The ‘Forum of Federations Handbook on Local Government in Federal Systems’, edited by Nico Steytler, provides a comprehensive analysis of local governments within federal systems across 16 countries. This comparative study offers valuable insights for scholars, practitioners, and policymakers, especially for nations like Nepal, which are at a critical stage in implementing federal structures.

The countries covered in the book include Argentina, Australia, Austria, Brazil, Canada, Ethiopia, Germany, India, Italy, Mexico, Nepal, Nigeria, South Africa, Spain, Switzerland, and the United States. By exploring how these countries manage their local governments, the book reveals key lessons applicable to both established and emerging federations.

In many countries, local governments are the level of governance closest to the people. They are fundamental in delivering essential services, ensuring representation, and maintaining accountability. Local governance is particularly crucial in urban areas, where most of the population resides. The Covid-19 pandemic underscored the vital role of local governments as they acted as first responders during the crisis. Their proximity to citizens enabled them to meet urgent needs. The handbook emphasises these dynamics, offering lessons that can guide efforts to strengthen local governance in federal systems.

Country-by-country overview

In Argentina, Penélope Vaca Avila highlights the federal, republican, and democratic system established by the 1853 Constitution. Argentina is divided into 24 subnational districts, including 23 provinces and Buenos Aires. Local governments in Argentina, though democratically elected, derive their legal status primarily from provincial laws. This results in significant variations in the size, powers, and tax capacity of local governments across the country, with some municipalities enjoying more autonomy than others.

Graham Sansom and Su Fei Tan explain that local government in Australia comprises 537 elected municipalities and some state-appointed entities. Due to the country’s vast geography and the varied frameworks of its states and territories, local governance in Australia is diverse. However, many rural municipalities struggle financially due to limited functions and revenue, while larger cities face challenges asserting national leadership. The lack of constitutional recognition for local governments means that they play a minor role within the federal system.

Karl Kössler’s examination of Austria reveals that, although local governments are recognised under the 1920 Constitution, they remain largely subordinate to the federal and Länder (state) levels. Local governments, or municipalities, are responsible for providing basic services but depend on the Länder’s financial support. Austria’s ‘three-level federalism’ system focuses mainly on financial relations, with municipalities striving for a more significant political role.

In Brazil, Sol Garson and Kleber Castro describe the country’s federal system, where municipalities were granted federal status with self-organising powers under the 1988 Constitution. However, despite the constitutional recognition, municipalities remain financially dependent on federal transfers and have weak ties with the states. Brazil’s decentralisation process has strengthened municipal autonomy, particularly in sectors such as healthcare, but municipalities still face challenges regarding their financial independence.

Canada’s local government structure, as described by Enid Slack and Zack Taylor, includes over 3,700 municipalities created by provincial legislation. These municipalities, which are "creatures of the provinces", derive their powers from provincial governments rather than constitutional recognition. The decentralised nature of Canada’s political system means that local governance varies significantly across provinces, with no uniformity in structure or functions.

In Ethiopia, Zemelak Ayitenew Ayele notes that while local governments are mentioned in the 1995 Constitution, they lack explicit constitutional recognition. The functions and powers of local governments are not clearly defined in the Constitution, and their role has remained marginal in the country’s political reforms. Local governments in Ethiopia often remain sidelined in legislative and constitutional discussions, limiting their influence in the federal structure.

As Henrik Scheller explains, Germany’s local governments are significant in providing public services but do not have the same constitutional status as the federal government or the Länder. Under Germany’s basic law, local governments are guaranteed autonomy in self-government but rely heavily on the Länder for financial support. Municipalities carry out delegated tasks from federal and Länder governments, yet their institutional status remains undefined.

India’s decentralisation, driven by the 73rd and 74th Constitutional Amendments of 1992, is discussed by Niranjan Sahoo. These amendments established a three-tier Panchayat system, introducing direct elections at the village, block, and district levels. While this has granted greater local autonomy and representation, including reservations for women and marginalised communities, challenges such as state resistance and bureaucratic barriers have hindered the full implementation of decentralised governance.

In Italy, Elisabeth Alber, Alice Valdesalici, and Greta Klotz describe the local government system in which municipalities, provinces, and islands are recognised under Article 137 of the Constitution. However, local authorities in Italy do not have direct powers, and their financial autonomy is limited. While the local governance structure has remained stable since 1978, municipalities lack legislative powers and taxation authority, with national law overseeing many key functions.

