Outcome Area Funds allocated including TA (in $ Percentage of total
million) resources
Outcome Area One: Policy 8.5 6.5
Support and IG mechanisms
Outcome Area Two: 104.5 80.4
Institution Building (IB)
Support (includes the IPF)
Outcome Area Three: CD 17.0 13.1
(including demand driven)
Total 130 100

Page | 77
5.2. Funding Arrangement

PLGSP is a government owned and centrally executed programme. It will adopt a ‘on
budget on treasury’ model of funding. The DPs will provide funds for PLGSP as programme
grants on a reimbursable mechanism as followed in LGCDP. The GoN and funding DPs will
sign a JFA on the basis of this agreed ProgDoc. The individual DP may have bilateral
agreements with the GoN for executing the JFA and the ProgDoc on their part. The
accounting, reporting and auditing procedures of the GoN will be followed. It is envisaged
that 92.3 percent ($120 million) of the overall budget will flow as cash (including
reimbursable) through ‘on budget on treasury system’ and 7.7 percent ($10 million) will be
spent through on budget off treasury for payments under the Technical Assistance. Of the
$120 million cash financing part of the programme budget, 89.2 percent ($107 million) will
be spent at the provincial and local levels for outputs and activities benefitting the provincial
and local level governments and 10.8 percent ($13 million) will be spent at the federal
(central) level. The Technical Assistance (TA) support will also serve the federal and
provincial levels as 65 percent ($6.5 million) will be diverted to provincial levels (benefitting
both provincial and local governments) to support PPIUs, PCGGs and other agencies of
provincial/local governments. The Programme outputs and their activities aimed at
supporting exclusively local governments are estimated to receive 42.3 percent ($50.7
million) of the budget (excluding TA ).

The PGs will be highly encouraged to allocate funds from their own sources tothis
programme, especially for the operation of the PCGGs. The local governments will also be
encouraged to set aside some funds from their own sources for the activities affiliated to
this programme, especially for the purposes of their institution building and CD. The local
governments will be encouraged to set aside adequate funds for the units or committees
that they will establish for capacity need assessment and formulating/executing CD Plans
(such as CDUs or Capacity/Institution Building Committee). Both the provincial and local
governments will have to partially finance their demand-based projects and IPF projects
under the PLGSP. The level of contribution of the PGs for meeting the objectives of the
PLGSP will be dealt in the MoUs between the MOFAGA and the PGs for the purpose of
executing the PLGSP programme in the provinces and subsequently in the proceedings of
the NSC and PCCs.

5.3. Fund Flow

The following fund flow mechanisms will be established and operationalized:

 JFA partners will channel their funds to the GoN’s FCA and the funds will be accounted
for in the Red Book of the MOF.JFA funding will use FCGO’s regular fund flow
mechanisms.

 The PLGSP funds will be shown in the MOF – Red Book in three parts: (a) funds to be
spent at the federal level ‘in cash’ will be presented as the line-item budget in the federal
budget; (b) funds that will be spent for ‘technical assistance’ (benefitting either federal
agencies or the sub-national agencies) will be presented as ‘direct payment’ in the
source book of federal government ; and, (c) funds that will be spent at the Provincial
levels (either through the PPIU or through the PCGG) will be presented as ‘block
conditional grants’ to the PGs in the sub-national budget of the federal government. The
PGs will show the PLGSP budget in their Red Books as the line item budget which will
include the conditional grant received from the federal budget along with their own
contributions to the programme in provincial budgets.

 The PCU will make deliberations on the provincial annual programme and budget under
the PLGSP in consultations with the PPIUs on their funding requirements. For this

Page | 78
 purpose, the PPIU will need to present their approved annual work plan to the PCU at
the MOFAGA in the federal government. Annual Work Plan of the PPIUs should be
approved by the respective PCCs chaired by the Hon’ble Chief Minister or minister
designated by Hon’ble Chief Minister. PPIUs will forward the approved annual work plan
to the PCU on time.

 The PCU will submit the national annual work plan and budget to the NEC which shall
be chaired by the MOFAGA Secretary after integrating the seven provincial annual work
plans and budgets along with the ‘federal only’ annual work plan and budget into one
annual plan and budget to meet the objectives of the programme. The NEC will approve
the annual work plan and budget upon the basis of policy and strategic guidelines given
to it by the NSC and issues raised or policy decisions made in the deliberations of the
PCCs. The approved annual program and budget of the PLGSP will be submitted to the
MOF and NPC for inclusion in the annual federal and sub-national budget and
programme.

 The annual budgeting cycle will follow the regular process of MTEF of the GoN.

 The IPF will be provided on annual basis to the PGs, after its operationalization as an
integrated programmatic part of the provincial PLGSP budgets. The proceeds from the
IPF will be utilized to co-finance the approved projects of the provincial and local
governments as per the mandates of the operationalization of the IPF. The local
governments receiving funds from the IPF will receive it as a conditional grant from the
respective PG after the approval of the PCC and the deliberations in the respective PPIU
on the proposals submitted by them. Similarly, the aspiring provincial agencies will have
to submit their proposals for co-financing from the IPF to the PPIU. The PCC will approve
the proposal for IPF. The concerned local governments or the provincial agencies will
bear the responsibility for audits of the finances received from the IPF. The PCU will
prepare guidelines on the use of competitive fund. These guidelines will be approved by
the NSC on the recommendation of the NEC. The PPIUs and the PCCs will follow these
national guidelines and they can add more value to the use of funds from the IPF by
also following supplementary guidelines developed and approved by the PCCs.

The following Figure 3 on ‘Fund Flow Diagram’ presents the fund flow mechanisms,
decision making mechanisms, reporting mechanisms, TA flow mechanisms and the result
flow mechanisms of the PLGSP:

Page | 79
 Figure 3: PLGSP Fund Flow Diagram

MoF  MOFAGA
Federal Treasury PLGSP
 FCA Programme Coordination Unit

Technical
Assistance
FCGO/ DTCO Service
Provider

Provincial

Treasury


IPF
Provincial
FCGO

OCMCM/ Provincial
Provincial Centre Program Local Levels
for Good Implementation Unit
Governance (PPIU)

Legends
Fund Flow:

Reporting:

Page | 80
5.4. Financial Management

The following mechanisms will be adopted for the financial management of PLGSP.

 Local and PGs receiving funds from the PLGSP will follow GoN planning, budgeting,
procurement, accounting, auditing and reporting procedures. The PPIU will need to
report to the PCU (central level) for the financial reports without which the funds for next
trimester will not be released to the provincial treasury from the federal budget.

 Central level GoN agencies including MOFAGA and the line ministries receiving funds
from PLGSP will follow the GoN procurement act and rules, GoN financial reporting and
audit mechanisms for their financial management of the programme.

 The procurements made under the TA component of the programme will follow the
procurement rules of the ‘TASP’ and all such financial proceedings will be reported to
the PCU. The budget for the TA will be shown as direct payment in the Red Book and
will be audited by the AGO also along with the audits done by the agencies responsible
to audit the financial transactions made by the Service Provider.

The following Table 12 presents the PLGSP tentative budget with annual breakdowns and
up to the output level.

Page | 81
ANNEX 1: PLGSP THEORY OF CHANGE MATRIX
PROVINCIAL AND LOCAL GOVERNANCE SUPPORT PROGRAMME - Theory of Change

FINAL IMPACT ALL CITIZEN RECEIVE QUALITY SERVICES AT THE PROVINCIAL AND LOCAL LEVEL AND ENJOY BETTER LOCAL INFRSATRUCTURE AND ECONOMIC PROSPERITY Time Line
FINAL IMPACT

3. Federalisim and devolutionw- if implemented to the true spirit and letter of the constitution- will bring
1. sub-national good govenace will bring peace and stablity. Peace and stablity are nessary condition to bring large 2. Accountable, sustinable and inclusive sub-national governmnts will provide quality services to all citizens and will create better 4. Good Governace of the SNG level will creat climate for faster and higher investments and economic growth. This will reinforce
ToC investments and prosperity socio-and physical infrsatructure
more opportunities and choices to the local people. Their voices will be heard by SNG leaders. This will
peace and stablity and prosperity for all.
reinforce their faith in Sub national Governace.

INTERMEDIATE IMPACT/
PROGRAMME GOAL
PROVINCIAL AND LOCAL GOVERNMENTS ARE FULLY FUNCTIONAL, SUSTAINABLE, INCLUSIVE AND ACCOUNTABLE TO THEIR CITIZENS years 4 2022
INTERMEDIATE IMPACT/ PROGRAMME GOAL

IMPACT INDICATOR Functionality indicators(baseline)-efficency/effectivness/ out reach of services Inclusiveness indicators (GESI) Baseline Accountablity Indicators- Baseline Good Governace other Indicators- Baseline
Sustainablity Indicator, OSR- Natural resource, HR- baseline

- Elected officials have enough motivation to serve the citizens.

-Three level of governments have synergy in O&D and IB
- Sectoral programms support functioning of federal governace and Inter governmental mechanisms. - National ICT/PFM/planning/ public finance - Adequate number of staff deputed/recruited at SNGs and their role are clear.
ASSUMPTIONS (ENABLERS) -Financial and other sources (including legal and HR) are adequatly avalibale for IB.
management, sectoral governace systems/standards and operational rules/ civil service is restructured within a year (2019) to improve federal governace and inter governmental mechsnims - Elected officials optimise use of staff to their fullest capacity.
-Newly aquired capacities arebest used for IB. IG relationships support IB at SNGs.
- other resources compliment the officials in discharging thier duties.

- Three levels of government doesn't work at cross purposes. - Adequate federal legal arrangements - Three level of Governments doesn't work at cross purpose at each other. - Officials use their newly acquired skills and capacities optimally.
PRE-CONDITIONS are made to support federal governace and SNG's operation. - Federal and provincial leaderships are committed to federal governace work in - People Planning, implementation and F/B/ M & E are done for SNG-IB. - The CD instruments are useful and of required quality.
tandum - High Level coimmitment (political and buuracratic) resists for federal IB. - Enough number of elected official and staff receive CD inputs.

3. Motiviated, informed and capacitated elected officials and staff build and develop efficient, effective, sustinable and
1. Supportive federal ministries and agencies with proper and functional inter-governmental mechanism can help 2. Efficient, effective, inclusive and accoutable institutions will make provincial and local governments fully functional, sustainable, inclusive and accountable. Supportive federal organisation, I-G mechsnisms and motivated and capacitated official at SNGs will help developing such SNG
ToC accountable Provincial and Local governments. Effective institutions and supportive federal agencies go hand in hand to
institutionalize federal governace and delolution in Nepal and make SNG functional, sustainable, inclusive and accounable. institutions.
achieve the goals and enrich each other.

1. GOVERNMENT INSTITUTIONS AND INTER-GOVERNMENTAL MECHANISMS AT ALL LEVELS ARE FULLY FUNCTIONING IN 3. ELECTED RESPRESENTATIVES AND CIVIL SERVENTS AT PROVINCIAL AND LOCAL GOVERNMENTS HAVE THE CAPACITY
FINAL OUTCOMES 2. PROVINCIAL AND LOCAL GOVERNMENTS HAVE EFFICIENT, EFFECTIVE, INCLUSIVE AND ACCOUNTABLE INSTITUTIONS year 3/4 2021-2022
FINAL OUTCOMES

SUPPORT OF FEDERAL GOVERNANCE AS PER THE CONSTITUTION AND SERVE CITIZENS TO THEIR SATISFACTION

- Clarity in IG relationships. - Institutional growth indicators-baseline. - effectiveness, efficiency indicators. - CD indicators,

- support indicators on policy matters (for federal Government) - inclusive, GESI, accountablity indicators. Proxy Indicators:- - Access to Services - cost of services - quality of services - quality of planning/F/b/M&E - - Service delivery Indicators
INDICATORS
- Indicators on development of I-G administrative and sectoral frameworks, standards, reports and data formates. OSR and financial -E11 delivery of quality infrsatructure - Good Governace Indicators
- Coordination indicators.
- Other programms compliment the I-G policy and administrative mechanism.
- Elected officials and staff are motiovated to serve the citizens.
- Horizontal and vertical communications are based upon federal governance principles. - Sectoral support performamce strengthern in SNG institutions. - ICT/ financial and other support to SNGs are condusive to IB.
ASSUMPTIONS (ENABLERS) - Adequate number of staff are recruited/posted at SNG levels.
- SNGs cooperate with federal agencies. - SNG officials will commit for IB at SNGs
- IB and CD support each of the SNG reforms.
- Adequate legal framework are developed for I-G cooperation

PRE-CONDITIONS MoFAGA, OPMCM and LMs work togther at initial stage (2019) for I-G coordintaion and avoid cross-purpose Adequate HR is provided to SNGs. Adequate legal and policy framework are extended to SNGs by Federal Government. SNGs focus on legal and policy frameworks Work environment exist or cretaed for better untilization of CD. Elected officials are committed/ dedicated to serve citizens.

