Political Economy and Social Development: Lessons from the Nepal Case. Aly Rahim, ECSS4

Transcription

1 Political Economy and Social Development: Lessons from the Nepal Case Aly Rahim, ECSS4

2 Why PE Matters Bank strategies and operations based purely on sectoral technical analyses can be ineffective if they are out of synch with key political trends, stakeholders and processes. Strategy/Project success is often contingent on political effectiveness as much as technical effectiveness. Risks management (ORAF etc.) requires a more global assessment of risks and mitigation strategies based on actual research and analysis. Impact of political dynamics on project/strategy as well as project s/strategy s impact on political dynamics. Teams and TTLs have long addressed political economy issues systematization benefits: Systematic link to design process. Effective multi-stakeholder engagement with client governments and other actors. Coherent and informed risk management.

3 What is PE Analysis? OECD/DAC Definition: Political economy analysis is concerned with the interaction of political and economic processes in a society: the distribution of power and wealth between different groups and individuals, and the processes that create, sustain, and transform these relationships over time. Processes, tools, and approaches to enhance overall development effectiveness by examining institutional, political, and social issues often considered exogenous to the core sector/technical issues for specific Bank strategies and projects. Analysis and mapping to understand and maximize the overlapping space between politically feasible and technically desirable actions in order to help ensure the best possible strategy/project design and implementation

4 PE: Key Variables & Questions

5 Undertaking PE: Levels Country Level: overall country context; CAS/strategy input; portfolio wide analysis. Thematic/Sector Level: thematic problem driven, e.g. NRM, decentralization. Sector strategies/policy reform processes, DPL series. Project Level: linked to preparation/implementation of a specific project.

6 Undertaking PE: Basic Tools Desk review: literature review and analysis Stakeholder Consultations: Focus Group Discussions with semi-structured questionnaires; key expert roundtables etc. Key Informant Interviews Primary Document reviews Quantitative Data Analysis

7 NEPAL CASE ASSUMPTIONS FROM THEORY AND PRACTICE Horizontal inequalities and conflict When cultural differences coincide with economic and political differences, deep resentment that may lead to violent struggles can result Presence of major HIs political, social, economic, cultural - among culturally defined groups significantly raises risk of conflict Limited access orders and conflict Two types of political order - open and limited access In LAOs, state does not have secure monopoly on violence and society organizes itself to control violence among elite factions There is a direct link between creation of rents and maintenance of order Political elites divide up control of economy and have incentives to be peaceable - if allocation of rents is misaligned with balance of power, violence can break out Stability of rents and social order demands limiting access and competition

8 What is WDR telling us ASSUMPTIONS FROM THEORY AND PRACTICE Grievances, sometimes national, but often local, can rapidly escalate into conflict, especially when political and socio-economic change lags behind expectations Conflicts are not one-off events in fragile states and they threaten development Countries and sub-national regions with weakest institutional legitimacy and governance are most vulnerable and least able to respond to multiple stresses In such cases temporary elite pacts do not provide grounds for stable states or sustained security and development (the LAO premise) Most violence-affected areas face deficits in collaborative capacities to mediate peacefully - rapid urbanization can abet due to weakening of social cohesion Some states try to maintain stability through coercion and patronage networks, but risk violence due to high levels of corruption and human rights abuses

9 ASSUMPTIONS FROM THEORY AND PRACTICE Local governments matter in a fragile post-conflict environment Peace, political reconciliation and immediate on the ground improvements Basic blocks of state building Service delivery, poverty alleviation and local economic development But much remains to be done to make localization work Determining the form for local governments Relation between provinces and local governments System for local election to ensure inclusion and democratic character Administrative decentralization: recruiting, managing, paying local civil service Structure of local public finances

10 GENERAL CONTEXT The (precarious) state of the Nepali State Fragile and post-conflict environment - 10 years of armed conflict Deep-rooted poverty and disparities ethnic and regional grievances Going through major changes presently: Dissolution of elected local bodies in 2002 From 10 years of armed conflict to peace agreement in 2006 Monarchy to republic and unitary to federal: IC in 2007, CA in 2008 Federalism is the overarching theme of state restructuring but no clarity or consensus on its shape, timeline, and implementation arrangements Meantime, continuing political instability and major unresolved political issues Very high rates of urbanization high potential for conflict to shift to urban areas

11 The emerging constitutional paradigm Present New Constitution Central Government Dormant Zones and Regions 75 DDCs 3,915 VDCs, 58 Municipalities Wards New Federal Government - transfer major functions to PGs & LSGs 6 to14 new Provincial Governments No District Governments New Village Governments (700+ only) More Municipalities Wards?

