Abbreviations

ADB Asian Development BankASIP Annual Strategic Implementation PlanJFTA Joint Funding for Technical AssistanceCA Constituent AssemblyCAC Citizens’ Awareness CentreCCT Climate Change TechnologyCCU Cluster Coordination UnitCD Capacity DevelopmentCEDAW Convention on Elimination of Discrimination Against WomenCFA Child Friendly ActivitiesCFLG Child Friendly Local GovernanceCFLGC Child Friendly Local Governance CommitteeCIAA Central Investigation of Abuse AuthorityCoC Code of ConductCRC Convention on Rights of ChildrenCSO Civil Society OrganizationCSP Community Support Programme (DFID)DACAW Decentralized Action for Children and Women ProgramDAG Disadvantaged GroupDDC District Development CommitteeDDF District Development FundDDP District Development PlanDfid Department for International Development (UK)DG Director GeneralDIMC Decentralization Implementation and Monitoring CommitteeDoLIDAR Department of Local Infrastructure Development and Agricultural

RoadsDoWCD Department of Women and Child DevelopmentDP Development PartnerDPMAS District Poverty Monitoring and Analysis SystemDRM Disaster Risk ManagementDSMC District Social Mobilization CommitteeDTCO District Treasury Comptroller’s OfficeDTMP District Transportation Management PlanDTO District Technical OfficeEBG Expanded Block GrantEFA Environmentally Friendly ActivitiesEFLD/G Environmentally Friendly Local Development/GovernmentEO Executive Officer (Municipalities)FCA Foreign Currency AccountFCGO Financial Comptroller General OfficeFRRAP Fiduciary Risk Reduction Action PlanFY Financial YearGDP Gross Domestic ProductGESI Gender Equality and Social Inclusion

GGA Good Governance Act (2004)GON Government Of NepalGIZ German Society for Technical CooperationGRBA Gender Responsive Budgeting and AuditingHDI Human Development IndexHRD Human Resource DevelopmentICPD International Conference on Population and DevelopmentIEC Information, Education and CommunicationINGO International Non-Governmental OrganizationIPC Integrated Planning CommitteeIPFC Integrated Planning Formulation CommitteeIT Information TechnologyJD Job DescriptionJFA Joint Financing AgreementJICA Japan International Cooperation AgencyLA Line AgencyLB Local Body (Refers To All Levels Of Local Government)LBA Local Body AssociationLBFAR Local Body Financial Administration RegulationsLBFC Local Bodies Fiscal CommissionLDTA Local Development Training AcademyLED Local Economic DevelopmentLG Local GovernmentLGAF Local Governance Accountability FacilityLGCDP Local Governance And Community Development ProgrammeLIP Livelihood Improvement ProgrammeLPP Local Periodic Plan (M/V/DPP)LSGA Local Self Governance Act 2056 (1999)LSP Local Service ProviderM&E Monitoring and EvaluationMAAS Municipal Accrual Accounting SystemMARS Municipal Administration and Revenue SystemMCPM Minimum Conditions and Performance MeasuresMDF Municipal Development FundMDG Millennium Development GoalsMDP Municipal Development PlanMFI Microfinance InstitutionMLD Ministry of Local DevelopmentMoF Ministry of FinanceMoFALD Ministry of Federal Affairs And Local DevelopmentMOGA Ministry of General AdministrationMOHA Ministry of Home AffairsMOWCSW Ministry of Women, Children and Social WelfareMSMC Municipal Social Mobilization CommitteeNAC National Advisory CommitteeNACS NAC sub-committeeNGO Non-Governmental OrganizationNIM National Implementation ModalityNLSS Nepal Living Standards Survey

NPC National Planning CommissionNPD National Programme DirectorNPPR Nepal Portfolio Performance ReviewNVC National Vigilance CentreO&M Operation & MaintenanceOAG Office of the Auditor GeneralOPMCM Office of the Prime Minister and Council of MinistersPAA Programme Alignment ApproachPAF Poverty Alleviation FundPBGS Performance Based Grant SystemPCC Policy Coordination CommitteePCU Programme Coordination UnitPEFA Public Expenditure and Financial AccountabilityPETS Public Expenditure Tracking SurveyPFM Public Financial ManagementPFMA Public Financial Management and AccountabilityPPMO Public Procurement Monitoring OfficePPP Participatory Planning ProcessPPSF Policy and Programme Support FacilityPRF Programme Recruitment FacilityQA Quality AssuranceRBM Results Based ManagementRCU Regional Cluster UnitRTI Right To InformationSDC Swiss Development CooperationSDO Social Development OfficerSM Social MobilisationSPMP Strengthening Public Management Program (ADB)SWAp Sector Wide ApproachTA Technical AssistanceTARF Technical Assistance Recruitment FacilityTASC Technical Assistance Sub-CommitteeTYP Three Year PlanUG/C User Group / CommitteeUN Women United Nations Development Fund for WomenUNCDF United Nations Capital Development FundUNDP United Nations Development ProgrammeUNEP United Nations Environment ProgrammeUNFPA United Nations Population FundUNICEF United Nations Children’s FundUSAID US Agency for International DevelopmentUNSCR United Nations Security Council ResolutionUNV United Nations VolunteersVDC Village Development CommitteeVDF Village Development FundVDP Village Development PlanWCF Ward Citizen Forum

Table of Contents

Programme SummaryProgramme SummaryProgramme SummaryProgramme SummaryProgramme Summary

Chapter 1: Situational AnalysisChapter 1: Situational AnalysisChapter 1: Situational AnalysisChapter 1: Situational AnalysisChapter 1: Situational Analysis 111111.11.11.11.11.1 BackgroundBackgroundBackgroundBackgroundBackground 111111.21.21.21.21.2 Social, PSocial, PSocial, PSocial, PSocial, Political and Economic Contextolitical and Economic Contextolitical and Economic Contextolitical and Economic Contextolitical and Economic Context 111111.2.1 Social Context 11.2.2 Political Context 21.2.3 Economic Context 21.31.31.31.31.3 Institutional, Legislative and PInstitutional, Legislative and PInstitutional, Legislative and PInstitutional, Legislative and PInstitutional, Legislative and Policy Contextolicy Contextolicy Contextolicy Contextolicy Context 222221.3.1 Institutional Context 21.3.2 Implementation of Local Self-Governance Act and Good Governance Act 31.3.3 LGCDP Alignment with the GoN’s National Plans and International

Conventions 3

Chapter 2: Evolution of LGCDPChapter 2: Evolution of LGCDPChapter 2: Evolution of LGCDPChapter 2: Evolution of LGCDPChapter 2: Evolution of LGCDP 555552.12.12.12.12.1 LGCDP FLGCDP FLGCDP FLGCDP FLGCDP First Phaseirst Phaseirst Phaseirst Phaseirst Phase 555552.1.1 Introduction 52.1.2 LGCDP First Phase Programme Outcomes 52.1.3 LGCDP I Activities and Related Achievements 52.22.22.22.22.2 Lessons and Opportunities of LGCDP ILessons and Opportunities of LGCDP ILessons and Opportunities of LGCDP ILessons and Opportunities of LGCDP ILessons and Opportunities of LGCDP I 88888

Chapter 3: Programme DescriptionChapter 3: Programme DescriptionChapter 3: Programme DescriptionChapter 3: Programme DescriptionChapter 3: Programme Description 11111111113.13.13.13.13.1 Rationale for LGCDP II ProgrammeRationale for LGCDP II ProgrammeRationale for LGCDP II ProgrammeRationale for LGCDP II ProgrammeRationale for LGCDP II Programme 11111111113.23.23.23.23.2 New Directions, Strategies and Principles for LGCDP IINew Directions, Strategies and Principles for LGCDP IINew Directions, Strategies and Principles for LGCDP IINew Directions, Strategies and Principles for LGCDP IINew Directions, Strategies and Principles for LGCDP II 12121212123.2.1 New Directions 123.2.2 Key Principles of LGCDP II 163.33.33.33.33.3 Goal, PGoal, PGoal, PGoal, PGoal, Purpose, Outcomes, Outputs and Indicative Activitiesurpose, Outcomes, Outputs and Indicative Activitiesurpose, Outcomes, Outputs and Indicative Activitiesurpose, Outcomes, Outputs and Indicative Activitiesurpose, Outcomes, Outputs and Indicative Activities 19191919193.3.1 Goal 203.3.2 Purpose 203.3.3 Outcomes, Outputs and Indicative Activities 203.3.4 Cross Cutting Areas 29

Chapter 4: Programme ManagementChapter 4: Programme ManagementChapter 4: Programme ManagementChapter 4: Programme ManagementChapter 4: Programme Management 31313131314.14.14.14.14.1 LGCDPLGCDPLGCDPLGCDPLGCDP’s Stakeholders’s Stakeholders’s Stakeholders’s Stakeholders’s Stakeholders 31313131314.1.1 Central Level Stakeholders 314.1.2 Local Level Stakeholders 324.24.24.24.24.2 National Level Programme ManagementNational Level Programme ManagementNational Level Programme ManagementNational Level Programme ManagementNational Level Programme Management 33333333334.34.34.34.34.3 Programme Management at the Local LevelProgramme Management at the Local LevelProgramme Management at the Local LevelProgramme Management at the Local LevelProgramme Management at the Local Level 36363636364.44.44.44.44.4 Programme MonitoringProgramme MonitoringProgramme MonitoringProgramme MonitoringProgramme Monitoring, Reporting and Evaluation, Reporting and Evaluation, Reporting and Evaluation, Reporting and Evaluation, Reporting and Evaluation 36363636364.4.1 Programme Monitoring and Reporting 364.4.2 Programme Evaluation 374.4.3 Programme Reporting 374.54.54.54.54.5 Assumptions, Risks and their MitigationAssumptions, Risks and their MitigationAssumptions, Risks and their MitigationAssumptions, Risks and their MitigationAssumptions, Risks and their Mitigation 38383838384.5.1 Assumptions 384.5.2 Risks and Mitigation Strategies 38

Chapter 5: Programme FChapter 5: Programme FChapter 5: Programme FChapter 5: Programme FChapter 5: Programme Financinginancinginancinginancinginancing 41414141415.15.15.15.15.1 Programme BudgetProgramme BudgetProgramme BudgetProgramme BudgetProgramme Budget 41414141415.25.25.25.25.2 FFFFFunding Arrangements for Governement &Development Punding Arrangements for Governement &Development Punding Arrangements for Governement &Development Punding Arrangements for Governement &Development Punding Arrangements for Governement &Development Partnerartnerartnerartnerartnersssss 43434343435.35.35.35.35.3 FFFFFund Flowund Flowund Flowund Flowund Flow 43434343435.45.45.45.45.4 FFFFFinancial Managementinancial Managementinancial Managementinancial Managementinancial Management 43434343435.55.55.55.55.5 Local Level Planning and Budget ProcessesLocal Level Planning and Budget ProcessesLocal Level Planning and Budget ProcessesLocal Level Planning and Budget ProcessesLocal Level Planning and Budget Processes 44444444445.65.65.65.65.6 Sector WSector WSector WSector WSector Wide Approachide Approachide Approachide Approachide Approach 4444444444

List of TList of TList of TList of TList of TablesablesablesablesablesTable 1: LGCDP II Log Frame 26Table 2: Management Arrangement at the Centre 35Table 3: Funding Commitments 41Table 4: LGCDP II Programme Budget 42

List of AnnexesList of AnnexesList of AnnexesList of AnnexesList of AnnexesAnnex 1: LGCDP II Logical Framework 47Annex 2: Risk Management 52Annex 3: Funding Arrangement for Development Partners 54Annex 4: Fund Flow Mechanism 55Annex 5: Participatory Planning Process 56Annex 6: Budget Allocation System and Modality of District Plan 57Annex 7: Indicative Staffing Requirements for PCU and RCU 58Annex 8: Programme Management Structure of LGCDP 60Annex 9: Indicative Sub-Activities of LGCDP II 61Annex 10: Strategic Approach of LGCDP II 72

Programme Summary

Programme Period 16 July 2013 - 15 July 2017

Executing Agency Ministry of Federal Affairs and Local Development

Implementing Agencies Local BodiesLocal Offices of Sectoral Ministries

Supporting Agencies Sectoral MinistriesNon-Government OrganizationsCivil Society OrganizationsPrivate Sector Organizations

Geographic Coverage 75 Districts, 58 Municipalities and 3,915 VillageDevelopment Committees

Development Partners Multilateral Development Agencies: ADB, WorldBank, European UnionBilateral Development Agencies: DfID,Government of Denmark, GIZ, JICA, Government ofNorway, SDC, USAID,UN Agencies: UNCDF, UNICEF, UNDP, UNFPA,UN Women, UNV,

Financial Contribution Government of Nepal : US$ 1126 millionDevelopment Partners : US$ 236 millionTotal : US$ 1362 million

Financing Modality Joint FinancingArrangement (JFA) : US$ 194.9 millionJoint Funding for TechnicalAssistance (JFTA) : US$ 13.5 millionProgramme AlignmentArrangement (PAA) : US$ 26.1 million

Programme Components Policy: Governance ReformSupply: Service Delivery and Capacity DevelopmentDemand: Citizens EmpowermentLocal Development: Socio-Economic andInfrastructure Development

Programme Goal To contribute towards poverty reduction through betterlocal governance and community development

Programme Purpose To improve local governance for effective servicedelivery and citizen empowerment

Programme Outcomes 1. Citizens and communities hold their localgovernance actors accountable.

2. Local Bodies are more responsive to citizen’sdemand.

3. All citizens are provided with efficient and effectivelocal services.

4. Strengthened policy and institutional framework fordevolution, sub-national governance and localservice delivery

Programme Outputs 1. Citizens and community organizations areempowered to actively participate and assert theirrights in local governance.

2. Accountability mechanism for local governance arein place.

3. LBs’ access to resources increased4. Public financial management system improved5. Institutional and human resource capacities of LBs

and central agencies involved in local governancestrengthened

6. Access to and quality of local infrastructure andother socio-economic services administered by LBsare improved.

7. Strengthened integrated planning, budgeting,monitoring and evaluation and coordinationamongst local governance actors

8. Refined policy on local governance and improvedinter-agency cooperation

9. Policies developed for devolution and federalism

Sectors of Investment (1) Local Government Restructuring (2) FederalGovernance (3) Fiscal Decentralization (4) FiduciaryRisks Reduction (5) Results Based Management (6)Capacity Development (7) Social Mobilization (8) ChildFriendly Local Governance (9) Gender Equality andSocial Inclusion (10) Information, Education andCommunication (11) Local Governance andAccountability Facility (12) Environmentally FriendlyLocal Governance (13) Vital Registration (14)Community Mediation (15) Social Security (16) LocalCommunity Infrastructure Development (17) SocialDevelopment (18) Local Economic Development (19)Livelihood Improvement Schemes (20) Research andDevelopment (21) Public Financial Management (22)Rural energy, climate resilience and disastermanagement

1

1.1 Background

The Government of Nepal (GoN) is committed toimproving people’s standards of living throughcitizen-centric governance and effective servicedelivery based on democratic values and rights-based development. It has achieved consider-able success in implementing the first phase ofthe Local Governance and Community Develop-ment Programme (LGCDP), a national flagshipprogramme in the area of local governance andcommunity development. Given the success thathas been achieved in the implementation ofLGCDP I, the importance of this programme inensuring the accountable delivery of local servicesthrough established institutions and systems andthe commitments being expressed for its continu-ation, the GoN and the LGCDP developmentpartners (DPs) have decided to continue theprogramme into a second phase. In doing so, theywill strive to build on Phase I successes while ad-dressing its emerging challenges, demonstratingvalue for money and practicing effective risk man-agement in a transitional and politically uncertainenvironment.

1.2 Social, Political andEconomic Context

Development programmes are affected by thesocial, political and economic contexts withinwhich they operate. Examining the context forLGCDP implementation is critical to its successbecause very large and complex programmes ofthis sort are often more vulnerable to contextual

forces than are smaller, straightforward and loca-tion-specific micro projects. The second phaseof LGCDP is being formulated in a relatively dif-ferent social, political and economic context thanprevailed when its first phase was being concep-tualized.

1.2.1 Social ContextNepal is a landlocked country with diverse ecol-ogy and culture. Half of its 26.6 million peoplelive in the low-lying southern Terai plains while43 per cent live in the middle hills and 7 per centlive in the northern mountains. The country has125 caste and ethnic groups speaking 123 lan-guages. Caste, ethnicity, language and religionremain the major sources of cultural identity. Thecountry is struggling hard to reduce, if not elimi-nate, the gender-based, caste-based, ethnicity-based and spatial exclusions created by socio-eco-nomic and geo-political structures. For instance,women and girls lag behind men and boys be-cause of disparities in education, lack of fair rep-resentation in decision making, low access toemployment opportunities, limited access to andutilization of essential health care services and ahigh vulnerability to gender-based violence.

Two statistics from the 2011 census are illustra-tive of the gender gap that still exists in the coun-try. The country’s male literacy rate is 75.1% whilethe female literacy rate is only 57.4%, 17.7%lower. Although 25.7% of Nepali households areheaded by women, only 18% of rural householdsreported female ownership of fixed assets. The2011 census also reported that one in every fourhouseholds has at least one member of the family

1ChapterSituational Analysis

Situational Analysis

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absent or living outside the country. Nepal’s popu-lation is characterized as young with about 35%of its population being under 14 years and youthaged 15 to 24 years constituting approxi-mately20% of the total population, the largestyouth cohort in Nepal’s history. Nepal has aunique opportunity to reap the potential benefitsof this demographic dividend in the coming de-cades.

1.2.2 Political ContextNepal is going through a complex and challeng-ing political transition. The country’s democracyis undergoing a historic change following the endof its decade long armed conflict in April 2006.Because the socio-economic and political issueswhich fuelled that conflict were complex and deeprooted in society, the post conflict transition hasbeen equally difficult and protracted. The failureof a Constituent Assembly (CA) to approve a newconstitution before the deadline of 27 May 2012and its subsequent dissolution have prolonged thetransition, resulting in increased political uncer-tainties. Now there is a call for a new CA elec-tion, but the date and modalities for it has notbeen agreed upon. The timing for elections atthe local level is equally uncertain. A nationalconsensus is yet to emerge regarding ways to re-solve the present political deadlock. Despite thesedifficulties, the major political forces in the coun-try are determined to restructure the state andbring about a socioeconomic transformation lead-ing to sustainable equity, justice and prosperity inthe country.

1.2.3 Economic ContextNepal has been able to maintain its macroeco-nomic stability despite the protracted conflict buthas lost the opportunity to maintain the highgrowth rate that it had achieved following the re-establishment of multi-party democracy in the1990s. Economic growth was adversely affectedby the 1996 -2006 armed conflict. Despite animproved political and economic environmentsince the peace process began in 2006, the presentannual growth rate of around four per cent is in-sufficient to bring about a significant reduction inthe level of poverty, which remains high with 25%of the people living below the poverty line in 2011.At the same time income disparities have beenincreasing. The Nepal 2010/11 Living Standards

Survey showed that 15.5% of the Nepali popula-tion living in urban areas were living below thepoverty line while in the urban areas it was 27.4%.At the same time, Nepal is experiencing a seriousincrease in income disparity as measured by theGini coefficient. According to the UNDP HumanDevelopment Report, in 1995/96 it stood at 0.34;in 2010/11 it was calculated to be 0.33. The 2011Report also ranked Nepal 157th among 187 coun-tries with a human development index (HDI) ofonly 0.458. Although this number showed amarked improvement over its 1980 index of0.210, it is clear that concerted and sustained ef-forts will have to be made to raise the position ofNepal on the HDI scale to the median level.

1.3 Institutional, Legislative andPolicy Context

LGCDP was designed to meet the growing ex-pectations of people to access efficient and effec-tive service delivery from the state apparatus andto engage in a meaningful way in local governanceprocesses as per the letter and spirit of the 2007Interim Constitution, the 1999 Local Self-Gover-nance Act, the 2006 Good Governance Act, the2007 Right to Information Act and national peri-odic plans. It also aims to assist the Ministry ofFederal Affairs and Local Development (MoFALD)to introduce best practices in local governance inaccordance with other relevant legislation andpolicies.

1.3.1 Institutional ContextThe Ministry is moving from a focus on local gov-ernance and development to a broader set of re-sponsibilities that will encompass whatever inter-mediate structures are to be established under thenew constitution for national and sub-nationalgovernance. MoFALD will have to consider theimplications of, and take a lead role with respectto, relations between government levels in the newconstitution, including facilitating the necessaryinstitutional changes and capacitating citizens tobe able to engage with whatever structures areput in place. In its new role, MoFALD will pro-vide support to sector line Ministries at centrallevel in relation to the functions of federal andlocal governance and will act in partnership withnational agencies including Ministry of General

Situational Analysis

3

Administration (on management audit), FinancialComptroller General’s Office (on public financialmanagement), Office of Auditor General (onaudit),National Vigilance Centre (onaccountability),Public Procurement MonitoringOffice(on public procurement), National PlanningCommission (on results-based management),LocalDevelopment Training Academy (on research,certification and capacity building), Local BodyFiscal Commission (performance based grants sys-tem) and Local Bodies’ Associations (on capacitybuilding for local politicians). Decentralization,Implementation and Monitoring Committee(DIMC), chaired by Prime Minister and Office ofthe Prime Minister and Council of Ministers(OPMCC) to provide overall guidance to devolu-tion process and integrated planning process inorder to ensure effective service delivery.

Local bodies, with the support of MoFALD andother sector line Ministries, will assume a stron-ger role in promoting local level coordination ofall government service delivery activities in theareas of local infrastructure, education, health, andagriculture and livestock development. Whilecommunity organizations such as Ward CitizenForums (WCFs) and Citizen Awareness Centres(CACs) are still evolving, they have a very impor-tant role to play at the grassroots level underLGCDP guidelines for planning, oversight, coor-dination, monitoring and facilitation of all locallevel public services and developmental initia-tives.

