With the promulgation of the new Constitution of the Federal Democratic Republic of Nepal in September 2015, Nepal switched from a unitary system of governance to a federal system with three parallel forms of government – the federal, the provincial and the local. The Constitution confers both legislative and executive powers to all three forms of government. Schedule 8 of the Constitution of Nepal particularly confers exclusive power to the Local Governments on 22 matters, including matters relating to public finance (raising taxes, fees, and fines), management of local services, local infrastructures, local statistics and records, and local market. Furthermore, the Constitution also enshrines ‘prosperity’ as a national agenda. Along this end, creating employment through necessary economic policy reforms for an investment-friendly business environment has been widely accepted as Nepal’s mantra of prosperity. Having legislative and executive powers that can be exercised to achieve the goal of prosperity creates space for local governments to forge a shared vision of growth and prosperity together with local stakeholders. Continue reading
The government of Nepal must introduce the following reform agendas in the upcoming pre-budget discussion to achieve the desired economic growth:
Starting a Business:
- Devolve business registration functions to local levels and a functioning one-window for registration
- Develop a universal database and use compatible softwares at different government institutions to enable real-time inter-department coordination
- Allowing incorporation of a one-man company based on a one-page AoA; building a model document for more-than-one-man private companies; and allowing nominating agents to handle the entire incorporation process in case of a public company.
- Make a legal provision to complete industry registration within 36 hours and complete company incorporation within seven days of having filed application