Governance and Public Administration

a) Cruxes of the Problem for Achieving Good Governance in Nepal

Public Sector

1. Political instability and instability of institutions — frequent changes of government, transfer of civil servants, and lack of continuity in policy weaken accountability and long-term planning.
2. Weak rule of law and impunity — delayed justice, politicisation of law enforcement, and non-enforcement of anti-corruption laws encourage corruption (reflected in Nepal's low Corruption Perceptions Index rank).
3. Rampant corruption and rent-seeking — in public procurement, revenue administration, land registration, and licensing.
4. Weak accountability institutions — CIAA, OAG, and parliamentary committees lack enforcement teeth; audit reports are not acted upon.
5. Politicisation of the bureaucracy — merit-based recruitment and promotion are undermined by political patronage; transfer and posting are used as rewards.
6. Weak service delivery and citizen interface — red tape, discretionary powers, poor e-governance, and lack of grievance redressal.
7. Fiscal indiscipline and poor project management — cost overruns, duplication of projects, and low capital expenditure.
8. Exclusion and inequality — marginalised groups (Dalits, women, Madhesis, Janajatis) remain under-represented in decision-making.
9. Weak local governance capacity — newly formed local levels lack technical manpower, resources, and clarity of intergovernmental relations.
10. Lack of transparency — poor access to information, weak citizen participation, and inadequate social accountability mechanisms.

Private Sector (Corporate Governance and CSR)

1. Concentration of ownership and family-dominated boards — weak separation of ownership and management; boards act as rubber stamps.
2. Weak regulatory enforcement — OCR, SEBON, and NEPSE lack capacity and independence; penalties are negligible.
3. Weak CSR practice — CSR is treated as charity or publicity rather than strategic responsibility; reporting is not mandatory or audited outside the banking sector.
4. Tax evasion, transfer pricing, and informal economy — large informal sector escapes governance scrutiny.
5. Poor disclosure and transparency — financial statements are often not timely, comparable, or reliable.
6. Weak audit and internal control — auditors lack independence; related-party transactions go unchecked.
7. Collusion between business and politics — policy capture, syndicates, and cartels distort fair competition.
8. Low stakeholder protection — minority shareholders, workers, consumers, and communities have weak voice.
9. Lack of a strong, enforceable CG code — guidelines and directives are not followed in practice.
10. Limited CSR impact — spending is scattered, unmeasured, and disconnected from SDGs.

Root crux: The gap between formal legal provisions and actual enforcement, driven by political patronage, weak institutions, and a culture of impunity — in both sectors.

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b) Legal and Institutional Frameworks: Strengths and Weaknesses

Public Sector

Private Sector

Overall weakness: Overlapping mandates, weak enforcement, political interference, and lack of a unified CG/CSR monitoring body.

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c) Recommendations with Action Plan for Achieving Good Governance

Recommendations

Public Sector

1. Strengthen rule of law — fast-track courts, judicial reform, and strict enforcement of anti-corruption laws.
2. Depoliticise the bureaucracy — fixed tenure for civil servants; merit-based promotion; independent PSC oversight.
3. Enhance accountability — mandatory follow-up of OAG and CIAA reports; publish action taken.
4. Expand e-governance — digital service delivery, online grievance redressal, and open data.
5. Empower local governments — capacity building, clear fiscal transfers, and social accountability tools.
6. Promote inclusive governance — affirmative action for marginalised groups.
7. Institutionalise citizen participation — public hearings, citizen charters, and participatory budgeting.

Private Sector

1. Mandatory CSR reporting — amend company law to require audited CSR reports linked to SDGs.
2. Strengthen CG code — make key provisions mandatory and introduce penalties for non-compliance.
3. Enhance regulatory capacity — strengthen SEBON, NRB, and OCR with skilled manpower and technology.
4. Promote board independence — independent directors; audit committees; whistleblower protection.
5. Encourage ethical business — tax compliance, fair competition, and anti-cartel measures.
6. Link CSR with SDGs — incentivise strategic CSR through tax benefits and recognition.
7. Establish a unified CG/CSR monitoring body — coordinate across sectors.

Action Plan (3-Year)

Monitoring & Evaluation

• Annual Good Governance Index (public + private sector)
• Citizen feedback surveys and social audits
• Parliamentary oversight of CIAA/OAG reports
• Public disclosure of CG/CSR compliance

Conclusion: Good governance in Nepal requires political will, institutional strengthening, legal enforcement, and active citizen participation — in both the public and private sectors — to translate constitutional aspirations into real prosperity.