1.3.2 Implementation of LocalSelf-Governance Act andGood Governance Act

In the history of decentralization, Local Self-Gov-ernance Act (LSGA) was landmark legislation inthe devolution of power and resources in that itestablished an important foundation for the pro-vision of socially inclusive services to the citizenrythrough grassroots democracy. The Act not onlymakes arrangements for ensuring that LBs are ac-

countable to their citizens, but also dictates thatcitizens be involved in local democratic processesincluding integrated planning processes and pub-lic service delivery. The LSGA specifically high-lights six policies and principles of good local gov-ernance: devolution, efficient and effective insti-tutional support, own source revenue mobiliza-tion, good governance, strong local leadership andprivate sector involvement.

The Good Governance Act (GGA) formalizes thisgood governance intent by transforming thesystem’s administrative structures into service pro-viders and facilitators with responsibility for up-holding the rule of law, promoting human rights,ensuring government accountability and encour-aging financially prudent and corruption-free pub-lic administration.

1.3.3 LGCDP Alignment with GoN’sNational Plans and InternationalConventions

The design of LGCDP is aligned with nationaldevelopment plans of Nepal which have povertyalleviation, inclusive growth, social transformation,sustainable peace and good governance as theirmajor objectives along with an emphasis on devo-lution, decentralization and development of lo-cal governance.

LGCDP also seeks to make a contribution to theachievement of the goals and objectives of a num-ber of major international conventions and de-velopmental agreements such as those set out inthe Convention on Rights of the Child (CRC),Convention on Elimination of DiscriminationAgainst Women (CEDAW), International Confer-ence on Population and Development (ICPD),various environment and climate change conven-tions, Millennium Development Goals (MDGs),five principles set out in Paris Declaration on AidEffectiveness, Accra Agenda for Action and BushanPartnership for Effective Development Co-op-eration.

5

2.1 LGCDP First Phase

2.1.1 IntroductionImplemented from 16 July 2008, the LGCDP is anational programme of the Government of Nepalon local governance and community develop-ment. The programme is being financed jointlyby the Government of Nepal and 13 develop-ment partners (DPs) under different financing ar-rangements. The overarching goal of LGCDP isto contribute towards poverty reduction throughinclusive, responsible and accountable local gov-ernance and participatory community-led devel-opment. Providing quick peace dividends througheffective delivery of services, building sustainablesystems and mechanisms for local governancethrough capacity development and policy reforminitiatives, and empowerment of citizens by adopt-ing a transformative approach to governance werethe key pillars of LGCDP I. The programme hasbeen successful in establishing the foundation forcitizen empowerment and service delivery. How-ever, there have been mixed results in internaliz-ing these reforms and institutionalizing these newlycreated structures due to the transitional gover-nance and political anomalies prevailing in thecountry during the implementation period.

2.1.2 LGCDP First PhaseProgramme Outcomes

The Focused Evaluation conducted in September2012 states that the extent to which citizens havebecome actively engaged and able to hold localgovernment to account has seen modest progress.As well, it found that much of the new social in-frastructure that is needed to enable this to hap-

pen has been successfully put into place. Signifi-cant effort was made during LGCDP I to preparethe foundations and structures for future localgovernance reforms. Hence, much can be ex-pected from the second phase of the programme.In particular it should be noted that the extent towhich women, children and disadvantaged groups(DAG) have been included in governance processeshas been greatly enhanced by the establishmentof community institutions like Citizen AwarenessCentres (CACs) and Ward Citizens’ Forums(WCFs). The Blended Block Grant Guidelinesintroduced by MoFALD during LGCDP I mandated35% of the united capital budget of the local bod-ies (LB) to be directed to these groups, which hadnot previously been explicit beneficiaries.

The Focused Evaluation also noted that there hasbeen a significant change over the life of LGCDPI in the capacity of local governments to manageresources and deliver services in an inclusive andequitable fashion. At the same time, it was ableto document that there has been a significantincrease in access to resources by local govern-ments as a result of LGCDP I activities.

2.1.3 LGCDP I Activities andRelated Achievements

LGCDP I activities were planned to achieve threeoverarching outcomes related to citizen empow-erment, local government operations and localgovernment policy making and execution. To-gether they aimed to strengthen the demand andsupply sides of local governance by empoweringcitizens to actively engage with local governmentbodies and to increase the capacity of the gov-

2ChapterEvolution of LGCDP

Evolution of LGCDP

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ernment to deliver basic public services througha devolved system of local government.

The most significant achievements of LGCDP Ihave been the re-establishment of links betweenstate and citizens in the aftermath of the conflict,the reinforcement of participatory planning pro-cess in the absence of elected officials and thecreation of citizens’ institutions across the coun-try. The programme has promoted inclusive andparticipatory development and built governmentpartnerships with Civil Society Organizations(CSOs) and Non-Government Organizations(NGOs) for citizens’ empowerment. The alloca-tion of fiscal transfers has been rationalized and aperformance culture has been introduced at thelocal level. LGCDP I has also promoted socialaccountability processes like public audit, publichearings and social audit throughout the country.As well, the programme has been highly success-ful in mainstreaming disadvantaged groups intothe development process by taking a rights-basedapproach to local governance.

More specifically, LGCDP I has: (i) involved morethan 770,000 citizens in WCFs in 3,817 VDCsand 387 Municipal wards in local level planningprocesses using 741 local service providers to fa-cilitate that engagement; (ii) implemented a GESIstrategy to ensure that the social mobilization pro-cess was inclusive of women, children and DAGs;(iii) established a Local Governance Accountabil-ity Facility for promoting downward accountabil-ity in the local governance system; (iv) increasedthe level of unconditional capital grant funding toLBs three-fold; (v) developed and implementeda system of performance-based intergovernmen-tal fiscal transfer system known as the minimumconditions and performance measures (MCPM)system; and, (vi) implemented a system of capac-ity development grants to LBs that allows them tomanage their own capacity development agen-das. These achievements are discussed in detailbelow.

Demand Side ActivitiesOn the demand side, the LGCDP has followed atransformative approach to social mobilizationwhich uses local service providers to organize

communities into Ward Citizens’ Forums and Citi-zen Awareness Centres in order to engage citi-zens in local governance processes and to ensurethat the country’s most disadvantaged groups areinformed about their rights and that their demandsare included in LB planning processes. By 2011/12 WCFs were functioning in 97.5% of all wardsand in 85% of all municipalities nation-wide.45%of the membership of these bodies were women1.35% of WCF members had participated in VDCor Municipality council meetings. In that singleyear over 33,000 WCFs proposed 106,280 com-munity infrastructure projects, of which 36,900were approved. By that same year, 4,082 CACshad been formed, involving nearly 110,000 per-sons, of whom 73% were women.

Concurrently, the Local Governance Accountabil-ity Facility (LGAF) established under the LGCDPhad contracted 75 civil society organizations toconduct expenditure reviews, expenditure track-ing exercises and public hearings of local bodiesfor holding them to account. On another front,the LGCDP’s gender equality and social inclusionprogramme has piloted a project to train men andwomen citizens, a cross-section of local body sec-retaries, line agency officials, gender equalitywatch group members, women members of NGO,and members and social service providers in 10districts in the GESI mainstreaming of planningprocesses and in GESI responsive budgeting andauditing.

Supply Side ActivitiesOn the supply side of local governance, theLGCDP has organized local body staff orientationand training programmes in the areas accountingand financial management, poverty monitoringand analysis and child friendly local governanceand information and education and communica-tion messaging. Using their own capacity devel-opment grants, District Development Committees(DDCs) and municipalities have installed com-puter software related to bookkeeping, vital reg-istration and social security programming and or-ganized various training programmes on policyguidelines, local level planning, accounting andfinancial management, leadership developmentand GESI and CFLG strategy implementation.

1 Source for results enumerated in this section is the LGCDP Annual Progress Report: 2011/12, MoFALD, November 2012

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Up to the end of 2011/12, a total of 58,073 com-munity infrastructure projects worth Rs 13.28 bil-lion had been provided to citizens by local bod-ies from blended unconditional and top-up grantsof which 39.6% were road projects, 13.0% wereeducation sector projects, 11.1% were clean drink-ing water projects and 36.3% were social sectorprojects (health, economic activities, environment,irrigation, etc.). Over 152,000 households arenow benefiting from the irrigation of 19,109 hect-ares of land.

Programming guidelines that were prepared earlyin the programme are now being reviewed andupdated and MoFALD is in the process of intro-ducing a results-based management system in thelocal bodies.

The MCPM assessment was introduced in mu-nicipalities while MC assessment was introducedin VDCs. The MCPM manual of DDC has beenrevised. The programme’s performance basedgrants system has now been rolled out in all thelocal bodies. In 2011/12, 85% of DDCs, 87% ofVDCs and 91% of municipalities were in compli-ance with its minimum conditions and had re-ceived a top-up grant.

In terms of public financial management and fi-duciary risk management, auditing guidelines thatprescribe standard methods for carrying out au-dits and preparing audit reports have recently beenprepared. In 2011/12, the Office of the AuditorGeneral (OAG) conducted performance audits in5 districts, covering 70 VDCs and 4 municipali-ties. The OAG report made 36 observations re-quiring attention. MoFALD has also prepared aPublic Expenditure and Financial Accountabilityand Fiduciary Risk Reduction Action Plan (PEFA-FRRAP) which amalgamates public financial man-agement and related fiduciary risk managementprogramming into a single action plan to improveLB transparency and accountability in their finan-cial transactions.

Finally, in the past year MoFALD has signed a num-ber of Memoranda of Understanding with Inter-national NGOs aimed at harmonizing theMinistry’s social mobilization programming withtheirs.

Capacity Development AchievementsLGCDP I invested heavily in both supply-drivenand demand-driven capacity development (CD).At the macro level, programme resources wereused to provide competency-based training toover 50,000 programme participants and stake-holders – to VDC secretaries and to local serviceprovider staff and their social mobilizers – in sub-jects ranging from accounting to the REFLECTapproach to social mobilization. LGCDP trainingprogrammes covered a wide range of skills includ-ing, among others, participatory planning, publicaudit, public hearing, public financial management,gender and social inclusion, child friendly localgovernance, social && environmental safeguardsand building code compliance. Capacity devel-opment plans were prepared by all DDCs and mu-nicipalities in compliance with the capacity devel-opment guidelines prepared by the Ministry.

Despite these successes, one of the issues thatLGCDP II will need to address is the capacity de-velopment shortcomings of LGCDP programmingidentified by the Focused Evaluation, one of whichwas the uses being made of the CD grants.

Programme Management AchievementsThe programme has introduced many changes tothe Ministry’s operational and management sys-tems and approaches. Procedures and documen-tation have been developed covering day to dayprogramme implementation activities, e.g. guide-lines for planning and decision making by localbodies. Procurement and financial managementsystems have been strengthened and a Public Ex-penditure and Financial Accountability and Finan-cial Risk Reduction Action Plan has been preparedto reduce fiduciary risks. Structures for network-ing with the local representatives of devolved sec-tor ministries have been established. MoFALDhas also made considerable progress in integrat-ing many of the LGCDP programme functions intoMinistry operations. This internalization processnow needs to be pursued at the local level.

A joint monitoring approach was adopted withcontributing development partners and oversightstructures within the Ministry have been estab-lished and/or strengthened, including a Ministry-wide framework for Monitoring and Evaluation.

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A number of reviews of specific aspects of theprogramme were undertaken, including mid-termand focused evaluations. A Quality AssuranceMechanism (QAM) was established to act as a toolfor (i) supporting MoFALD and DP efforts to vali-date LGCDP’s progress towards its stated results;(ii) conducting multi-level assessments of on-go-ing programme risks; (iii) identifying and assess-ing organizational and systemic constraints thathinder the LGCDP’s ability to reach its programmeobjectives; and (iv) making recommendations formore effective LGCDP implementation.

2.2 Lessons and Opportunities ofLGCDP I

Over its life cycle, LGCDP I has been subjectedto several different types of review processes: amid-term review, a focused evaluation and qual-ity assurance monitoring in addition to other is-sue specific monitoring and review processes. Thefollowing statements highlight a number of les-sons and observations arising from the experienceof Phase I as identified through these various as-sessment processes. They provide a useful inven-tory of areas of opportunity for LGCDP II.

Downward AccountabilityThe heightened need for appropriate institu-tional arrangements for downward accountabil-ity processes in the absence of a functioningrepresentative/political accountability system atthe local level.The need to activate and institutionalize vari-ous committees fulfilling oversight functions atthe local level, for example the Ward CitizenForums, District/Municipal Social MobilizationCommittees, Integrated Plan Formulation Com-mittees and Environmental Committee as well.The need to strengthen the roles played by theWCFs, CACs, CSOs and other grass roots levelcommittees such as the health and educationmanagement committees.The need to establish CSO linkages with WCFsand IPFCs.The need to apply the performance based fis-cal transfer systems to the regular GoN grantsto VDCs, to the devolved sector grant to lineagencies and to the conditional grants to DDCsand municipalities.

The need to ensure the autonomy of LGAFand to strengthen its capacity to engage in civicoversight and to ensure the quality of local gov-ernance by building the capacities of WCFsand CSOs in social accountability.The need to harmonize the social accountabil-ity practices of the national and local gover-nance actors by clarifying their roles vis-à-viseach other and collectively.The need to operationalize the Decentraliza-tion Implementation and Monitoring Commit-tees for effective sector coordination andsectoral devolution.

Demand Side ActivitiesThe need to expand the coverage of CACs intomore disadvantaged settlements and to linkthem with the services provided by other lo-cal governance actors. The need to establish links between existingSM activities and those of other LB governanceactors.The need to ensure that the transformativeapproach to social mobilization is fully inter-nalized by all local governance stakeholdersand that social mobilization programming getsstrengthened accordingly.The need to replace the national service pro-vider system with a regional one that is betterpositioned to provide capacity developmentsupport to the bottom tiers of the social mobi-lization system and its front line actors.The need to strengthen the capacity of Re-gional Coordination Units to effectively moni-tor and supervise the social mobilizationprogramme.The need to consolidate the number of localservice providers in order to improve theirquality.The need to enhance the capacity of WCFs inthe planning, civic oversight, community me-diation and development coordination func-tions in order to make these institutions theentry point for all social mobilization program-ming at the ward level.

Supply Side ActivitiesThe need to harmonize infrastructure relatedprogramming approaches and other DoLIDARactivities with LGCDP methodologies by ex-tending the applicability of processes like per-

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formance-based fiscal transfers, social account-ability, participatory planning, social mobili-zation and civic oversights across the local gov-ernment system.The need to provide capacity developmentsupport to MC failing local bodies in order toaddress their shortcomings with targeted com-petency-based capacity development interven-tions.The need to strengthen the Local Develop-ment Training Academy (LDTA) and Local Bod-ies’ Associations to be able to help developthe capacities of local bodies and the overallmanagement of CD programming.The need to transform VDC secretariats intothe reliable and viable government entities re-quired to exercise their public service man-dates by equipping them with the requisitehuman, technical, physical, and financial re-sources.The need to ensure adequate and appropri-ate staffing at all levels of local governmentand to improve the retention rate of LDOs,VDC secretaries and accounting staff and Ex-ecutive Officers.The need to build the technical capacity ofdistrict technical offices for ensuring the qual-ity of community infrastructure projects.The need to provide technical support to LBsto improve their own source revenue streams.

The need for special PFM arrangements to beput into place in high risk districts.The need to put alternative means of servicedelivery in place in high risk and remote areasuntil competencies for efficient and effectiveservice delivery have been developed.

Policy Development and ImplementationThe need to build MoFALD linkages with othersector/line agencies and other actors.The need to ensure a robust policy environ-ment for ensuring the effective delivery of lo-cal government services in compliance withthe LSGA and the other relevant legislation bystrengthening the mandate of Integrated PlanFormulation Committees in order that they beable to respond to the democratic account-ability requirements of LBs in a post-APM en-vironment.The need for coordination amongst the na-tional, regional and local oversight agenciesand for the pursuit of appropriate preventiveand remedial measures for reducing corrup-tion.The need to use the banking system for deliv-ering social security allowances based on a so-cial security information system.The need to restructure the MoFALD andDoLIDAR relationship to ensure effectiveprogramme implementation.

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3.1 Rationale for LGCDP IIProgramme

As noted at the outset of this document, LGCDPhas been and will continue to be the GoN’s flag-ship programme for supporting the improved func-tioning of local governance and community de-velopment related activities in Nepal with the ul-timate goal of contributing to the reduction ofpoverty throughout the country. At MoFALD, allthe programmes and budget heads will be alignedwith LGCDP II and coordinated by the Planningand Foreign Aid Coordination Division togetherwith those of the other sectoral agencies andprogrammes with local government responsibili-ties. The programme will also act as a frameworkto bring together all of the programmes, institu-tions and actors influencing and involved in thelocal governance process through enhanced net-working, collaboration and coordination mecha-nisms and systems aimed at achieving programmeoutcomes and outputs. LGCDP II will providethe systems, procedures, structures, tools and ca-pacities for facilitating the transformation of LBsinto local government entities. It will enable lo-cal bodies to coordinate local governance actorsfor effective and efficient service delivery and com-munity development in line with citizens’ priori-ties. This overall vision has a number of notewor-thy elements as it moves forward into the LGCDPII programme.

First, as attested by the mid-term review and Fo-cused Evaluation of the programme and the re-sults outlined above, the Phase I of the Programmehas accomplished a great deal in terms of build-

ing and extending the Ministry’s service deliverycapacities at both national and local levels. It hasproven to be an effective mechanism for strength-ening both the Ministry’s capacity and that of thelocal governance actors. Phase II is seen as a keyinstrument for continuing the momentum estab-lished in Phase I and making further advances inthese areas.

Second, international experience makes it clearthat building capacities for devolved local govern-ment and a transformed relationship between lo-cal bodies and local citizens and communitiesrequires a long term strategy and a commitmentto providing support covering more than just afour or five year time span. As LGCDP I draws toa close, many of its approaches, structures (e.g.community groups, CACs and WCFs) and prac-tices have only been in place for one or two yearsand are not fully consolidated or institutionalized.A sustained, long term investment of resourcesand effort is needed. To achieve this goal, LGCDPII represents the means by which this sustainedeffort can be delivered.

Third, the LGCDP II is a bold experiment in theapplication of a programme approach to aid de-livery in a very complex sector, local governance.Many steps were taken during LGCDP I to bringthe programme in line with the kind of programmeapproach to which both donors and the GoN haveexpressed a commitment, consistent with the fivecore principles of development aid effectiveness.These include, for example, incorporating projectstructures (the PCU and CCUs) into the Ministry,integrating donor funds into the blended block

3ChapterProgramme Description

Programme Description

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grant system, improving the management of fidu-ciary risks and other similar changes. Nonethe-less, there remain many areas that need furtherattention, and LGCDP II will continue to providethe structure for creating an environment withinwhich a programme approach can confidently beapplied.

Fourth, building a local governance system forenabling the country’s social and economic de-velopment is critical to the nation’s long term well-being. The ability of local government to con-tinue to function effectively despite the uncertain-ties of recent years has been and will continue tobe an essential contribution to the peace and sta-bility of Nepal. LGCDP will continue to provide asolid platform for managing Nepal’s transition to-wards federalism. It will also provide a strong foun-dation for harmonizing, coordinating and steer-ing the development efforts of government, non-government and private sectors at the local level.

3.2 New Directions, Strategies andPrinciples for LGCDP II

3.2.1 New DirectionsThe vision for the programme calls for LGCDP IIto act as a key support mechanism to the GoN’spoverty reduction efforts. Building on the experi-ence of Phase I, LGCDP II will embody a numberof changes in focus and approach. These are cov-ered in detail later in this document and are dealtwith more thoroughly in the LGCDP II StrategicImplementation Plan. They are described in sum-mary form in the following sections. To the ex-tent possible, the design of LGCDP II assumescertain conditionality that must be met if theprogramme is to achieve its intended results.These include:

Holding of local elections;Use of post-APM representative accountabil-ity structures;Strengthening of PFM structures, processes andcapacities,Assurance of timely budget formulation andrelease of funds to local bodies; andReduction in staff turnover and meeting theneed to fill vacant positions.

Accountability in Local GovernanceIn the long term, the return to representative orpolitical accountability requires the holding of lo-cal elections. In the absence of elected local bod-ies, LGCDP I initially worked through an interimarrangement in the form of an All Party Mecha-nism (APM) that lasted until 2012. Since the col-lapse of the APM, LGCDP II has been uniquelypositioned among GoN programmes to promotealternative downward accountability mechanisms.A number of initiatives will be taken along thispath,, each involving the revision and/or clarifica-tion of the roles and responsibilities of local bod-ies in the area of downward accountability andthe strengthening of the capacity of the institu-tions involved to carry out their mandates.

Integrated Plan Formulation Committees(IPFCs), which include representatives of po-litical parties together with WCFs, line agen-cies and NGOs, will be given a strengthenedmandate with regard to planning, oversight andmonitoring. They will be responsible for final-izing the annual plans of LBs based on partici-patory planning processes. Plans will be ap-proved by respective councils.The Local Governance and Accountability Fa-cility (LGAF) formed in LGCDP I was recog-nized in the Focused Evaluation to be playinga unique and vital role in supporting the mecha-nisms and capacities for exercising social ac-countability, including carrying out local ex-penditure reviews, public hearings, public au-dits and civic oversight and monitoring activi-ties. The scope of LGAF will be further strength-ened by entrusting it with the responsibility forcarrying out citizen-centred independent thirdparty monitoring, independent citizens' survey,and building the civic oversight capacity ofCSOs including the WCFs. LGAF will be themain instrument for executing the social ac-countability function in local governance sys-tems. The LGAF will be strengthened to mobi-lize CSOs to perform public hearings, publicaudits and civic oversight functions.LGCDP will mainstream these two initiativesin the form of institutionalized accountabilityarrangement and consolidated social account-ability. LGAF will be remodelled as the facilityto support civic oversight at local level. LGAF

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will also establish a national dialogue forum forall accountability actors and other relatedprogrammes.LGCDP will support the MoFALD to establishthe fair grievance system at local bodies thatallows the local concerns to be resolved inter-nally.Village and Municipality Supervision and Moni-toring Committees will be strengthened alongthe lines set out in Local Bodies' Resource Mo-bilization Guidelines to ensure institutionalizedcapacity and coordination of monitoring andcivic oversight. LSPs will be engaged tostrengthen the social accountability to this end.The capacity of WCFs will be further devel-oped to allow them to engage in downwardaccountability activities that include planning(as members of IPFCs), civic facilitation, com-munity monitoring, development coordination,community mediation and civic oversight.WCFs will be positioned to be the primary en-try point for all types of community-led devel-opment initiatives, including devolved sectorprogrammes and those of I/NGOs and otherlocal actors at ward level.

