Decentralization dilemmas: Lessons from Nepal’s federal transition

Federalism, as a governance model, has emerged as a cornerstone of modern political discourse. It offers promises of inclusivity, decentralization, and equitable development. However, its  implementation is often fraught with complexities, as exemplified by Nepal’s transition to a federal  democratic republic. In examining the socio-political dynamics of federalism within Nepal’s context, it becomes evident that the journey towards federalism is fraught with challenges, yet it also  presents opportunities for transformative change. 

Nepal’s transition to federalism in 2008 marked a significant departure from its centralized past.  There was a commitment to address historical grievances and foster inclusive governance. The  adoption of the Constitution of Nepal 2015 laid the groundwork for a federal structure. It aims to  distribute power and resources more equitably among diverse regions. The federal system changed the governing system, empowering local communities and ensuring their representation  in decision-making processes.  

The federal structure comprises three tiers of government: federal, provincial, and local. At the  central level, key responsibilities such as national security and foreign affairs are managed. While provinces and local bodies handle matters of regional and local significance. This  distribution of powers and responsibilities was intended to foster greater autonomy and  accountability at the grassroots level. However, the road to effective federalism has been filled  with hurdles, revealing deeper socio-political issues that demand attention and resolution. 

One of the primary challenges facing Nepal’s federal experiment is the struggle to establish powerful legal and institutional frameworks at the provincial and local levels. Despite the noble intentions behind decentralization, Nepal encountered several challenges in its implementation. One significant hurdle was the limited administrative capacity and resources at the local level.  Many municipalities lack the infrastructure, human capital, and financial resources needed to  effectively deliver services and govern their jurisdictions. This led to disparities in service delivery and hindered the realization of decentralization’s potential benefits. 

Despite constitutional mandates, the decentralization of power has been met with resistance and  bureaucratic inertia, hindering the effective delivery of public services and impeding developmental initiatives. Many local governments lack the institutional capacity, technical  expertise, and financial resources to fulfill their mandated responsibilities effectively. Delays in  devolving authority over key sectors such as education and law enforcement have led to friction  between federal and provincial authorities, increasing governance gaps.  

In addition to administrative challenges, political interference at the local level has threatened the  autonomy and effectiveness of local governments. Favoritism politics, nepotism, and corruption  undermined the principles of decentralization and eroded public trust in governance institutions. 

Moreover, Nepal’s federal journey has been marred by intergovernmental conflicts over resource  allocation and revenue sharing. The tug-of-war between federal and state governments reflects  broader tensions regarding the distribution of power and fiscal autonomy. In the absence of clear 

guidelines and mechanisms for cooperation, these conflicts have stymied progress and undermined  the potential benefits of federalism. For instance, disputes over the distribution of natural  resources, such as water and minerals, have escalated into protracted legal battles, further  polarizing stakeholders and impeding economic development. 

Beyond institutional challenges, Nepal’s federal experiment has also laid bare deep-seated social  divisions and identity-based grievances. Ethnic-based demands for greater autonomy and  representation have underscored the complexities of managing diversity within a federal framework. The proliferation of identity politics and ethnic tensions has raised concerns about the  potential for fragmentation and conflict, highlighting the delicate balance between autonomy and  national cohesion. For instance, the demand for provinces based on ethnic lines has fueled debates over territorial boundaries and resource allocation, posing existential challenges to Nepal’s nation building project. 

However, amidst these challenges, Nepal’s federal journey also offers insights into the  transformative potential of decentralized governance. The devolution of power to local  governments has empowered communities to participate in decision-making processes and shape  their own development agendas. Grassroots initiatives aimed at promoting social inclusion and  gender equality have flourished, showcasing the capacity of federalism to foster bottom-up  innovation and participatory governance. For example, initiatives such as community forestry  programs and women’s cooperatives have demonstrated the effectiveness of local ownership in sustainable resource management and crisis management as seen during the covid pandemic. 

As Nepal continues to navigate its federal journey, several key considerations emerge for  policymakers and practitioners worldwide. Firstly, ensuring effective coordination and collaboration between different tiers of government is essential for the success of federalism. This requires a clear distinction of roles and responsibilities, as well as mechanisms for resolving  disputes and promoting dialogue. Secondly, investing in local capacity-building and resource mobilization is crucial for empowering decentralized institutions and enhancing service delivery at the grassroots level. Thirdly, addressing underlying socio-economic disparities and identity based grievances is essential for promoting social cohesion and preventing conflicts within a federal framework. Finally, fostering a culture of transparency, accountability, and citizen engagement is vital for building trust in decentralized governance institutions and ensuring their  legitimacy and effectiveness. By embracing these principles and lessons learned from Nepal's  federal transition, countries can navigate their own decentralization journeys more effectively and  realize the transformative potential of federalism.

Aastha Pokhrel

BA LLB 

Kathmandu School of Law