12 Weak institutions with low credibility among citizens Rampant discrimination and exclusion in service delivery Lingering potential for violence by disaffected groups PC fragile state combining quick wins with long term state building Federalism and decentralization are basic themes of state restructuring Despite uncertainties, democratic local government likely to be stronger In the absence of elected local bodies since 2003, weak local accountability Decentralization strengthening accountability & effectiveness of local state Pivotal Role for Urban Local Governments Fastest urbanizing country in South Asia triggered by push and pull factors Productivity and poverty reduction significantly higher in urban areas Severe infrastructure deficits impede growth, job creation and livability Urbanization focus on growth, development and jobs in cities

13 Nepal Emerging Towns Project Local and National Political Economy and Conflict Studies Implementing Arrangements/ Outputs Financed by Governance Partnership Facility (GPF): ~$90k Executed over 6-month period involving extensive deskwork, fieldwork and consultative sessions TTL for Studies but Linked to Nepal Emerging Towns Project National Study: Lead International Consultant Local Study: Two National Consultants Outputs: Report 1: Local Political Economy and Post-Conflict Situational Analysis: A Study of Six Municipalities in Nepal Report 2: National Political Economy and Conflict Study on the Emerging Constitutional Framework, Decentralization and Local Government

14 Objectives of Local Study Local political economy and conflict study undertaken for targeted municipalities in the Eastern and Western North-South Corridor to: Understand prevailing local political and post-conflict environment that prevails in each of the targeted municipalities; Assess local-level risks related to the political, post-conflict, security environment that could impact decentralization and local government, and specifically the Emerging Towns Project, as well as opportunities to mitigate such risks; Engage key stakeholders in each targeted municipality and appraise opportunities and challenges existing or possible that could affect planning, design and implementation of the Emerging Towns Project

15 Objectives of National Study Examine the overall national political context and ongoing dialogue regarding decentralization and local government, particularly municipalities in Nepal; Specifically, examine the emerging outcomes of the Constituent Assembly deliberations that relate to decentralization and local government; Engage key stakeholders and appraise political opportunities and challenges existing or possible that could affect the future of decentralization and local government in Nepal. Assess national-level risks related to the political, post-conflict, security environment that could impact decentralization and local government, and specifically the Emerging Towns Project, as well as opportunities to mitigate such risks.

16 Local Study: Design/Execution Phase One: Literature Review and Data Analysis To gain broad-level perspectives on decentralization, local government, past and interim municipal governance structures, issues related to municipal finance, relationships between central government and local bodies Phase Two: Fieldwork in Targeted Municipalities Conducted in each of the six targeted municipalities. Field visits was 5-7 days long in each of the 6 targeted municipalities: Review of published/secondary sources, including municipal profiles, periodic plans of the municipalities, and financial reports and other documents Key informant interviews/fgds: District Development Committee (DDC), line ministries and ward offices; political party representatives; civil society organizations and CBOs; interest and beneficiary groups Phase Three: Data Analysis and Report Writing In each municipality, the existing state of affairs as well as trends over time were examined in order to map: dominant actors/stakeholders (e.g., political parties, civil society groups, community based organizations), the conflict situation, the relationship between members of the All-Party Mechanism (APM) and the Executive Officer. issues of accountability, transparency, and autonomy, project implementation, trends of financial irregularities, monitoring mechanism, and issues of inclusion.

17 Local Study: Design/Execution The key considerations addressed in each targeted municipality included: the political environment of the municipalities key demographic and sociopolitical changes in the municipality over the course of the conflict and postconflict transition; the priorities and policy positions of opinion-leaders in the municipality; the effectiveness and needs of interim decision-making bodies in the absence of elected municipal structures; risks, challenges and opportunities to the NETP in the municipality.

18 National Study: Design/Execution Phase One: Literature Review Broad-level perspectives on conflict and post-conflict factors, federalism, decentralization, local government. Phase Two/Three: Key Informant Interviews & Roundtables Targeted interviews with Nepali politicians and analysts, journalists, Constituent Assembly (CA) members, international development practitioners, donors and diplomats. Two roundtables in conjunction with UNDP/Center for Constitutional Dialogue (1) civil society representatives; (2) members of the Constituent Assembly, academics, political party leaders and CCD representatives. Phase Four: Data Analysis and Report Writing Analyzing conflict and post-conflict factors at the national level; status of the constitutionwriting process; issues relating to state restructuring, particularly, federalism, and matters relating to governance, public security, and identity-based movements. Attempt to understand and analyze how these factors would affect the implementation of the NETP.