CAPACITIES OF ELECTED OFFICIALS AND SNG STAFFS ARE IMPORTANT FOR BETTERSERVICE DELIVERY, BETTER
SUPPORT TO SNGS BY FEDERAL ORGANISATIONS IN PLOICY AND FUNCTIONAL I-G MECHANISM WILL STRENGTHEN FEDERAL FUNCTIONAL AND ACCOUNTABLE INSTITUTIONS ARE NEEDED AT PROVINCIAL AND LOCAL LEVEL. ONLY SUCH INSTITUTIONS CAN BE SUPPORTIVE AND COLLOBRATIVE TO EACH OTHER. IPF CAN GENERATE FUTURE INNOVATIONS. THIS WILL MAKE SNG INSTITUTIONS EFFICIENT, EFFECTIVE
ToC INFRASTRUCTURE AND GOOD GOVERNACE AT SNG LEVLS. CAPACITATED OFFICIALS CAN SERVE CITIZENS TO THEIR
GOVERNANCE AND SUSTAINABLE.
SATISFACTION.
1A. FEDERAL MINISTRIES AND AGENCIES ARE SUPPORTING THE SUB- 1B.INTER-GOVERNMENTAL ADMINISTRATIVE 2A. PROVINCIAL GOVERNMENTS HAVE FUNCTIONAL, INCLUSIVE AND ACCOUNTABLE INSTITUTIONS. 2B.LOCAL GOVERNMENTS HAVE FUNCTIONAL, SUBSTAINABLE, INCLUSIVE AND ACCOUNTABLE 2C.PROVINCIAL AND LOCAL GOVERNMNETS 3A.ELECTED REPRESENTATIVES AND CIVIL SERVANTS 3B.CITIZENS ARE SATISFIED FROM THE SERVICES OF THE
NATIONAL GOVERNMENTS IN POLICY AND INSTITUTIONAL SPHERES FOR MECHSNIMS ARE FULLY FUNCTIONAL INSTITUTIONS PROMOTE INNOVATIONS AND OF PROVINCIAL GOVERNMENTS ARE CAPACITATED CAPICITATED ELECTED REPRESENTATIVES AND CIVIL SERVANTS OF
IMPLEMENTING FEDERAL GOVERNANCE. PARTNERSHIP FOR INCLUSIVE GOVERNACE TO SERVE CITIZENS TO THEIR SATISFACTION. LOCAL GOVERNMENTS.
year 2/3/4
INTERMEDIATE OUTCOMES AND LOCAL DEVELOPMENT
INTERMEDIATE OUTCOMES

2020/2021/2022

- CD indicators
- PG- Governace Indicators - LG- Governace Indicators - IPF established. - CD indicators
INDICATORS - Support indicators (from MoFAGA/ OPMCP/MoF/LMs to SNGs) - IG administrative mechanism data- indicators - Sustinability Indicators
- PG IB indicators -LG IB indicators -Results of IPF investments - Public Administrative Indicators
-Citizen satisfactory Survey
- Capacity at federal level is a critical constraint for policy support to SNGs on -IG administrative mechanisms will enhance I-G -Other programms support have synergy. - LG leadership is committed to IB. - IPF will have adequate resources. - PCGG functions well and is capable of delivery. -PCGG functions well and is capable of delivery.
governance. cooperation and Coordination -Provincial leadership is committed to IB. PG collobration with LGs - Other programmes structural linkages are supportive of IB at LGs. - SNGs will have strong demand for IPF - Officials are well motivated to optimally use CD -Officals are well motivated to use CD programme and serve citizens.
- Federalofficial have enough motivation to extend policy and institutionbal -Proper and effective administrative mechansim - LGs recieves adequate support from FG and PGs programmes.
ASSUMPTIONS (ENABLERS)
support to SNGs will faciliate IG horizontal and Vertical
Communications.

Administrative mechanism are critical for

IPF can enhance and facilitate innovations Trained and motivated Provicial Governance political
Local capabilities is a critical gap at federal level. Capacitated federal agencies effective I-G coordination. Strengthening these IB support along with GESI and community governance supports to LGs will lead them to have Trained and informed LG leadership will be more effective and
ToC IB support to Provincial Government will head to functional inclusive and accountable institutions at provincial level for Good Govenance and better leaders and staff can be more effective. They will
can bring change and will support SNGs and federal governance mechanisms will enhance I-G corporation and functional and accountable institutions efficient in serving citizens
infrastructure discharge their duties better
implementation of federal governance

11. Local
8. Moderanized Local
1. Federal Level institutions 2. Federal level institutions 5. Modernaized Provincial 9. Local Government Governments
Governments have 10. Local 12. Innovation and Partnership fund is
develop legislations and policies to develop tools and systems to 4. Provincial Governments Government systems enable 6. Provincial Governments 7. PCGGs made operational systems enabled systems enable 13. Elected Representative and Civil servants at 14. Local Governments elected representative and civil
3. Inter-governmental administrative strong administrative Governments systems operational and transparently Program Period
Outputs support provincial and local support provincial and local drafted legislation in a horizontal and vertical Manage core public to deliver capacity horizontal and vertical citizen the province level are incentivized and trained servants are empowered and trained for delivering high
mechanisms strengthened and functional system, accountable mainstream GESI in supporting local governments 2019-2022
governments in a consultative Governments in a consultative consultative manner accountability to all citizens and Administration functions development services Accountability to all engagement and for delivering high quality services. quality services
and public financial their service delivery innovative practices
manner. process. mainstream GESI citizens inclusive
management system
participation
OUTPUTS

Indicators Aggregated sub - output indicators (Do) (Do) (Do) (Do) (Do) (Do) (Do) (Do) (Do) (Do) (Do) (Do) (Do)

Acivities will make

The activities will support federal Federal capacity leads to efective Strong I.G mechanisms lead to effective I-G Activities will result in adequate PCGG can deliver CD Activities will Activties will bring IPF can deliver innovations for GG and Training and CD will make them motivational
Assumptions Activities will make PG functional LGs effective and (Do)
governance policy strategic communication corporation legislation services mainstream GESI Accountability Infra and effective
accountable

Triggers per trigger are fulfilled

Pre- Conditions _ _ _ PLGSP programme
and maintained
i) MoFAGAs and LMs have i) SNGs receive support for i) MoFAGA and OPMCM have effective I-G i) PGs have technical resources to i)Provincial Coordination Council Strengthening i) i) PCGG is established Strengthening of i) Loacl Horizontal i) GESI plan i) Policy dev i) IPF policy strategic plan developed ii) i) Training /coaching courses developed (PCGG) i) Training CD models, courses developed , ii) Supply driven
capacity to furnish policy support effective and transportation PFM corporation mechanisms. draft required Strengtherned ii) Vertical PFM system ii) ii) It runs supply and i)PFM systems ii) Protocal on specfic mainstreamed (MoFAGA) IPF established iii) IPF is functional ii) Training, mentoring, knowledge seminars training on the job coaching , pre-learning mentoring
to SNGs as per federal role. system from MOF/FGCO/NNRFC. ii) Horizontal communication among legislation(OCMCM+PA+PLMs) Protcaol on specfic sector Public Administration iii) demand based CD Planning area ( Water ii) support GESI Focal ii) LGs incentivised and motivational workshops conducted PCGG programs conducted (PCGG) iii) Roaster Developed iv )
ii) Federal organizations have ii) SNGs receive support for federal organisations are functional on ii) PGs support LGs in legislation developed ( Economic growth, Civil Service programme process/M&E iii) management, Water person(MWC) to hear Cos iii) /OCMCM Demand driven courses conducted
efficient and effective strategic establishing effective Public SNGs issues. Iii) Provincial Government drafting (PPIU) Povertiy alliveation, SDG Vi) Provinical PSC (MoFAGA/OPMCM) Financial and taxation sharing, edication, iii) GESI tools Public Audit iv)
communications with SNGs. Administration system from (MoFAGA/OPMCM) have strong localization) iii) Horizontal V) IT infrastructure iv) IT infrastructure v) SDGs etc) iv) Public developed Socail Audit v)
SUB OUTPUTS (ACTIVITY GROUPS)

Sub - outputs Activity MoFAGA/ LMs. cooperationmechanismwwith LGs Protocal on specfic area ( Energy vi) Policy making including Fiscal Public Administration Hearing* v) Vi) GESI-CD (PCGG) Public Hearing Program Period
(Groups) iii) MoFAGA/ LMs have capacity to (OCMCM+PG/LMs) iv) Joint administrative and power, Economic growth, Policies vii) Planning process Vi) Sectoral Services Participatory 2019-2022
support SNGs. committee between OPMCM and MoFAGA, SDGs etc) iv) Provincial Public vii) vital registration Budgeting at local
v) Inter Provincial Council secreteriat Hearing* v) Participatory Viii) Linkages with Level. vi) GESI Audit at
strengtherned, vi) MoFAGA strengtherned Budgeting at Provincial Level. vi) PG/FG local level
to support Provincial Coordination Council GESI Audit at provincial level

i)PFM/GG/Public Administration i) no. of legislation ii) gaps in GG/Public i) policy developed i) Training /CD -Post Surveys i) Training /CD -Post Surveys
i) Policy support indicators i) Corporations / coordination mechanism GG/Public Administration
Indicators indicators legislation Effectiveness of PCGG Administration GESI indicators policy IPF is established and IPF is functional ii) PCGG functioning ii) PCGG functioning
ii) Communications indicators indicators (no of municipalities) indicators
ii) Indicators for MoFAGA iii) PG/LG legal confusion indicators implementated iii) Third Party review iii) Third Party Review
PLGSP Programme:
PLGSP Programme:
Financial Support, TA knowledge support, demand based
INPUTS

Inputs PLGSP programme :TA. Knowledge, suppot, financial support Financial Support, TA knowledge support, demand based supports
supports
IPF support : Institution building (IB support)
IPF support : Institution building (IB support),
Provinical Governments,Elected Leaders, Administrative
FOR WHOM

Provincial Governments, local Governments, PCGG, IPF, Programmes Management Committees, like PCGG, PPIU, Steering and ccordination committees, Federal Agencies, MoFAGA,MoF, MWC, FCGO, officials , staffs
Stakeholders Federal Ministries, Agencies, Provicial Ministries, Local Government : General Citizens
NNRFC : General Citizens Local Government : Mayors, Deputy Mayors, Councils, Adm,
officials PCGG

Constitutional: Constitution of Nepal 2015; 2017 Elections at three levels; Majority Government and stable political enviornment; Federal Restructuring done so far; Legal enviornment- civil service adjustments, NNRFC Act, IG fiscal Arrangement Act changes insectoral Acts, LGOA, Provincial Acts, Fundamental Rights Acts, Nepal Law Amendment Acts, amending LDTA Act in process; Administartive Restructuring; Civil Service Restructuring; SDGs and SNG level SDGs; New Fedral plans and SNG plans; SuTRA and PFM Reforms; IPFMRP,
CONTEXT

LISA/CNA of LGs, other progrmmes; Structural Administration and SNGs; LGCDP I and II, TSNGP, Review Reports and Sucess; Challengesof LGCDP; Previous one and half year work on SNGP prodoc; PLGSP Donors willing to support ; Voices at SNGs - PRGs,LGAs; Federal Government Agencies views; Expectations from present Govts; Citizens expectations from SNGs; Capacity gap and Institutional gaps; confusions; lack of federalisations planning; Role of federal agencies - MoFAGA, OPMCM, NNRFC, MoFCMs- confusions gap; centrality
of need of supports Federal development policies and communications - IG relationships, IB and CD

Page | 82
ANNEX 2: GUIDELINES ON MAINSTREAMING GESI IN GOVERNANCE

AREA THEMATIC ISSUE HOW TO MAINSTREAM

Establishment of GESI architecture for ensuring focus on GESI
Institutions issues
GESI friendly PSC exams
Administration &
Management HR policies for ensuring gender parity and diversity for GESI
responsive change management of LGs
Gender disaggregated analysis of incidence of revenue-raising
SYSTEMS and public expenditures, impact of budget on time-use, gender-
Public Finance
aware budget statements and gender-aware medium term
Management
frameworks of economic policy

Delivery of Preparation of a menu of essential services that priorities

Services women and DAGs
GESI Data Collection and analysis of GESI disaggregated data for
Management planning, budgeting, monitoring and reporting
GESI analysis of laws and policies for reforms and legislations
Laws & Policies that impact women and DAGs
LEGAL Development of GESI sensitive rules and regulations, standard
FRAMEWORKS Rules & operating procedures and guidelines for a uniform approach to
Regulations addressing GESI issues

