Local people making local decisions and solving local problems at the local level is the heart of federalism. It is about empowering people. It’s a governance system of self-rule at the local level and shared-rule at the national level.

Sadly, centralization continues on many fronts as the Kathmandu bureaucracy is trying to keep power and resources within it wherever possible. Sadly, we are not learning from the unsuccessful implementation of the Local Self-Governance Act, 1999. Had it been implemented, even 75%, we would probably not be talking about federalism today.

The biggest problem is that the political leadership is not clear about the distinction between the national issues and needs, and provincial and local issues and needs. There are overlaps and sometimes even the contradictions between different levels of government.

While the issues related to the mobilization of Kathmandu based civil servants to the local level has remained unimplemented, the overall performance of the local government has remained poor. The stable government is not able to use more than 45% per cent of the capital budget in the first 11 months of the current fiscal year. This has exposed the state’s low fund absorption capacity in the new federal governance system.

Where do we locate I/NGOs in the federal governance system? What’s the role of Social Welfare Council, apex body for I/NGOs? How do we break the ongoing love and hate relationship between the government and I/NGOs?

The draft Integrity Policy and then the 8-point decisions from the Ministry of Home Affairs raised a serious concern about GO-I/NGO relationship. No doubt, there are areas for improvements for I/NGOs on quality and accountability of operation. I/NGOs are also required to consolidate programs, improve developmental impact, and reduce fragmentation and transaction costs.

However, some controlling provisions in the draft policy and decisions are not civil society friendly. These provisions don’t encourage civil society organizations as development partners. The contributions made by I/NGOs are not well acknowledged in the areas of humanitarian assistance, capacity development, social development, and awareness and advocacy.

Learning from the world experience, constraining civil society space will not strengthen federalism in Nepal. There are resource gaps and capacity gaps at the local level. The engagement with SDGs is currently too slow to catalyze the magnitude of change required to bring at the local level in Nepal. Thus we need effective collaboration between the government, civil society and private sector at the local, provincial and national levels.

As a priority, the federal government should now look into streamlining foreign grant and assistance, and facilitating I/NGOs to work directly with provincial and local governments. It is crucial that the federal government should revise the Society Registration Act, 1977 and Social Welfare Act, 1992. These Acts are in contradictions to the federalism and thereby constraining civil society space in Nepal.

Overall, we need to improve public awareness on federalism – what it is, how does it function and what it means for common citizen? We need to improve GO-I/NGO collaboration. And, we need to break centralization, which has been impediment to citizenry engagement to governance, and their access to government services and opportunities.