Social MobilizationOn the demand side, WCFs will be strengthenedto fulfil their coordination and accountability func-tions related to planning, prioritization, moni-toring and oversight and to facilitate the buildingof linkages with service providers at local level.Downward linkages will be established with CACsand other SM groups while upward linkages willbe created with local bodies and other serviceproviders through IPFCs. As a result more than onemillion people (40,000 WCFs with an estimatedaverage of 25 members each) will be empoweredto exercise choice and control over developmentoutcomes of local governance activities.

WCFs will also be the main vehicle of social har-mony, social reform, and civic coordination at thegrassroots level. WCFs will engage in addressingsocial problems such as the dowry system, un-touchability, illiteracy, chaupadi, witchery, childmarriage, early marriage, domestic violence andcaste-based discrimination. The structure andfunctions of WCFs will be modified to make themmore functional and relevant to this new man-dates.

The existing LGCDP social mobilizationprogramme will be harmonized and coordinatedwith other social mobilization programmingthrough the D/MSMC mechanism. DSMCs will beempowered to monitor, coordinate and direct allaspects of the social mobilization process in theirrespective districts.

In addition, consistent with the overall focus ofthe programme on poverty alleviation, the cre-ation of CACs will be accelerated the adoption offully transparent processes aimed at ensuring theircomplete independence. The number of CACsto be developed will be determined on the basisof a detailed poverty mapping exercise. CACs willbecome the primary vehicle through which Live-lihood Improvement Schemes will be imple-mented. Based on participatory planning pro-cesses, the bulk of the35 % of the programme’snon-tied capital resources targeted at disadvan-taged groups will be made available to graduatedCACs to implement income generating activitiesfor improving the livelihoods of women, childrenand other disadvantaged groups.

In order to ensure continuous learning and ad-justment in demand side programming, it is ex-pected that social mobilization programming willcontinue to evolve in response to changing cir-cumstances. Some of the anticipated challengesand possible responses include: the increasingrequire for greater SM competencies requiringcontinuous retraining efforts; the evolving rolesof local bodies and the need for improved SMharmonization; and the re-emergence of electedlocal government and the necessity to harmonizethe political system with the SM system.

LDTA or other qualified institutions will be usedto standardize social mobilization methodologyand maintain quality. Regional Service Provider(RSP) may be contracted for each region by theirRCU to build the capacity of WCFs, CACs, socialmobilizers, D/MSMC, and LSPs. Social Develop-ment Officers in the DDCs and municipalities willact as focal persons for taking the lead in harmo-nizing and coordinating all of the social mobiliza-tion programmes and activities in districts andmunicipalities. These SDOs or designated of-ficer will work under the direction of their super-vising LDOs and EOs.

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At the VDC level, the LGCDP social mobilizer willact as the lead social mobilizer with responsibilityfor coordinating all of the social mobilizers andsocial mobilization programmes operating in theirVDCs. This lead social mobilizer will work underthe technical backstopping and supervision of LSPsand overall guidance and coordination of VDCsecretaries. He or she will liaise with the WCFsand CACs to link these institutions with VDC ser-vice delivery programming.

The programme will continue to involve NGOs/CSOs as the local service providers (LSPs) for thesocial mobilization programme. These LSPs willbe accountable to the LBs under which they servethrough the D/MSMC mechanism. Their rolesand responsibilities will be given greater defini-tion in order to ensure that SM programme con-tinues to improve in quality and to receive moreoversight by the SDOs and D/MSMC.

Focus on Service Delivery andResource MobilizationLGCDP Phase II will place a greater emphasis onthe supply side of local governance programmingfollow the concerted effort of the Phase Iprogramme to launch the demand sideprogramme. The Phase II emphasis on servicedelivery and improved citizens’ access to basicservices will begin with the core functions ofMoFALD: social security payments, vital registra-tions, community mediation and local infrastruc-ture projects identified and prioritized through theintegrated planning process. More than 140,000disaster resilient local infrastructure projects suchas community roads, culverts, trails, school build-ings and health posts are expected to be addedto the country’s social inventory by the end of theprogramme. As well, LGCDP II will include tar-geted CD programmes, technical assistance andmanagement support aimed improving the per-formance LBs that are consistently failing on theMCPM assessment system. LGCDP II will alsoaddress the issues around staffing, including mak-ing available technical advice and support to LBofficials through Ilaka level service centres. Andfinally MoFALD aims to energize the communitymediation roles of VDCs and municipalities byinvolving Ward Citizen Forums and other agen-cies in community mediation processes.

A facility will be created in MoFALD to deliverpublic services through NGOs/CSOs in selectedareas of high fiduciary risk and remote VDCs. Alldevelopment partners and agencies funding com-munity development programming throughNGOs/CSOs will be expected channel their fundsthrough this facility. A detail operational modalitywill be developed to activate this facility.

Phase II will also see the integrated planning pro-cesses extended to cover the local levelprogrammes of other Ministries as well as the de-velopment initiatives of INGOs/NGOs and otherdevelopment actors working at the local level. Themore prominent role of the IPFCs described abovewill constitute a central feature of the reorienta-tion of local government operations; other ele-ments of it will include a strengthened, integratedparticipatory planning process that encompassesthe development and service delivery programmesof all actors at the local level. Its reference pointwill be local Development Plans and the standardsand requirements for infrastructure projects andwill incorporate appropriate environmental safe-guards. This expansion in the coverage of theintegrated planning processes will require an in-creased commitment to cooperation betweenMoFALD and the other facilitation and oversightagencies at the central level, more cooperationbetween LBs and line agencies and other actorsworking at the local level anda greater harmoni-zation all of the social mobilization programmesof the sectoral line agencies and other actors work-ing at local level.

In order to streamline and harmonize the differ-ent mechanisms in local governance, the MoFALDis committed to integrating and codifying all ofexisting policies, guidelines, directives, manualsand frameworks affecting local governance. LBCommittees with similar mandates will be inte-grated and restructured and their roles and re-sponsibilities clarified.

Resource mobilization will also be a strong focusin this phase of the programme, including improv-ing and broadening the coverage of the perfor-mance-based fiscal transfer system. The param-eters of the MCPM system will be reviewed inorder to identify its LGCDP I limitations. Follow-

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ing this review, the MCPM criteria will be modi-fied to include consideration of LB performancerelated to own source revenue mobilization, en-vironmental stewardship, fiduciary risk and cor-ruption reduction and mitigation and timely M&Ereporting. Further, the scope of the MCPM sys-tem will be expanded to cover all GoN regulargrants to LBs. MCPMs will be applied to financialflows in devolved sectors on a pilot basis in se-lected areas. Sector specific performance criteriawill be devised based on national and interna-tional know-how. A further change will be in theuse of MCPM scores to identify low performingbodies and link them to capacity buildingprogrammes aimed at addressing identified short-comings.

While revenue oriented activities in Phase I werelimited to grants, they will now be expanded toencourage the mobilization of local resources,including own source revenues, in support of longterm fiscal sustainability. Attention will also beturned to improving the capacity of local bodyinstitutions and staff to be able to respond moreeffectively to the increasing demands and expec-tations of local citizens.

New Emphasis on Local EconomicDevelopment and Livelihood ImprovementSchemesLGCDP II will see the introduction of local eco-nomic development and livelihood improvementschemes within the MoFALD programming man-date. The Local Economic DevelopmentProgramme will be rolled out on a public/privatepartnership basis in selected municipalities andurban-centric VDCs. The programme will pro-vide technical inputs to entrepreneurs by linkingthem with financial institutions. LGCDP will pro-vide conditional grants to targeted LBs to roll outthe LEDP in cooperation with private sector asso-ciations at the local level.

The main target for livelihood improvementschemes will be the poor and disadvantaged.Graduated CACs will be the local partners for thispart of LGCDP II. It will link up with local re-sources, I/NGOs and local microfinance institu-tions (MFIs) in order to engage their members inincome generating and livelihood improvementactivities. Top-up grants will fund livelihood im-

provement schemes that are proposed by CACs.At least 100,000 households (4,000 CACs eachwith an estimated average of 25 household mem-bers) will benefit from the livelihood improvementactivities of LGCDP II.

Increased Emphasis on PFM andManagement of Fiduciary RiskThe need for a strong PFM system and the impor-tance of addressing systemic fiduciary risks arerecognized to be critical elements of LGCDP II.Many of these were clearly identified in the PEFAreview that was carried out in LGCDP I and forwhich the Financial Risk Reduction Action Plan(FRRAP) was developed. The ADB fundedStrengthening Public Management Programme(SPMP) will be an integral part of LGCDP II andwill address many of the issues identified in rela-tion to PFM and the management of fiduciary risks.The FRRAP will be updated and be fully imple-mented in this second LGCDP through SPMP sup-port.

Additional measures will also be taken tostrengthen PFM in the local governance system.The programme will aim to introduce improve-ments in the procurement system (again with sup-port of SPMP), covering all of the levels of gov-ernment at which procurement takes place. Pro-cedures and systems for timely and reliable finan-cial reporting will be strengthened with the ob-jective of achieving a significant reduction in au-dit arrears. Capacity building programs will beintroduced covering internal processes and espe-cially PFM systems, which will benefit from a stron-ger focus on fiduciary risk reduction with the aimof reducing corruption vulnerabilities and increas-ing safeguards against fraud and corruption ingovernment operations.

As part of the PFM activities, the Ministry will in-vestigate how to achieve better synchronizationof programme budgeting and funds release withthe project planning and implementation cycle.This will include ensuring the timely release ofbudgeted funds from the central level down tothe DDCs and from the DDCs down to the VDCs,as well as ensuring that they are properly allo-cated to, and spent for, women, children andDAGs as per the block grant guidelines. They willalso include the timely provision of budget ceil-

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ings and guidelines to the ward level in order tofacilitate planning and prioritization processeswithin local budgeting processes.

Preparing for a New System ofLocal GovernanceIn its current role as the Ministry of Federal Affairsand Local Development, the Ministry will have toundertake certain preparatory initiatives in antici-pation of the expected resolution of the nationalconversation on a new constitution. The specif-ics of the new system of local government willnot be known until the final decisions on federalstructures have been made at the political level.However, it is important that the Ministry try toanticipate and begin to prepare for some of im-plications of a new federal system. For example,both the Ministry (from a policy and systems per-spective) and local bodies (from a capacity per-spective) will have to be prepared to hand overresponsibilities or respond to the needs of electedlocal bodies once elections have been held andthe final form of delineated roles and responsi-bilities for devolved local governance has beendetermined. LGCDP II will support the Ministry’sanalytical and policy activities in relation to bothits current and expected future obligations.

LGCDP II will also help strengthen MoFALD’s sys-tem-wide capacity in programme monitoring,evaluation and quality assurance. This will includeboth strengthening the Ministry level capacity inRBM and M&E and building LB capacities in M&E.The Introduction of Environment Friendly LocalGovernance (EFLG).

LGCDP II will roll out an environment friendlylocal governance framework by incorporating theprinciples of sustainable development as well therecent burning issues of climate change under thebroader umbrella of EFLG. Assessment criteria willbe developed to declare the households, wards,VDCs and municipalities as environment–friendlyentities. The entire programme related to envi-ronment and local adaptation to climate changeunder the MoFALD will be brought under thebroader framework of EFLG. A Poverty and Envi-ronment Initiative (PEI) will be mobilized to fi-nance EFLG. MoFALD will coordinate with Min-istry of Environment and other stakeholders tocarry out specific programmes on environment,

green energy, climate change, disaster resilience,and sanitation at the local level. LBs will be theimplementing agencies for all community focusedenvironment, climate change and disaster man-agement programming. The electricity royalty toLBs will be mobilized to fund most of EFLG activi-ties at local level.

3.2.2 Key Principles of LGCDP IILGCDP II will embody the following key principlesand strategies for guiding its actions and behaviourin the course of programme implementation.

EquityLGCDP II will follow the guiding principles of fair-ness and justice by focusing on building the ca-pacity of all of the country’s citizens, especiallywomen, children, differently-able persons andDAGs, to take advantage of all available opportu-nities. LGCDP II will also reinforce the equitableallocation of resources to LBs and is committedto strengthening the capacities of local bodies todeliver their services as inclusively, transparently,efficiently and effectively as possible.

SubsidiarityThe LGCDP represents a key support mechanismfor the GoN to realize its commitment to decen-tralization through devolution by following thedictum that decision making powers and resourceutilization should always reside with the lowestlevel of government capable of exercising andmanaging them. In this regard, local bodies areexpected (in addition to their service deliveryobligations) to raise local revenue, prepare bud-gets, make expenditures and carry out other regu-latory functions in accordance with the prioritiesof their citizens, especially of women, childrenand DAGs, by involving them in local bodies’, lineagencies’, Civil society’s and private sector orga-nizations’ service delivery systems.

Harmonization and AlignmentUnder LGCDP II, all local governance relatedpolicies and institutional mechanisms will be re-viewed, aligned and harmonized with the changedcontext and new constitutional arrangement thatis expected to emerge during its life. LBs will pre-pare/modify their periodic plans by accommodat-ing sectoral goals, objectives and targets. Locallevel programmes will be harmonized and aligned

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with local strategic plans (DDP, VDP, and MDP).DPs and I/NGOs working at local level will beencouraged to harmonize their programmes withlocal body programmes by becoming part of lo-cal government planning processes and workingthrough WCFs. Sectoral parallel planning will bediscouraged to avoid duplication and reduce trans-action costs.

Participation and CollaborationLGCDP II will work to create a local level enablingenvironment that provides opportunities for themeaningful participation of all citizens, especially,women, children, DAGs and disabled persons, aswell as persons living in remote areas, in localdecision making processes. In this regard, specialefforts will be made to ensure that LGCDP de-mand side institutions like CACs, WCFs and IPFCsare inclusive in their membership and know howto hear and respond to the voices, preferencesand priorities of marginalized persons and groups.Collaborative service delivery will be initiated byestablishing strong partnerships of LG service pro-viders to respond to citizen’s priorities reflectedthrough local planning processes. There will beharmonization among the social mobilizationagencies regarding the social mobilization prac-tices.

Mutual AccountabilityAll of the agencies engaged in local governancewill be held accountable for carrying out their as-signed responsibilities as set out in responsibilitymatrices and job descriptions. The application ofthe principle of mutual accountability will applyequally to the central government and to localbodies to ensure responsibilities are fully met onboth sides, for example, in relation to the timeli-ness of financial flows for grants, VDC secretarystaffing appointments, predictability of grant trans-fers and so on. A local governance Code of Con-duct will be developed and enforced for bothpoliticians and officials. GoN and DPs will equallyrespect the principle of mutual accountability asreflected either in JFA and/or other partnershipagreements.

Sustainability and Value for MoneyIt is important that the limited funds available fordevelopment be put to the best use possible. Inthis regard, LGCDP II will strive to ensure expen-

diture efficiencies. While doing so might not al-ways mean selecting the cheapest programmedesign or contracting option because total lifecosts, product quality and durability also need tobe factored into any procurement or contractingdecision, every effort will be made to achievevalue for money in any contracting action. Aswell, every effort will be made to strengthen thefinancial, environmental and institutional capabili-ties of local bodies and to improve their opera-tion and maintenance systems.

Downward Accountability and TransparencyLGCDP will continue to contribute to improvingtransparency at all levels of government. MoFALD,local bodies and other implementing agencies willfollow a zero-tolerance policy on the misuse orabuse of entrusted powers by office holders. Bothpreventive and curative measures will be takento address fiduciary risks. State institutions' ac-countability will be strengthened and maintainedthrough more citizen engagement. Allprogrammes and budget figures, public audits,public hearings and monitoring processes and theirresults will be publicly disclosed and made acces-sible to the general public. The provisions of the'Right to information Act / Rules' will be fullyhonoured. Awareness programmes will be imple-mented through the Information, Education andCommunication (IEC) component of theprogramme to make citizens more aware of locallevel activities.

A Sector Wide Programme Approach(SWAp)LGCDP II will continue its movement toward theprogramme approach that was launched in thedesign and delivery of LGCDP I by making LGCDPII the GoN’s framework for local governance andcommunity development. Over time it will movetowards the form of all-encompassing local gov-ernance SWAp. This will involve not only a fur-ther integration of the LGCDP into the MoFALDbut deepening of the Ministry’s coordinating link-ages with the other devolved ministries, both atthe national and local levels, and increasing thelevel of harmonization between MoFALD pro-gramming, other sector SWAps and other donorand non-governmental projects and programmes.It will also require systemic changes in MoFALDaimed at improving PFM, reducing fiduciary risk

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and undertaking the capacity strengthening ac-tivities. All the on-going projects supported bydevelopment partners within the MoFALD willbe aligned with LGCDP and no separate stand-alone programmes other than LGCDP will be for-mulated in the future in the areas of local gover-nance and community development.

Operational Strategy of LGCDPLGCDP-II will adopt following strategies:1. As an umbrella framework, LGCDP II will fur-

ther reinforce transformational approach tosocial mobilization by harmonizing the pro-cess with other agencies engaged in social mo-bilization. Ward Citizens Forums will be madean entry point for all sorts of community-leddevelopment initiatives. WCFs will be em-powered to engage in downward accountabil-ity.

2. Development partners will aligned all theirprogramme related to local governance andcommunity development with LGCDP us-ing common framework on social mobiliza-tion , monitoring and social accountabilitymeasures.

3. Social mobilization will be the vehicle to bring-ing social harmonization among the differentstrata of society with particular focus on sup-porting the people to fight against the anti-social behaviours such as dowry system,chaupadi, child marriage, domestic violenceagainst women, gender and caste discrimina-tion, etc. and the instrument of political, eco-nomic and social empowerment of citizens.

4. Environment Friendly Local Governanceframework will be rolled out across the coun-try in order for ensuring environmentsustainability and awareness building.

5. Rural energy initiatives will be piloted throughlocal bodies.

6. LGCDP will support to implement climate anddisaster management through harmonizedapproach to implement GoN's local adapta-tion plan of action and district disaster man-agement planning framework.

7. The programme will continue to involve theNGOs/CSOs as the local service providers(LSPs) in social mobilization however; the rolesand responsibilities will be rationalized in or-der to implement social mobilization effec-tively and efficiently.

8. The CACs will be linked with local resources,I/NGOs, poverty alleviation fund, local microfinancial institutions in the markets to engagetheir members in income generating and live-lihood improvement activities.

9. A facility will be created in MoFALD to de-liver the public services through NGOs / CSOsin selected in districts. All the developmentpartners and agencies funding the commu-nity development through NGOs/CSOs willchannel their fund through this facility.

10. All the on-going projects supported by de-velopment partners within the MoFALD willbe aligned with LGCDP and no any separatestand-alone programme other than LGCDPwill be formulated in the future in the areasof local governance and community devel-opment.

11. GoN will blend all the regular conditional andunconditional grants to LBs by linking withperformance based assessment system .Sec-tor specific performance criteria will be de-vised based on national and internationalknow-how.

12. Devolved sector top up grants based on per-formance assessment will be provided to lineagencies through DDFs.

13. Local Economic Development Scheme will berolled out on public private partnership basisin potential municipalities and VDCs theprogramme will provide technical inputs tothe entrepreneurs by linking them with finan-cial institutions.

14. The Local Governance and AccountabilityFacility (LGAF) will be strengthened to mo-bilize CSOs in the areas of social account-ability such as public hearing, public auditand civic oversights, . In the absence ofelected representatives, M/VSMCs, Inte-grated Plan Formulation Committee ( IPFC),in which the members of locally activepolitical parties are represented will bemade responsible to finalize the annualplan of LBs based on participatory planningprocess.

15. The programme will take a harmonizing ap-proach and use a common framework when,funding public and community services, in-frastructures and other public assets in orderto lay a SWAp approach for supporting de-centralized local governance.

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16. The programme will introduce results basedmanagement in local bodies to strengthenmonitoring and evaluation system.

17. The programme will take multiple approachesto reduce fiduciary risks at local level.

18. The programme will be fully aligned with cur-rent legislation, policies and plans and in par-ticular it will be fully compliant with Local SelfGovernance Act 1999.

19. In order to streamline and harmonize thedifferent mechanism in local governance, theprogramme will support to integrate andcodify all the existing policies, guidelines, di-rectives, manuals and frameworks. Commit-tees with similar mandates at LBs will beintegrated and restructured with clarity onroles and responsibilities.

20. Given limited resources available for theprogramme and growing competency of lo-cal staffs to handle local governanceprogramme in the country, LGCDP will nothire any international staffs or consultants onlong-term basis. However, LGCDP will engagethe technical expertise of international con-sultants on short-term basis as per the deci-sion of TASC.

21. The programme will support to activate com-munity mediation roles of VDCs and mu-nicipalities as assigned by LSGA with activeinvolvement of Ward Citizen Forums

22. Harmonized approach will be followed tostreamline poverty identification process incoordination with other stakeholders.

23. The existing performance based funding sys-tem will be refined in order to tie the inter-governmental fiscal transfer with results byintroducing necessary incentive mechanismsfor better performance .

24. Coordination will be established among thesector agencies both at centre and local level.Sector agencies will be responsible to executesector activities in coordination with Lbs

25. The programme will support to effective sec-tor service delivery by strengthening sectordevolution and fostering coordination amongthe line agencies at local level.