Development/adaptation of GESI and governance training

manual and pedagogic materials for building
Generic
capacity of all Municipal staff, elected representatives and
communities
CAPACITY Development/adaptation of GESI and governance training
Targeted Capacity
BUILDING manual and pedagogic materials on GRB, GESI analysis and
Building
For Staff and data, GESI mainstreaming, GBV/VAW and Sexual
Elected Harassment, Gender and Justice for relevant Municipal staff
Representatives and elected representatives (men and women)

Development of guidelines/orientation for ensuring effective

Citizens (Esp. participation of citizens especially women and DAGs in
Women &DAGs) planning and budgeting processes
Civil Society Identification and mobilization of civil society groups for
Groups advancing GESI issues in governance
PARTICIPATION & Entering into a memorandum of understanding with
PARTNERSHIPS Interest Groups organization of women, dalits, ethnic, indigenous differently-
abled, LGBTQI working on GESI and development issues
Inviting media to meetings and field visits to encourage wide
Media coverage and reporting on GESI issues

Partnering with multi-lateral and bi-lateral agencies to

DPs/INGOs/NGOs
implement
PLANNING & Designing/ GESI analysis for identifying gaps and challenges through use
PROGRAMMING Formulation of GESI disaggregated data and qualitative information
Programmes
Use of GRB methodology for adequate budget allocation in
GRB
programmes
Development of quantitative and qualitative GESI indicators to
Indicators
measure progress towards gender responsive SDGs

Page | 83
 AREA THEMATIC ISSUE HOW TO MAINSTREAM
Use of qualitative GESI indicators and OECD-DAC gender
Tracking Results coding to measure progress to track progress towards
and Expenditures identified results and expenditures
Periodic monitoring visits to examine challenges
Monitoring and success of implementation of plans and programmes
IMPLEMENTATION
Reporting Development of reporting format for regular reporting
Internal and mid-term reviews for providing empirical evidence
Reviews and effecting changes in plans and programmes as per
recommendations
Timely and Information on essential services, rules and regulations to be
Relevant disseminated in local languages
Information
INFORMATION &
QQTBP (Quantity, Information on decisions that impact local populace especially
COMMUNICATION
Quality, Timely, women and DAGs to be communicated promptly on the
Beneficiaries, principle of right to information and not on a need to know
Place) basis
Organize public audits and hearings critical issues related to
Public Audits and good governance so that the public are made aware and can
Hearings claim their rights as rights-holders

FEEDBACK Development of a Citizen-Scorecard for collecting feedback

Citizen Scorecard on LG service delivery for improving LG performance
Social Use
Accountability ofGenderSafetyAuditsforensuringgenderbasedviolencefreeM
Tools unicipalities
Council Meetings Ensuring inclusion of the GESI agenda in meetings and
and Reporting reporting
Incorporating GESI dimensions in all aspects of LG self-
MCPM/MISA assessments to locate GESI high on the governance agenda

Periodic GESI status reports to examine progress on the

implementation of CEDAW, CRC, ICPD, Eliminating All Forms
ACCOUNTABILITY Compliance to of Racial Discrimination, various ILO Conventions, UN
& TRANSPARENCY International Convention on the Rights of Persons with Disabilities,
Commitments Declaration on Rights of Indigenous Peoples including UPR
recommendations

Complaint Development of a user-friendly and easily accessible

Handling grievance redress mechanism and training Municipal staff to
Mechanisms respond to grievance and documentation of responses

Evaluation and Development of GESI evaluation tools and documentation of

Learning best practices and lessons learnt
KNOWLEDGE Commission research/assessment on topical issues for
MANAGEMENT revealing the extent and nature of gender inequality and social
Research
exclusion for policy advocacy and programming

Page | 84
ANNEX 3: INDICATIVE MENU OF SERVICES FROM PROVINCIAL CENTREFOR GOOD
GOVERNANCE (PCGG)

Key Themes Support areas

 Leadership enhancement
 LG vision and mission / facilitating Joint visioning exercises
 Define municipal functions (sector focus) for local situation
 The functioning of a local government - Relationship and roles
assembly and administration
 Managing a change process
 Understanding of shifting contexts and relevant trends (external
factors)
 Confidence to change, whilst leaving space for diversity, flexibility and
creativity
 Use of opportunities and incentives, the acknowledgment of mistakes
and stimulation of discipline for learning
 Have systems in place for evaluation & leaning also for senior
Leadership and management
Vision
 Municipal governments as part of a society
 The municipality and other actors - Alliances with external
stakeholders
 How to organise and use citizen feedback
 Effective resource mobilisation (non-financial)
 Municipal institutional self-assessment
 Special assistance with organising MISA
 Preparing a CD action plan on the basis of MISA results
 The Municipality and its role in sector service delivery
 Responsibilities
 Planning at municipal level
 Local implementation
 Citizen charters
 Streamlining/rationalising of Municipal staff
 A properly functioning HR department/Support the Municipal HR function
 Staff performance assessments / discussions around staff performance
 Course on Human resource management for Heads of departments,
including the following topics:
 Action oriented leadership
Staff and  Credibility and reliability
Staff management  Leadership’s integrity and acceptance by staff
 Operating principles
 Motivation/incentivising of LG staff (not financial)
 Multi-tasking, IT savvy admin management
 Preparation and effective monitoring of work-plans
 Developing realistic performance improvement plans
 Conducting meetings effectively / making and using minutes
 Management of the annual planning and budget cycle
Participatory  Training on planning cycle and approaches to inclusive planning
Planning and  Facilitation of municipal level planning sessions (administration,
budgeting assembly, joint)
 Effective and efficient data collection and data use (including data base
Page | 85
 Key Themes Support areas
management)
 Transparent budgeting and budget presentation
 Supplementary / tailor made assistance with setting up the Open Local
Government Accounts platform
Budget execution
 Effective reporting to the assembly
 Reporting formats and use of various communication channels (including
social media)
 Procurement rules and regulations /Roll out SuTRA and Local level PFM
Financial  Asset management
management  Financial reporting and financial statements
 Assistance with addressing audit queries
 Innovative experiences in municipal service delivery; use of smart
IT technology in delivery of services, monitoring; innovative experiences in
local economic development etc
 Strategies to enhance inclusive planning
Attitudes and  Conducting a GESI analysis
Ethics  Preparation of the GESI status report
 Integrity and Anti-corruption strategies
 Local resource mapping and resource assessment
 Methods, experiences and strategies for local revenue generation and
resource mobilization
 Localization of SDGs
Specific technical  Methods and process of Local and Regional Economic Development
topics related to (LED/RLED)
municipal  Land use, Zoning, Urban planning
mandates  Inter municipal cooperation
 Shared infrastructure (solid waste management, energy systems, higher
order services/facilities) planning among local governments to take
advantage of scale economies
 Disaster Management
 Assistance with preparation of a local action plan to enhance
participation and accountability - Making a choice between various
mechanisms and prepare an action plan
 Voice mechanisms
Participation and - Open budget meetings
Accountability - Meet and greet the assembly members
 Stakeholder feedback mechanisms
- Scorecards
- Town hall meetings

Note: The above services (which will all require few days up to few weeks) will mainly be provided through roster
consultants after a municipality makes a specific request. PCGG will develop a mechanism to make demands for
consultancy support. A request for support could very well be the result of initial contact with the core staff of the
PCGGthat is always available for advice, coaching and mentoring on any of the above topics as well as others
falling within the purview of PLGSP.

Page | 86
ANNEX 4: LOCAL GOVERNMENT INSTITUTIONAL SELF ASSESSMENT ( LISA)

1. Background

The Constitution of Nepal has given legislative, executive and judicial rights to local
government. In this context, it is necessary to understand the existing institutional capacity
of local governments to carry out judicial, executive and legislative responsibilities in line
with constitutional provisions. Moreover, it is necessary for local governments to
understand their institutional strengths and weaknesses regularly to ensure that they have
the capacity to carry out constitutional responsibilities effectively. As local governments are
autonomous, it would be relevant for them to do institutional assessment by themselves.
The LISA technique is developed to introduce and institutionalize self-assessment
technique at local level. The LISA will help local governments to identify areas where they
have to improve their institutional capacity. This guideline will be refined based on findings
from pilot testing in some local governments.

2. Justification

Following are justification of self -assessment:

 As local governments are at different stages of institutional development, there is a need

to understand their strengths and weaknesses to deliver basic services to citizens
effectively.

 As there is no basis with local government to formulate CD plan and policies there is a
need of assessment system that provides basic information to identify areas where there
is a need to improve.

 Local Government needs information to take necessary actions to improve service

delivery.

 Self-assessment helps local governments for healthy competition in service delivery.

3. Objective

Following are the main objectives of LISA:

 To help the local governments to assess their strengths and weakness to carry out
responsibilities in an accountable manner as per the provision in the constitution.

 To help local governments to develop the strategic work plan and its implementation to
use resources in effective and efficient way.

 To identify the areas of investment for local governments in institutional development.

 To help in establishing the competitive local governments and promote good practices.

4. Process

Following are the process of LISA:

Page | 87
  Orientate elected representatives and local governments’ staff on LISA.

 Engage elected representatives and heads of departments, units and sections as well
as staff of LG to conduct LISA.

 Adopt a participatory approach and assign a focal person for each of the topics of LISA.

 Discuss the findings of LISA in the EC meeting and get approval from the EC.

 Disseminate LISA results through various media.

5. Self-Assessment Sectors and Indicators

LISA will be carried out on the basis of overall situation, process situation and quantitative
situation of governance related sectors. Each sector consists of number of indicators. For
making self- assessment simple and users’ friendly, indicators have been made specific,
measurable, attainable and relevant as far as possible. Indicators are given in Annex 1.

LISA is based on local governance related ten thematic sectors which are as follows:

1. Governance Process
2. Administration and Organization
3. Annual Budget and Plan Formulation
4. Fiscal and Financial Management
5. Service Delivery
6. Judiciary
7. Physical Infrastructure
8. Social Inclusion
9. Environment Conservation and Disaster Management
10. Cooperation and Coordination.

Each sector will be assessed in terms of overall situation, process situation, and
quantitative situation.

 Overall Situation: Overall situation indicated general scenario of specific subject.

 Process Situation: Process situation gives how the Act, regulations, and guidelines
adopted by LG.

 Quantitative Situation: Quantitative situation indicates achievement in specific subject.

6. Indicators and Weightage

A total of 100 indicators has been identified for 10 thematic sectors. As the indicators have
been identified on the basis of responsibilities of local government, the number of indicators
for each thematic sector differs. Each indicator has been assigned score with maximum of
one point. Weightage of indicators is given in Annex 2.

Weightage for overall situation, process situation, and quantitative situation are shown
below:

Page | 88
 Overall situation is classified into four conditions: Condition 1, Condition 2, Condition 2,
Condition 3 and Condition 4. The condition 1 is assigned 0.25 weightage, Condition 2 is
assigned 0.50 weightage, Condition 3 is assigned 0.75 weightage and Condition 4 is
assigned 1 weightage. Evaluator needs to select either of the four condition which
describes best situation of LG.

Process situation and quantitative situation are classified into three conditions viz. poor,
satisfactory and good. Evaluator needs to select either of the three conditions which
describes best situation of LG. The poor condition is assigned 0.30 weightage, satisfactory
is assigned 0.60 weightage and good is assigned 1 weightage.

7. Quality Assurance

Evaluators can use their discretion to assess the situation and condition of the thematic
sectors but, it should be supported by report, document, meeting minutes, publication and
official circulars.

8. LISA Apps

In line with the policy towards adoption of new technology at the local level, an IT based
application has been developed based on the above methodology. LISA is developed on
a web-based platform.

ANNEX 5: TERMS OF REFERENCE NATIONAL STEERING COMMITTEE

1. Background

The GoN is committed to improving people’s standard of living through citizen-centric

governance and effective service delivery based on democratic values and rights-based
development. The promulgation of the constitution of Nepal on 20th September 2015 is a
paradigm shift on system, structure and processes of sub national governance in federal
set up. The constitution recognizes federal, provincial and local level as a main state
structure and governments at all level shall exercise state power as provided by the
Constitution and law.

The Constitution stipulates various reform initiatives to be undertaken by federal, provincial

and local level. The rural municipalities and municipalities in total will have 36,639 elected
representatives of which 13,360 will be women representatives and 1,751 Dalit and
marginalized representatives. A policy and legislative framework in the form of Local
Government Operation and Management Act 2017 has been enacted by the Legislative
Parliament. A Functional Unbundling Report has been prepared which sets out
responsibilities allocated to Provincial and Local Governments, as per the constitution.