19 National Study: Design/Execution The key considerations addressed in the national study included: political economy mapping of the current national political environment, with a focus on interests, incentives and viewpoints of key actors/stakeholders on federalism, decentralization and local government; assessment of possible outcomes and trends for local government, with a focus on municipalities, and decentralization in the ongoing constitutional and federalism dialogue; identification of risks factors, analysis of opportunities to advance peace-building, framing of key linkages between post-conflict stabilization and decentralization.

20 Local Study: Key Findings POLITICAL ECONOMY INSTITUTIONAL: In practice the All-Party Mechanism takes the major decisions and the responsibility of the Executive Officer is to mediate between competing claims and ensuring APM s decisions are implemented. In all municipalities, the three large national parties the Nepali Congress, the Communist Party of Nepal- Unified Marxist Leninist (CPN-UML) and the Unified Communist Party of Nepal-Maoist (UCPN-Maoist) were the most dominant. Domination of political parties and the Executive Officer in municipal affairs, the misuse of municipal funds by the parties and the limited mechanism for civil society and community oversight pose threats ACTORS/STAKEHOLDER: Civil society influence over municipal affairs is limited due to their fragmentation along party lines and dependence on donors or local government for funds. Community-based organizations like the Users Groups (UGs) and Tole Lane Organizations (TLOs) have emerged as important actors but have become vulnerable to political cooptation, elite capture and financial mismanagement. Significant overrepresentation of upper-caste groups in the local institutions, including the APM, municipal office, civil society groups and community-based organizations. For Nepal Emerging Towns Project: NETP could exacerbate competition between various groups vying for access and control over municipal resources. NETP should ncourage the participation of civil society groups in municipal activities, implementation of projects through Users Groups and TLOs instead of contractors

21 National Study: Key Findings POLITICAL ECONOMY STRUCTURAL: Failure to define what a federalist structure would entail could further exacerbate identity-based conflicts. Federalism as discussed in Nepal goes beyond service delivery and improved administration and aspires to use state restructuring as an instrument to remedy structural exclusion of key demographic groups. INSTITUTIONAL: Local governance has become vulnerable to partisan interests of political parties represented in the All-Party Mechanism, and/or central government officials who are neither accountable nor answerable to the public. the nature of new state structures, including the future role of municipalities, is not yet clear. Similarly, relations among the central, provincial, local and special structures have not been delineated besides the principles of cooperativeness, coexistence and coordination. The lack of clarity, and the absence of clear planning, especially in government civil service could exacerbate tensions For Nepal Emerging Towns Project: The six NETP-targeted towns currently selected do not include any Madhesi town. In the current political environment, this lack of inclusion of the Madhes could be manipulated for political ends The absence of democratic local officials since 2002 has several risks, most notably the capture by parties of decisionmaking on funds and projects and the continued exclusion of groups such as Dalits and Janajatis as well as women. The control of funds at the municipal level is vulnerable to elite capture, notably by high caste men and some dominant ethnic groups. Social exclusion is a feature throughout Nepal, including in the NETP target municipalities, and is a constant source of friction. NETP will have to include measures to ensure the promotion of minority groups in formal decision-making bodies and ensure that they are proportionately part of the beneficiaries of the project.

22 Integrating PE into Bank activities Expectations task teams and actual approach to PE diagnostic need to be well matched Management attention is crucial and valuable E.g. if analysis suggests that additional supervision effort is needed Consider dissemination issues early on Disseminating PE work can be sensitive There are many options between 2,3 people only and full/broad dissemination Ensure that findings reach relevant Bank teams Ensure that key messages reach local stakeholders Integrate PE diagnostics as closely as possible with other work Such as CAS preparation, project preparation, other elements of diagnostic work (e.g. for CEM, PER, etc.) Pay attention to processes as much as to products (i) the process of producing the analytic output including quality management (ii) the follow-up process of using PE diagnostics for decisions strategy or operational design, whether to adjust these, whether and how to engage in coalition-building for reforms, etc.

23 Other Examples of PE Zambia GAC for CAS diagnostic and process (country- and sector-level; now followed by follow-up process & further detailed diagnostic work) Albania CAS Governance Filter and subsequent analytic work IGR with significant PE aspects Mongolia Governance Assessment to inform the CAS and follow-up GPF activities DRC mining, forestry and security sectors, growth study; now followed by country-level assessment