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The fiscal year 2024/25 has commenced, and almost all local governments have presented their budgets. Municipalities are now busy preparing their procurement plans to ensure a smooth budget execution during the year. As budget sizes have grown, there is an expectation among the public for better service delivery and improved development outcomes. At the local government level, the country’s six metropolitan cities command the largest budgets. Given their larger land area and population size, they receive a higher share of grants from the federal government. Besides federal grants, metropolitan cities generate a significant amount of own-source revenue (revenue generated by levying local-level taxes).

Own-source revenues (OSR) have become a major source of financial resources for metropolitan cities and now comprise a large share of their budgets. For the ongoing fiscal year, Kathmandu Metropolitan City presented a budget of Rs 25.7bn, of which 75 percent came from OSR. Among the six metropolitan cities, Kathmandu and Lalitpur have the highest OSR capacity while Biratnagar and Birgunj have the least. The direct effect of this capacity is on the size of the budgets metropolitan cities present. In the current fiscal year, metropolitan cities with higher OSR have presented the largest budgets while those with weaker OSR have the smallest budget sizes. The resulting difference in budget sizes (which runs into billions) has led residents of Birgunj and Biratnagar to feel neglected by the federal government in budget allocation.

Locals of Birgunj, including the city’s chief, have alleged the federal government of allocating a smaller budget to the city despite the state collecting a large share of its customs revenue from the Birgunj Customs Point. They blame the federal government’s disregard for the city as the main reason behind its consistently small budget size. However, evidence suggests otherwise. Analysis of the last five years’ data on aggregate intergovernmental grant transfers (IGGT) to metropolitan cities suggests that Birgunj is the second-highest recipient of federal grants, sitting only behind Pokhara. The real reason why the budget size of Birgunj, and by extension Biratnagar, has not been able to take off like other metropolises is because of poor OSR capacity. It is easy for local government chiefs to shift the blame to the federal government, but it is difficult to boost taxation and bring more people under the tax ambit.

Other metropolitan cities like Bharatpur and Pokhara have robust and growing budget sizes, thanks to their success with effectively utilizing the taxation rights available to local governments. These cities command budgets more than double the size of Biratnagar and Birgunj, which have seen slower progress with OSR. For the ongoing fiscal year, the budget size of Pokhara and Bharatpur metropolises are Rs 7.5bn and Rs 7.4bn respectively, while the same figures for Biratnagar and Birgunj are Rs 3.5bn and Rs 2.9bn. Taken over the long term, such a large difference in budget sizes can result in significant disparities in development levels across metropolises. The resulting variations in local infrastructure, quality of life, and economic opportunities could affect migration trends, drawing people to better-performing metros while making other cities less desirable. Such migration patterns could induce inequity tendencies given that a growing population in more prosperous metros would lead to a wider tax base and higher OSR capacity; thus making them more developed.

The discussion about metropolitan cities’ budgets and their OSR is important because it has a direct bearing on the quality of life of the growing Nepali urban population. As cities expand and urban demands increase, the need for robust financial management becomes more critical. Providing for local infrastructure, creating planned urban settlements, and undertaking big-ticket projects like waste management require larger budget envelopes for the metropolises. With the adoption of federalism, local governments are now responsible for primary education, healthcare, and sanitation, meaning their finances also impact human development indicators. The large population residing in the metropolises lends further importance to this issue, as their budget performance directly affects the lives of a vast number of people. 

To avoid potential inequities and to strengthen Nepal’s urban centers, metropolises need to take the issue of OSR more seriously. It is understandable that federalism is still taking root in Nepal and that local governments are still in the process of fully assuming their responsibilities, but the more they delay exploiting their taxation rights, the slower growth they will witness in the long term.

It is a well-established fact that local governments are not fully utilizing their taxation powers, particularly business tax and house rental tax. Poor tax administration, lack of proper databases, and insufficient institutional capacity drive the underutilization. In order to enhance their revenues, local governments must conduct detailed studies on the scope of their OSR potential. Collecting data and maintaining accurate records of taxpayers, businesses, and property owners is essential to improve tax management. A community engagement strategy that improves awareness among people about their tax duties can also enhance OSR capacity. Given there is ambiguity on taxation rights between provincial and local governments on certain taxes, the federal government needs to play a more active role in clarifying these rights. A few donor-funded programs capaciting sub-national governments on tax administration have been introduced, but their coverage remains limited. 