Federalism requires all the devolved sectors to work in coordination, which is very different
to a unitary system of governance. Implementing the constitution of Nepal means that all
the key agencies or arms of governments work together in a coherent manner to support
the provincial and local governments to carry out their executive and concurrent
responsibilities. This requires an integrated approach which is in line with “whole of
government concept”.

Page | 89
 The ‘whole of government’ and state restructuring approaches have not been properly
internalized by all central agencies, not least because there is no clear policy statement
agreed by all relevant stakeholders. This leads to the massive need for reorientation,
training, re-role setting, motivating and CD of the staff of federal and sub-national agencies.
Similarly, the freshly elected 36,369 office bearers of the new LGs and future PGs will also
need orientation courses and capacity building trainings in a massive way. This draws the
attention of this transition programme towards channelling adequate resources for capacity
building and institutionalization of the new structures. This not only creates the basis but
also shows the future path for any support programme (PLGSP) which will be formulated
to support the SNGs and state restructuring.

The PLGSP is a national flagship programme of the GoN and DPs. The PLGSP is intended
to be a programmatic framework and common platform for CD of all the SNG structures in
Nepal. The key objective of the programme is to have a functional SNG structure and
systems that will ensure effective service delivery to citizens. The purpose of the
programme is to improve sub national governance for effective service delivery and citizen
empowerment. It provides an overall framework for strengthening decentralization,
devolution and improved sub national governance systems for the effective delivery of
basic services and the empowerment of citizens, especially women, children and DAGs
and their institutions. It has been designed as a framework programme with three outcomes
and 14 output areas.

The programme is being jointly financed by the GoN and DPs under a JFA2. The GoN and
DPs, collectively referred to as the JFA DPs (JFADPs), are signatories to the JFA. There
are two decision making mechanisms for this programme: one at the national level and the
other at the provincial level. The National level decision making body is called NSC and is
the highest decision-making body of this programme. The other decision-making body is
the PCC. NSC is tasked to provide strategic policy guidance to the overall programme as
well as analytical support, quality assurance and programme monitoring, reviews and
evaluations of PLGSP, including a MTR, thematic evaluations and an independent
evaluation towards the end of the programme period.

The ToR set out the principles, aims, tasks and responsibilities of the NSC.

2. Structure and Organization

The NSC at the federal level will provide guidance and oversee PLGSP implementation.
The Hon’ble Minister of the Ministry of Federal Affairs and General Administration will chair
the NSC, whilst the National Programme Director/Joint Secretary will serve as member
secretary. The Hon’ble Member of the National Planning Commission, Secretaries of
MOFAGA, OPMCM, MOF, FCGO, representatives of the PCCs as designated by the
Hon’ble Chief Minister (7), Mayor (2) Deputy Mayor (2), Chair (2) and Deputy Chair (2) of
Rural Municipality with at least four women members as designated by Hon’ble Minister of
MOFAGA in consultation with local government representative organizations will serve as
members. The steering committee may invite other officials and focal points of DPs as and
when required. This Steering Committee will steer overall policy agenda and support
activities for institutionalization of federalization/devolution process and plans of the
government and provide guidelines to the PLGSP management on overall policy
coordination between various agencies of the government. The National Programme
Director/Joint Secretary of MOFAGA will be member secretary of this Steering Committee.

2Joint Financing Arrangement for Provincial and Local Governance Support Programme (PLGSP) is an agreement,
between the GoN and the UK Department for International Development, the Swiss Federal Department of Foreign
Affairs, the Norwegian Ministry of Foreign Affairs, the European Delegation, and the UN agencies.
Page | 90
 The Steering Committee will meet once every six months and at other occasions as and
when required.

3. Name

The name of the Committee will be ‘NSC’ and will be the apex decision making entity of
the PLGSP.

4. Membership

 Chair: Hon’ble Minister of MOFAGA;

 Members: Hon’ble Member of NPC, Secretaries of MOFAGA, OPMCM, MoF;
 Representatives of the Provincial Coordination;
 Committees (7) as designated by the Chief Minister;
 Mayor (2) Deputy Mayor (2), Chair (2); and
 Deputy Chair (2) of Rural Municipality with at least four women members as
designated by Hon’ble Minister of MOFAGA in consultation with local government
representative organizations.
 Member Secretary: NPD/Joint Secretary, MOFAGA.

5. Chairperson

The Chairperson of the NSC is Honourable Minister, Ministry of Federal Affairs and
General Administration, who acts as the executive head of the policy making committee of
PLGSP. He or she will on behalf of GoN will ensure that the programme is guided and
implemented as per the letter and spirit of the programme document and will provide all
necessary strategic guidance to the programme.

6. Secretariat

The PCU will act as a secretariat for NSC, which is responsible for convening the NSC
meetings and providing the secretariat support. Following are main responsibilities of the
secretariat:

 The Secretariat liaises with federal agencies and DPs and informs the
government/DPs on the activities and results progress of PLGSP. It circulates policy
updates of the programme to all DPs.
 The draft agenda of NSC meetings is drawn up by the Secretariat in consultation with
the Chair and DP Chair, and is circulated with the final minutes of the previous meeting
to all NSC members one week prior to the forthcoming meeting.
 The Secretariat is responsible to prepare the Aid Memoire of the NSC meeting and
circulate it to the member for their inputs within a week.
 The yearly schedule of meetings will be issued in advance by the Secretariat to
members of the NSC to facilitate forward planning.

7. Periodicity of Meetings

The NSC will meet once every six months. The first meeting will be in April/May of each
year, which will approve the ASIP and review the progress made in the previous year. The
second meeting will be in November/December which will review the progress made so
far on the Annual strategic Implementation plan. Extraordinary meetings can be called by
the Chair in case of issues requiring immediate attention and decision-making.

8. Objectives

Page | 91
 The overarching objective of the NSC is to support the GoN in strengthening
decentralization and sub national government in Nepal.
The specific objectives are:

 The NSC is the key decision-making body of the sub national governance programme.
It ensures aid effectiveness, including harmonization and alignment of development
assistance in support of the GoN with regard to the implementation of PLGSP. In
addition, the NSC aims to promote strategic collaboration with GoN to strengthen the
support to decentralization and sub national governance.

 The NSC aims to promote transparency between the DPs and the GoN and among
all bilateral and multilateral DPs and affiliated partners involved in governance
programmes, projects and activities in Nepal. It also intends to have common vision
within the PLGSP in regard to SNG issues particularly related to CD.

 The NSC intends to reduce transactions costs for both the GoN and DPs and to ensure
policy and implementation coherence in all governance programmes supported by
DPs and the Government.

9. The Member Secretary:

9.1 In coordination with Chair, the Member Secretary will act as facilitators for
communication and information with the GoN on matters concerning the
implementation of the PLGSP.

9.2 Ensure proper facilitation, follow-up on the implementation of the PLGSP and the JFA
and on specific issues identified by the GoN (or by the DPs) in regard to planning,
implementation and monitoring of the PLGSP. However, he/she does not have any
authority to make policy and strategic decisions on behalf of the PLGSP.

9.3 He/she will represent at the NSC, NEC, Fiduciary Risk Reduction Mitigation Sub-
committee meetings and TASC.

9.4 Based on the decision of the NSC will initiate the draw-down of funds from FCA in
writing, as mentioned in the JFA.

9.5 He/she will ensure the proper follow up of the final audit report.

9.6 He/she will facilitate the Mid-term review, focused evaluation and other high-level
strategic planning reviews, evaluation together with the GoN.

10. The NSC as a whole will:

10.1 Ensure that there is coherent programme organization at both the national,
provincial and local levels;

10.2 Monitor and control the progress of the programme activities at a strategic level
considering the changes influenced by the programme on any baseline
investments;

10.3 Ensure that risks are being tracked and mitigated as effectively as possible;

10.4 Promote and maintain focus to deliver the outputs from the programme;

Page | 92
 10.5 Ensure that there sources from the program suppliers are readily available;

10.6 Ensure that the expected programme outputs and related activities of the project
remains consistent with the perspective of programme outcome and beneficiaries;

10.7 Facilitate national policy and institutional changes necessary to engender success
in programme activities; and

10.8 Bi–annually review programme progress and make managerial and financial
recommendations as appropriate, including steps that need to be taken by the PCU,
review and approval of annual reports, budgets and work-plans.

11. NSC will be the supreme decision-making body of PLGSP and will provide broad policy
guideline and strategic polices with regard to implementation and achieve the set goals of
PLGSP.

12. NSC will approve the ASIP of PLGSP. The ASIP will have the consolidated seven
Provincial Annual Strategic Implementation Plans and the part that supports the central
level activities.

13. NSC will coordinate and make necessary policy decisions regarding any other institution
building or CD support from other sources, including the DPs who have not joined the JFA
of the PLGSP – to better align and synergize the results to meet in order to meet the
objectives of the PLGSP and to avoid any resource overlaps.

14. NSC will follow up on the action taken on the decisions made in the previous NSC meetings.

15. NSC will provide over all guidance to PSC through the annual work plan and strategic policy
guidelines, and PSCs shall work within the broad strategic policy guidance provide through
the NSC.

16. Individual members may propose issues to be included in the agenda of NSC meeting.
These proposals may be made at prior NSC meetings or directly to the Secretariat at least
one week prior to the following meeting.

17. The NSC may appoint technical committees from staff in their respective organizations to
analyse and recommend potential interventions on specific issues.

18. Conclusions will be formulated and agreements made on the basis of consensus. The NSC
will agree amongst its members how work will be taken forward, particularly with regard to
follow-up discussions with Government, notably concerning programme implementation,
fiduciary matters and audit issues. They will agree to and provide joint
inputs/feedback/statements to the PLGSP management.

19. When needed, the NSC will carry out field missions in order to assess the programme’s
implementation. Feedback will be provided to the PLGSP Management through the above-
mentioned channel.

20. Arbitration

The NSC Chair will be the final arbitrator of the programme. Any dispute, controversy or
claim arising out of, or in relation to, this programme, including the validity, invalidity,
breach, or termination thereof, shall be resolved by arbitration, where the final decision of
the NSC chair will be final.

Page | 93
ANNEX 6: TERMS OF REFERENCE FOR NATIONAL EXECUTIVE COMMITTEE

1. Background

The Provincial and Local Governance Support Programme (PLGSP) is a national flagship
programme of the GoN and DPs. The PLGSP is intended to be a programmatic framework
and common platform for CD of all the sub national governance structure in Nepal. The key
objective of the programme is to have a functional sub national governance structure and
systems that will ensure effective service delivery to citizens. The purpose of the
programme is to improve sub national governance for effective service delivery and citizen
empowerment. It provides an overall framework for strengthening decentralization,
devolution and improved sub national governance systems for the effective delivery of
basic services and the empowerment of citizens, especially women, children and
disadvantaged groups (DAGs) and their institutions. It is designed as a framework
programme with three outcomes and thirteen output areas.

The ToR set out the principles, aims, tasks and responsibilities of the NEC.

2. Structure and Organization

The NEC will be formed under the chair of Secretary of MOFAGA with representatives from
OPMCM, NPC, MoF, FCGO, MOUD, MOEST, MoHP, MoALD, Ministry of Women,
Children and Senior Citizen(MOWCSC) and NNRFC at Joint Secretary level and the
Chair/Convener of the participating Development Partners Group. The NEC will agree upon
the PLGSP annual plan/ASIP and recommend it to the NSC for approval. It will provide
overall guidance to the PCU for implementation of PLGSP.

The NEC will provide guidance, review physical and financial progress, recommend annual
strategic plan for approval by the NSC, recommend guidelines and manual for approval
by MOFAGA, discuss policy issues and support activities for institutionalization of
federalization/devolution process and provide guidelines to the PLGSP management to
implement programme smoothly and effectively. The National Programme Director/ Joint
Secretary of the Capacity Development Division, MOFAGA will be Member Secretary. The
NEC will meet on trimester basis and at other occasions as and when required.

3. Name

The name of the Committee is National Executive Committee.

4. Membership

The NEC will have following members:

 Chair: Secretary MOFAGA

 Member: Joint Secretaries of OPMCM, NPC, MoF, FCGO, MOUD, NNRFC, MOEST,
MOHP, MoALD, MOWCSC
 Chair/Convener of the participating DPs’ group
 Member Secretary: NPD/Joint Secretary, MOFAGA

5. Chairperson

The Chairperson of the NEC is Secretary, Ministry of Federal Affairs and General
Administration, who will ensure that the programme is implemented as per the letter and

Page | 94
 spirit of the programme document and will provide all necessary strategic guidance to the
PCU and PPIU.

