Governance failure in Nepal

Every political party is now talking of good governance, anti-corruption, service delivery, integrity, accountability, and transparency. Zero tolerance against corruption, inefficiency and lethargy have become political catchphrases. However, in reality, performances defy promises.

In a previous article, using state fragility indicators, I refuted the hypothesis that Nepal is heading towards state collapse. The available indicators show that the country is improving, albeit slowly, its fragility and vulnerability situation while restoring resilience and stability. Since state is still a significant factor in Nepal’s development as well as under-development, understanding governance situation provides an important clue on our state of affairs.

World governance indicators

This time, using governance indicators, produced by the World Bank - World Governance Indicators (WGI), I will try to assess governance situation of Nepal. The indicators are available for a longer period of time spanning from 1996 to 2021, for nearly 200 economies of the world. This makes possible for drawing historical sketch on our governance situation, including longitudinal and cross-sectional comparisons.

First, a brief primer on governance and its measures is required. Governance could mean many things to many people. It could mean corporate governance, institutional governance, local, municipal, provincial and federal governance. However, the Bank has defined governance as “the traditions and institutions by which authority in a country is exercised”.  This includes the process by which governments are selected, monitored and replaced (political governance); the capacity of the government to effectively formulate and implement sound policies (economic governance); and the respect of citizens and the state for the institutions that govern economic and social interactions among them (institutional governance).

Each of these three dimensions of governance included two indicators, giving a total of six indicators. These are briefly described below:

Political governance

• Voice and Accountability: This includes variables like political process, civil liberties and political rights and media freedom.
• Political Stability and Absence of Violence/Terrorism: This includes variables like perceptions on likelihood of government being overthrown by unconstitutional and/or violent means.

Economic governance

• Government Effectiveness: This variable includes quality of public service provisions, quality of the bureaucracy, competence and independence of the civil service, credibility of the commitment of government policies. 
• Regulatory Quality: The effectiveness of government regulations on markets, public perception of the regulatory burden.  

Institutional governance

• Rule of Law: The perception and incidence of violent crimes, effectiveness and predictability of the judiciary and enforceability of the contracts.
• Control of Corruption: Various sources of corruption including their frequency and impact on business environment.

 The data

Chart 1 presents the trends in composite governance indicator (simple averages of the three) and three dimensions of governance (again simple average of two components) for Nepal. The full data is given in Table 1. Please note, only percentile scores are being used where 100 is the full score (best possible situation) and zero (worst situation). The higher the score the better is the performance. For more details on methodology and scoring, please visit www.govindicators.org.

In the Chart, I have also superimposed significant events or incidents having possible impact on our governance situation. Starting from the initiation of the Maoist War in 1996, our governance situation seems to have declined to a rock-bottom during the period of royal regression (2004-06), thereafter there is a kind of roller-coaster ride with a gradually improving trend. The Covid-19 did not affect much on our governance situation as did the royal regression, political transition and April Earthquake and economic blockade.

Among the three components of governance, political governance has taken a biggest toll due to the Maoist war and royal takeover, possibly due to rescinding of elections and civil and political rights. However, with the People’s Movement II in 2006 and holding of elections, we have made considerable gains in political governance. In fact, it is the topmost factor contributing to our governance situation. However, the gains in voice and accountability has been offset by the losses due to political instability. In fact, the average value on political instability, i.e.,  16 out of 100, is the lowest score.

Again, overall gains in political governance seem to have been offset by losses in the economic governance. From 2013, it is at the bottom and moreover, in a declining trend. The breakdown of the economic governance into “government effectiveness” and “regulatory quality” indicates government effectiveness playing a havoc with our governance performance. There is a greater need for taming bureaucracy than churning out good regulatory policies.

Institutional governance, the primary indicator of social trust, is in a real roller-coaster ride with rule of law and control of corruption moving in tandem. It is too difficult to predict institutional trust.

With an average score of 27 out of 100, we can safely say that governance in Nepal is an exercise in failure. In my next instalment, I will dwell on how failed governance has impacted our economic competitiveness – that is about reading Global Competitiveness Index from the World Economic Forum, Davos.

Table 1: Governance Scores for Nepal (1996-2021)

 Data source: www.govindicators.org

Published on 6 April 2023