México’s federal republic, as Mónica Unda-Gutierrez and Alejandra Reyes explain, constitutionally recognises municipalities as central to governance. The 1917 Constitution established “free” municipalities, but decentralisation efforts only gained significant momentum in the late 20th century. The 1983 Municipal Reform reduced federal and state control, yet municipalities in Mexico still face legal and political barriers that restrict their independence.

In Nepal, Gopi Krishna Khanal and I have outlined the country’s transition to a federal democratic republic through the 2015 Constitution. This reform established a three-tier system—federal, provincial, and local—granting significant autonomy to local governments. The Constitution enshrines the rights of local levels, includes functional lists in its schedules, formalises local autonomy, and ensures at least one-third of female representation through elections. These provisions have strengthened citizens’ trust in local governments and contributed to the constitutional devolution of powers, ensuring a more decentralised governance structure.

In Nigeria, Rotimi T Suberu discusses the constitutional development of local government, which traces its roots to British indirect rule. Despite being recognised as the third tier of the federal system, local governments remain weak due to intergovernmental conflicts, limited resources, and ongoing centralisation. Constitutional reforms aimed at empowering local governments have been undermined by corruption, insufficient funding, and resistance from federal and state governments.

South Africa, as described by Jaap de Visser, granted local governments constitutional protection in 2000. Despite this legal recognition, municipalities often struggle with financial and political autonomy. While the 1996 Constitution grants local governments significant powers, including the ability to raise revenue, many municipalities face difficulties in providing effective services due to operational and structural challenges within government.

As Francisco Velasco Caballero writes, Spain’s local government system includes municipalities, provinces, and islands, which have the right to self-government under Article 137 of the Constitution. However, local authorities in Spain do not possess direct powers, and their financial autonomy is limited. The roles of rural municipalities are increasingly uncertain due to issues like depopulation, necessitating urgent reforms.

Andreas Ladner highlights the significant role of local governments in Switzerland, where municipalities enjoy substantial autonomy despite their small size and high number, particularly in fiscal matters. Regulated by cantonal constitutions, they exhibit remarkable diversity, yet increasing policy complexity demands greater intergovernmental cooperation. While municipalities formally have equal status and competencies, future asymmetrical adjustments may be necessary. Historically, municipalities predate cantons, evolving from medieval cooperatives into self-governing entities. Although not initially recognised in the national Constitution, their importance remained undisputed, with governance shaped by 26 distinct cantonal constitutions and laws, reflecting Switzerland’s deep-rooted federalist traditions.

In the United States, Meryl Justin Chertoff explains that the Constitution does not address local governments directly, allowing states to assert control over local governance. Despite this lack of constitutional recognition, municipalities in the US provide essential services and maintain a degree of administrative and fiscal autonomy. Local governments operate under various models, balancing local leadership with national frameworks, but their constitutional status remains weak.

Insights for Nepal and the global community

The comparison of local governments in various federations offers key insights for Nepal as it strengthens its federal system. A prominent lesson is the importance of constitutional recognition for local governments, as seen in Argentina and Brazil, which grants them greater autonomy.

For Nepal, the 2015 Constitution’s recognition of local government autonomy is a significant milestone, laying a strong foundation for decentralisation. However, as seen in many countries like Mexico and Nigeria, decentralisation faces hurdles such as political interference, financial dependency, and unclear legislative frameworks.

Nepal must ensure local governments are constitutionally empowered, adequately resourced, and supported by clear legal frameworks.

The Covid-19 pandemic underscored the vital role of local governments in addressing immediate needs. This highlights the importance of resilient, adaptable local governance structures that effectively manage routine and emergency challenges. While Nepal’s federalism is still developing, it can learn from other federations by ensuring local governments’ financial sustainability, legal empowerment, and operational capacity. Nepal’s experience can serve as a model for other countries seeking to strengthen their local governance systems. With continued reforms, Nepal can become a global leader in effective federal governance.

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Devkota is an expert in federalism and local governments.

Forum of Federations Handbook

Editor: Nico Steytler
Publisher: Palgrave MacMillan
Year: 2024