6. Secretariat

The PCU will act as a secretariat for NEC and will be responsible for convening the NEC
meetings and providing the secretariat support, including:

 The Secretariat liaises between federal agencies and DPs and informs the
government/DPs on the activities and results progress of PLGSP. It circulates policy
updates of the programme to all DPs;

 The draft agenda of NEC meetings is drawn up by the Secretariat and is circulated
with the final minutes of the previous meeting to all NEC member one week prior to
the forthcoming meeting;

 The Secretariat is responsible to prepare the minute of the meeting and circulate it to
the member for their inputs within a week;

 The yearly schedule of meetings will be issued in advance by the Secretariat to

members of the NEC to facilitate forward planning;

 Preparing the agenda;

 Sending the invitation on behalf of the chair;

 Draft Aid Memoire of the meetings;

 Disseminate documentation;

 Collect comments; and

 Finalize the Aid Memoire and circulate the same.

7. Periodicity of Meetings

The NEC will meet once in every trimester. The first meeting will be held in October /
November of each year, which will review the physical and financial progress, recommend
for recruitment of consultants as per need, review and approve study report, recommend
guidelines and manual for approval by MOFAGA. The second meeting will be held in April
/ May which will recommend ASIP to NSC for approval. The third meeting will be held
August/September which will review annual progress and provide policy guidelines for
effective monitoring and supervision of PLGSP activities.

8. Objectives

The overarching objective of the NEC is to support the PCU and PPIU for effective
implementation of PLGSP activities. The NEC aims to promote transparency between DPs
and the GoN and among all bilateral and multilateral DPs and affiliated partners involved
in governance programmes, projects and activities in Nepal. It also intends to have
common vision within the PLGSP in regard to sub national governance issues particularly
related to CD.

9. Role and Responsibilities

Page | 95
 Following are the roles and responsibilities of the NEC:

 Review and assess the progress towards achieving the outputs and outcomes of
PLGSP and make managerial and financial recommendations as appropriate,
including steps that need to be taken by the PCU.

 Recommend ASIP of PLGSP for approval by NSC. ASIP will have the consolidated
seven Provincial Annual Strategic Implementation Plans and the part that supports
the central level activities.

 Ensure that the expected programme outputs and related activities remain consistent
with the perspectiveof programme outcome and beneficiaries.

 Ensurethat risks are being tracked and mitigated as effectively as possible.

 Facilitate national policy and institutional changes necessary to engender success in

programme activities.

 Appoint Technical Assistance Servicer Provider for PLGSP.

 Follow up on the action taken on the decisions made in the previous NEC meetings.

 Provide overall guidance to the PCCs. The PCCs shall work with in the broad
strategic policy guidance provide through the NEC.

 Individual members may propose issues to be included in the agenda of NEC

meeting. The proposals may be made at prior NEC meetings or directly to the
Secretariat at least one week prior to the following meeting.

 Agree amongst members how work will be taken forward, particularly with regard to
follow-up discussions with Government, notably concerning programme
implementation, fiduciary matters and audit issues. Provide inputs/feedback to the
PLGSP management.

 Carry out field missions at least twice a year to assess the programme
implementation. Provide feedback to the PLGSP management based on monitoring
visit.

10. Member Secretary

10.1 In coordination with chairperson, Member Secretary will act as facilitator for
communication and information with the GoN on matters concerning the
implementation of PLGSP.

10.2 Ensure proper, facilitation, follow-up on the implementation of the PLGSP and on
specific issues identified by the GoN (or by the DPs) with regard to planning,
implementation and monitoring of the PLGSP. However, he/she do not have any
authority to make policy and strategic decisions on behalf of the PLGSP.

10.3 Based on the decision of the NEC, Member secretary will initiate the drawdown of
funds from FCA in writing, as mentioned in the Joint Financing Arrangement.

10.4 Ensure the proper follow up of the final audit report.

Page | 96
10.5 Facilitate the Mid-term review, focused evaluation and other high-level strategic
planning reviews, evaluation together with the GoN.

Page | 97
ANNEX 7: TERMS OF REFERENCE FOR PROVINCIAL COORDINATION COMMITTEE

1. Background

The Provincial and Local Governance Support Programme (PLGSP) is a national flagship
programme of the GoN and DPs. The PLGSP is intended to be a programmatic framework
and common platform for CD of all the sub national governance structure in Nepal. The key
objective of the programme is to have a functional sub national governance structure and
systems that will ensure effective service delivery to citizens. The purpose of the
programme is to improve sub national governance for effective service delivery and citizen
empowerment. It provides an overall framework for strengthening decentralization,
devolution and improved sub national governance systems for the effective delivery of
basic services and the empowerment of citizens, especially women, children and
disadvantaged groups (DAGs) and their institutions. It is designed as a framework
programme with three outcomes and thirteen output areas.

The PCC will be formed in all the provinces and it will be the supreme decision-making
body of PLGSP at the provincial level and will follow the broad policy guideline and strategic
polices that have been provided by the NSC with regard to implementation and achieve the
set goals of PLGSP within their respective province.

The ToR set out the principles, aims, tasks and responsibilities of the PCC.

2. Objectives

2.1 The overarching objective of the PCC is to support the PG in strengthening

decentralization and supporting the local government within their province in
implementing the PLGSP.

2.2 The specific objectives are:

 The PCC is the key decision-making body of the PLGSP in the province. It
ensures aid effectiveness, including harmonization and alignment of
development assistance in support of the PG with regard to the implementation
of PLGSP. In addition, the PCC aims to promote strategic collaboration with
both local governments and the PG to strengthen the support to
decentralization and sub national governance.

 The PCC aims to promote transparency between the PG and the local
governments and among all other actors and affiliated partners involved in
governance programme, projects and activities within their province. It also
intends to have common vision within the PLGSP in regard to SNG issues
particularly related to CD.

 The PCC will work independently but within the overall policy framework of
PLGSP set by the NSC. The PCC will have the flexibility and freedom to
prepare the Provincial Annual strategic Plan within the policy framework
provided by the NSC.

3. Structure and Organization

A PCC will be formed under the chair of Hon’ble Chief Minister or minister designated
Hon’ble Chief Minister and it will have Principal Secretary, Secretaries of MOEAP, MOIA,
MOSD, MOID, Provincial Financial Comptroller General and National Programme
Director/National Programme Manager of PLGSP as its members. The PCC will also have
Page | 98
 Mayor (2), Chair (2), Deputy Mayor (2 women), Deputy Chair (2 women) of local
government as designated by the OCMCM in consultation with local government
representative organizations at province level as members. The PCC will also have
representatives of provincial chapters of the LGAs (MuAN and NARMIN) as its members.
The Secretary in the Governance Reform Division of the OCMCM will be member
secretary.

4. Role and Responsibility of PCC

4.1 Approve the Provincial Annual Strategic Implementation Plan of PLGSP. The
Provincial Annual Strategic Implementation Plan will have consolidated inputs from
local governments within the province and the part that supports the provincial level
activities.

4.2 Facilitate national policy and institutional changes necessary to engender success in
programme activities.

4.3 Review and assess the progress towards achieving the outputs and outcomes of
PLGSP and make managerial and financial recommendations as appropriate,
including steps that need to be taken by the PPIU.

4.4 Provide overall guidance to PPIU and to local governments who shall work within the
broad strategic policy guidance provide through the PCC.

4.5 Provide guidance to PPIU to ensure that there is coherent programme organization
at both the provincial and local levels.

4.6 Monitor and control the progress of the programme activities at a strategic level
considering the changes influenced by the programme on any baseline investments.

4.7 Carry out field missions in order to assess the programme implementation. Feedback
will be provided to the PLGSP management.

4.8 Work for coordination between the agencies of PGs and the local governments within
the province.

4.9 Provide policy guidance to PCGG .

5. Secretariat

5.1 The PPIU will act as a secretariat for PCC and will be responsible for convening the
PCC meetings and providing the secretariat support. The Secretariat liaises between
PPIU and PCU and inform on activities and progress of PLGSP. It circulates trimester
progress report including financial report to the PCU and concerned agencies.

5.2 The Member Secretary will in coordination with chair will act as facilitators for
communication and information with the PGs on matters concerning the
implementation of the PLGSP. He/she will:

 ensure proper, facilitation, follow-up on the implementation of the PLGSP and

the PCC decision and on specific issues identified by the PGs (or by the local
governments) in regard to planning, implementation and monitoring of the
PLGSP. However, he/she does not have any authority to make policy and
strategic decisions on behalf of the PLGSP to:

Page | 99
  ensure the proper follow up of the final audit report;

 liaises between PPIU and PCU and informs the PG/PPD on the activities
and results progress of PLGSP;

 circulates policy updates of the programme to all local governments;

 prepare minutes of the PCC meetings and circulate them to the member
for their inputs within a week;

 prepare annual schedule of meetings in advance and forward to members

of the PCC to facilitate forward planning;

 facilitate to recruit Chief Executive Officer and staff of PCGG; and

 follow up on the action taken on the decisions made in the previous PCC
meetings.

6. Periodicity of Meeting

The PCC will meet once every trimester. The first meeting will be held in October/November
of each year and will review the physical and financial progress. The second meeting will
be held in April/May for approval of Annual Strategic Implementation Plan. The third
meeting will be held August/September which will review annual progress and provide
policy guidelines for effective monitoring and supervision of PLGSP activities.

Page | 100
ANNEX 9: TERMS OF REFERENCE FOR THE PROGRAMME COORDINATION UNIT

1. Scope of Work

This section describes how the objectives of NSC will be achieved through the conduct of
meetings and subsequent activities.

2. The Member Secretary

2.3 In coordination with Chair will act as facilitators for communication and information
with the PGs on matters concerning the implementation of the PLGSP.

2.4 Ensure proper, facilitation, follow-up on the implementation of the PLGSP and the
NSC decision and on specific issues identified by the PGs (or by the Local
Governments) with regard to planning, implementation and monitoring of the PLGSP.
However, he/she do not have any authority to make policy and strategic decisions on
behalf of the PLGSP.

2.5 He/she will represent at the NSC, NEC, Fiduciary Risk Reduction Mitigation meetings
and TASC.

2.6 Based on the decision of the NEC, will initiate the trimester funds from PCU in writing,
as mentioned in the MoU between the PPIU and PCU.

2.7 He/she ensure the representation in NSC meetings.

2.8 They ensure the proper follow up of the final audit report.

2.9 They facilitate the MTR, focused evaluation and other high-level strategic planning
reviews, evaluation together with the PCU.

2.10 The PCU will act as a secretariat for NSC and the NEC which is responsible for
convening the NSC meetings and providing the secretariat support, including:

 preparing the agenda;

 sending the invitation on behalf of the chair;

 draft Aid Memoire of the meetings;

 disseminate documentation;

 collect comments; and

 finalize the Aid Memoire and circulate same.

Page | 101
ANNEX 10: TERMS OF REFERENCE PROVINCIAL PROGRAMME IMPLEMENTATION
UNIT

1. Introduction

The seven PPIU are main mechanisms to operationalize the programme support at the
Provincial levels benefitting both provincial and local governments. PPIU works as
provincial coordination units of the PLGSP. These are responsible for realizing the
Outcomes 1, 2 and 3 as defined in this ProgDoc at provincial and local government levels.

2. Approach

PPIUs are to develop innovative ways of communicating with the municipalities, while
making use of modern ways of electronic communication, allowing them to serve a large
number of municipalities at the same time.

The success of the PPIUs will be determined by their capability to get away from a top
down approach, position themselves for serving the provincial and local governments and
demonstrate creativity to find ways to reach a large number of local governments in a
manner that serves an overall agenda of putting into place systems and procedures that
are fundamentally uniform.

Each PPIU is seen as a decentralized unit and is responsible for its own success, although
for reasons of efficiency they will need to collaborate with the federal PCU.

3. Scope of work / Responsibilities:

3.1 The PPIUs are responsible for the expected results under Outcomes 2 and 3 as set
out in this ProgDoc. More specifically, the PPIU are expected:

 to provide demand driven support to the Provincial and Local Governments on

both generic questions (in the fields of governance, planning, budgeting, PFM,
HR, etc) as well as more technical questions;

 to facilitate the designated consultants to assist the local governments undertaking

the annual self-assessment and analyze these data, both for individual LGs as
well as for the aggregate to help design the (supply driven) institution building and
CD agenda;

 prepare annual provincial results of the annual self-assessment;

 Prepare and facilitate PCC meetings to facilitate their decisions and do necessary
to implement them;

 Work with the federal PCU in preparing, implementing and monitoring the province
level annual strategic implementation plans of the PLGSP;

 Perform the responsibilities as designated by the federal PCU in terms of getting

and transmitting financial and result reports from the PG units (including that from
PCGG) and local governments under its jurisdiction;

 Perform other responsibilities and tasks as have been assigned by the federal
PCU and PCCs;

Page | 102
 Function as secretariat of the PCC; and

 Facilitate establishment and operationalization of the PCGG and the IPF.