Hence, local governments, and particularly laggard metropolises, need to pay more attention to their own-source revenues. While some problems arise from inadequate action on the part of the federal government, a lot can be done by local governments themselves, as some metropolises have shown. Going forward, the performance of Nepal’s metropolises, and by extension all local governments, will be greatly determined by how well they perform on this front. The emerging urban centers will be the driver of Nepal’s future growth and stakeholders must work collectively for their financial empowerment. 

Shahida MacDougall is the Country Director of British Council Nepal. She has previously worked with the British Council under various roles in countries such as Tanzania, Pakistan, Bangladesh, India, and Sri Lanka. In this interview, Shreya Shrestha of ApEx talks to MacDougall about her experience, motive and programs that the British Council has organized in Nepal. Excerpts:

The British Council has been in Nepal since 1959. How would you summarize the key contributions and milestones of the British Council in Nepal over the past 65 years?

The British Council has been a key partner in Nepal since 1959. Over these 65 years, we have supported Nepal’s government and people with our work in English language, education, arts and culture. We started first as a British Library, and since then, we've impacted millions through education and skills programs utilizing our UK expertise and global presence across over 100 countries. In the 60s and 70s, we introduced UK literature and education models, including Budhanilkantha School.

In the 90s, we advanced English language initiatives, like Cambridge A Levels, and helped form Nepal English Language, Nepal English Language Teachers Association (NELTA) and Association of British Alumni (ABAN). 

We’ve supported the EU-funded Dakchyata project for vocational training and the School Sector Development Plan, focusing on Nepal’s strategic priorities for graduation and positioning for the Middle Income Country by 2030. Our current work with youth, particularly women, is crucial in skills development and collaborations in English, education, arts, culture, and UK qualifications.

In the 1970s and 1980s, the British Council played a significant role in institutionalizing English education in Nepal. How did these initiatives shape the current state of English language education in the country?

The Government of Nepal endorsed the National Education System Plan (1971–76), which made English a compulsory subject in the school curriculum from Grade 4 up to the undergraduate level. We played a key role in supporting this agenda. We trained university-level English teachers and designed various teacher training programs. We also provided scholarships to hundreds of professionals who studied in the UK and now influence English education policy in Nepal.

Tribhuvan University graduates capable English teachers, scholarship recipients shape English education policy, and NELTA forums benefit for teachers across seven provinces, improve English skills for marginalized girls for better jobs, standardized assessments like listening and speaking, and provide access to international exams like IELTS and A Levels.

Last year, we researched the Continuing Professional Development (CPD) needs of teacher educators to enhance teacher training and classroom quality and are now developing a competency framework with Center for Education and Human resource Development (CEHRD).  We’re working with all levels of government to improve English teaching and assessment. We’re also partnering with other organizations to extend our reach to marginalized and remote areas, supporting the School Education Sector Plan (SESP).

How has the British Council promoted cultural exchange between Nepal and the UK, and what impact has this had on fostering mutual understanding and collaboration?

The British Council has a rich history of fostering cultural exchange between Nepal and the UK. The main mission is about creating people’s connection because its mutual benefit is not just only for Nepal but also for people in the UK. Over the past decades, we’ve continued to be that bridge between our nations and cultures through various programs.

It connects artists and cultural sectors from both countries. Each year, we send Nepali artists to the UK for art programs and festivals to expand their networks. For instance, this year, we supported a Nepali filmmaker to attend the Sheffield Documentary Film Festival and sent two other artists to festivals and residencies. Our Culture Responds program focuses on diverse groups, including youth, women, disabled individuals, and LGBTIQA+ people. Over the past three years, we’ve worked with UK and Nepalis partners to support green business entrepreneurs through our ‘In Our Hands’. We’ve helped over 80 teams develop green business ideas and supported 17 teams with research and prototyping.

Since 2017, we’ve organized the Women of the World Festival in Nepal, focusing on gender issues. This major arts-culture festival has reached over 25,000 people. This year, we’re hosting the 7th edition in Kathmandu, in partnership with Kathmandu Metropolitan City. Projects include Maithili relief sculptures, archival work in Dolpo, the Kusunda language, and food heritage among Nepal’s indigenous communities are being promoted.

The Dakchyata project focuses on skills development in agriculture, construction, and tourism. How has this project impacted these industries in Nepal, and what are the future plans for similar initiatives?

