Government replicates UNCDF performance based grant system in 75 District Development Committees

All sectors of society in Nepal are working indefatigably to contribute to the country's economic growth, to develop the nation's infrastructure and to improve the livelihoods of all Nepalese. UNCDF is providing comprehensive support to decentralized governance, local service delivery and community empowerment in Nepal, and supporting the basis for a national programme framework for all such assistance by development partners. Photo by Magnus Magnusson.

KATHMANDU – 15 May 2008: The Government of Nepal has decided to replicate UNCDF’s performance based grant system in all of the country’s 75 District Development Committees linking the results of the performance assessment with its own development grant. The performance-based grant system is at the heart of UNCDF’s Decentralized Financing and Development Programme (DFDP), which aims to reduce poverty through supporting local governments to provide services and deliver targeted infrastructure in accordance with the Local Self Governance Act (LSGA) in an efficient, accountable and transparent manner.

The programme, which is supported by the United Kingdom’s Department for International Development (DFID) is expected to have a direct local impact on socio-economic development and poverty reduction; to strengthen the capacities and legitimacy of local bodies and other local institutions; and to contribute to evolving procedures, practices and policies of wider relevance for the decentralization process in Nepal.

“We are very pleased that the Government is taking ownership of what we believe to be a very important pre-condition to sustainable, long-lasting development at the local level,” said Kadmiel Wekwete, UNCDF’s Director of Local Development.

Performance of each of the 75 districts will be individually evaluated annually based on Minimum Conditions (MCs) and Performance Measure (PMs) indicators. The MC/PM assessment manual was approved by the Ministry of Local Development on 17 April.

Started by UNCDF and DFID in 2004/2005 in 20 programme districts, these Minimum Conditions are the minimum safeguards for proper utilization of public resources, identifying the basic absorption capacity and maintaining financial discipline. Performance Measures are designed to create incentives for Local Governments to improve their performance.

The UNCDF/Decentralized Financing and Development Programme (DFDP) is currently providing approximately US$ 100,000 capital development grant per district/ year. The Local Body Fiscal Commission (LBFC) will conduct a national Minimum Conditions and Performance Measure assessment in June, with financial and technical support by DFDP. The results of this assessment will have influence the size and targeting of the Government of Nepal’s unconditional capital development grants allocated to the District Development Committees for the fiscal year 2008/09.

For more information on UNCDF’s programmes in Nepal, please visit the UNCDF Nepal webpage.