26. Decentralization Implementation and Moni-toring Committee will be reactivated.

27. MoFALD will enter into the memoranda ofunderstanding with different programme re-

lated to local governance and community toavoid overlapping and duplication on the useof development resources. PAA partners willuse common formwork planning, social mo-bilization and results-framework .DDC will beinvolved in monitoring, evaluation and coor-dination and implementation responsibilitywill be assigned to line agencies, VDCs andmunicipalities.

28. The programme will support to rationalize thenumber committees formed at LBs related tolocal governance and community develop-ment.

3.3 Goal, Purpose, Outcomes,Outputs and IndicativeActivities

LGCDP is intended to be a programmatic frame-work and common platform for local governanceand community development in Nepal.

As a framework,,,,, LGCDP II will encompass all ofthe programmes, actors, institutions in the localgovernance process through enhanced network-ing, collaboration and coordination mechanismsand systems in order to achieve its outcomes andoutputs. Within the framework concept, LGCDP-II will provide the systems, procedures, structures,tools and capacities to facilitate the transforma-tion of LBs into LGs capable of implementing de-centralized local governance system. It will alsobring together the local level programmes of allline ministries and agencies under one umbrellaby managing integrated planning and monitoringprocesses with common standards and frame-works for the collection of data and reporting re-sults.

As a programme LGCDP II will ensure that its in-tended results are achieved and that itsprogramme activities are delivered in strong part-nership with all of the demand and supply sideactors directly or indirectly involved in local gov-ernance and community development processes.In order to implement this mandate, it will de-velop and operate the structures and systemsneeded to implement the framework concept setout above.

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3.3.1 GoalThe overall goal of the programme is to contrib-ute towards poverty reduction through better lo-cal governance and community development.....

The goal of the programme is aligned with thenational goals of the GoN’s national plans andwill contribute either directly or indirectly to theirrealization by empowering citizens and respond-ing to their priority needs, while at the same timestrengthening decentralized local governance sys-tems, community development, infrastructuredevelopment, economic development and inte-grated service delivery.

3.3.2 PurposeThe purpose of the programme is to improve lo-cal governance for effective service delivery andcitizen empowerment.

LGCDP II provides an overall framework forstrengthening decentralization, devolution andimproved local governance system for the effec-tive delivery of basic services and the empower-ment of citizens, especially women, children andDisadvantaged Groups (DAGs) and their institu-tions. It has been designed as a frameworkprogramme with four outcome and nine outputareas.

3.3.3 Outcomes, Outputs andIndicative Activities

The four outcomes encompass citizen's empow-erment (demand side improvements), capacitydevelopment (supply side improvements), en-hanced service delivery, integrated planning pro-cesses, and citizen-centric policy development.All together there are nine outputs under thesefour broad outcomes. The indicative activities areincluded in this section and the key activities ofthe programme are defined and elaborated byStrategic Implementation Plan as reflected throughASIP on annual basis.

Outcome 1Citizens and communities hold their localgovernance actors accountableDuring the first phase of LGCDP, a strong institu-tional base and capacity was created through so-cial mobilization and capacity development ini-tiatives. In this second phase, the focus of the

programme will be on producing results by em-powering citizens, especially women, children andDAGs and their institutions, and by engaging citi-zens, including youth as change agents, in locallevel planning, monitoring and oversight processesin order to make local governance actors account-able and to make the social mobilizationprogramme more effective. In this phase liveli-hood improvement programme will be intro-duced in the graduated CACs by establishing co-ordination with national level programme suchas Poverty Alleviation Fund.

Under this outcome two demand side outputs willbe achieved.

Output 1Citizens and community organizations are

empowered to actively participate and assert their

rights in local governance

This output will focus on the empowerment ofcitizens, especially women, children and disad-vantaged groups, and their institutions (CACs,WCFs, IPFCs, DSMC/MSMCs, and CFLGCs) sothat they can meaningfully participate in localplanning, budgeting, monitoring and decisionmaking processes and have access to the servicesavailable at local level.

The indicative activities to be undertaken toachieve the results of this output will be:1. Strengthening the social mobilization

programme for the social, economic and po-litical empowerment of citizens;

2. Expanding and capacitating WCFs in localplanning, monitoring, community mediation,coordination and civic oversight processes;

3. Expanding the reach of CAC programminginto other disadvantaged areas;

4. Strengthening and building the capacity of D/MSMC, LSPs, LAs, social mobilizers, commu-nity facilitators and other district level coordi-nation committees in social networking inorder to effectively implement and harmo-nize social mobilization programming;

5. Updating and digitizing the social, poverty andresource information systems and maps andfeeding that information into national data-based systems;

6. Introducing livelihood improvement schemesand providing skill enhancing training and

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capital inputs to CACs by involving develop-ment actors (LAs, I/NGOs, cooperatives, pri-vate sector actors, financial institutions etc.)and responding to the demands of CACsfor community development;

7. Promoting social harmony and local peace bycapacitating the social mobilization institutionsto mitigate social problems; and

8. Mainstreaming the LGCDP’s crosscuttingthemes - GESI, CFLG,EFLG, RBM and IEC inthe transformational approach to social mo-bilization.

Output 2Accountability mechanisms for local governance

are in place

Socially mobilized groups and institutions will alsobe engaged in oversight activities in order to holdlocal governance actors responsive and account-able to citizens and their institutions.

This output includes the following indicative ac-tivities:1. Strengthening the competencies of MoFALD,

DoLIDAR, RCUs and national agencies inprogramme oversight and compliance moni-toring activities;

2. Strengthening the competencies of the LocalGovernance and Accountability Facility(LGAF) to carry out citizen-centred indepen-dent third party governance monitoring andto build the civic oversight capacity of CSOsto make LBs and other local governance ac-tors responsive and accountable to the pri-orities of their citizens;

3. Supporting LBs and other local governanceactors to adopt good governance practices(citizen charters, public audits, social audits,public hearings, information disclosure, etc.)in order to promote responsive, responsible,transparent and accountable governance atthe local level;

4. Capacitating and activating LB IPFCs tostrengthen participatory planning and over-see programme implementation, audit andcompliance processes;

5. Strengthening LB capacities in ICT and IECprogramming;

6. Updating and codifying the guidelines/manu-als/policies on local governance and commu-nity development; and

7. Strengthening the capacities of the NationalVigilance Centre and the MoGA for buildinglocal capacities in technical and managementauditing.

Outcome 2Local Bodies are more responsive to citizen'sdemandThrough this outcome LGCDP will seek to expandthe availability of local body fiscal resources, thusenabling them to provide their citizens with bet-ter public goods and services. This will be donethrough formula-based and equitable fiscal trans-fers allocated to local bodies on the basis of theirperformance (as measured through MCs/PMs), aswell as through increases in own-source revenues.Performance assessments will provide a basis uponwhich to identify key capacity “gaps” at the locallevel and thus help target LGCDP’s support forcapacity development – in terms of identifyingboth under-performing local bodies and in thethematic areas within which local bodies facechallenges. This outcome also places an empha-sis on supply-driven capacity-building aimed atstrengthening local PFM and reducing fiduciaryrisks.

Three outputs will be delivered in pursuit ofachieving this outcome.

Output 3LBs’ access to resources increased

This output seeks to ensure that LBs are able tosecure adequate finances for providing mandatedservices and meeting the priority service needsof their citizens. This output will focus on maxi-mizing the grants and transfers from the centralgovernment to the local bodies. Optimization ofown-source revenue is also a focus of thisoutput. The major activities under this outputare:1. Supporting the tax administration system of

local bodies in order to increase their ownsource revenue by amending the LSGA toincrease their tax rate/base, harmonizing thelocal tax system with the national tax system,mapping LB’ tax potentials, linking the localtax database with the central one, introduc-ing the integrated municipal administrationrevenue system and applying ICTs to the lo-cal revenue collection system;

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2. Refining and implementing a results-orientedperformance and formula-based funding sys-tem for block grant transfers to DDCs andMunicipalities in order to improve efficiencyand equity;

3. Developing and introducing performancebased and results-oriented MCPM indicatorsfor conditional and devolved sector grants;

4. Providing performance based conditional andunconditional grants to LBs and devolvedgrants to LAs in selected sectors;

5. Refining MCPM indicators, developing andintroducing the Performance Measures (PMs)system for VDCs and rolling out the results-oriented MCPMs and a formula based fund-ing system for VDC block grants; and

6. Enhancing LB capacities to manage increasedresources by strengthening the utility-basedand transparent PFM system.

7. Reviewing the revenue sharing mechanism (vertical and horizontal) to LBs

8. Establishing a reward mechanism for VDC andmunicipalities in their own source revenuecollection.

Output 4Public financial management system improved

This output encompasses all of the LGCDP’s PhaseII efforts to strengthen the capacities of theMoFALD, local bodies and other local governanceactors in financial management, in order to bothimprove its efficiency and effectiveness and toreduce fiduciary risk. These activities will be sub-stantially aligned with the Strengthening PublicManagement Programme (SPMP) supported byADB, which focuses on:

Enhancing budgeting and expenditure manage-ment and fiscal sustainability at the sub-nationallevel;Reducing fiduciary risks at the sub-nationallevel;Enhancing the transparency, economy and ef-ficiency of public procurement at the nationaland sub-national levels; and,Strengthening the capacity of oversight andaccountability institutions.

The indicative activities to be undertaken toachieve this objective include those fundedthrough the aligned ADB-funded SPMP initiativeand cover:

1. Rolling out and strengthening a municipalaccrual based accounting system (MAAS) inall Municipalities; and,

2. Introducing an integrated financial informa-tion system at central and local levels by es-tablishing and strengthening software-basedaccounting and networking systems in all mu-nicipalities and DDCs and in selected VDCsand operationalizing a simplified expendituretracking system in VDCs;

3. Strengthening the audit system and improv-ing LB compliance with audit regulations andprocedures and developing audit tracking sys-tems at MoFALD and DDCs;

4. Providing support to the OAG for perfor-mance and risks-based audits of LBs, ICANfor capacity development of private auditorsand FCGO for improving the overall PFM sys-tem related to LBs;

5. Strengthening procurement planning and bid-ding systems in all LBs, and supporting thePPMO in strengthening the capacity of localbodies and line agencies in procuring goodsand services; and

6. Updating and implementing the PEFA/FRRAP.7. Institutionalizing the concept of GESI budget-

ing and audit to ensure that the local plan-ning and budget allocation is poverty and gen-der-responsive;

Output 5Institutional and human resource capacities of

LBs and central level agencies involved in local

governance strengthened.

This output has to do with strengthening the insti-tutional capacities and human resource capabili-ties of MoFALD, DoLIDAR, LBFC, local bodies,line agencies and other local governance actors.This includes actions aimed at implementing or-ganizational, procedural and process reforms. Forlocal bodies, capacity building activities will bepartly guided by the outcomes of MCPM assess-ments.

The indicative activities to be undertaken underthis output include:1. Undertaking institutional assessments and sup-

porting MoFALD, DoLIDAR, LDTA, LBs andlocal governance actors in preparing andimplementing capacity development and in-stitutional reform plans;

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2. Developing and delivering competency basedtraining programmes based on plans for ad-dressing the CD needs of both demand side(e.g., WCF, CAC, IPFC) and supply side (e.g.,LB, line agencies) officials and stakeholders;

3. Enhancing LB capacities by clearly linking theMCPM assessment results with a capacitydevelopment grant and supply-driven train-ing modules, with the aim to fully support lowperforming and failing LBs;

4. Assessing and rationalizing staffing require-ments of LBs and support to assess the feasi-bility of introducing technical service centresat the Ilaka level;

5. Mapping CD service providers at national andlocal levels and orienting the service provid-ers selected for enhancing CD of local actorsthrough a restructured LDTA with an en-hanced capacity, monitoring CD service pro-viders for the efficacy of their trainingprogrammes, and introducing certificationsystems in local governance tools such as so-cial accountability, MCPM , participatory plan-ning etc.;

6. Capacity building for implementing/mainstreaming cross cutting themes (CFLG,GRBA, CC); and

7. Supporting LB associations to advocate ondevolution and to build local political capac-ity for local good governance.

Outcome 3All citizens are provided with efficient andeffective local service.The third outcome covers improvement in deliv-ery of MoFALD’s core services and seeks to im-prove and integrate the delivery of services indevolved sectors and other development actorsworking at local level in response to communitydefined priorities and needs.

Two outputs are proposed for achieving this out-come:

Output 6Access to and quality of local infrastructure and other

socio-economic services administered by LBs are

improved.

This output addresses the various activities thatwill be undertaken to ensure effective and effi-cient delivery of MoFALD’s core services related

to local infrastructure development, vital registra-tion, social security payment and communitymediation. Care will be taken to ensure that allof the LGCDP’s cross cutting themes aremainstreamed in the delivery of these core ser-vices. Their delivery will be either through regu-lar government/LB service delivery channels or,where these are not fully functional, through al-ternative service delivery channels, including I/NGOs, CBOs or the private sector. The major fo-cus of this output will be on improving the effec-tive delivery of social security allowances andimproving the quality of local infrastructure bystrengthening the capacity of the technical humanresources involved in the design and supervisionof infrastructure projects.

LGCDP will work to build the technical capacityof District Offices and municipal technical units.Todo this, direct technical assistance will be providedto VDC and sub-district technical cells will be es-tablished by contracting technical service provid-ers to serve VDCs and DDCs. This programmeaims to place at least one sub-engineer in eachVDC. To accomplish this, LGCDP intends to pro-vide scholarship to VDC selected School LeavingCertificate passed student to get training fromCentres of Technical Education and Vocation Train-ing. At a later stage, this large pool of technicalexpertise will be use to create a system of techni-cal service providers.

The indicative activities to be undertaken underthis output are:1. Reviewing, updating and modifying the

norms, designs, standards and guidelines forimproving the quality of local infrastructureprojects, aligning those standards with thoseof devolved sectors and establishing qualitycontrol labs;

2. Building LB technical capacities, developinga technical human resources pool for VDCsand establishing and operationalizing sub-dis-trict technical cells ;

3. Establishing a technical division in MoFALDfor providing effective technical oversight,carrying out technical audits, rationalizing theDoLIDAR structure and strengtheningDoLIDAR’s capacity;

4. Mapping the agencies involved in the deliv-ery of community mediation services and roll-

Programme Description

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ing out mediation programming in non-servedVDCs and municipalities using participatoryapproaches;

5. Strengthening the management of the socialsecurity system and coordinating it with theplanned National Social Protection Frame-work by (i) improving and modernizing theregistration system; (ii) having citizens’ groupsand WFCs promote access to and participatein the oversight of and public hearings re-garding their implementation; and (iii) ex-panding use of web-based technologies suchas biometric cards, hologram certificates andmobile banking technology;

6. Developing/updating District/Municipal Peri-odic Plans and developing the periodic plansof 500 VDCs;

7. Achieving 100% coverage of civil/vital regis-tration (birth, marriage, divorce, migration anddeath) through improvements in and mod-ernization of the registration information sys-tem and through a greater collaborationamongst the involved agencies, and by pilot-ing of a national ID system;

8. Supporting the municipalities and urban-cen-tric VDCs in implementing local economicdevelopment programmes on a public-privatepartnership basis in coordination with privatesector institutions at local levels;

9. Establishing the semi-autonomous NGOs fa-cility at MoFALD and delivering servicesthrough NGOs and CSOs in selected remoteand high risk VDCs;

10. Supporting to enforce the building code inmunicipality and urban-centric VDCs;

11. Supporting the implementation of Environ-ment Friendly Local Governance Frameworks,rural energy, climate resilience, disaster reduc-tion in vulnerable districts identified byNepal's National Adaptation Programme ofAction and providing support to the greenenergy initiatives of LBs

12. Providing support to regulatory reform in lo-cal governance and community developmentfor improving the effective local service de-livery; and

13. Improving the efficiency and effectiveness oflocal service delivery and socio-economic andinfrastructure development.

Output 7Strengthened integrated planning, budgeting,

monitoring and evaluation and coordination amongst

local governance actors

One of the significant changes to be introducedin LGCDP II is the strengthening of integratedadministrative and management processes tocover the activities of all service providers involvedin local development. District Periodic Plan willbe the basis for coordinating all sectoral plans anddevelopment. Output 7 addresses the range ofinitiatives to be undertaken in this regard, includ-ing the following indicative activities:1. Mapping all service providers involved in lo-

cal development in order to enhance the qual-ity and coverage of the services they are pro-viding through enhanced service provider co-operation and harmonization and throughstrengthening the capacities of local commit-tees (e.g., heath facility management commit-tee, school management committee) to planand oversee high quality devolved sector ser-vices;

2. Reviewing and updating local level planningguidelines and strengthening informationbased periodic plan (DPMAS/DTMP, resourcemap, profiles, digital district level data bases,sector related information) development andprioritizing plan activities through the prepa-ration of Local Medium Term ExpenditureFrameworks (LMTEFs) with the active involve-ment of sectoral line agencies and by refer-encing cross-cutting themes;;

3. Developing and operationalizing the perfor-mance based M&E Framework in MoFALD,DoLIDAR and LBs, aligning LA reporting withthat of LGCDP II and introducing web-basedreporting systems in DDCs, Municipalities andselected VDCs;

4. Mainstreaming GESI, CFLG and EFLG, IEC,climate resilience, waste management, disas-ter management and programme monitoringplans in local periodic and annual plans;

5. Developing systems and mechanisms for pro-moting and supporting inter-LB joint program-ming;

6. Supporting DDCs and Municipalities to up-date and implement DTMP and MTMP in acoordinated manner among LBs; and

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7. Supporting LBs to bring all the developmentagencies under the umbrella of the local plan-ning process and developing DDC, VDC andmunicipal results-frameworks that incorporatethe programming of all of the developmentactors.

8. Support to develop and implement periodicplans of local bodies integrating all sectoralplans.

Outcome 4Strengthened policy and institutional frameworkfor devolution, sub-national governance andlocal service delivery.Through this outcome, LGCDP II will improve andupdate the policy and institutional framework fordevolution, sub-national governance and localservice delivery – both to better reflect currentcontexts and to prepare and redefine sub-nationalarrangements in the context of federal structuringof the state. This policy-related outcome will beprimarily focused on the political, administrativeand fiscal dimensions of decentralization anddevolution, as well as on overall arrangements forthe improved delivery of sector services. The out-come will also pave the way for implementingforthcoming constitutional provisions insofar asthey will have a bearing on sub-national arrange-ments. The outputs to be undertaken to achievethis outcome are:

Output 8Refined policy on local governance and improved

inter-agency cooperation.

The activities that fall under this output will aimto bring a range of current policies and institu-tional arrangements into line with the current na-tional context for local governance but with a for-ward-looking perspective. Activities will focus onpolicy agendas for which there is a realistic chanceof moving forward given current political economyconsiderations. Consideration may be given tothe possibility of a community empowerment actthat would recognize, empower and facilitatecommunity-based organizations and developproper linkages with local governments. Activi-ties will be based on policy dialogue, technicalsupport, analytical work, and policy-relevant learn-ing and pilots.

The indicative activities to be undertaken underthis output are:1. Reviewing and amending the LSGA/R and

LBFAR and enacting new acts as appropriateto reflect past learning and changed contextsin order to strengthen the local governancesystem through devolution;

2. Categorizing LBs on the basis of establishedcriteria and revising their roles and responsi-bilities;

3. Supporting MoGA in reviewing provincial/lo-cal governance legal/policy frameworks andadministrative structures including administra-tive restructuring of local governments;

4. Assessing the need for restructuring of LBFC,MoFALD, and Local Development TrainingAcademy and implementing high prioritychanges;

5. Designing and drafting metropolitan city leg-islation and developing the criteria to trans-form urban-centric VDCs into municipalities;

6. Urban-centric VDCs will be developed as themodel city with appropriate institutional andinfrastructure base

7. Exploring the potential of merging the VDCsand municipalities and devising necessary in-centive schemes for such self-initiated merg-ers; and

8. Restructuring the Local Development Train-ing Academy to make it a centre of excel-lence in the areas of certification, research,quality assurance and training related to localgovernance and community development.

Output 9Policies developed for devolution and federalism

This output can be divided into two sets of activi-ties. The first set of activities is aimed at preparingthe ground for local governance arrangements inthe context of state restructuring. These will beconcerned largely with ensuring that MoFALD andother stakeholders are adequately prepared toengage in policy dialogue about a range of likelysub-national issues and ready to develop newpolicies. Second, as and when the new constitu-tion is enacted, activities under this outputwill focus on the development and implementa-tion of policies, etc. appropriate to the new con-text.

Programme Description

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The first group of activities to be undertaken un-der this output includes:1. Collecting and analysing information on sub-

national (provincial and local) political, ad-ministrative and fiscal arrangements.

2. Promoting and facilitating consultations andpolicy dialogue on sub-national governance(federal arrangements).

While they may be started before new arrange-ments are fully identified, the second set of ac-tivities will only be finalized as and when a newconstitution is promulgated and will include (butnot be limited to) the following:1. Developing and implementing transition plans

for concerned national institutions and agen-cies (including Ministries such as MoFALD);

2. Aligning existing policies/laws and enactingnew generic laws in accordance with the spirit

of the new constitution and with clarity onthe delineation of the roles/ responsibilitiesof each level of governance (federal, provin-cial and local) and proposing appropriatehorizontal and vertical linkages and disputesettlement mechanisms;

3. Establishing high-level institutions required forinstitutionalizing federal relationships includ-ing those for steering inter-governmental fis-cal relations, taxation rights, resource trans-fers and economic integration;

4. Establishing a Local Government Restructur-ing Commission and restructuring local gov-ernments as per the mandate provided by thenew constitution; and

5. Developing the modality of governance, in-frastructure and devolved sector SWAps in thecontext of federal governance .

Table 1 LGCDP II Programme Framework

Expected results Indicators

Goal

To contribute towards poverty reduction a) A reduction in the national poverty level asthrough better local governance and defined by NPCcommunity development. b) An increase in the country’s Human

Development Index (HDI) score

Purpose

To improve local governance for effective a) Extent of change in citizens’ perceptions ofservice delivery, local development and the quality of and access to services andcitizen empowerment. infrastructure

b) Extent of change in citizens’ perceptions oftheir involvement in local governanceprocesses.