The EU-funded Dakchyata Technical Vocational Educational Training (TVET) Practical Partnership Project, run by the British Council, aimed to enhance public-private partnerships in TVET, focusing on agriculture, construction, and tourism sectors for Nepal’s economic growth. 

The project trained 6,750 individuals (29 percent female, 47 percent aged 15-24) and developed an Occupational Demand Tool. For the first time in Nepal, five private sector federations, including construction and tourism associations, worked together on skills development and also assisted with the Ministry of Education Science and Technology in creating the 10-year TVET Strategic Reform Plan, shaping the sector for the next decade.

In partnership with UNDP, ILO, and IOM, we up-skilled over 2,000 returnee migrant workers, aiding their reintegration into Nepal’s economy during Covid-19. Our public information campaigns reached over 2.2m people through TVET festivals, broadcasts, social media, and digital platforms, raising awareness about TVET among young people.

How has the British Council’s role in providing technical assistance to projects like the School Sector Development Plan influenced Nepal’s education system?

The British Council has supported Nepal’s SSDP, aiming for inclusive, quality education and federalism. Since 2019, technical assistance has improved teacher development, assessment, curriculum reform, and Education Management Information System (EMIS). A teacher mentoring system has been developed, enhancing local officials’ capacity and supporting government delivery.

During the Covid pandemic, we modeled interventions around remote teaching by developing national strategies and guidelines, training teacher trainers, and enhancing CEHRD’s online learning portal. Our work included developing handbooks and assessing the portal’s accessibility to support safe online learning.

We also contributed to national reforms, including the development of a national assessment framework, improvement of the Grade 8 examination with 3,000 test items, and training local officials on administering the exam. We improved the EMIS system and trained 1,000 educators. In partnership with UNICEF, we are supporting the government and developing multilingual education standards and capacity building for teachers.

What has been your personal journey with the British Council, and how do you see your role contributing to its mission in Nepal? 

I’ve been with the British Council for over 11 years. The individual has experienced the transformative power of education and cultural exchange, driving their career with the British Council. As Country Director, we are here as trusted partners to support the government’s strategic objectives by building people-to-people connections, collaborating with government agencies, educational institutions, and development partners to enhance English language education, cultural exchanges, and educational reforms.

Additionally, I’m committed to driving innovation within our program. This means exploring new approaches and solutions that can address emerging challenges and opportunities. A significant part of my role also involves nurturing a collaborative and inclusive environment within our team, celebrating and embracing diversity. 

Ultimately, my goal as Country Director is to ensure that the British Council’s work in Nepal continues to make a positive difference. By leveraging my experience, focusing on strategic partnerships, and fostering innovation, I believe we can contribute significantly to Nepal’s educational and cultural development and ultimately continue strengthening the bonds of mutual understanding between our two nations.

The Constitution of Nepal has established basic healthcare as a fundamental right of its citizens. In the context of the federal governance system, it is the responsibility of the state to ensure easy access to quality health services for all. The national health policy 2019 primarily aims to develop and expand a health system based on social justice and good governance. Moreover, the policy has laid emphasis on the social health protection system by integrating the most marginalized sections within and across societies. 

At a recent press conference, Health Minister Pradeep Paudel presented his key health priorities and action plan to ensure people have easy access to quality health care services at all levels. The rationale of these priorities is largely based on the guiding principles of national health policy, 16th plan and the 2030 agenda for sustainable development. Ensuring equitable access to healthcare is a primary agenda of health sector reforms. 

In the federal context, the first and foremost priority is to develop a solid strategic roadmap to improve coordination with clarity on roles and responsibilities within and across three levels of governments in order to harmonize effective implementation of national health policies, strategic guidelines and the emerging priorities. The idea of establishing an integrated health infrastructure development project is innovative and timely as it provides a clear picture of existing human resources, health infrastructure, health financing mechanisms, logistics and supply chain management at all levels. 

Undoubtedly, this strategic approach will facilitate federal, provincial and local governments to identify new opportunities and gaps, and address existing challenges in delivering quality healthcare services. Strengthening the institutional capacity of local health governments and health facilities is one of the critical challenges in the health sector due to limited human resources, inadequate health infrastructure and supplies, poor monitoring and evaluation systems of healthcare services. 