Page | 103
ANNEX 11: TERMS OF REFERENCE OF THE TECHNICAL ASSISTANCE SERVICE
PROVIDER

1. Background

The GoN is committed to improving people’s standard of living through citizen-centric

governance and effective service delivery based on democratic values and rights-based
development. The promulgation of the constitution of Nepal on 20th September 2015 is a
paradigm shift on system, structure and processes of sub national governance in federal
set up. The constitution recognizes federal, provincial and local level as a main state
structure and governments at all level shall exercise state power as provided by the
Constitution and law.

The Constitution stipulates various reform initiatives to be undertaken by federal, provincial

and local level. As a first step, it stipulates territorial reform of local government which the
GoN has completed and established 481 rural municipalities, 246 municipalities, 11 sub-
metropolitan and 6 metropolitan cities. The rural municipalities and municipalities in total
will have 36,639 elected representatives of which 13,360 will be women representatives
and 1,751 Dalitand marginalized representatives. A policy and legislative framework
design for local governance by federal government is in progress and Local Governance
bill 2017 has been tabled in the Legislative Parliament. A Functional Unbundling Report
has been prepared which sets out responsibilities allocated to Provincial and Local
Governments, as per the constitution.

The provincial structures are in place and the provincial assembly and PG have substantial
powers and responsibilities as per the annexes of the constitution. The PGs may also
exercise significant regulatory, monitoring and planning role over their own functions and
functionaries as well as over the local governments either directly or through DCCs.

Since the local government system in federal set up is obviously a new practice for Nepal,
it is a founding process that requires an adequate knowledge and skills-based interventions
which will have added value for more sustained, result oriented and democratic practice of
local governance. The sub-national structures need to be institutionalized and their capacity
needs to be built.

Federalism will require all the devolved sectors to work in coordination, which is very
different from a unitary system of governance. Implementing the constitution of Nepal will
mean that all the key agencies or arms of the governments to work together in a coherent
manner to support the local governments to carry out the executive and concurrent
responsibilities. This will require an integrated approach which is in line with “whole of
government concept”.

Local bodies have now been transformed into ‘local governments’ as per the arrangements
of the constitution; PGs will soon follow. The present devolution exercise must give way to
this holistic approach though it may take a planned and gradual approach to devolve all
functions and functionaries to the LGs or PGs.

Management of transition based on the whole government approach also results in

strategic restructuring of the federal ministries and other federal agencies with streamlined
and smart central structures with mostly steering, coordinating and parameter setting roles.
This will also help avoid the experiences that Nepal faced in the implementation of the Local
Self Governance Act. The vertical and horizontal lines of communication among various
tiers of the government and among parallel SNGs based on cooperative federalism
principles are also some of the landmark changes that define this approach.
Page | 104
 The ‘whole of government’ and state restructuring approaches have not been properly
internalized by all central agencies, not least because there is no clear policy statement
agreed by all relevant stakeholders. This leads to understand the massive need of
reorientation, training, re-role setting, motivating and CD of the staff of federal and sub-
national agencies. Similarly, the freshly elected 36,369 office bearers of the new LGs and
future PGs will also need orientation courses and capacity building trainings in a massive
way. This draws the attention of this transition programme towards channelling adequate
resources for capacity building and institutionalization of the new structures. This not only
creates the basis but also shows the future path for any support programme (PLGSP) which
will be formulated to support the SNGs and state restructuring.

In December 2017 a new SNG programme was jointly prepared by GoN and the DPs and
endorsed by the National Advisory Committee (NAC) meeting and the GoN. As part of the
implementation of the PLGSP, the programme document envisaged to contract an external
agency to provide technical assistance service to the programme, to be able to achieve its
expected results.

2. Context of Formulating PLGSP

Nepal has adopted a federal governance system and is also a signatory to the SDGs and
is committed to achieving these goals. The government has taken necessary steps toward
realizing the constitutional commitment to federalism. The three-year plan also reinforces
the GoN’s commitment to implement the constitution provisions. Along these lines a
concept note on future SNGP had envisaged to support the GoN in managing the transition
to SNG under the federal system as envisaged in the constitution. More particularly,
establishment and strengthening of the sub-national structures of governance and capacity
building at the level of institutions and functionaries in the new governance structures are
the support areas identified in the concept note. More specifically the concept note had
identified following areas of support under the then SNGP (now PLGSP):

2.1 Enhancing capacity of central ministries/agencies to cope with new mandate and
functions (including support to Ministry of Finance, Natural Resource and Finance
Commission, OAG, Ministry of Federal Affairs and Local Development and Ministry
of General Administration) and strengthening IG administrative mechanisms;

2.2 Institution building at provincial and local levels of governance(including support to

design and establishment of new SNG systems in light of functional assignments,
assessment and plan for core multi-skilled and multi-tasking human resource and IT
systems for the new governance structures, strategies for institutionalizing demand
side and arrangements to ensure that devolution is owned and facilitated by sector l
development agencies);

2.3 CD(including capacity building of ‘PCGG – PCGG) and on areas such as orientation
on devolution to elected leaders and other target groups, material development and
professional training for enhancing institutional and individual capacity, professional
trainings related to context-specific local revenue generation and resource
mobilization, local and regional economic development, localization of SDGs, local
level infrastructure planning and aspects of urban/municipal planning, developing
resource centres for innovative practices in devolution and for priority themes in local
development and effective service delivery;

2.4 Public finance management;

2.5 Basket fund for provincial and local governments.

Page | 105
3. Objective

The main objective of the TASP is to provide technical assistance support for
implementation of the PLGSP in order to be able to achieve the expected results.
Specifically, the TASP will make available the entire necessary technical specialist and
experts (both long term and short term) who will be placed at the disposal of the PCU and
through the PCU to the PPIU and the PCGG. The technical specialist and experts will
provide necessary technical support to achieve the key results of PLGSP under the three
outcome and seven sub-outcome areas with activities under fourteen output areas.

4. Scope of work

The TA Service Provider will make available the entire required specialist, experts and
support staffs required by the PCU and the PPIU in charge of executing the PLGSP
programme under the overall guidance and leadership of the National Programme Director,
along with National Programme Manager and Provincial Programme Director and
managers located in seven provinces across Nepal. Following are the specific tasks:

4.1 Prepare Detailed ToRs on all the technical specialists, experts and support staffs
both long term and short term as directed by the Programme Director and the
Managers and make them available for the review of the task team assigned for
recruitment of these technical staffs.

4.2 Recruitment of the technical specialist and experts will be recruited by the TA
service provider in a competitive and transparent manner based on the best practices
of HR recruitments

4.3 Maintaining Roster of experts to ensure that there are no gaps in the hiring
specialist and experts, the TA service provider will maintain all time updated roster
of experts who will be made available to the programme implementation unit heads
for immediate mobilization and deployment.

4.4 Compensation and payment of services will be determined based on UNDP NIM
guideline and the TA service provider will pay the specialist and experts based on
the pre- determine compensation package to each of these specialist and experts on
a month equal instalments for the long term staff and for short term based on the
recommendation made by the hiring managers.

4.5 CD and knowledge enhancement activities and opportunity for the specialist and
experts will be developed in consultation with the PLGSP management. The TA
service provider will make available all information related to such opportunity on a
regular basis and shall make all arrangement for such training programme both
internal and external.

4.6 Procurement of equipment will be carried out as per the approved procurement
plan of the programme. The TA agent will on behalf of the PLGSP management
procure and deliver high quality equipment in a competitive and transparent manner.

4.7 Expenditure report of the TA services will be provided on a trimester interval to the
PCU and the PPIU in a prescribed format determined by MOFAGA.

4.8 Audit report will be provided by the TA service provider to the PCU on an annual
basis. Such audit will be carried out with the overall guidance of the Office of Auditor
General of Nepal.
Page | 106
 4.9 Procurement of vehicle will be carried out as per the approved procurement plan
of the programme. The TA agent will on behalf of the PLGSP management procure
and deliver high quality equipment in a competitive and transparent manner.

5. Deliverables

The TA service provider is expected to produce the following outputs:

5.1 Approve ToRs of all the specialists, experts and staff in consultation with NPD and
NPM;

5.2 Recruitment of all the specialists, experts and staff;

5.3 Training and CD proposals;

5.4 Delivery report of equipment and vehicles;

5.5 Trimester Expenditure statements; and

5.6 Audit Reports.

6. Reporting

The TA service provider will report to the national and provincial programme directors on a
regular basis as determined by the NEC and PCCs.

7. Condition of Payment

The payment will be made on trimester basis based on the performance of the TA
service provider. On signing the agreement, the first trimester portion will be provided
as advance and the subsequent trimester will be reimbursed on actual at the end of
each trimester and the advance will be liquidated in the final trimester payment.

Page | 107
ANNEX 14: NOTE ON INNOVATION PARTNERSHIP FUND

1. Background

1.1 Nepal’s constitution has established a federal model of governance, with three spheres
of government working together in coexistence, collaboration and coordination. In
addition to the Federal Government, there are now 753 local governments and 7 PGs,
with the functions and responsibilities of the state divided between them.

1.2 Local Governments: The local governments have been established as ‘elected
Mayoral executive’ systems, comprising an elected Executive, headed by a Mayor /
Chair, but also including a Deputy Mayor, Ward Chairs and Ward members (all directly
elected to their positions). This Executive reports twice a year to a wider Assembly,
formed of all locally elected officials mainly from the wards. The decisions made by the
Executive are implemented by an Administration, headed by a CAO. As well as
legislative and executive functions, the local governments have some judicial
functions, exercised by a Judicial Committee headed by the Deputy Mayor/Chair.

1.3 Provincial Governments: PGs comprise a unicameral parliamentary system, with an

elected Chief Minster heading a Cabinet of Ministers that forms the Executive. The
Provincial Assembly passes all legislation and oversees the work of the Executive. A
Principal Secretary, currently appointed by the Federal Government, works as the
Chief of Staff of the Provincial Administration.

1.4 Funding: Arrangements for allocating resources to Local and PGs through the five
revenue sharing/grant mechanisms are being developed (Inter-governmental Fiscal
Transfers). The Office of the National Natural Resource and Fiscal Commission
(NNRFC) has been established, although Commissioners have not been appointed
yet. From the Fiscal Year 2018/19, in addition to the conditional and equalisation
grants, local and PGs have started receiving revenue sharing, special and matching
grants.

1.5 Staffing: Arrangements for allocating staff from the federal government to local and
provincial administrations are temporary at present. 3 A number of employees have
been deputed, but most local and PGs lack sufficient staff to fulfil their functions.
Detailed Organisation and Management Surveys conducted by the SNGs themselves
are expected to form the basis for organizational and staffing decisions for the
provincial and local governments. Many Local Governments also lack financial
management and procurement systems.

1.6 Systems and ways of working: Although some of these systems can be modelled
on previous systems, in many cases, new ways of working together and reaching
collective decisions are required of elected representatives, often coming from different
parties. Model laws, templates and processes have been developed by the Federal
Government and shared with LG leaders and first round of orientation/training has
been provided to selected elected officials, representatives and administrators. These
provide a basis and starting point for SN governments to become operational.

1.7 IG capacity, structures and systems: The constitution and subsequent functional
unbundling report sets out specific functions for each sphere of government4, together
with a range of concurrent functions assigned to more than one sphere of government.

3The local governments have inherited the staff from the hitherto local bodies; however, the provincial governments
been relying purely on the staff deputed from the federal government
4In case of the local governments, the functions have been documented in the LGOA.

Page | 108
 Envisaged in the Nepali constitution and a common feature of many federal systems
is the provision for and emergence of structures and processes that promote
governments coming together to agree strategies, policies and programmes.

2. Provincial and Local Government Support Programme:

2.1 The PLGSP is intended to build the capacity of the SNG units so that they can play
their full role in the new system of governance.

2.2 The programme envisages the creation of PCGGs in each province, whose role would
be to serve the CD needs of each local government and PGs. Each local government
will determine its own needs based on a LISAbefore the PCGGs will respond by
offering a ‘menu’ of capacity building services.5

2.3 In addition to the provision of training and technical assistance to support public
administration at the local and PGs, the programme also intends to (a) promote
innovation in governance, service delivery and local economic development; and (b)
encourage collaboration between provincial and local governments and between local
governments themselves.