Outcome 1Citizens and communities hold their local a) Extent of WCFs and CSOs’ oversight ofgovernance actors accountable. services provided by local governance actors

and extent to which local governance actorsact upon observations raised by WCFs andCSOs.

Output 1Citizens and community organizations are a) % of VDCs and Municipalities that haveempowered to actively participate and assert conducted ward level planning workshop totheir rights in local governance. prepare annual plan

LGCDP-II Programme StructureThe table below outline the structure of the programme including goal, purpose, outcomes and outputsand their indicators of the programme. The full logical framework is included in Annex 1: LGCDP IILogical Framework. This programme structure is further defined and elaborated by the Strategic Imple-mentation Plan and reflected through Annual Monitoring and Evaluation Plan (AMEP) on annual basis.

Programme Description

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Expected results Indicatorsb) % of ward level planning workshop with

documented participation of women,children and DAG

c) % of CAC members engaged in LivelihoodImprovement Programme (LIP)

d) Number of local bodies (DDC, Municipality,VDC) that have incorporated children'sneeds (disaggregated data by gender) in theirannual plan from "balbhela" (annualchildren consultation meeting)

Output 2Accountability mechanisms for local a) % of annual public hearing conducted ingovernance are in place. accordance with the LBs’ Resource

Mobilization Guidelines (49.7)(disaggregated by LBs).

b) % of annual public audit conducted inaccordance with the LBs’ ResourceMobilization Guidelines (50.5) in particularthe participation of women, children, anddisadvantaged groups (disaggregated byLBs).

c) % of annual social audit conducted inaccordance with the LBs’ ResourceMobilization Guidelines (50.6)(disaggregated by LBs).

d) % of LBs that share their annual audit reportin their respective councils(disaggregated by LBs ).

Outcome 2Local Bodies are more responsive to a) LB performance in meeting MCPMscitizens demand. b) MoFALD annual performance index (TBD)

developed.c) Improved performance of local governance

actors in financial management, HRdevelopment, M&E and reporting

Output 3LB's access to resources increased a) Increase in LBs’ own source revenue

generationb) Increased revenue assignment base for LBsc) % of total GoN budget allocated as block

grant to LBs each year.

Output 4Public financial management systems a) Fiduciary risks reduced by fullimproved. implementation of FRRAP

b) Evidence of improvements in theprocurement system

c) FMS and procedures improved for timelyand reliable financial reporting and areduction in audit arrears.

Programme Description

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Expected results IndicatorsOutput 5Institutional and human resource capacities a) Capacity development plan of MoFALD,of LBs and central level agencies involved DoLIDAR, LDTA and LB Associations(LBA)in local governance strengthened are in place and implemented focusing on

policy making, planning and monitoringand facilitating LBs.

b) % of capacity development plans of LBsbased on MCPM results, audit report andneeds assessment are in place andimplemented.

c) % of LBs staff who participated in at leastone relevant training (disaggregated byLB's category)

Outcome3All citizens are provided with efficient and a) % of service receiver reporting serviceeffective local service. received on time and in prescribes

standards.

Output 6Access to and quality of local infrastructure a) Availability of technical standards forand other socio-economic services sustainable local infrastructure (includingadministered by LBs are improved. proper design, regular O&M and

monitoring) and for service deliveryactivities, and evidence of their on-goinguse.

b) Community level dispute settlement throughmediation

c) Increased coverage of vital eventregistrations

d) Coverage and timeliness of social securityand social protection benefits made througha unified MIS registration system anddelivery innovations such as electronicpayment and mobile banking

e) % of VDCs covered by ilaka service centre

Output 7Strengthened integrated planning, budgeting, a) Evidence of systematic and on-goingmonitoring and evaluation and coordination interaction between LBs and other localamongst local governance actors governance actors in participatory planning

and oversight processes·b) Percentage of local committees that involve

local governance actors in accordance withLBs’ Resource Mobilization Guidelines(IPFC, Monitoring and SupervisionCommittee, and Project Monitoring andFacilitation Committee).

c) Evidence that WCF and CAC priorities areconsidered by respective local governanceactors.

Programme Description

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Expected results Indicatorsd) # of local bodies (DDC, municipalities,

VDCs) that have adopted CFLG processes,gender-responsive budgeting, genderauditing and EFLG

e) Proportion of capital funds that areallocated and spent to target groups by LBs.

Outcome 4Strengthened policy and institutional a) Devolution policies refined and institutionalframework for devolution, sub-national framework developed for administrative andgovernance and local service delivery. fiscal federalism

Output 8Refined policy on local governance and a) LSGA reviewed and amended to be inimproved inter-agency cooperation conformity with the constitution and

sectoral laws.b) Local governments categorized and

restructuring plan developedc) LBFC, MoFALD, LGAF and LDTA

restructured to assume responsibility in thedevolved context.

d) Guidelines/manuals/policies updated·

Output 9Policies developed for devolution and a) Devolution policy refined in the context offederalism federal governance

b) LBFC restructured to assume responsibilityfor fiscal federalism

c) Local Government Restructuring Commissionestablished and LGs restructured

(Please refer to Annex 1 for detail presentation of the LGCDP logframe.)

3.3.4 Cross Cutting AreasUnderlying all LGCDP II activities are thematic orcross-cutting areas. These are themes that mustbe considered in relation to each activity and tothe programme as a whole. Capacity develop-ment (CD) is a major cross-cutting area and nearlyevery LGCDP activity requires a CD input. WhileLGCDP II is more than a CD programme, manyof its activities have a significant element of CD.Most social mobilization programme is a CD ac-tivity. More accountable local bodies are of littleuse if they lack the capacity to deliver what theyare mandated to do or to respond to local de-mands. At the central level there is a range ofhuman resource and organizational developmentactivities to be carried out, such as the reorgani-zation of the LDTA and meeting the massive HRDneeds which will be associated with the establish-ment of a federal system.

In LGCDP II the main cross-cutting areas are:

Capacity Development (CD);Gender Equity and Social Inclusion (GESI);Child Friendly Local Governance (CFLG);Environment Friendly Local Governance (en-vironmental safeguards, climate change adap-tation mitigation and disaster risk management(ES-CCM-DRM)); andResults-Based Management.

These cross-cutting themes represent significantelements of all LGCDP II outputs and activitiesand will be fully integrated into all aspects of theprogramme’s implementation. The cross-cuttingtasks for each activity will be included in AnnualImplementation Plans and a separate annual planwill be developed for each cross cutting theme.Thus there will be a CFLG annual plan and a CDannual plan, etc. These plans will facilitate imple-mentation of the LGCDP II programme by betteraligning and integrating activities across MoFALD’sstructure.

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4.1 LGCDP’s Stakeholders

4.1.1 Central Level StakeholdersThe Local Self-Governance Act assigns responsi-bility for the multi-sectoral coordination of devo-lution and decentralization processes to theMoFALD. In LGCDP II, MoFALD will be the leadexecuting and coordinating agency of these pro-cesses at central level and the LBs will be theirimplementing and facilitating agencies at the lo-cal level.

Sector MinistriesThe MoFALD will cooperate with the other lineministries in promoting local good governance.For this to be effective the sector ministries willneed to move well beyond the boundaries of NACmeetings towards a greater involvement in all as-pects of local governance. In particular they willneed toget more involved in the project andprogramme budgeting, priority setting, financingand monitoring and evaluation cycle. In this re-gard, LGCDP Phase II intends to become moredirectly engaged with the Ministries of Agricul-tural Development, Education, Health and Popu-lation, Peace and Reconstruction, Urban Devel-opment, Women and Social Welfare, Coopera-tives and Poverty Alleviation, Forest and Soil Con-servation, Technology, Science and Environment,Land Reform within a framework of enhancedprogramme coordination.

Facilitating and Oversight AgenciesIn order to implement its local governance man-date, the MoFALD will cooperate with a largenumber of national level facilitation and oversight

agencies. It will work in partnership with the Of-fice of the Auditor General (OAG) concerning theannual cycle of internal and external local bodyaudits and with the National Vigilance Centre(NVC) concerning the execution of technical au-dits. As well LGCDP II will liaise with the PublicProcurement Monitoring Office to improve allaspects of local level procurement. Among otheragencies, it will coordinate with:

Ministry of Finance (MOF) on local governmentfinancing;National Planning Commission (NPC) for pro-moting and facilitating integrated participatoryplanning and monitoring processes through thetimely release of budget ceilings to LBs in or-der to ensure the predictability of resource al-locations;Local Body Fiscal Commission for strengthen-ing the MCPM process, improving audit stan-dards, studying revenue potentials and revisingthe fiscal decentralization road map and its use;Office of the Prime Minister (OPMCM) on gen-eral devolution matters across the governmentand on reactivating the DIMC and the DIMWC;Ministry of General Administration regardingmanagement audits and effective human re-source management at local levels and withinMoFALD itself;Ministry of Women and Social Welfare aboutgender equality and NGO affairs; and,Ministry of Urban Development concerningmunicipal affairs.

Development PartnersTo facilitate further progress towards a SWAp ap-proach to LGCDP financing, the MoFALD will

4ChapterProgramme Management

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enter into a joint financing arrangement with anumber of development partners as the bestmethod for promoting donor coordination. How-ever, in order to allow flexibility in the DP financ-ing of LGCDP Phase II, a number of financingmechanisms will be used. They will include aJoint Financing Arrangement (JFA), a Joint Financ-ing for Technical Assistance Arrangement (JFFTA)and a Programme Alignment Approach (PAA).Donor coordination will be orchestrated througha National Advisory Committee which will meettwice a year, a National Advisory Sub Committeewhich will meet on a more regular basis on op-erational matters and a number of MoFALD-DPoutput groups.

4.1.2 Local Level Stakeholders

Local BodiesThe existing two tier system of local body institu-tions will remain the primary focus of LGCDP II’scapacity development activities and, as such, itskey stakeholders. LGCDP II will continue to buildupon the success of LGCDP’s first phase in mak-ing LBs more downwardly accountable throughthe creation of WCFs and CACs which are be-coming increasingly able to respond to local de-mands for improved service delivery. LGCDP IIwill support LBs in coordinating more closely withother local level governance actors such as WCFs,CACs, IPFCs and I/NGOs. DDCs will be gener-ally involved in the planning, coordination anddevelopment oversight functions, whereasprogramme implementation responsibilities willlie primarily with the line agencies, the VDCs andthe municipalities and with the other local ser-vice providers.

Local Line AgenciesUp until now LGCDP has forged a limited num-ber of linkages with the agencies of other Minis-tries which provide services at the local level. Thiswill change during LGCDP Phase II through a re-newed effort to strengthen the integrated conver-gent planning processes at the DDC, municipaland VDC levels linked to the periodic planningprocesses of these bodies. Cooperation with lo-cal line agencies will be enhanced by supportinglocal economic development/livelihood improve-

ment programming and by encouraging more in-teraction between WCFs and LAs so that citizensbecome better positioned to access the full rangeof local government services. Local line agencieswill be involved in the implementation of the sec-tor-specific activities of district, municipal and vil-lage councils.

Civil Society Organizations,Non-Governmental Organizationsand the Private SectorMoFALD has already taken a number of concretesteps to harmonize its social mobilization activi-ties with the community development and exten-sion activities of local and International NGOs,many of whom are operating with bilateral andmultilateral donor support. As well, LGCDP re-cently launched a local initiative programme (CACDAG-4 LIP pilot) that uses the LGCDP’s WFC andCAC ward and citizen-based institutions to pro-mote economic development for poor householdsby linking them to local line agency services, localmarkets, financial institutions and cooperatives.The results of this pilot programme will eventu-ally be replicated more widely. A working grouphas been established and a study is under way tofind ways of deepening the harmonization ofMoFALD-INGO-NGO social mobilization pro-gramming based on a number of MOUs that havebeen jointly signed by them. A semi-autonomousNGO Facility will be established in MoFALD todeliver a range of support services through NGOand CBO channels in a number of targeted vul-nerable communities.

CitizensLGCDP is about citizens. It is specifically con-cerned with their empowerment and for ensur-ing that they are provided with basic services.LGCDP II will continue to support and facilitatethe WCFs, CACs and other CBOs in order to en-hance the access of all citizens to local services.In this regard, WCFs will be considered to be thekey community partners for all DDC and VDCactivities. More CACs will be created to providegreater opportunities for a larger number ofmarginalized people to become engaged in localgovernance.

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4.2 National Level ProgrammeManagement

Policy Coordination CommitteeMoFALD is the GoN’s lead ministry for implement-ing the LGCDP and its national coordinatingagency with overall responsibility for programmeexecution. To carry out these core functions, ithas a Policy Coordination Committee chaired bythe Ministry’s Secretary and a membership com-prised of all the Joint Secretaries of the Ministry aswell as the Director-General and Assistant DGs ofDoLIDAR. This Committee meets at least onceevery trimester and is responsible for endorsingthe programme guidelines and handbooks pre-pared by MoFALD, approving the Ministry’s HRDplan, facilitating programme coordination, man-aging the programme’s thematic areas, providingpolicy directions to local governance processesand reviewing the progress being made on theannual work plans developed by the LBs andMoFALD itself.

National Advisory CommitteeGiven the size and scope of the LGCDP and itsrequirement to coordinate with line ministries andits development partners, a special National Ad-visory Committee (NAC) has been established tocoordinate its programming with them. It meetstwice a year, is chaired by the Secretary ofMoFALD and is made up of senior officials fromMoFALD, Ministry of Finance, National PlanningCommission (NPC), related sectoral ministries,FCGO and the heads of the contributing devel-opment partners. Its key responsibilities are to actas a programme review and policy making forum,to approve the LGCDP Annual Strategic Imple-mentation Plans and to review the overall progressbeing made towards the achievement of expectedprogramme results.

National Advisory Sub-CommitteeAs in the Phase I programme, a National AdvisorySub-Committee (Sub-NAC) will be formed inwhich representatives of LGCDP’s partners willmeet on a regular basis (at least every two monthsand before the PCC and NAC meetings). The Sub-NAC will be chaired by the division head of theLocal Self-Governance Division of MoFALD. Itwill be responsible for the implementation of thepolicy decisions made by the NAC, for operational

level decision-making, for acting as the consulta-tive coordinating body of the LGCDP and for de-ciding on LGCDP human resource and technicalassistance issues. Senior representatives of thecontributing development partners will participatein Sub-NAC meetings. Sub-NAC will lead man-agement of TA activities related to programme andmay form other thematic committees as and whenrequired.

Programme Coordination UnitIn order to coordinate LGCDP II day-to-day op-erations and to ensure the internal coordinationof policy matters by the PCC, the existingProgramme Coordination Unit (PCU) will continueto function under the supervision of the Local SelfGovernance Division to coordinate LGCDP ac-tivities across the Ministry. The Joint Secretary ofthe Local Self Governance Division will serve asthe National Programme Director of theprogramme. A full time Under Secretary will con-tinue to serve in the PCU along with otherprogramme staff in order to coordinate the day today management of the programme under theguidance of the NPD. Since the programme willbe fully integrated into the MoFALD, the PCU’srole will be to provide technical backstopping for,and coordination of, the programme.

Outcome Coordinators and Output GroupsIn LGCDP II, the chiefs of each MoFALD Divisionwill be responsible for the implementation of theLGCDP outcome relevant to the mandates of theirdivisional responsibilities. This arrangement willensure that the LGCDP is firmly embedded inMoFALD’s regular operating structure. As well,the thematic groups used in LGCDP I for donordialogue will be replaced in LGCDP II by outputgroups responsible for undertaking detailedprogress and technical reviews and for opera-tional planning. These output groups will includethematic staff members from MoFALD, line min-istry representatives and DP sector specialists. Itwill be led by a designated MoFALD section chief.The output groups will meet at least once everytwo months.

Good Governance SectionThe Good Governance Section of MoFALD willhave the responsibility for coordinating and re-porting on the activities and issues relating to good

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governance, including the handling of grievancesand anticorruption measures. A Financial Moni-toring and Compliance Unit will be established inPEFA Secretariat at FCGO to monitor the finan-cial compliance of programme fund. FinancialManagement Support Unit will be institutional-ized in Financial Administration Section/MoFALDto support the LBs on financial management andin implementing PEFA-FRRAP activities. Andprogress reports on investigations and PEFA-FRRAPimplementation will be shared in Trimester Fidu-ciary Risk Mitigation meetings.

Citizen-Centred Monitoring ArrangementThe Local Governance and Accountability Facil-ity (LGAF) formed in LGCDP I was recognized inthe Focused Evaluation as having played a uniqueand vital role in supporting the mechanisms andbuilding capacities for performing the social ac-countability functions, including public audits,social audits, civic oversight and corruption sur-veying. LGAF will be further strengthening as thevehicle for ensuring the quality of programmeimplementation and results achievement as wellfor acting as an independent third party qualityassurance mechanism. Unlike in the LGCDP-I,there will not be a QAM-like mechanism; ratherLGAF will be assigned the added responsibility ofthird party monitoring. The PCU will take the leadin assuring the quality of programme implemen-tation using external expertise from outside GoN.

Technical Assistance ArrangementsAn arrangement for a joint pooling fund manage-ment of the technical assistance, either throughthe UN system or other channels, will be agreedbased on the TA Framework (TAF). By 2015, as apart of the graduation and ownership process,GoN will establish a government modality forLGCDP TA and management arrangements. Thiswill enable DPs to channel TA funds through thegovernment system.

The GoN and a range of DPs have agreed to imple-ment LGCDP II by pooling their resources intothe single framework with three distinct, albeitcomplementary, financing modalities namely, (i)Joint Financing Arrangement (JFA), (ii) Joint Fund-ing for Technical Assistance Arrangement (JFTAA),and ( iii) Programme Alignment Arrangement(PAA). The Technical Assistance Framework (TAF)

will serve as guidance to mobilize and managethe technical assistance of the LGCDP II to en-sure effective implementation of Programmebased on GoN ownership and a results orientedand harmonized approach.

The total TA has been divided into three mainPillars. A short description of the Pillars along withtheir budgetary requirement is presented below:

Pillar ITA for Programme Implementation SupportTA under this Pillar will be used to for two pur-poses: (1) assist MoFALD in the implementationof LGCDP II activities, at both the national andsub-national levels, and (2) build capacity of theMinistry and local bodies to manage such Pro-gram on their own in future. Program Coordina-tion Unit (PCU) and five Regional CoordinationUnits (RCUs) will need some additional staff re-sources and one additional RCU will be estab-lished. 75 District Governance Advisors and 58Municipal Governance Advisors will be hired toprovide support for LBs and strengthen the link-ages with the RCUs. Pillar I will also support shortterm national consultants to work on specific ac-tivities related to programme implementation andadministrative and management costs related tothe monitoring of programme activities.

Pillar IIPolicy, Research and Capacity Development(CD) supportThis pillar will be used to support CD initiatives(at both national and local levels) for new areas ofwork, policy development, and technical reviewsand studies, in addition to specialist areas of tech-nical support that cannot be procured in country.This pillar will provide high level policy advisoryservices on issues such as LB restructuring anddecentralization, including fiscal decentralisation.Pillar II will also be used to address emerging policydevelopment needs jointly identified by GoN andthe DPs.

Pillar IIIPolicy and Programme Support Facility (PPSF)Pillar III will cover the management of DP coordi-nation of support to LGCDP II and activities toensure efficient and effective liaison between theDPs and GoN. Pillar III will include TA to provide

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strategic policy guidance to the DPs and GoN aswell as analytical support, quality assurance andprogramme monitoring, reviews and evaluationsof LGCDP II, including a Mid Term Review (MTR),thematic evaluations and an independent evalu-ation towards the end of the programme period.This three pillar framework for TA support arrange-ments will provide the programme with an effi-cient and effective mechanism for high level na-tional and short-term international technical sup-port, policy advice, quality assurance and over-sight and the pilot testing of policy developmentinitiatives. The functioning of these arrangements,including the transition to full GoN responsibilityfor TA management, will be reviewed on a regu-

lar basis and will be refined and aligned with theGoN systems as required.

DPs working through the Programme AlignmentArrangement (PAA) who wish to support LGCDTA activities will work through the TASC in thesame way as JFA/JFTA partners. This will ensurethat all LGCDP TA is aligned and coordinated tomeet LGCDP capacity development objectives.Their funds will be managed in accordance withtheir respective PAA agreements.

The following table summarises the managementarrangements that will be used to manage LGCDPII at the centre.

Table 2 Management Arrangements at the Centre

Program Structure Function Meeting Frequency Members and Chair

Policy Coordination Apex executive Every trimester All senior MoFALD officialsCommittee (PCC) body of the (at least) (including DoLIDAR officials);

programme chaired by the MoFALD Secretary

National Advisory High-level inter- Bi-annual (i.e. Senior officials of MoFALD,Committee (NAC) agency steering every six months) MoF, line ministries, independent

committee agencies, and all LGCDP donorrepresentatives (under any of thefour funding arrangements);chaired by the MoFALD Secretary

National Advisory Consultation and Every two months Senior representatives fromSub-Committee coordination; (at least) MoFALD, MoF, line ministries,(sub-NAC) operational donor representatives; chaired

decision-making by the LGCDP Nationalforum Program Director

Output Groups Thematic Every two months Representatives from MoFALD,planning, (at least) NPC, line ministries andmonitoring and development partners; chairedissue resolution. by the output managerTrimester lreporting tosub-NAC

Trimester Fiduciary Fiduciary Every trimester Senior representatives fromRisk Mitigation risk investigations (at least) MoFALD, MoF, line ministries,Meeting and implementation donor representatives; chaired

of the PEFA-FRRAP by the MoFALD Secretary

Technical Assistance TA supervision On monthly Senior representatives fromsub-Committee basis MoFALD, MoF, l donor(TASC) representatives; chaired by

the National Programme Manager

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4.3 Programme Management atthe Local Level

The programme will be managed at the local levelas follows:

Local Bodies will be the programme’s imple-menting and coordinating Agencies and theLocal Development Officers, Executive Offic-ers and VDC secretaries will support the coor-dination of the LGCDP activities at local level.LGCDP activities will be integrated into annualLB plans that will be approved by LB councils.Local Governance Advisor and Urban Gover-nance Advisor and other experts will be hiredby the Programme Recruitment Facility and bedeputed to DDCs, municipalities and selectedVDCs to support DDC, municipality and VDCto implementation programme with a focus onmonitoring, reporting and facilitation.In order to provide operational guidance onCD, monitoring and evaluation, PFM, SM andother specialized areas to LBs and report to therespective Programme Coordinators as well tomonitor LGCDP implementation, a sixth Clus-ter Coordination Unit will be created to sup-port the LBs situated in Bagmati and the hilldistricts of Janakpur zone. They will be re-named Regional Coordination Units (RCUs)and will be over time be fully staffed by civilservants deputed from government.The Programme Recruitment Facility will workwith relevant departments in Nepal’s universi-ties to mobilize post graduate students to serveas volunteers for providing IT support to se-lected LBs2. The PRF will develop the requiredoperational manuals for this scheme. In everyVDC and municipal ward, the LGCDP socialmobilizer will act as the lead social mobilizerin their respective areas.