Therefore, the ambitious action plan to increase the coverage of health insurance as well as other social security schemes is easier said than done. Evidence suggests that national health insurance and other social protection services are facing serious implementation challenges. However, it is yet to be seen how the new priorities of the health minister are implemented in the months to come. The ground reality is that without realistically addressing persistent structural barriers in health systems and ensuring effective implementation of policy and regulatory frameworks, one can not simply hope for significant reform in the health sector.

Other emerging issues such as mental health, non-communicable diseases, disaster and health emergencies need a more pragmatic approach for actions to enhance the capacity of local governments for multi-sector response in the health sector. Interestingly, migrant health has also received  priority in order to address the health care needs of migrants and their families. 

By formulating a new population policy, there is an increasing focus on strategizing demographic dividend for sustainable socioeconomic development. The health security of marginalized and indigenous populations is another priority, but again needs a clear strategic roadmap for implementation. Among many other priority areas, one of the praiseworthy initiatives is to improve nutritional status of children under five years of age, adolescents and mothers by enhancing the institutional capacity of provincial and local governments to effectively implement the multi-sector nutrition plan at the communities. 

Though there is explicit focus on urban health systems, climate change and associated environmental health risks for consideration, it is interesting to see how these issues will be effectively mainstreamed in federal health systems for timely action. In addition to enhancing the capacity of hospitals across the country, improving physical infrastructure of the health facilities in the rural areas is a high priority in the health agenda. 

Moreover, there is a critical need to strengthen procurement and supply chain management by ensuring transparency and efficient practices to avoid any interruptions in supplies of drugs and other essential logistics. Ensuring safety, quality and efficacy of medicines is crucial. At the same time, public awareness on road safety is equally important to reduce the mortality, injuries and disability. Health promotion and communication strategies for behavior change are also critical to a healthy lifestyle. 

Therefore, the key stakeholders are now enthusiastically looking forward to effective implementation of the priorities as highlighted by the health minister. Without good governance and strong political commitments, the ambitious plans are less likely to deliver the expected results. The implementation mechanisms and structures must be strengthened with clear terms of reference and a strategic roadmap for reform. Establishing robust monitoring and evaluation systems should be a high priority action point to track the progress and realistically address the bottlenecks in health systems at all levels. 

Despite some notable progress in the health sector, the federal health system has a long way to go to meet the wider expectations of people in accessing and utilizing quality healthcare services at the local level. There is still hope that effective implementation of the new priorities in the health sector will have profound implications in ensuring equity and social justice at large.  

The author is a health policy analyst

The protests in Bangladesh have made daily life there challenging and unsafe. Many Nepalis returned home while others chose to stay back because of their circumstances. Shreya Shrestha from ApEx spoke to three undergraduate students in Bangladesh about what is going on in their minds as they study and work in a place where their safety isn’t guaranteed.

Karishma Thapa, 23

At the Asian University for Women in Bangladesh where I study, the situation is quite volatile. Students are feeling several kinds of emotions. They are navigating academic challenges and political uncertainty. We’ve been engaging in various activities to maintain our well-being, such as extracurricular activities, peer support groups, and recreational events.

The university administration is also making efforts to provide the necessary resources and support to ensure that we can continue our education in a safe and conducive environment. Despite the challenges, there’s an underlying sense of hope and solidarity that keeps us going. The Nepal government should provide support to Nepali students, including safety during crises, easing educational expenses, advocating for better degree recognition, and addressing specific concerns faced by Nepali students in Bangladesh.

Khushranjan Mahato, 24

The situation in Sirajganj got out of hand when students set fire to the homes of former and current MPs. People threatened and targeted Hindus on this particular day. There were many fatalities. Right now, things are under control because Dr. Muhammad Yunus is the leader of the interim administration. As a Nepali, I was a little worried about staying here because of the incident. According to the embassy, 400 Nepalis are here in Bangladesh and no one has been targeted or threatened. So, I feel lucky that we are safe here. But we were expecting support from the Nepali embassy. We thought they would facilitate our return to Nepal. We feel helpless.

Dr Aabid Dewan, 25

Compared to the last few weeks, the situation is getting better. Students are really happy right now and they are hopeful of a better future. I can see that people are relieved and happy. Since the very first day of the protests, I didn’t face any kind of difficulties or threat from any political parties or anyone else. I was on my regular medical duties. I don’t really have that many expectations from our government. As a medical student here in Bangladesh, we face a lot of difficulties and all I want is for the Nepal government to reach out to us so these problems and issues can be solved.