3. The Innovation Partnership Fund (IPF)

3.1 Why the IPF? Generally the IPF will support good governance, as set out in Article
51(b) of the constitution. Specifically, there are several reasons for introducing an IPF
modality to the Provincial and Local CD Programme:

 To create a special purpose vehicle for funding innovations: The Fund will be
a special purpose funding vehicle for financing innovations at sub-national levels
to demonstrate, learn and replicate good innovative practices. This will be a risk-
fund where the SNGs will participate with a partnership approach to take risks for
governance innovations.

 To encourage ownership: Under the IPF modality, local governments

(sometimes in partnership with non-government partners) must apply for services.
This ensures they are requesting something they genuinely have an interest in
receiving.

 To allow variation depending on context: Local governments in Nepal vary in

size and capacity, from large metropolitan governments with populations close to
1 million, to small rural governments with populations less than 10,000. An IPF
modality allows Local Governments to decide for themselves, based on their
specific requirements, what support they wish to receive. The service is not
planned in Kathmandu and ‘delivered’ to them but rather conceived by the
provincial and the local governments themselves.

 To allow innovation and learning: The existence of 753 autonomous local

governments provides a unique opportunity for innovations in governance, service
delivery and economic development. New ways of working, if successful, can be
sponsored for scale-up by PGs or the Federal Government. If unsuccessful,
lessons can be learned and shared with other local governments. The ability to

5In addition, upon the request of the Government of Nepal, the World Bank and the TSNGP are planning to carry
out a comprehensive ‘federal needs assessment’ including a sample of provincial and local governments to provide
a snapshot of the current situation.

Page | 109
 compare how one local government tackles a problem versus how another tackles
the same problem can be extremely powerful and in other countries has been a
successful way to implement reforms.6

 To promote federal-provincial-local cooperation: While the constitution makes

federal, local and PGs autonomous, they nonetheless must cooperate in a range
of areas from spatial planning to economic development to the delivery of
concurrent functions. Similarly, due to the relatively small size of many local
governments relative to the functions assigned to them, there is a lot of scope for
cooperation among the local governments and the LGOA provides for joint service
arrangement among them for the effective delivery of services. By providing a role
for each of the federal, provincial and local governments in the operation of the
IPF, the Fund will create practical grounds for collaboration and cooperation
between all three spheres.
3.2 Competitive vs non-competitive models: Most similar (challenge) Funds are
competitive. They seek to allocate scarce resources effectively by comparing
proposals and awarding funds to those assessed to have the most promise. The
dynamics of competition incentivises innovation and quality as ‘bidders’ seek to deliver
more than their competitors. The downside of competitive approaches, however, is
that, by definition, many local governments must miss out and that it typically will be
the local governments with the least capacity (and therefore arguably the greatest
need) that fail to secure funds. The IPF must therefore balance competition with less
competitive models, for example, whereby all governments are able to secure funds
for certain things, should they meet minimum criteria (e.g. a clear proposal, rationale,
plan for sustainability, etc). In general:

 The more the objective is innovation, the greater the level of competition should
be; and

 If the objective is less on innovation and more on cooperation and capacity, the
less competition there should be.

3.3 Challenges and risks: There are two main challenges or risks that the IPF will need
to mitigate against:

 Very small, low capacity governments will not have the ability to bid effectively for
support. This can be mitigated by having ‘windows’ for applications that are less
competitive, and by providing specialist support initially from the TA facility, and
then from the PCGG when ready, on concept/proposal preparation.

 Most local governments in Nepal now lack basic ability to function, and arguably
must focus on these basics before seeking to innovate creatively. This can be
mitigated by offering ‘windows’ focused more on basic functions and less on
innovation.

 The competitive dynamics of the IPF approach encourages competition instead of

collaboration between local governments. This can be mitigated by having
‘windows’ for collaboration on particular services (as foreseen under clause 26 of
the LGOA), whereby local governments apply jointly (perhaps with support from
DCCs).

6 See for example “Policy Experimentation in China’s Economic Rise” by Sebastian Heilmann:
https://link.springer.com/article/10.1007/s12116-007-9014-4.
Page | 110
  Managing and administering IPF effectively so that high quality applications are
received and well-executed is a highly labour-intensive exercise. This will be more
apparent in the case when dealing with 753 local governments, most of which are
new and none of which will be familiar with competitive IPF approaches. A
relatively large number of highly capable staff will be needed in each province; and
a special communication package will be required to inform the local governments
about the opportunity.

 When they receive extra funding, the local governments may try to meet the needs
of citizens that are not met by their regular sources or incentivise the officials by
paying extra benefits. This can be addressed by putting in place stringent
measures in the guidelines to not to pay for such costs from resources received
from the Fund. Similarly, the co-financing arrangement will help tackle this issue.

3.4 Objectives: The IPF will encourage progressive and innovative local governments to
use their initiative to propose creative and innovative ways of working within their own
governments and in association with other governments and to secure additional
resources for piloting and implementing those ideas.

3.5 The IPF will reward innovation and promote cooperation whilst allowing elected leaders
to both exercise initiative and to retain ownership. The Challenge Fund modality will
promote the collaboration and cooperation principles of Nepali federalism by not
imposing on different spheres of government but allowing different approaches within
the constitution and law to develop in response to local conditions.

3.6 This can be summarised in three objectives (all in support of the overall PLGSP
objectives):

 To help local governments develop their basic functional capability in a way that
retains strong ownership by the local government itself.

 To encourage innovation and experimentation in governance, service delivery and

economic development, so that all local governments can learn from new and
effective ways of working.

 To encourage cooperation between local governments, especially neighbouring

local governments, and with provincial governments.

3.7 To achieve these objectives, the IPF will have two ‘windows’ for grant applications:

 Innovation co-funding; and

 Collaboration and shared/joint services.

3.8 Window A: Innovation co-funding (competitive window)

This window would solicit innovative proposals for service delivery, contribution to
SDGs, governance (e.g. transparency and accountability), dispute resolution and local
economic development. Bids would be open to Local Governments directly or in
partnership with NGOs or private companies. Criteria would be developed to ensure
funding was genuinely directed at innovation and was not merely additional to other
funding sources. As experience develops of actual calls on the fund, more targeted
criteria, themes or even sub-windows for particular types of innovation (IT,

Page | 111
 transparency, remote communities, etc) could be considered. There will be a small
component of co-financing (suggested 25 percent). 7

3.9 Window B: Shared services (competitive window)

Although local governments are autonomous legal entities under the constitution, there
are many interdependencies between neighbouring local governments created by
geography and trade. Further, there is scope for efficiency gains and cost-savings if
local governments cooperate with each other. The purpose of the window would be to
encourage such collaboration.

Applications to the window would be, for example, to secure the services of specialists
that local governments cannot afford to recruit full-time on their own (e.g. economic
specialists, or legal advisors, or spatial planning experts). Alternatively, they could be
for joint projects, such as a feasibility study for subprojects that span local government
geographical boundaries. Applications would have to come from multiple local
governments and not by one local government alone.

Shared services would be widely defined to include local economic development, but
could also include health, education, agriculture, the management of forests and water
resources. Where applications are for specialist staff, the costs of the staff should be
met 100 percent by the local governments making the application, but the recruitment
will be handled by the PCGG. Where applications are for non-staff costs, local
governments should co-fund a suggested 25 percent8.

4. Governance, organisation and management of the IPF

4.1 The NEC will oversee the IPF. Assisted by a Secretariat, this committee will:

 Decide on the allocation of funds to each province each year under each window.

 Develop guidelines for the management of the Fund and make clear the principles
for appraisal of proposals under each window.

 Track funds and assess the performance of each Provincial Fund.

 Commission research and evaluation services to assess the impact of project

awarded funding, ensuring wide and public dissemination of learning for other
local governments.

 Ensure audit of each project by the OAG.

 Prohibit local governments from future applications for a fixed period of time where
there has been malpractice.

4.2 The PCC will administer the Provincial IPF and make decisions on grants for each
proposal on the basis of recommendation of the PPIU which will appraise the proposals
received from the LGs or the agencies of the PG. The PPIU will have adequate and
capable professional staff to appraise the proposals. The PSC will approve additional
(supplementary) strategic guidelines for processing the proposals and for

7 For example, a local government could bid in partnership with an IT software firm to pilot use of smartphones to
monitor drug stocks or environmental degradation.
8 For example, 3 local governments could bid together for an urban planning expert to regularly visit and help to

develop/monitor spatial development plans.

Page | 112
 disbursements from the IPF in alignment with the national guidelines furnished by the
NSC. The PCC will follow the national guidelines and any additional guideline provided
to it by the PSC. The PCC will:

 On the basis of the approved guidelines, agree calls for proposals.

 Publicise calls for proposals, including through regional and local media.

 Review proposals shortlisted by the IPF Secretariat (the PPIU), against set scoring
criteria, and make awards.

 Publish on a dedicated website the applications received, and the reasons for both
short-listing and award.

 With the support of the Secretariat, periodically monitor selected subprojects, to

ensure transparency and accountability, but also publicise successes.

 Where problems or non-compliance is found, review, document and escalate to

the PSC with a recommendation for action.

4.3 The PPIU will function as the secretariat to manage the operations of the IPF. The role
of the Secretariat will be:

 To prepare calls for proposals.

 To solicit proposals, by intensive communication and liaison with local

governments and non-governmental organisations.

 To provide support to local governments on how to prepare proposals.

 To review and shortlist applications, following the criteria set by the PSC,
maintaining a record of each appraisal for publication online, and utilising the
services of independent experts, e.g. from Universities, but possibly anonymous.

 Arrange and support the holding of PCC meetings.

 Communicate awards and manage the allocation of funds/services.

 Receive narrative and financial reports from grant recipients, notifying the PCC or
problems or non-compliance.

 Commission third-party monitoring of grant implementation.

 Manage finances and submit comprehensive financial reports each trimester to

the NEC and PSCs and ensure that audit reports are received on time.

 Disseminate findings on the performance of local governments and each

provincial fund and manage cross-learning among the LGs, e.g. by organizing
innovation market place at the provincial level.

 Each PPIU/ IPF Secretariat will have adequate and qualified experts and
administrators to manage the fund. The Programme TA Fund will support the PPIU
with experts for the programme period to work as Governance Specialist, Grants
Management Specialist, Monitoring and Evaluation Specialist, and a
Page | 113
 Communications officer. The rest of the staff will be appointed from the
programme finances as per the need.

4.4 Who can apply? For Window A, proposals will be accepted from (a) individual local
governments, or, agencies of the PGs (b) multiple local governments applying jointly
or (c) local governments applying in partnership with non-governmental organisations
or private firms whose expertise is necessary for implementation of the project. For
Window B, proposals will be accepted only from multiple local governments applying
jointly.

4.5 How will appraisal work? Detailed design of the operation of each Window will
determine exact criteria for appraisal but could include, for example, likely impact,
innovation, feasibility, comprehensiveness of proposal, costs, monitoring and
evaluation arrangements and sustainability. Some Windows may require a two-stage
process: first short concept notes, and only then full applications. All proposals,
appraisal scores and decisions should be published on a dedicated website, to ensure
maximum transparency and reduce the number of complaints from unsuccessful
applicants. (A complaint management system may nonetheless be necessary). A
process for soliciting anonymous peer reviews of proposals from suitable experts
should be put in place.

4.6 What will the fund not support? The IPF will not support the construction of
infrastructure, except in exceptional cases where a strong argument can be made that
the method of construction will be highly innovative (and then funding will only be for
feasibility and a prototype); or when such funding is part of an application for shared
services under Window 3. The Fund will also not pay the salaries or allowances of full-
time staff working for the local government (all grants must be time-limited and
demonstrate a plan for sustainability). Similarly, no vehicles and furniture will be
allowed to be purchased from the funds for the regular purpose. Financial limits on the
size of applications will need to be set out in the guidelines approved by the Federal
Steering Committee.

4.7 Research, monitoring and evaluation: One of the major advantages of the IPF
approach is that it allows innovation, variation and comparison of different approaches.
But the benefits from this can only be realised if lessons are learned by study, analysis,
documentation and sharing of experience. This is most appropriately performed by
independent, expert researchers or evaluators, perhaps from regional Universities,
following guidelines/methodologies set by the PLGSP PCU.

4.8 Audit and fiduciary risk: All grants should be audited by the OAG, with Financial
Statements presented according to a format stipulated by the OAG. Additional fiduciary
risks unlikely to be captured by OAG audits should be mitigated by (a) clear financial
management and procurement guidelines for grant implementation and (b)
deployment of third party monitoring experts from a centrally-contracted firm, given the
authority to confirm whether activities are being carried out as they have been reported,
and in accordance with implementation guidelines. Consideration should be given to
ineligible expenditure, such as (a) regular running costs of local governments or the
provincial agencies concerned, (b) vehicles or POL and (c) allowances or salary top-
ups to staff.