4.4 Programme Monitoring,Reporting and Evaluation

The following mechanisms will be adopted toensure the achievement of programme resultsthrough decision making processes based on in-formation derived from an effective M&E system.Monitoring and evaluation activities will follow the

newly revised national M&E Guidelines preparedby NPC.

4.4.1 Programme Monitoring andReporting

MonitoringProgramme monitoring will take place at severallevels and be guided by continuous reference tothe performance indicators in the programme’slog frame and in its monitoring and evaluationframework. The following monitoring arrange-ments will be used to support the managementof LGCDP II.

At the community level, community organiza-tions and WCFs will be encouraged to buildtheir capacity to oversee local governance andservice delivery activities. Independent fivemember monitoring and facilitating commit-tees will be formed for each project with rep-resentation drawn from the concerned WFC.At least two members of this committee willbe women selected from the beneficiary com-munity. These committees will be responsiblefor project monitoring and supervision. No fi-nal payments will be made in either user groupor contractor implemented projects without arecommendation from this committee. Super-vision and monitoring committees consisting ofrepresentatives from local political parties,women members of WCFs and CACs, lineagencies formed under the provision of LocalBodies’ Resource Mobilization Guidelines willbe capacitated and operationalized.At the community level, community organiza-tions (primarily WCFs, CACs and User Com-mittees), will be capacitated to directly moni-tor local governance activities and in particularthe delivery of services. At the VDC and Mu-nicipal levels, the capacity of their IntegratedPlanning Committees (IPCs) will be strength-ened to monitor projects and the provision ofservices within their respective areas as well asto support the direct monitoring activities ofcommunity organizations. VDC and Munici-pal SMCs will be responsible for monitoring thefull range of social mobilization activities in theirparticular areas. LSPs will be accountable toLBs through these committee structures.

1 The specific criteria for choice of LBs will be developed in the early stages of LGCDP II.

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Independent citizen survey will be carried outon annual basis in some selected VDCs andmunicipalities for feedback of citizens intoto local service delivery process .DDC Planning and Administrative Officers willbe the focal persons for monitoring activities atthe DDC level. They will be supported by Lo-cal Governance Advisors. In addition to sup-porting the lower level structures, DDCs willcarry out at least one annual social audit andorganize meaningful public hearings twice ayear following guidelines approved byMoFALD. DDC monitoring will include themonitoring of NGO activities in the district. TheDistrict Technical Office will monitor compli-ance with the procurement and environmentsafeguards management plans for the infrastruc-ture projects of local bodies and prepareprogress reports on devolved sectorprogrammes. At the regional level, the RegionalCoordination Units will support and monitorcitizen-centred monitoring activities and se-lected infrastructure projects. They will makeuse of participatory methodologies for prepar-ing annual development and procurementplans on a selective basis.A full-functional Monitoring and EvaluationDivision will be established in MoFALD withrequired number of sections to introduce andinstitutionalize the results-based monitoringsystems at MoFALD and LBs.The MoFALD’s M&E Framework will providethe foundation for programme monitoring atthe national level and a system of LB web-basedreporting will be developed during the initialstages of LGCDP II. As per the FRRAP guide-lines, MoFALD will undertake spot checks oflocal body compliance with financial manage-ment guidelines and cooperate with the MoGAto conduct management audits of at least onedistrict in each development region each year.The LBFC will monitor and inspect the qualityof MCPM assessments while the responsibleMoFALD sections will undertake monitoringfield visits to check the timeliness of social se-curity payments and in cooperation withDoLIDAR, the quality of user and contractorimplemented infrastructure projects. As well,on a sample basis, they assess the levels fidu-ciary risk in the financial management of a num-ber of local bodies. The practice of joint moni-

toring at the district and central level will becontinued and strengthened. Joint Secretar-ies, Under Secretaries, and Section Offices ofMoFALD will be mobilized for monitoringMoFALD programming across the entire nation.The Ministry’s M&E framework will be re-viewed on a regular basis to determine its util-ity as a tool for informing Ministry decision mak-ing processes.

4.4.2 Programme EvaluationThe following tools will be used for evaluating theprogramme.

A baseline survey will be undertaken at the startof LGCDP Phase II. It will take into accountthe work done by donors (particularly ADB andUNDP) in relation to the collection of baselinedata on related projects. After completion ofthe programme, an end-of-programme evalu-ation will be undertaken against the baselineindicators in order to evaluate the achievementof programme results.An independent Mid-Term Evaluation ofLGCDP II programming will be undertaken dur-ing the first quarter of the third year of theprogramme. In addition, a Public ExpenditureTracking Survey will be carried out by inde-pendent contractors twice over the life of theprogramme..One or more focused evaluations will be un-dertaken toward the end of the programme inorder to review the effectiveness of social mo-bilization programming, sector devolution, so-cial security programming, environmentfriendly local governance and the efficacy oflocal economic development programmingwithin a governance SWAp.

4.4.3 Programme ReportingThe progress being made against Annual Strate-gic Implementation Plans (ASIP) targets will bereported on at least every trimester (i.e., everyfour months) and the resulting reports will beposted on MoFALD’s web site. These trimesterreports will be based on a roll up of the progressreports prepared by VDCs, DDCs and municipali-ties that cover the activities of User Groups, WCFs,CACs and V/M/DSMCs. DDCs and municipali-ties will publish annual reports and post them ontheir web sites. The MoFALD’s M&E Section willprepare an annual results-based report that will

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include a detailed assessment of at least one ofLGCDP main component. The parameters andprinciples for all this porting will be developedduring the initial stages of LGCDP II. The activi-ties to be implemented to achieve LGCDP’s re-sults will be detailed in a Strategic Action Plan.

A comprehensive annual report will be preparedfor the NPC and the DPs. It will include a de-tailed financial report and a line-by-line report onexpenditure against line budget items. In addi-tion, as part of its commitments under the FRRAP,MoFALD cooperate with the OAG and the MOFto prepare an annual audit report for submissionto the donors.

Detailed reporting requirements outlining tablesof content, preparation responsibilities, reportingfrequencies and roll-up modalities will be pre-pared and their application overseen by theMoFALD M&E section. Programme reporting willbe linked to and built on the information gath-ered through the MoFALD’s improved M&E sys-tem.

The LGCDP will be jointly reviewed by DPs andMoFALD on a regular basis. At the regional level,RCUs will be responsible for reviewing programmeperformance against LFA performance indicators.

4.5 Assumptions, Risks andtheir Mitigation

4.5.1 AssumptionsThere are several policy assumptions that havebeen made in order to ensure the smooth imple-mentation of LGCDP II. They include:

The voice and demand side governance agendawill need to be fully supported at the nationalpolitical level. LGCDP provides a good frame-work for the upward channelling of commu-nity demands on a national scale.Local elections are a pre-requisite for the per-manent institutionalization of representative/political accountability and for the long termimprovement in service delivery standards.PMF plans for improving the performance ofcentral and local government and devolved sec-tors must be linked with each other in order to

improve service delivery at the local level. Thesystematic implementation of the PEFA-FRRAPcan make a significant contribution towardspreventing corruption resulting from assump-tions of impunityThe community-based model of service deliv-ery can be made relevant even in remote andpolitically disturbed districts.LGCDP type programming can create oppor-tunities for preparing for administrative and fis-cal federalism. For example, the system of for-mula-based fiscal transfers initiated in LGCDPI through the institutional transformation of theLocal Bodies Fiscal Commission (LBFC) is prov-ing to be a useful tool for preparing for fiscalfederalism.LGCDP II represents a platform for demonstrat-ing a continued commitment by both the do-nors and the GoN to building a sustained mo-mentum for advancing the “idea” of a SWApapproach to improved local governance.

4.5.2 Risks and Mitigation StrategiesThe ability to anticipate risks and manage themin a systematic way will be a major determinantof the success or failure of LGCDP II. In broadterms risks can be classified into seven categories,each of which contains sub risk factors:1. Operational risks covering human resource,

operational management and critical informa-tion risks affecting the bureaucratic integrityat local levels;

2. Planning and budgeting risks caused by theuntimely approval of the budget at centrallevel, the untimely determination of ceilingsdown at local levels, the lack of convergencebetween all of the actors in the integratedplanning and budgeting processes, ineffec-tive internal, external and joint monitoringarrangements and the lack of operation andmaintenance follow-up;

3. Institutional risks in the form of CACs andWCFs formation without due process, with-out provision for oversight functions and lagsin DIMC and LBFC operationalization;

4. Coordination risks between central and locallevel agencies and between administrative andsectoral devolution;

5. Financial risks associated with poor budget-ing;

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6. Developmental risks related to policy incon-sistencies, political dysfunctionalities and con-text challenges; and

7. Reputational risks associated with a lack ofstakeholder confidence.

A systematic approach to risk management willbe an integral part of MoFALD’s LGCDP Phase IImanagement regime. A regular review of riskswill be an essential part of the systematic moni-toring processes of LGCDP II and risks and miti-

gation strategies will be continuously adjustedon the basis of these reviews. A section on risksand their mitigation will be included in trimesterreporting . In addition, risk managementand mitigation strategies will be reviewed ona trimester basis by the project’s outputgroups and biannually as part of NAC meetingagendas.

A risk mitigation strategy is presented in Annex 2of this document.

41

5.1 Programme Budget

The total budget for LGCDP II is US$ 1,362 mil-lion. It includes a proposed DP JFA contributionof US$ 236 million that includes a SPMP contri-bution of US$ 25 million, a UNJP contribution ofUS$ 45 million and GIZ contribution of US$1.1

5ChapterProgramme Financing

million. The balance of the programme budgetnot covered by the DPs under the JFA, JFTA andPAA will be will be assumed by the GoN.

The Table below provides an overview of fundingthat is expected to be available for LGCDP II fromthe various development partners.

Table 3 Funding Commitments

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42

Tab

le 4

LG

CD

P -I

I Pro

gram

me

Bud

get (

Am

ount

s in

mil

lions

of N

PRs)

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43

5.2 Funding Arrangements forDonors and Government

There will be both direct and aligned financialsupport to LGCDP II. The direct support will beprovided by development partners in two ways:(1) as programme grants to LGCDP through theJoint Financing Arrangement as part of the totaltransfer pool of the central budget; or (2) as partof the Joint Funding for Technical Assistance (JFTA).Aligned support will also be provided in two ways,either by (1) aligning existing and new governanceprogrammes and local infrastructure programmeswith the LGCDP II by agreeing to use WCFs andD/MSMCS for prioritizing spending, or by (2) pro-viding targeted TA to MoFALD as part of an al-ready existing and/or new TA programme whichhas a larger focus than LGCDP and/or MoFALDalone. In this case PFM support to MoFALD willbe part of a more general TA programme focusedon PFM.

The Government of Nepal will blend all types ofregular conditional, unconditional and sectoralgrants with LGCDP as the financial contributionof the GoN to the programme. These blendedresources will include the regular GoN block grantto LBs, the regular sector conditional grants pro-vided to all DDCs through the DDF , conditionalgrants provided to all municipalities and devolvedsector grants channelled through the DDF toline agencies for primary education , primaryhealth, livestock development, and agricultureextension. At the centre MoFALD will blend alltypes of regular programme funds available forcentral level activities with LGCDP. MoFALD willalign all stand-alone programmes and their fundsimplemented with the support of developmentpartners with the LGCDP using common frame-works for reporting, auditing, monitoring and so-cial accountability applicable to LGCDP. At thelocal level, DDCs will blend their own sectoralfunds with devolved sector grants and channelthem to line agencies for implementation. DDCswill not be involved in implementation in thoseareas where the sector line agencies have the req-uisite competencies.

Annex 3 presents the funding arrangements fordevelopment partners.

5.3 Fund Flow

The government will blend LGCDP II funds withconditional and unconditional grants and chan-nel them to DDCs, municipalities and VDCsthrough the DDF, MDF and VDF respectively. Thefund flow mechanism for LGCDP-II is set out inAnnex 4.

The following fund flow mechanisms will be es-tablished and operationalized:

JFA partners will channel their funds to theGoN’s Foreign Currency Account and the fundswill be accounted for in the red book of theMOF. JFA funding will use FCGO’s regular fundflow mechanisms.JFA partners contributing to the JFTA will chan-nel their funds to the LGCDP TA accountthrough an FCA to finance technical assistancefor Pillars I and II. Funds received for TA will beaccounted for in the TA Book of MoF.Non-JFA JFTA Partners will channel their fundsdirectly to the LGCDP TA account for execut-ing TA activities and to DDF/VDF/MDF for ex-ecuting programme related activities at the lo-cal level.The programme details listed in the programmebook part 2 of the NPC will be jointly plannedand will follow an integrated planning processusing existing funding and authorization chan-nels.At local levels, the devolved sector funds of theGoN and sector conditional grants of LGDCPto line agencies will be directly transferred toline agencies through the DDF following cus-tomary processes, but the plan and programmeswill have to be approved by local councilsthrough their participatory planning processes.....Programme Alignment Partners may channeltheir funds through the LGCDP TA account andDDF/VDF/MDF with their programming re-flected in LGCDP II ASIP and LB annual plans.

5.4 Financial Management

The following mechanisms will be adopted for thefinancial management of LGCDP.

Local bodies and devolved line agencies andGoN agencies at local levels receiving funds

Programme Financing

44

from the LGCDP will follow LSGA, LSGR andLBFAR planning, budgeting, accounting, au-diting and reporting procedures .Central level GoN agencies including MoFALDand the Line Ministries receiving funds includedin the Red Book will follow the GoN’s procure-ment act and rules for their financial manage-ment of the programme.There will be separate operational proceduresfor the management of the funds received forthe financing of Pillar I TA activities under theJFTA. The operational procedures for this ar-rangement will be set out in an agreementbetween the GoN and the DPs as recom-mended by the NAC and discussed in TASC.UNJP NEX/NIM system will be applied to theimplementation of Pillar II and III TA activities.

5.5 Local Level Planning andBudget Processes

A Participatory Planning Process following LocalSelf-Governance Act regulations will be the basisfor programming at the local level. The timingand sequencing of programme implementationwill be aligned with the LA planning cycle. LBcouncils will approve their annual plans for theirprogramme at the local level. Annex 5 sets outthe steps to be followed in order to adhere to theprescribed participatory planning process. Annex6 describes the budget allocation system andmodality of the district development planning sys-tem that incorporates the resource allocations ofall of the sector programmes.

5.6 Sector Wide Approach

The LGCDP-II programme document establishesGoN framework for local governance and com-munity development programme. Over the lifeof the programme, LGCDP will move towardsthe establishment of an all-encompassing min-istry-wide SWAp by establishing three sub-sectorSWAps in the areas of governance, sector devo-

lution and local infrastructure development. In thisway, LGCDP will take the lead in developing thenecessary framework and build the required ca-pacities for moving the Ministry’s programmingin the direction of a comprehensive SWAp. Theprocess of establishment of full SWAp will befinalised by the end of the programme period .

The trail bridge sub-sector within the local trans-port infrastructure is already being imple-mented by DoLIDAR in sector wide approach.Other sub-sectors within local transport infra-structure will also be implemented by DoLIDARin line with LGCDP framework. .The devolved sector SWAp will be establishedin coordination with line ministries. The activi-ties financed under this mechanism will be ex-ecuted by the line agencies as per the LSGAand LSGR.MoFALD will be the lead agency for the ex-ecution of the governance SWAp which willinvolve bringing all governance relatedprogrammes of the Ministry under a singleframework.All of the activities undertaken in the name ofthe three SWAps will be included in the ASIPof the LGCDP Framework.Ministry’s Monitoring and Evaluation Sectionwill develop a single M&E framework for man-aging this SWAp.SWAp will help LBs to integrate and harmo-nize all of their future year development pro-gramming into a single comprehensive annualplan. As well, using these three SWAps as pro-gramming guides will facilitate the holding oflocal bodies to account and help the MoFALDto carry out its various accountable functions.The national and international non-governmentorganizations involved in local governance andcommunity development will execute theirprogramme in consistency with the LGCDP IIframework. It will be mandatory for I/NGOsto include their programme in LBs’ annualplanning process. At the centre, NGO facilityat MOFALD will coordinate such processwhereas NGO desk at DDC will be maderesponsible to facilitate at local level.

Programme Financing

45Annexes

Annexes

46

Annexes

47

Annex LGCDP II Logical Framework1

Indicators Baseline Targets

Outcome 1Citizens and communities actively engage with local governance actors and hold them to account

Extent of WCFs and CSOs’ To be determined X % of citizens participate in local governance

oversight of services provided processes such as planning, public audit,

by local governance actors and public hearings by end of project

extent to which local governance 538 VDCs covered by 80% of WCFs participate in oversight of LB

actors act upon observations CSO monitoring in performance by end of project and 50% of

raised by WCFs and CSOs first phase observations are acted upon by local

governance actors by 2016/17

34,800 WCF established WCFs established in all Wards (with

and participate in local settlements) with about 1 million members

planning process mobilized for local planning and monitoring.

35% LBs approved • 80% of the total number of projects and

infrastructure projects 2/3 of total budget included in annual

based on demands from plan of VDCs are based on WCFs demand

WCFs in 2011/12 • 70% of the total number of projects and

1/2 of total budget included in annual

plan of municipalities are based on

WCFs demand

Output 1Citizens and community organizations are empowered to actively participate and assert their rights in local

governance

VDCs and Municipalities Mapping of VDCs and 95 % VDCs and Municipalities conducted

conducted ward level planning Municipalities conducted ward level planning workshop annually by

workshop to prepare annual ward level planning in the end of 2016/17

plan as per guideline. FY 2012/13

Ward level planning workshop Documentation of 90 % Ward level planning workshop

with documented participation attendance documented participation of women,

of women, children and DAG. (disaggregated data) children and DAG

CAC members engaged in Less than 100 CACs have 3,000 graduate CACs have received LIP

Livelihood Improvement implemented Livelihood support by 2016/17, supporting an estimated

Programme (LIP). Improvements Plans in 25,000 to get out of poverty

2012/13

WCF are empowered to 5% WCFs are under 75% of WCFs under Category either

actively participate and assert Category A and 30% A or B.

their rights in local governance under Category B on

performance basis.

Annexes

48

Indicators Baseline Targets

Number of local bodies 20 VDCs in 5 districts of At least 15 priority DDCs, 7 municipalities

(DDC, Municipality, VDC) that MFDR,32 VDCs in and 800 VDCs incorporated children's needs

have incorporated children's 4 districts of EDR, in their annual plan by 2016/17

needs in their annual plan 10 VDCs in 3 districts of

from "balbhela" (annual CDR have incorporated

children consultation meeting) children needs in their

annual plan 2012/13

All projects at VDC level LGAF supported 90% of LBs conduct Social Audit, Public

monitored 538 VDCs with Audit and Public Hearing as per guideline

monitoring and oversight in 2016/17

activities in 2012/13

Output 2Accountability mechanisms for local governance are in place

WCFs start practicing social N/A Social accountability tools integrated in Social

accountability tools in Mobilisation process and all WCFs practice

monitoring of local governance according to revised Social Mobilisation

actors’ activities Guidelines

Civil society led compliance Two rounds of CSO Civil society led compliance monitoring in all

monitoring in 75 districts grants for 5 to 9 months 75 districts initiated by 2013/14 and fully

of activities in 54 and functional in all districts by end of programme

75 districts

National accountability Individual reports, Annual national accountability report

initiatives are closely aligned e.g. LGAF, PRAN

Outcome 2Local Bodies are more responsive to citizens’ demand

LB performance in meeting LBs MCPM performance • 30% reduction of failed MC in LBs

MCPMs in 2012/13 by 2016/17

• 10 pct points average MCPM improvement

by 2016/17

MoFALD annual performance To be determined To be determined

index (TBD) developed

Improved performance of To be determined To be determined

local governance actors in

financial management,

HR development, M&E

and reporting

Output 3Local Bodies’ access to resources increased.

Increase in LBs’ own source To be determined by 10 percent increment of own source revenue

revenue generation baseline survey annually.

Increased revenue assignment To be determined by 10 percent increase annually in revenue

base for LBs baseline survey coverage ratio of LBs.

% of total GoN budget allocated Total unconditional grants Annual allocation of block grant to LBs from

as block grant to LBs each year. in 2011/12 was 3.8% GoN is at least 5 % of total government

(DDC: 0.9%; VDC: 2.8%; budget by 2016/17.

