Distance Matters: How Federalism Can Offset Geographical Challenges in Nepal

Author: Raunak Mainali

There is an old Chinese proverb that goes “the mountains are high, and the king is far away” alluding to the distant lands that posed governance and administrative issues to the monarch.

It is a pity that a similar maxim does not exist in Nepal as it is poised to claim the same relevance in the country. Nepal’s mountains are very high — some of the highest in the world in fact — and whilst the King was removed after the People’s Movement in 2006, the succeeding governments are facing great difficulties promoting development in far-away districts.

There is a strong negative correlation between the Gross National Income (GNI) per capita of a given district and its distance from the federal government in Kathmandu. The further away a district is from Kathmandu, the more likely it is that their inhabitants will suffer financial constraints. Whilst the adoption of a federal framework in 2017 was a positive first step towards addressing this issue, it needs to be strengthened in order to promote equitable status amongst all 77 districts in the country.

The Issue at Hand:

Despite being one of the smallest nations in the Asian continent, Nepali administrators are obstructed by various factors that prevent them from delivering effective governance in far-flung districts. The mountainous landscape has posed several logistical challenges and the lack of infrastructure such as roads and airports have contribute to exacerbate the magnitudes of these obstacles. However, an often-omitted factor is the deliberate weakening of the federal framework by the central government through key political appointments and other moves.

Deploying an income per capita by district dataset by OpenNepal and comparing it to the road distance of district headquarters from Kathmandu, one can analyze their relationship. The districts of Accham, Bajura and Baitadi are all situated in the Western regions in Nepal and require more than 800km travel by road. These districts also happen to be some of the poorest in the country with per capita GNIs of less than 25,000 rupees (215 USD). Other districts such as Humla, Dolpa, Jajarkot and Kalikot also display a similar trend.

Figure 1: Scatter chart displaying a negative correlation between distance in kilometers and GNI per capita

Contrastingly, districts within close proximity to Kathmandu possess significantly higher GNIs. Lalitpur and Bhaktapur which share a border with Kathmandu boast GNIs of 84,715 (730 USD) and 61,686 (532 USD) rupees respectively. Chitwan and Rasuwa, who are within a 150km from the capital, possess GNIs of 68,748 (593 USD) and 67,973 (586 USD) rupees. Whilst these figures are still way behind that of developed nations, Kathmandu and districts close by possess far greater wealth than their distant counterparts.

Conducting a regression analysis shows that a single increase in kilometer from Kathmandu results in a decrease by 30 rupees in GNI.

Necessary Steps:

Distant districts possess economic potential which has not yet been tapped into. For instance, Bardiya National Park within the Banke and Bardiya districts contain tremendous tourism potential. The National Park is bigger and boasts of a higher Royal Bengal Tiger population than its counterpart in Chitwan. However, the districts themselves are significantly poorer.

Similarly, as a country synonymous with awesome mountains and serendipitous lakes, Nepal has not acknowledged the available potential of the Mugu district. Although it is home to Rara, the biggest lake in Nepal and its complementary picturesque views of the Himalayas, Mugu does not receive many visitors due to its lack of physical infrastructure. Whilst districts with similar natural attractions such as Solukhumbu and Kaski have GNIs upwards of 69,000 rupees (595 USD), Mugu remains destitute at around 39,000 (336 USD).

Nepal’s government has acknowledged the industrial potential of several underdeveloped distant districts such as Siraha, Jumla, Banke and Kailali by designating them as Special Economic Zones (SEZ). These SEZ have been established with the aim to promote industry by providing economic incentives such as free trade zones, liberal labour laws and tax exemptions. However, progress with the SEZ is lethargic and so far most of the designated zones are still conducting feasibility studies and only two out of 14 areas have begun construction.

There is an urgent need to improve infrastructure in districts far away from the capital with particular attention to remote areas. According to research on Nepal, even something as basic as un-tarmacked earth road, can deliver positive economic impacts through an increase in wage earners and selling of various natural resources. Expanding the road system in these districts and introducing airports would go a long way in increasing GNI through agricultural income, wage income, livestock income and more. This has to be conducted in conjunction to increased institutional infrastructure such as government bodies to ensure equitable distribution of wealth in order to minimize wealth inequality.

Finally, Nepal needs to further consolidate and reinforce its federal framework. Under the current framework, the provincial and local governments are at mercy to the federal government in Kathmandu when it comes to finance and development. The attitude of the central government is also very negative towards federalism as instead of seeing local and provincial governments as independent political bodies, they perceive them as subordinate to Kathmandu. By revising attitudes and allowing greater financial and executive autonomy to provincial and local governments, Nepal can offset its distance/development disparities.

The views and opinions expressed in the piece above are solely those of the original author(s) and contributor(s). They do not necessarily represent the views of Governance Monitoring Centre Nepal and/or Centre for Social Change.