Some countries may have achieved economic growth and development without democracy or even an advanced form of the rule of law. However, no country has ever achieved the same without effective governance. This is not to deemphasise the importance of the rule of law or democracy or social mobilisation, but to clarify that governance effectiveness is a must to achieve the much-coveted accelerated economic growth.

When we talk of governance effectiveness, it is understood that this means the goals of the government are accomplished on time, within the set parameters of quality, quantity and cost. The major indicators include how credible the government commitments are, how independent its administrative agencies are from undue political pressures, how qualitative public services are, the soundness of policies and decisions, and how effective their implementation is. It means that essential services are effectively delivered, development projects are completed as planned and markets are efficiently regulated both to ensure a level playing field and to protect core public interests like public health and safety.

The general public can sense the effectiveness of the government on a daily basis in the provision of health and education services, infrastructure services (like transportation or electricity or telecommunication), water, sanitation and waste disposal services and the promptness of solutions to disruptions in public services and order. Specifically, from the point of view of economic growth, there exist key areas or locations where intervention is necessary to improve governance effectiveness.

Based on experiences of the last few years, it is clear that the concerned agencies of the government of Nepal have fallen short of the public capital budget expenditure, which could boost the multiplier effect. A major chunk of the spent capital budget lacks in effectiveness since it is done hastily towards the end of the fiscal year. The no-one-can-be-blamed principle must go. If the government is unable to spend, or if spending occurs in projects that are sub-standard, it should be brought under scrutiny and penalised where necessary. Meanwhile,  efficient performance must be rewarded visibly. The much-awaited fiscal responsibility legislation needs to address these problems.

 Lackadaisical performance has plagued the execution of national pride projects and other mega projects. There may be plenty of institutional bottlenecks to crack down on, but the responsibility to perform should not be evaded by putting the blame on erroneous or faulty institutions. Responsible public managers must take charge of tasks to correct faulty institutions as quickly as possible. A performance-based appraisal system should be put into place. Awarding and enforcement of public contracts must be strengthened.

Most importantly, the modernisation and commercialisation of the agriculture sector is key. Our agriculture sector suffers from land fragmentation and lack of large-scale cultivation for the mass production of appropriate crops. The constitution clearly provides space for land reforms, management and regulation in accordance with the law, to enhance the productivity of the land. It is now time for the government to consider effective and scientific land reform measures to promote full-scale commercialisation and mass production in the agricultural sector, taking charge of land use decisions by the government wherever possible. Ineffective land management is also a stumbling block in almost all developmental and industrial activities, and land acquisition is considered most cumbersome.

Next, it is obvious that we do not have enough products to sell in international markets. However, the more deeply rooted problem is that our products are not competitive owing to quality issues. The state must have the regulatory capacity to ensure standards of products. The practice of substandard products mars the image of Nepali goods in the international market, spoils health of its citizens and harmfully disturbs the level playing field in the domestic market too.

In the new structure, the dynamics of local economies and provincial economies will be fundamentally catalytic to take the national economy on a growth trajectory. The dream of decentralisation in practice is overdue from the past.  The capacity building of provincial and local structures, particularly those authorities that are related to economic development, warrants greater attention.

 At the core, effective governance will be incomplete without the augmentation of the quality of civil service that involves programming, implementation, and the review of development activities. Data skills for effective measurement of economic and developmental activities, research skills for innovative solutions, and strategic skills for effective management may be sought. It should also address performance management and knowledge management systems. All these apply to civil services at the provincial and local levels.

On the external front, aid effectiveness is not at a satisfactory level, thanks to low absorptive capacity and gap between commitment and reimbursement or actual realisation. The trade deficit is ballooning and foreign direct investment inflow as a percentage of GDP is negligible. The-whole-of-government approach in economic diplomacy calls for better coordination with a clear division of roles and set targets.

 The other areas of governance effectiveness that matters for economic growth may include financial intermediation to convert remittances into productive investment, management of quality technical education for school graduates and enhancing the effectiveness of public enterprises. Thus it is pretty clear that the focus should be on effective governance as this is vital to realise structural economic transformation and sustained growth.  

Wagle is a section officer at the Ministry of Foreign Affairs.