Municipalities: 0.1%) of

total government

expenditures

Better projection and p 2012/13 baseline Less than 20% deviation between actual and

redictability of Fund of LBs budgeted amount by 2016/17

Annexes

49

Indicators Baseline Targets

Timely transfer of fund to 2012/13 baseline 50% of annual budget disbursed by the end

local bodies of second trimester by 2016/17

Output 4Public Financial Management System Improved

Fiduciary risk reduced by full PEFA /FRAAP Prepared PEFA/FRRAP targets achieved by 2015/16

implementation of PEFA/FRRAP

Evidence of improvements in NA LBs prepare annual procurement plan

the procurement system by 2014/15

FMs and procedures improved Accounting Accounting

for timely and reliable financial Accounting software in Introduction of accounting software in 1000

reporting and a reduction in 200 VDCs and accrual VDCs by Q4 2014 and accrual accounting

audit arrears accounting system system in 20 municipalities by 2016/17

introduced in Financial Statements

6 municipalities 100% of required LB financial reports

Others produced within deadline by 2014/15

NA including trimester and annual reports.

Audit

Reduction of audit arrears by at least 40%

annually (in monetary terms)

Output 5Institutional and human resource capacities of LBs and central level agencies involved in local governance

strengthened.

Improved management 2012/13 staffing levels • More than 90% VDC Secretaries in office

support for local bodies for at least 6 months in 2016/17

• 75% of Municipalities and DDCs adhere to

two year tenure of EO/LDO in 2016/17

TA support roles 2012/13 long-term TA • RCU Coordinators roles transitioned

institutionalised support roles in PCU • Programme Recruitment Facility operational

and RCU • Other roles to be determined

Outcome 3All citizens are provided with efficient and effective local services.

Evidence in improvement in N/A Out of the total number projects checked by

quality of local infrastructure quality lab, 95 % are of good quality by the

projects end of 2016/17

Percentage of service receivers To be determined in 50 percent of citizens receive LB’s services in

reporting services received on baseline survey stipulated time at prescribed standards by

time and to prescribed standards 2016/17

Local bodies implement 31,650 community • # infrastructure projects annually

community infrastructures infrastructure constructed benefitting # households

in 2011/12 benefitting • 25% of community infrastructure

1,234,340 households implementations are disaster resilient

Output 6Access to and quality of local infrastructure and other socio-economic services administered by LBs are improved

Availability of technical standards Technical standards are • Revise and updated technical standards are

for sustainable local infrastructure available documented and applied for all local

(including proper design, regular • Labour base rural road infrastructure and for service delivery

O&M and monitoring) and for construction manual activities by 2014/15;

service delivery activities, and is issued • LBs receive funds for infrastructure projects

evidence of their on-going use • Quality lab established on a predictable and timely basis by 2016/17

in 35 districts but and rural roads make use of environmentally

not functional labor based technology in conformity of

DTMP;

Annexes

50

Indicators Baseline Targets

• Quality Lab established and functional in

DoLIDAR 2016/17

Community level dispute About 300 community • XX % increase in the number of VDCs /

settlement through mediation mediation center municipalities covered by community

established of 200 VDCs mediation services compared to the

of 20 Districts baseline data. (Percentage to be determined

after baseline data are obtained)

• XX % increase in the number of disputes

settled through mediation compared to the

baseline data. ( Percentage to be determined

after baseline data are obtained)

Increased coverage of vital To be determined Birth registration of 80% of children under

event registrations under 5 yrs five by end of 2016/17

Coverage and timeliness of • Banking channel in • All VDCs and municipalities update social

social security and social district headquarter and security beneficiaries annually;

protection benefits made XX major municipalities • 100% coverage of eligible recipients of

through a unified MIS • Branchless banking in social security payments;

registration system and delivery 2 districts piloted • All payments made within 30 days of due

innovations such as branch date by 2016/17;

less banking • Branchless banking will reach to 61 districts

by 2016/17

% of VDCs covered by To be determined 33% VDCs received services from ilka

ilaka service centre service centre

Local Bodies grievance No systematic mechanism 75% of DDCs have grievance place with

system established to report to local trimester reports

grievances to district and

central officials

Output 7Strengthened integrated planning, budgeting, monitoring and evaluation and coordination amongst local

governance actors.

Evidence of systematic and Baseline: DDC= 6, • 75 % DDCs and 95% municipalities have

on-going interaction between LBs Municipality = 50 current periodic plans by 2016/17

and other local governance actors • Sectoral allocation based on illaka level

in participatory planning and recommendation and no duplication

oversight processes (periodic plan). between sectoral and LBs planned activities.

Percentage of local committees 21 municipalities applied • LBs meet with local representatives of other

that involve local governance the IPFC guidelines line ministries, INGOs, NGOs and other

actors in accordance with LBs’ actors ( child club network, women

Resource Mobilisation and network and DAG)working in their areas at

Management Operation Guidelines least twice annually

(IPFC, Monitoring and Supervision • 90% of VDCs and Municipalities follow the

Committee, and Project Monitoring membership provision in the local

and Facilitation Committee) committees ( such as Integrated Plan

Formulation Committee, Monitoring &

Supervision Committee ) in accordance

with LBs’ Resource Mobilisation Guideline*

(LBRMG) formed by 2014/15

Proportion of capital funds that To be determined At least 35 % of block capital fund of LBs are

are allocated and spent to target allocated and spent on targeted group annually

groups by LBs as per the demand of groups such as Balbhela

for 10% resources allocated for children

Annexes

51

Indicators Baseline Targets

% of youth ( aged 15-24) from 1.4% in DDC council At least 15% of the total participants are from

the district level youth network meeting and 1.7% in youth networks in the DDC council meeting

who participate in local district IPFC meeting in and district IPFC meeting by 2016/17

government planning process 18 UNFPA supported

districts (2012/13)

# of local bodies (DDC, • CFLG baseline 18 DDCs • At least 65 % VDC plan are in line with

municipalities, VDCs) that have • GRB baseline, DDC=0, article 19 of RMG by the end of project

adopted CFLG processes, Municipality =0 period.

population issues integrated • About 10 % infrastructure • CFLG adopted in all DDCs and

gender-responsive budgeting, projects consist of EMP municipalities by the end of 2016/17

gender auditing and EFLG • No declared EFLG • 20 DDCs and 15 Municipalities will be

by 2013/14 declared child friendly

• Gender Responsive Budget implemented at

least in 50 DDCs and 40 Municipalities by

the end of 2016/17

• At least 300 VDCs, 4 Municipalities and 4

DDCs will be declared as EFLG by 2016/17

• At least 30 % projects of local bodies will

have Environment Management Plan (EMP)

by the end of 2016/17

Annual independent citizens’ None 80% of indicators in citizens’ perception

perception survey completed survey shows improvement from baseline

(2013/14) in 2016/17

Outcome 4Strengthened policy and institutional framework for devolution, sub-national governance and localservice delivery.

LSGA reviewed and amended LSGA (1999) LSGA amended

to be inclusive and in

conformity with the constitution

and sectoral laws.

Local governments categorized N/A Local governments categorized by 2014/15

and restructuring plan developed. and LB restructuring plan developed and

implemented by 2016/17

Guidelines/manuals/policies Existing manuals and • DIP reviewed and approved by 2014/15

updated. guidelines • Updating of guidelines /manual/policies

completed by 2015/16

Output 8Refined policy on local governance and improved inter-agency cooperation.

LSGA reviewed and amended to be LSGA (1999) LSGA amended

inclusive and in conformity with

the constitution and sectoral laws.

Local governments categorized N/A Local governments categorized by 2014/15

and restructuring plan developed. and LB restructuring plan developed and

implemented by 2016/17

Output 9Policies developed for devolution and federalism

Devolution policy refined in N/A Policy framework for legal, institutional and

the context of federal governance fiscal devolution prepared by 2016/17

LBFC restructured to assume Current LBFC structure LBFC restructured by end of 2014/15

responsibility for fiscal federalism

Local Government Restructuring No LGRC in place LGRC established

Commission established

Annexes

52

Annex Risk Management2

Component Risks Anticipated Management Strategy

Risk Levels

1) Social Social Mobilization may create M Livelihood Improvement Plan

Mobilization higher demand than the supply will be introduced for CAC

capacity

2) Fiscal Resistance from LAs on HM PBCGs will be introduced on

Decentralization performance-based conditional a gradual manner

grantsResistance from LBs on

performance-based conditional

grants

3) EFLG Competition among M Effective coordination will be

the stakeholders devised among stakeholders

4) Local Government Existing LBs may resist change H Political consensus at the

Restructuring centre will be sought

5) Local Governance Conflict of interest may arise with M Advocacy-based NGOs will be

and Accountability development -NGOs motivated to get grant from

Facility LGAF

6) Conditional Households have less incentives CCT will be extended in

Cash Transfer in CCT H the most poor areas

7) Participatory LBs may not fully comply with L IPFC, WCF and CAC will be

Planning Process the participatory planning process empowered to make able to

in the absence of elected exert pressures on LBs to have

representatives compliance on PPP.

8) Fiduciary Risks Increasing risks of fiduciary risks H VDCs will be classified into

at VDCs at VDCs due to fragile politics high, medium, and local risks

zone and special M&E

measures will be devised in

high risks VDCs

9) Procurement Non-compliance of annual H Annual procurement plan

Management procurement plan will be made mandatory and

there will regular follow-up

the annual procurement plan

from RCU

10) Resource Corruption or abuse of power M FRRAP will be implemented

Utilization by local officials with zero-tolerance policy

11) User Committee Political interfere and corruption H User Committee will be

in User Committee formed in the presence of

WCFs and CAC

Annexes

53

Component Risks Anticipated Management Strategy

Risk Levels

12) Social Security Corruption in social security M WCFs and CACs will be

allowance by stakeholders mobilized in the distribution

of social security allowance

13) General-Financial GoN is unable to satisfy funding M Specific programming

Risk conditions of donors re: fiduciary risk, management

oversight, capacity building in

MoFALD

14) General- MoFALD lacks the capacity to M MoFALD's CD Plan addresses

Implementation fully implement the programme specific areas of identified

Risk as specified need; steps taken to retain

expertise

Annexes

54

Annex Funding Arrangement for Development Partners3

Financial resources Resources for TA

Direct 1. Joint Financing Arrangement (JFA) 2. Joint Funding for Technical Assistance to

support for capital and/or recurrent grants to LBs MoFALD and LBs (JFTA)

to LGCDP (i.e. direct budget support for LBs)

Basket Funding Arrangement in the form This contribution also goes through

of JFA, with one budget fund flows will be the MOF but–in contrast to JFA funds–

major source of modality in LGCDP II. it provides MoFALD itself (not the LBs)

JFA will follow GoN financial procedures. with additional budgetary resources.

This contribution goes to the MOF and MoFALD will establish (i) a Programme

is transferred through the Treasury (FCGO) Recruitment Facility (PRF) which will be

to the LBs and MoFALD through managed by the Ministry, and (ii) a Policy

the District Treasury Offices (DTCOs). and Programme Support Facility (PPSF)

MOF will need to provide a Medium-Term which is financed by a Multi Partner Trust

Fiscal Framework for LBs to donors. Fund (MPTF) and administered through

In addition, detail modality will be decided a GON, UNDP and UNCDF joint

by Sub-NAC on how the various conditional programme applying NEX/NIM

and unconditional grants can/will be procedures. Within the broad areas for

gradually merged and consolidated. which LGCDP II will require technical

MoFALD and donors will also need to assistance (TA), the program will

decide on the approach in regard to distinguish between (a) TA required for

capacity-building grants (CD) for LBs. implementation support, (b) TA required

for program support, and (c) TA required

for policy piloting and innovation. All TA

on the program will be directed by the TA

sub-Committee chaired by the NPM.

Aligned 3. Program Alignment Arrangement (PAA)

support Programme Alignment Arrangement will

to LGCDP accommodate the programmes of

development agencies which are executed

outside the LGCDP II the JFA. TA activities

will be implemented working through

the TASC in the same way as JFA/JFTA

partners for purposes of aligning overall

planning, coordination and oversight of

TA activities. Funds will be managed

in accordance with the respective

PAA agreements between GoN and DPs.

Annexes

55

Regular GoN Block Grant to LBs

Regular GoN Conditional Grantto DDC and Municipalities

Regular Developed Sector Grantto LAs through DDF

Regular Programme Fundof MoFALD

+

+

+

+

DP Top-Up Grant

DP Programme Fund to

DP Conditional Top-Up Grant

1. DP Sectoral Top-Up Grant2. Sectoral Resources of DDC

DP Programme Fundfor MoFALD

Annex Fund Flow Mechanism4

Fund Flow Mechanism for Development Partner

GoN’s Contribution to LGCDP and Fund Blending

FCA FCGO/DTO DDF Line Agencies

MDF

VDF

DPs

FCA

FCGO/DTO

LGCDP TA

Line and othercentral agencies

MoFALD

Annexes

56

Annex Participatory Planning Process5

Budget ceilingsand guidelinesfrom NPCto DDCs

Pre-planningformulationworkshopat DDC

Budget ceilingand guidelinesto VDCs andMunicipalities

Pre-planningworkshopat VDC/Municipalities

Settlementlevel planningworkshop

Ward LevelPlanningWorkshops andPrioritizationby Wards/WCFs

Formulation ofintegrated planby IPC atVDCs andMunicipalities

Formulation ofannual plan byVDCs andMunicipalities

Approval ofannual planby council ofVDCs andMunicipalities

Planformulationworkshop atIlaka level

Formulationof DDYPby DDC

Approval ofDDYP byDDC Council

Budgetguidelinestoward WCFin VDCs andMunicipalities

Submission ofDDYP toNationalPlanningCommissionand concernedagencies

Submission ofannual plan toDDCs andotheragencies byVDCs andMunicipalities

Annexes

57

AnnexBudget Allocation Systemand Modality of District Plan6

GoNNGOs/INGOs

DPs DirectSupport

Own SourceRevenue

VDCs andMunicipalResources

Total DevelopmentBudget of Districts

RevenueSharing

PrivateSectors

DDF Resources Non-DDFResources

DDC ResourcesGrant to otheragencies from DDCs

Devolved SectorResources

Capital Current

Unconditional Conditional

Infrastructure

Non-Infrastructure

Promotional

Infrastructure

Targeted Non-Targeted

DAG Children Women

Annexes

58

Annex Indicative Staff Requirements for PCU and RCU7

Programme Coordination Unit

S.No Position Required Number Funding

1. Programme Manager 1 GoN

2. Administrative Officers 2 GoN

3. Results Based Monitoring Expert 1 TA

4. Social Mobilization Expert 1 TA

5. Procurement Expert 1 TA

6. Building Code Expert 1 TA

7. EFLG Expert 1 TA

8. GIS Expert 1 TA

9. Gender Responsive Budget Expert 1 TA

10. Communication Expert 1 TA

11. GESI/CFLG Expert 1 TA

12. Fiscal Decentralization Expert 1 TA

13. Charter Accountant 1 TA

14. IT Engineer 1 TA

15. Office Secretary 2 TA

16. Admin and Finance Assistant 1 TA

17. Drivers 3 TA

Regional Coordination Unit

S.No Position Required Number Funding

1. Regional Coordinator 6 TA

2. Account Officer 6 GoN

3. Regional Governance Advisor 6 TA

4. Monitoring and Reporting Officer 6 TA

5. Social Mobilization Expert 6 TA

6. Capacity Development Expert 6 TA

7. Charter Accountant 6 TA

8. Office Secretary 6 TA

9. Driver 12 TA

Annexes

59

Local Bodies

S.No Position Required Number Funding Working Station

1. Local Governance Advisor 75 TA DDC

2. IT Engineers( Volunteer) 75 TA DDC

3. Urban Governance Advisor 58 TA Municipalities

4. IT Engineers( Volunteer) 58 TA Municipalities

Annexes

60

Annex Programme Management Structure of LGCDP8

Policy Coordination Committee

at MoFALD

(Headed by Secretary)

National Advisory Committee

(Headed by Secretary)

Good Governance Unity

(Headed by Secretary)

National Advisory Sub-Committee

(Headed by NPD)

Output Coordinators

(Joint Secretary)

TA Sub-Committee

(Headed by NPD)

Output Groups

(Under Secretary)

Annexes

61

AnnexBudget Allocation Systemand Modality of District Plan9

OUTPUT 1: Citizens and community organizations are empowered to actively participate

and assert their rights in local governance

ACTIVITIES and PRIORITY SUB-ACTIVITIES

1.1. Strengthen the social 1.1.1. Refine and update Social Mobilisation guidelines for DDCs,

mobilisation institutions VDCs and Municipalities to include social harmony, GESI,

(H) CFLG, EFLG and other aspects

1.1.2. Update and disseminate Social Mobilisation training materials

and capacitate Social Mobilisers, WCF and CAC members

1.1.3. Reconstitute, clarify role and responsibility of M/DSMC to

ensure representation of SM agencies

1.1.4. Design and disseminate children participation and Bal Bhela

facilitation guidelines and support for Bal Bhela events in

all Local Bodies

1.1.5. Update ToR for LSPs and undertake regular performance reviews

1.2. Ensure consistent methodology 1.2.1. Establish Social Mobilisation Service Provider (LDTA as lead

and quality assurance of Social agency) for capacity building of social mobilisation actors at

Mobilisation implementation (M) national level

1.2.2. Develop standardize training packages for social mobilisation for

DDCs, VDCs and Municipalities to include social harmony,

GESI, CFLG, EFLG and other aspects

1.2.3. Introduce WCF as entry point for development activities at ward

level

1.2.4. Integrate municipal Tole Lane Organizations into LGCDP

1.2.5. Review concept of DAG and update DAG identification process

1.3. Clarifying WCF mandate (M) 1.3.1. Clarify WCFs roles after local election

1.3.2. Introduce re-constituting process including membership criteria

for WCFs

1.3.3. Expand WCFs into all Wards

1.4. Mainstreaming accountability and 1.4.1. Re-select LSPs based on updated ToR that includes supporting

monitoring at the local level (H) WCFs in their new monitoring and oversight responsibilities.

1.4.2. Capacitate WCFs in planning process, MC criteria and local

accountability

1.4.3. Mobilize WCF in planning and civic oversight activities at local

level (Public Audit, Public Hearing)

1.4.4. Capacitate IPFC at VDC level to steer the SM activities.

1.4.5. Mobilize Supervision and Monitoring Committee of LBs in

monitoring of project implementation

Annexes

62

ACTIVITIES and PRIORITY SUB-ACTIVITIES

1.5. Establish CAC graduation and 1.5.1. Develop CAC graduation criteria and expansion

expansion modality (M) modality

1.5.2. Mapping of CACs based on graduation criteria

1.5.3. Expand Citizen Awareness Centers according to DAG priority

1.6. Implement LIP activities 1.6.1. Mapping of existing LIP programme at VDCs/Municipalities

for graduated CACs (M) (beyond LGCDP)

1.6.2. Introduce livelihood improvement programme into graduated

CACs

1.6.3. Transform graduated CACs into self help community awareness

groups

1.6.4. Support the construction of community buildings for graduated

CACs using multiple sources of financing as per demand

1.7. Harmonisation of Social 1.7.1. Organize district level Learning and Sharing Meetings of social

mobilisation programmes (M) mobilisation actors once a year

1.7.2. Organise VDC secretary meetings once in every trimester and

exchange learning and sharing of best practices

1.7.3. Sign MoU between SM actors at local level and the national

level for formal cooperation

1.7.4. Link MOFALD/LGCDP social mobilisation with other LAs and

DPs/I/NGOs social mobilisation activities (e.g. NRREP).

1.8. Improve effectiveness of targeted 1.8.1. Orient IPFCs, VSMC of VDCs and municipalities in planning,

(35%) grants to women, LB Resource Mobilisation and Management Operation

Children and DAGs (M) Guideline

1.8.2. Train Social Mobilisers, VDC Secretaries and WCF coordinators

on best practices for targeted grants

1.8.3. Regular monitoring of implementation of projects by LBs

authorities (Village/Municipality Supervision and Monitoring

Committee)

1.9. Expand Child Friendly 1.9.1. Capacitate social mobilisation actors (e.g. mobilizers, WCFs and

Local Governance (M) CACs) on CFLG

1.9.2. Support local bodies to institutionalise Bal Bhela as regular steps

in the bottom up planning processes

1.9.3. Support and capacitate local bodies (e.g. to design module project

bank) for effectively using 10-15% resources allocated for

children

OUTPUT 2: Accountability mechanisms for local governance are in place

ACTIVITIES and PRIORITY SUB-ACTIVITIES

2.1. Establish new LGAF modality (H) 2.1.1. Restructure National Committee of LGAF according to revised

ToR for NC and new mandate

2.1.2. Establish secretariat of LGAF within MoFALD with the

operational manual including fund flow and procurement

arrangements

2.1.3. Set up reporting and knowledge management mechanism

2.2. Civil society led compliance 2.2.1. Prepare ToR for CSOs for compliance

monitoring in 75 districts (H) monitoring

2.2.2. Procure services of CSOs for compliance monitoring based on

quality and cost according to Public Procurement rules and

regulations.

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ACTIVITIES and PRIORITY SUB-ACTIVITIES

2.2.3. Monitor CSOs’ activities

2.2.4. Organize feedback sessions with LBs

2.2.5. Publish the national and district level compliance monitoring

reports

2.3. Consolidate Social Mobilisation 2.3.1. Sensitise District Social Mobilisation Committees on

process of LGCDP II by accountability tools in the revised social mobilisation

integrating accountability tools (H) guidelines

2.3.2. Train LSPs for social mobilisation on accountability tools

2.3.3. Mobilize DSMCs and CSOs selected by LGAF for reinforcing

capacity and monitoring of social mobilisation LSPs’ on using

social accountability tools

2.4. Align national accountability 2.4.1. Agree coordination modality with

programmes with LGAF (L) stakeholders

2.4.2. Agree priority programmes and implementation methodology

with stakeholders

2.4.3. Monitor and document accountability interventions in an annual

national accountability report

OUTPUT 3: LBs’ access to resources increased

ACTIVITIES and PRIORITY SUB-ACTIVITIES

3.1. Expanding the tax base 3.1.1. Conduct study to reviewing LB revenue sharing mechanism and

for LBs (L) procedures (GON to DDC and Municipalities)

3.2. Supporting LB revenue 3.2.1. Develop local revenue administration guidelines for DDC, VDC

administration and collection (M) and Municipality covering assessment, billing, collection, appeal,

tax payer education and forecasting.