4.9 Costs: The total funding available for the IPF will be built into the provincial conditional
grants from the federal budget into the “Sub-national” budget book. The NEC will
indicate the funds available for subprojects under the IPF in each year’s ASIP for
Provincial Programme under PLGSP. The NEC will allocate funds for the provincial
IPF taking into account provinces’ population, relative unit costs (e.g. of staff and
Page | 114
 services) and previous performance. There will be no allocation for the IPF in the FY
2018-19 (January – July period) and the FY 2019-20. The allocation will start at
moderate scale in the Year 2020-21 for the IPF and can be up-scaled in the
subsequent years based upon the experience of execution of the subprojects under
IPF in the Year 2020-21, increasing in the outer years 3 and 4 as staff and local
governments become familiar with their roles; systems and procedures are defined;
and, lessons from the first rounds of grants are learned.

4.10 Performance-based allocations: Building on the heritage of the ‘minimum conditions-

performance measures’ system, allocations to each provincial fund could, from Year 2
onwards, take into account previous year performance. This could include ‘minimum
conditions’ such as transparent reporting on the use of grant funds, and performance
measures such as utilisation of funds and numbers of applications received.

4.11 Size of IPF: Total size of the IPF will be moderate in the initial years of the programme
and can be increased based upon success of the Fund in bringing results and meeting
the objectives of the Programme. The demand-based projects being similar to IPF
projects, the resources from DD window can be diverted to IPF in outer years of the
Programme. The tentative initial allocation is estimated to be $60 million.

Page | 115
Annex 15: Note on Key Elements for the Charter to establish the Provincial Centre for
Good Governance

The PCGG is proposed to be established in each province. The federal government

(MOFAGA) has proposed amendments to the existing LDTA Act for the purpose of handing
over the regional centres under the LDTA to the PGs. The PGs will need to establish their own
institutions to furnish trainings and other capacity building inputs of high quality and relevance
for the local governments and the agencies of the PGs within their provinces. This can be
done through the effective and efficient use of the properties and other resources handed over
to them by the federal government. The PGs should enact a legislature by their provincial
assemblies providing a charter to establish such institution. A name for such institution has
been suggested to be ‘PCGG’. If some of the PGs take time to draft and pass the Bill to
establish the PCGG, they may establish the PCGG through an executive order for the time
being and at a later period, can convert the executive order/charter into a provincial Act. It is
suggested that the MOFAGA provide some template/model of charter for establishing the
PCGG in order to maintain some uniformity across the seven provinces and establish linkages
with the federal dispensation for the purposes of the restructured LDTA. A model Act will also
help the PGs to fast-track the drafting of the charter/provincial Act and its enactment from the
Assembly. Effective implementation of the PLGSP right from the beginning of the programme
period depends upon quick operationalization of the PCGGs as they will be major vehicles to
deliver the capacity building inputs to the local governments and the provincial agencies.

Following are some points for consideration while writing the draft provincial law or the charter
to establish the PCGG. The charter should include provisions for:

1. A Steering Committee, or, a Council chaired by high level political executive of the PG to
decide on long term policy matters and overall steering of the operations of the centre;

2. An Executive Committee of the PCGG to execute annual plans, implement them and
make other strategic decisions;

3. A Chief Executive Officer, a high calibre- professional appointed through a transparent

and competitive basis from the market – his tenures, ToR and executive powers and
duties;

4. Financing of the Centre – should include grant financing from PG and local governments
as co-owner of the centre;

5. Types of programs for capacity building, trainings, empowerment of the elected officials,
research, academic works and allied activities – that the centre will offer and the way
such programs are costed/financed;

6. Shared financing for the services in the offered ‘menu’ – from the service recipients,
especially, the local governments or the provincial agencies – procuring the service;

7. Staffing methods for both for professionals and the office staff should have an element of
competitive method of screening and selecting such staff should make an essential
mention in the charter;

8. Book-keeping, accounting, internal audit and control of the finances and inventories;

9. External audit to be done by the OAG or its nominee;

10. Especial mention of execution of donor funded or co-funded programs on CD – in order

to meet the Programme requirements and mitigate the fiduciary risks;
Page | 116
11. Relationships with the federal restructured LDTA in terms of core curriculum on devolution
and good governance, accreditation, quality assurance of training delivery and academic
programmes and joint activities and their modalities; and

12. Relationships with PG and its agencies including with the other CD providers in the public
sector within the provinces. Joint and integrated programs may be run by the PCGG in
collaboration with the universities, academic institutes and other governmental/ parastatal
training institutes.

Page | 117
ANNEX 16: NOTE ON KEY ELEMENTS FOR THE MOU BETWEEN THE MOFAGA AND
THE PROVINCIAL GOVERNMENTS TO EXECUTE THE PLGSP

As, the three levels of governments in federal Nepal are autonomous governments in their
respective spheres of official business, the implementation of the PLGSP at the provincial
level, especially with the dispensation of decision making structures like: PSCs, Provincial
Executive Committees (PECs), PPIUs and the Provincial Centre of Good Governance
(PCGGs), can be made fully effective, only if, the PGs agree with the PLGSP Programme
Document, their roles and responsibilities, financing and implementation modalities of the
Programme and the fiduciary arrangements for the Programme, like: accounting, reporting,
auditing and M & E provisions. Such understandings can be reached between the federal
ministry of MOFAGA and the PGs – represented by their implementing agencies – the Office
of the Chief Minister and the Council of Ministers (OCMCM) through a ‘Memorandum of
Understanding’ (MoU) deliberating on these essential components for smooth implementation
of the Programme at the provincial level. While the DPs and the federal MOF/MOFAGA can
have the ‘Programme Document’ (ProgDoc), joint financing arrangements (JFA) and the
bilateral agreements to make the programme and its financing effective at the national level,
the MoU between the MOFAGA and the OCMCMs of the PGs will expedite the matters related
with implementation of the programme at the provincial level.

Following are some elements which should be agreed by the PGs (OCMCM) with the
MOFAGA to execute the PLGSP. These elements are suggested to be built-in in such MoU
between the MOFAGA and the OCMCMs:

1. Agreeing the ProgDoc;

2. Agreeing with the management structures at the federal level and at the provincial level,
including those of: NSC, NEC, PCU (national level), TASP, PSC, PEC, PPIU and the
PCGG;

3. Agreeing with the budgeting and planning arrangements of the programme to receive
funds from the programme including those emancipating from the annual ASIPs,
guidelines approved by the NSC or other competent agencies responsible for execution
of the programme;

4. Agreeing to use the resources made available as ‘conditional grants’ to them (from the
federal budget for SNGs) as per the agreed ASIP and the ProgDoc and with further
provincial allocations made (through their Red Books - to the needful agencies such as
the PPIU, PCGG and the respective local governments;

5. Agreeing to adhere to the principles of GESI (through mainstreaming and through setting
aside separate resources for dedicated GESI activities), good governance, devolution,
participatory processes, downward accountability mechanisms (towards the citizens
groups) and principles of transparency and ‘zero tolerance to corruption;

6. Agreeing to execute the Governance Challenge Fund as per the guidelines approved by
the NSC and agreeing to ensure best use of resources for the purpose;

7. Agreeing to execute demand-based co-financing projects with a subsidy policy approved

by the NSC;

8. Agreeing to allocate a pre-determined resource base for the PCGGs and also add-on to
the programme provincial funds either as matching fund or as supplementary funds;

Page | 118
9. Agreeing with the fiduciary arrangements including those on: financial and resulting
reporting (also to the PCU at MOFAGA), accounting, internal audit, external audit, M&E
arrangements (including those on third party evaluation) and further agreeing to send all
financial reports (from PPIUs) to the PCU (federal level) in time (as agreed in the MoU) –
failure to which may lead to suspension of further grants from the federal treasury;

10. Agreeing to fulfil the responsibilities of the respective parts such as OCMCMs agreeing
to establish PSC, PEC, PPIU and the PCGG, providing adequate professional staff and
other resources to these units, appointing CEO of the PCGG on competitive and
transparent basis, adhering to the good governance practices in the best ways possible
and co-owning the Programme and its management structures at the provincial level with
the local governments within the province with a spirit of coordination and cooperative
federalism – the MOFAGA agreeing to devolve the functions, functionaries and finances
for institution building and CD for the SNG (including the properties and the resources for
erstwhile regional centres of the LDTA) to the PGs, supporting the PG and its agencies
with both financial and technical resources as per the spirit of coordination and
cooperative federalism and as per the provisions of the ProgDoc and furnishing with
technical support to the PGs and the local governments for building their institutional
strengths to best implement the Programme and be able to minimize the fiduciary risks
as envisaged in the ProgDoc; and

11. Agreeing to jointly own the programme along with the federal ministry of MOFAGA and
the local governments; jointly evolve the required structures, processes and procedures
and execute them along with the experiences and lessons learnt during the Programme
cycle; jointly sustain and foster the institutions and structures created during the
programme cycle (including the PCGGs); and, jointly plan, execute, monitor, evaluate and
review/revise the programme based upon such joint learning.

Page | 119
ACRONYMS AND ABBREVIATIONS

ADB Asian Development Bank

ASIP Annual Strategic Implementation Plan
CAC Citizens’ Awareness Centre
CAO Chief Administrative Officer
CD Capacity Development
CHF Swiss Franc
CSO Civil Society Organization
DAG Disadvantaged Group
DCC District Coordination Committee
DFID Department for International Development (UK)
DP Development Partner
FCA ForeignCurrent Account
FCGO Financial Controller General’s Office
FDG Focused Group Discussion
GBP British Pound
GESI Gender Equality and Social Inclusion
GoN/GON Government of Nepal
HRM/HRD Human Resource Management/Human Resource Development
IB Institution Building
IG Inter-Governmental
IPF Innovation Partnership Fund
IPFC Integrated Plan Formulation Committee
JFA Joint Financing Agreement
JICA Japan International Cooperation Agency
LDTA Local Development Training Academy
LED Local Economic Development
LG Local Government/s
LGA Local Government Association
LGCDP Local Governance and Community Development Programme
LGOA Local Government Operations Act, 2017
LISA Local Government Institutional Systems Assessment
LSGA Local Self-Governance Act 2056 (1999)
M&E Monitoring and Evaluation
MARS Municipal Administration and Revenue System
MDTF Multi donor trust fund (for PFM)
MOALD Ministry of Agriculture and Livestock Development
MOEST Ministry of Education, Science and technology
MOHP Ministry of Health and Population
MOF Ministry of Finance
MOEAP Ministry of Economic Affairs and Planning (Provincial Ministry)
MOIA Ministry of Internal Affairs (Provincial Ministry)
MOSD Ministry of Social Development (Provincial Ministry)
MOID Ministry of Infrastructure Development (Provincial Ministry)
MOFALD Ministry of Federal Affairs and Local Development (Erstwhile)
MOFAGA Ministry of Federal Affairs and General Administration
MOWCSC Ministry of Women, Children and Senior Citizen
MTR Mid Term Review
MAN Municipal Association of Nepal
NARMIN National Association of Rural Municipalities of Nepal
NCC National Coordination Committee
NNRFC National Natural Resource and Fiscal Commission
Page | 120
NAFRMP National Advisory Fiduciary Risk Management Committee
NPD National Programme Director
NSC National Steering Committee
NOK Norwegian Kroner
NPC National Planning Commission
O&M Organization and Management
OAG Office of the Auditor General
OCMCM Office of the Chief Minister and Council of Ministers (Provincial Government)
OLPGA Open Local/Provincial Government Account
OPMCM Office of the Prime Minister and Council of Ministers
PCGG Provincial Centrefor Good Governance
PG Provincial Government
PCU Programme Coordination Committee
PLGSP Provincial and Local Governance Support Programme
ProgDoc Programme Document
PFM Public Financial Management
PLG Provincial and Local Governments
PPIU Provincial Programme Implementation Unit
PCC Provincial Coordination Committee
PSC Provincial Steering Committee
SDC Swiss Agency for Development and Cooperation
SDG Sustainable Development Goals
SNG Sub-national governance/governments
SNGP Sub-National Governance Programme
SUTRA Sub-national Treasury Regulatory Application
TA Technical Assistance
TASC Technical Assistance Sub-Committee
TASP Technical Assistance Service Provider
TLO Tole / lane (Community) Associations
ToC Theory of Change
ToR Terms of Reference
TSNGP Transition to the Sub National Governance Programme
UNDP United Nations Development Programme
USAID United States Agency for International Development
WCF Ward Citizen Forum
WDO Women Development Officer

Page | 121