Local Infrastructure Support Programme

1 Introduction

1.1 Infrastructure and Governance in Nepal

Resilient infrastructure is critical for economic growth. Nepal’s 2017 move to three spheres of government – and, therefore, decentralization of policy decision-making - was predicated on the idea that bringing government closer to the people would give them a greater voice in policy-making. Local municipalities are de jure empowered to deliver local infrastructure to their constituents, yet face resource and capacity constraints. In this context, the Local Infrastructure Support Programme (LISP) aims to improve Nepal’s new local and provincial governments’ ability to respond to local infrastructure demands; and thereby create jobs and drive local economic development. It will maintain a focus on BEK strategic objectives by increasing the legitimacy, capacity, and accountability of local governments.

LISP Programme activities can increase space for new political actors (via, for instance, community de- liberations as infrastructure is planned, and including provisions to empower female politicians), new economic actors (via, for instance, broad-based employment and transparent contracting in the construction of infrastructure), and enable inclusive development. In its scoping phase, the programme aimed to learn about local government capacity, decision-making practices, and coordination with other spheres of government.

In support of this work, this scoping report has three objectives:

• Define a measurement and monitoring framework for government capacity, decision-making processes, and coordination
• Report key findings from a phone survey of government officials using this framework
• Propose a potential impact evaluation of planned LISP implementation activities

1.2 Summary of Key Survey Findings

​​​​​​Drawing from our phone survey of local officials conducted within the scope of this exercise, as well as citizen surveys, we report three main findings:

Local Governance Capacity

• Most local officials report lack of funds as a key constraint in delivering infrastructure, although some had not spent a large proportion of allocated infrastructure funds at this point in the fiscal year, and many approved projects had not yet been implemented. This points to a potential lack of capacity to spend funds.
• Many municipalities also reported a lack of key processes and data collection to enable infrastructure planning, implementation, and construction monitoring. Our analysis suggests that urban municipalities without these processes in place are less able to spend their allocated funds.
• We conclude that technical assistance may be a binding constraint to improving infrastructure services in most local areas. In LISP implementation, indices of several binary process indicators can be helpful in accessing local government capacity to actually complete projects after receiving grants.

Local Government Decision-Making Practices

• Although local elected government officials state that they base infrastructure investment decisions on the preferences of their electorate, we find that elected officials are not significantly more aligned to local demands than Chief Administrative Officers. Instead, all local officials prioritize roads over other infrastructure categories, and new construction over maintenance, suggesting a bias towards visible infrastructure spending.
• Overwhelmingly, User Committees are the primary mechanism for involving citizens in infrastructure decisions. Yet these committees may not be effectively representing the preferences of the majority of citizens, and they may even be sites of conflict that impede infrastructure delivery. Municipalities that report the influence of local elites and high-level politicians as challenges in forming user committees have significantly lower project implementation rates.
• We conclude that training citizens on how to evaluate costs and benefits of different infrastructure items, the relative value of new projects versus maintenance and transparency on project choice could be valuable.

Intergovernmental Coordination Processes

• Local governments overwhelmingly report financial and budgetary assistance (which is constitutionally- mandated) as the main form of support they have received in the past fiscal year. This support is critical to enable infrastructure delivery, as local governments do not have sufficient internal capacity to raise revenue for infrastructure projects.
• There is evidence of demand from local officials for technical assistance from other spheres of government, but it seems largely unmet. Many local officials were dissatisfied with their last interaction with federal or provincial officials on the topic of infrastructure. Although over half (54%) of municipalities have requested technical assistance from the federal government, only 28 percent of requesting municipalities actually report receiving it.

Collectively, our data provide a few key policy recommendations. First, municipalities are not able to spend the funds that they have and still have not put in place the essential processes to provide infrastructure. This points to a clear role for technical assistance focused on setting up basic processes. Second, the preferences for elected officials are as different from those of citizens as unelected bureaucrats. As such, there is a clear need to develop mechanisms to create infrastructure that reflects citizens’ preferences.