3.2.2. Design organisational setup of tax administration of DDC and

Municipality and support LBs to strengthen revenue projection

and tax potentiality mapping

3.2.3. Conducting a representative study of revenue potentiality of

DDCs, Municipalities and VDCs to make a strategy on the basis

of geographical area

3.2.4. Organize training for revenue staff of LBs on revenue forecasting,

assessment, billing, collection, and appeal and tax payer education

and build the capacity of 500 strategic road side urban centric

VDCs on own source revenue mobilisation

3.2.5. Support to harmonize the central and local tax system.

3.2.6. Support to expand IPT and capacitate the DDC and

municipalities in IPT including GIS base, and link it with

national system at MOFALD

3.2.7. Support to build the capacity of Municipality on IPT

3.3. Improve predictability (forecasting 3.3.1. Analyse difficulties faced in the area of budget projection and

of grants to LBs in time predictability of funds including problem of compliance with

for budget preparation (M) financial administration law and rule

3.3.2. Prepare mitigation strategy based on above findings including

capacity development of all the actors involved in forecasting

process

3.4. Ensure timely transfer of funds 3.4.1. Analysis of the bottleneck in timely transfer of

to LBs (M) funds to LBs

3.4.2. Recommend the necessary changes in fund flow process/

procedure

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ACTIVITIES and PRIORITY SUB-ACTIVITIES

3.5. Implement existing 3.5.1. Support to update and prepare grant allocation formula and

recommendation of changes related indicators such as cost, accessibility, infrastructures,

in grant allocation formula (M) financial discipline etc.

3.5.2. Support to prepare a new allocation formulae for regular

conditional grants and devolved grants

3.5.3. Prepare LBs equalisation formulae based on geographical location

and revenue optimization

3.5.4. Support implementation of the strategy

3.6. Review and update 3.6.1. Update MCPM System and Institutional

MCPM System (H) Framework

3.6.2. Harmonize MCPM assessment and indicators for municipalities

and DDCs

3.6.3. Design and introduce PM in VDCs on a pilot basis

3.6.4. Support MCPM assessments of VDCs and VDC MCPM

evaluators at district level

3.7. Apply performance based 3.7.1. Develop and introduce MCPM indicators for developed sector

principles to earmarked funding grants in the area of primary education, primary health,

at the local level (M) agriculture & veterinary

3.7.2. Provide performance-based sector grants under primary

education, primary health and agriculture & veterinary

3.7.3. Develop MCPM criteria for regular conditional grants to DDCs

and municipalities and provide support to roll out

3.8. Provide local bodies with 3.8.1. Conduct MCPM assessments

performance based annual 3.8.2. Provide performance based and other annual grants

block and other grants (H) to DDCs

3.8.3. Provide performance based and other annual grants to

Municipalities

3.8.4. Provide performance based and other annual grants to VDCs

3.9. Pilot MARS in Kathmandu 3.9.1. Design MARS

Metropolitan City (M) 3.9.2. Pilot MARS in Kathmandu Metropolitan City

3.9.3. Replicate MARS in selected Municipalities

3.10. Establish reward and sanction 3.10.1. Design Reward and Punishment system in LB’s revenue

mechanism in LBs finance (L) mobilisation

3.10.2. Pilot Reward and Punishment system in LB’s revenue

mobilisation

3.10.3. Replicate Reward and Punishment system in LB’s revenue

mobilisation

Output 4: Public financial management system improved

ACTIVITIES and PRIORITY SUB-ACTIVITIES

4.1. Improvement in Budget and 4.1.1. Develop time bound action plan for timely and streamlined

Fiscal Management (M) disbursement of block grants from central to local governments

4.1.2. Integrate guidelines for allocation and disbursement of small

community level grants in LB Resource Mobilisation and

Management Operation guidelines

4.1.3. MoFALD to implement Medium Term Budget Framework

(MTBF)

4.1.4. Support to introduce gender responsive budgeting in LBs

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ACTIVITIES and PRIORITY SUB-ACTIVITIES

4.2. Strengthening the internal and 4.2.1. Develop audit tracking system in DDCs and MoFALD

external audit system (H) for ensuring appropriate responses to final audit

4.2.2. Train internal and private external auditors of local bodies

4.2.3. Strengthening internal audit section of DDCs/Municipalities

4.2.4. Update internal audit guidelines of local bodies

4.3. Reducing Fiduciary Risk (H) 4.3.1. Update PEFA/FRRAP

4.3.2. Orientation to key LB officials on PEFA/FRRAP

4.3.3. Establishment of central level financial management support

unit and Financial Monitoring and Compliance unit

4.3.4. Categorize LBs on the basis of fiduciary risk

4.3.5. Support to prepare and implement model FRRAP for local bodies

4.3.6. Support to carry out PEFA assessments of LBs& local PETS

4.4. Roll out improved accounting 4.4.1. Revision of LBFAR and chart of accounts

system at local bodies (M) 4.4.2. Implement Revenue enhancement plans in at least 7

municipalities

4.4.3. Support to introduce accounting software in selected VDCs

4.4.4. Support to introduce accrual accounting system in selected

municipalities

4.4.5. Support to revise Financial Accounting Management Package

(FAMP) of DDCs and link with MOFALD

4.4.6. Support to establish networking of accrual accounting software

within MoFALD

4.4.7. Provide book keeping support to VDCs in Clusters.

4.4.8. Provide support to FCGO/DTCO to improve release, report and

internal audit system in LBs.

4.5. Provide support to OAG, ICAN 4.5.1. Provide support to OAG to conduct performance and

and LBs to improve external risks-based audits of LBs

audit value (M) 4.5.2. Provide support to ICAN for capacity development of private

auditors

4.6. Strengthening procurement 4.6.1. Support in strengthening the capacity of local bodies and line

planning and bidding systems agencies in procuring goods and services.

in all LBs(L) 4.6.2. Support to PPMO in strengthening the capacity LBs and LAs in

public procurement management system.

4.6.3. Introduce e-bidding system in DDCs, and municipalities.

4.7. Strengthen Financial 4.7.1. Undertake study to determine institutional development needs

Management Reporting capacity 4.7.2. Prioritise recommendations and implement high impact

in MoFALD (H) initiatives

OUTPUT 5: Institutional and human resource capacities of LBs and central level agencies

involved in local governance strengthened.

ACTIVITIES and PRIORITY SUB-ACTIVITIES

5.1. Strengthen LB capacity 5.1.1. Improve LBs compliance with guidelines and regulations

for service delivery (H) 5.1.2. Develop and implement non-training capacity development

initiatives

5.1.3. Reduce VDC secretary vacancies and absenteeism

5.1.4. Enforce performance management contracts with LDOs and EOs

to produce greater stability in results

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ACTIVITIES and PRIORITY SUB-ACTIVITIES

5.1.5. Maintain and fulfil the personnel information system in LBs

5.1.6. Assess staff requirements of LBs

5.2. Provide programme support (H) 5.2.1. Provide national programme support from PCU

5.2.2. Provide regional programme support from RCUs

5.2.3. Provide ICT support for DDC and Municipality

5.2.4. Agree performance targets and transitional plans

for all long-term TA roles

5.3. Implement LBs capacity 5.3.1. Prepare and approve an overarching capacity development

development initiatives (H) strategy

5.3.2. Ensure common training standards and delivery modality

5.3.3. Design training modules for local body staff targeted MCPM

assessment criteria

5.3.4. Deliver tailored training to LBs based to on needs

5.3.5. Review and revise CD plans of LBs

5.3.6. Assess impact of training to identify improvement to modality

5.4. Establish and operate the 5.4.1. Undertake study to determine appropriate procurement

Programme Recruitment Facility system for programme related HR

(PRF) in MoFALD (M) 5.4.2. Establish Programme Recruitment Facility

5.4.3. Support all National TA needs for MoFALD

5.5. Strengthen capacity of national 5.5.1. Pilot LDTA capacity improvements in three districts

institutions to support local (aligned to GIZ led initiative)

governance institutions (M) 5.5.2. Reorganise LDTA as national service provider and local

governance knowledge centre

5.5.3. Review result of LDTA pilot and determine rollout priorities

5.5.4. Roll-out CD activities through LDTA Regional Training Centres

5.5.5. Support LDTA to design training modules, certification system,

and regulating CD service providers at local level

5.5.6. Strengthen LB Associations to advocate on devolution

5.6. Expand capacity in LBFC towards 5.6.1. Undertake study to determine institutional development needs

the capacity expected from 5.6.2. Prioritise recommendations and implement high impact

a National Fiscal Commission (L) initiatives

5.7. Capacity building for 5.7.1. Assess priority crosscutting initiatives

mainstreaming crosscutting 5.7.2. Integrate GESI priorities including GRBA in standard operating

themes (L) procedures and guidelines

5.7.3. Integrate CFLG in standard operating procedures and guidelines

5.7.4. Integrate EFLG in standard operating procedures and guidelines

5.7.5. Integrate population and development issues in standard

operating procedures and guidelines

5.8. Update and digitise local bodies 5.8.1. Update and digitise local social and poverty resource maps

information systems (L) 5.8.2. Feed digitized information into a national data-based system

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OUTPUT 6: Access to and quality of local infrastructure and other socio-economic

services administered by LBs are improved

ACTIVITIES and PRIORITY SUB-ACTIVITIES

6.1. Improve QA of local 6.1.1. Establish new quality labs in DDCs

infrastructure (H) 6.1.2. Operationalise non-functional quality labs

6.1.3. Capacity development for quality lab staff

6.1.4. Update District Transport Master Plans

6.1.5. Organise training for sub-engineers (2 per DDC) of all DDCs

6.1.6. Extent quality lab facility in other districts

6.2. Provide technical backstopping 6.2.1. Develop strategy for providing technical support services to

to VDCs (H) VDCs

6.2.2. Implement strategy

6.2.3. Provide refresher training to VDC technicians

6.3. Establish and operate MoFALD 6.3.1. Operationalize technical division in MoFALD

technical division (L) 6.3.2. Ensure technical oversight of DOLIDAR and local bodies

6.4. Develop local-level community 6.4.1. Support in mapping the agencies involved in community

mediation services (M) mediation

6.4.2. Study the situation on dispute management through alternative

dispute resolution (ADR) including community mediation in

each district

6.4.3. Organize cascade training on community mediation for

community mediators

6.4.4. Establish Community Mediation Centres (CMCs) in VDCs and

municipalities.

6.4.5. Support in monitoring and evaluation of the functioning of

CMCS

6.4.6. Regular sharing among the actors of community mediation

under the convenor ship of MoFALD

6.5. Strengthen and improve local 6.5.2 Support to strengthen vital event registration and social

management of vital event security wing of LBs

registration and social security 6.5.3 Develop centralized mechanism to monitor cash transfer

system (M) 6.5.4 Introduce and roll out integrated vital event registration and

social protection MIS database system in each district

6.5.5 Test out use of banking system for payment of social security

benefits

6.5.6 Introduce branchless banking for social cash transfers

6.5.7 Organize training for LB staff on integrated vital and social

protection MIS

6.6 Undertake vital registration 6.6.2 Support vital registration campaign

awareness campaign (M) 6.6.3 Organize training on vital event registration for LBs staff

6.7 Implement local economic 6.7.1. Identify/design local economic development programme on

development activities in PPP basis and in cooperation with other approaches

municipalities and peri-urban 6.7.2 Support municipalities to implement local economic

VDCs (L) development programmes under PPP on pilot basis

6.7.3 Support peri-urban VDCs to implement local economic

development programmes under PPP on pilot basis

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ACTIVITIES and PRIORITY SUB-ACTIVITIES

6.8 Develop alternative NGO/ 6.8.1. Design NGO facility at MoFALD to deliver services through

CSO-based service delivery NGOs and CSOs in high risk and remote areas

options for high risk and remote 6.8.2 Establish NGO facility in MoFALD

districts/VDCs (H) 6.8.3 Implement delivering services through NGOs and CSOs in high

risk and remote districts/VDCs

6.9 Improve grievance 6.9.1. Support effective implementation of Village and Municipality

mechanism (H) Supervision and Monitoring Committees in line with Local

Body Resource Mobilisation and Management Operation

Guidelines 2069

6.9.2. Establish local linkage to District Supervision and Monitoring

Committee for complaints that cannot be resolved locally

6.9.3. Establish district linkage to Good Governance Section in

MoFALD for complaints that cannot be resolved in the districts

OUTPUT 7: Strengthened integrated planning, budgeting, monitoring and evaluation and

coordination amongst local governance actors

ACTIVITIES and PRIORITY SUB-ACTIVITIES

7.1. Review and update periodic 7.1.1. Prepare periodic plan of DDCs

plan of LBs (H) 7.1.2. Prepare periodic plan of VDCs ensuring GESI, CFLG indicators

and issues are mainstreamed

7.1.3. Review and update periodic plans of municipalities ensuring

CFLG, GESI indicators and issues are mainstreamed

7.2. Improve coordination between 7.2.1. Mapping of service providers involved in local development

local bodies and local service 7.2.2. Develop and implement coordination mechanism among local

providers (H) service providers under the leadership of LBs

7.2.3. Support coordination and linkage between DDCs and line

agencies to strengthen, harmonise and align their annual

planning processes

7.2.4. Support coordination and linkage between VDCs/municipalities

and line agencies to strengthen, harmonise and align their annual

planning processes

7.2.5. Support for integrated preparation of transport and other sectoral

plans (ensuring CFLG sectoral indicators reflected in national

strategy are mainstreamed)

7.3. Mainstream GESI, CFLG and 7.3.1. Pilot local climate adaptive living facility

EFLG, disaster management 7.3.2. Roll out community based green energy initiatives

and programme monitoring 7.3.3. Develop EFLG assessment indicators and support roll out

plans in local periodic and in LBs.

annual plans (M) 7.3.4. Prepare GIS based disaster vulnerability maps and develop plans

to address vulnerability.

7.3.5. Integrate Rural Renewable Energy options into local body

planning processes

7.3.6. Integrate population dynamics and its interlinkages with the

needs of young people , sexual and reproductive health services

(including family planning), gender equality and poverty

reduction in local level plans and planning/budgeting processes

7.3.7. Localization GESI policy/strategy up to WCF/CAC

7.3.8. Support for national CFLG roll out including technical support

to local bodies for CFLG adoption and declaration

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ACTIVITIES and PRIORITY SUB-ACTIVITIES

7.4. Provide support to local annual 7.4.1. Review and update local level annual planning guidelines

planning processes (H) ensuring cross-cutting issues are mainstreamed

7.4.2. Support to strengthen DPMAS in DDCs

7.4.3. Support to establish database, resource maps, and GIS based

information in DDCs and municipalities.

7.4.4. Support preparation and implementation of local medium term

budgeting framework. (MTBF)

7.4.5. Support LBs to prepare project banks, based on demand of

citizens and communities and identified/prioritized through

participatory planning process.

7.4.6. Support capacity building of line agencies to use empirical data

for evidence-based local planning

7.4.7. Support the involvement of youth networks in local governance

processes

7.4.8. Support local government to implement gender responsive

budget at district level in DDCs and Municipalities and line

agencies

7.5. Planning Coordination among 7.5.1. Hold pre-planning meeting

central level ministries and 7.5.2. Hold inter-agency thematic working group meeting

NPC (L)

7.6. Strengthen monitoring and 7.6.1. Review and refine M&E Framework of MoFALD. Prepare M&E

reporting systems at national framework of DDCs

and local levels (M) 7.6.2. Support preparation and implementation of M&E Framework of

DoLIDAR and LBs

7.6.3. Support to introduce web-based reporting system in all DDCs

and municipalities

7.6.4. Review, refine and introduce results-based monitoring systems in

LBs.

7.6.5. Undertake programme reviews

7.7. Introduce a citizens’ perception 7.7.1. Conduct annual citizens’ perception survey

survey (M) 7.7.2. Assess performance in local governance service delivery

7.7.3. Recommend activities to improve service delivery

OUTPUT 8: Refined policy on local governance and improved inter-agency cooperation

ACTIVITIES and PRIORITY SUB-ACTIVITIES

8.1. Update overall institutional 8.1.1. Review LSGA provisions with respect to LB functions and

framework for decentralisation classification (including metropolitan issues)

and local governance(L) 8.1.2. Review, update and disseminate any required amendments to

LSGA

8.1.3. Review, update and disseminate any required amendments to

LSGR

8.1.4. Review, update and disseminate any required amendments to

LBFAR

8.2. Review/update DIP and Fiscal 8.2.1. Review, update and disseminate any required amendments to

Decentralisation Roadmap (FDR) Decentralisation Implementation Plan (DIP)

and redynamise Decentralisation 8.2.2. Initiate regular DIMC meetings

Implementation Monitoring 8.2.3. Initiate regular Secretary level inter-ministerial meetings

Committee (DIMC)(M)

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ACTIVITIES and PRIORITY SUB-ACTIVITIES

8.3. Categorize LBs on basis of 8.3.1. Undertake study to determine need for establishing

new/updated criteria and LB categories

analyse functional and 8.3.2. Establish new criteria for categorizing LBs and undertake

administrative implications (M) categorization

8.3.3. Assess staffing, budget and functional assignments of different LB

categories

8.3.4. Agree and implement changes (e.g. sub-classification) for VDCs

8.3.5. Agree and implement updated categorization of Municipalities

8.3.6. Agree and transform urban-centric VDCs into municipalities

8.4. Rationalising local body 8.4.1. Establish criteria for merging local bodies (VDCs and

jurisdictions (L) municipalities)

8.4.2. Establish criteria for sub-dividing local bodies

8.4.3. Provide incentives for VDCs and municipalities to merge

8.5. Update, codify and consolidate 8.5.1. Review existing guidelines and manuals for consistency,

policy on local governance and relevance, accuracy and user-friendliness

community development and 8.5.2. Update, revise, codify and publish guidelines and manuals

the corresponding guidelines/ 8.5.3. Develop a foreign aid and technical assistance framework on local

manuals (M) governance and community development in line with national

foreign aid policy.

8.5.4. Develop technical audit guidelines and integrate in Resource

Mobilisation and Management Operation Guidelines

OUTPUT 9: Policies developed for devolution and federalism

ACTIVITIES and PRIORITY SUB-ACTIVITIES

9.1. Establish and operate 9.1.1. Draft and agree on Terms of Reference for FAU

a Federal Affairs Unit (FAU) 9.1.2. Decision taken to establish FAU

within MoFALD(M) 9.1.3. Budget allocated for FAU operations

9.2. Establish a high-level Local 9.2.1. Draft and agree on Terms of Reference for LGRC

Government Restructuring 9.2.2. Decision taken to establish LGRC

Commission (LGRC) (L)

9.3. Prepare policy paper on 9.3.1. Identify existing research papers completed and key stakeholders

sub-national governance in preparation for political, administrative and fiscal

options in a federal context(M) decentralization in federal systems of government in Nepal

9.3.2. Undertake study of international experience of political,

administrative and fiscal decentralization in federal systems of

government in areas that need further research

9.3.3. Draft policy paper on devolution, decentralization and local

government in a federal system

9.4. Promote and facilitate 9.4.1. Circulate policy paper (see 9.3. above)

consultations and policy 9.4.2. Organise workshops to discuss policy options

dialogue on sub-national

governance (L)

9.5. Developing and implementing 9.5.1. Review existing national transition plans/proposals with key

transition plans for national stakeholders

institutions and agencies linked 9.5.2. Review and provide exposure to international experience in the

to local governance management of transitions from unitary to federal arrangements

(including MoFALD)(L). 9.5.3. Draft transition management plan for MoFALD and discuss with

stakeholders

9.5.4. Draft transition management plans for other national institutions

and discuss with stakeholders

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ACTIVITIES and PRIORITY SUB-ACTIVITIES

9.6. Start to align existing policies/ 9.6.1. Undertake study to determine policies and laws for local

laws and identify new laws governance that need to be changes following the new

(in a federal context)(L) constitution

9.6.2. Review and provide exposure to international experience in

adapting policies and laws on local governance and local service

delivery to federal system of government

9.6.3. Draft options paper on alignment to a federal system of

government and discuss with stakeholders

9.7. Identify options for high-level 9.7.1. Review existing plans/proposals with stakeholders and agree

institutional arrangements for scope for LGCDP/MoFALD in developing these plans

oversight of inter-governmental 9.7.2. Review and provide exposure to international experience in

fiscal relations (L) establishing federal bodies to oversee and advise on inter-

governmental fiscal relations

9.7.3. Draft policy paper on options for Nepal and discuss with

stakeholders

9.7.4. Provide support to establish national level fiscal institution

9.8. Review administrative structures 9.8.1. Conduct assessment of LG administrative structuring (DDCs,

and arrangements for VDCs, municipalities)

sub-national bodies(L) 9.8.2. Agree functional roles and responsibilities with other stakeholders

9.8.3. Determine administrative capacity and staffing requirements

9.8.4. Draft proposal for GoN approval

9.9. Designing and drafting 9.9.1. Undertake study to recommend improvements to metropolitan

metropolitan city legislation (L) city legislation

9.9.2. Draft and agree on legislative changes with stakeholders

9.9.3. Implement metropolitan policy and new legislation/regulations

9.10. Developing the modality of local 9.10.1. Review experience with governance and infrastructure& service

governance and infrastructure/ delivery SWAps in federal countries

-service delivery SWAps in the 9.10.2. Develop modality on options for SWAps in a federal system of

context of federal governance (L) government and discuss with stakeholders

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Annex Strategic Approach of LGCDP II10LGCDP II will adopt a four-pronged strategic approach consisting of the following elements::• Targeting of women, children, disadvantaged groups and the poor and the targeting of specific geographic areas that

are in greatest need;• Mainstreaming of cross-cutting themes, actors, innovations and best practices in local development and local governance;• Collaboration among government, non-government and private actors at the local level; and• Stabilization and consolidation of local institutions, structures, processes and organizations.