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1. Minimum Conditions and Performance Measures
(MCPM)
A Tool of Performance Monitoring in Local Governments of Nepal
(Policy Design and Implementation in Developing countries)
Resham Lal Kandel
Student ID: MEP15112
Country: Nepal
Affiliation: Ministry of Federal Affairs and Local Development
2. Outline
Overview of governance system in Nepal
Overview of the Performance of LBs
–Existing situation, and issues on the Performance of
LBs
Learning & Development
–MCPM, its initiation and mainstreaming.
Future prospective
4. Overview of Governance System in Nepal
President
Parliament Executive Body Judiciary Other constitutional
Bodies
Council of Ministers
NPC Ministries
Departments
District
Offices
Regional
Offices
Service Centers
DDCs
VDCs Municipalities
NPC- National Planning Commission
DDCs- District Development Committees
VDCs-Village Development Committees
Po
lic
y
M
ak
in
g
Im
pl
e
m
en
ta
ti
o
n
In
Transition
al Phase
of Unitary
and
Federal
Governm
ent
5. Efforts towards Decentralization in Nepal
Commitment in Decentralization and about 50 years
experience.
Fundamental principles of local governance system
–Local self-governance, and
–Principle of devolution
Local Self-Governance Act (LSGA), 1999 and its
Regulation 2000.
6. Overview of the Performance of Local Bodies (LBs)
Existing Situation of local governance
LBs are autonomous on functional and financial decision
making and implement their priorities.
There is growing trend of responsibilities as well as
source of funding.
The new local self-governance act was enacted and
elected LBs were working.
But many LBs were not accountable according to the
spirit of decentralization.
7. Overview of the Performance of LBs…
The central political will power remained weak.
Some local leaders were comparatively motivated,
but there was no uniform working environment.
Planning and Implementation used to be delayed.
Alignment of local investment was difficult.
No more local elections were held after 2002.
Control from center was almost impossible
because of the issue of autonomy.
8. Issues on the Performance of LBs
Improvements on local public services and
establishing an accountable LBs.
Introduce Performance Based Grant System.
Start strong and effective tools of monitoring in the
LBs.
9. Selected policy issues
How the LBs could be monitored with
consideration of the principle of local autonomy
and make them accountable for their
responsibilities.
Introduce Minimum Conditions and performance
Measures (MCPM) to monitor the performance of
Local Governments.
10. What is MCPM ?
A monitoring/evaluation tool to assess the performance of LBs.
Indicator based assessment related to the duties and responsibilities
of LBs based on legal provision.
Two sets of indicators:
(1) Minimum Conditions (MC)- Threshold criteria for the LBs.
LB has to comply with the MCs if it is to be eligible to receive
additional grants from the central government.
Indicators for MCs are statutory requirements of LBs as
provisioned in the LSGA 1999 and associated acts, rules,
regulations and directives.
Indicators for MCs are core functional areas of LBs such as
planning and budgeting, financial management, functioning of
various committees, transparency etc.
11. (1) MC indicators
S.N. DDC indicators VDC indicators Municipality indicators
1 Annual Budget and program approval Annual Budget and program
approval
Annual Budget and program approval
2 Annual progress appraisal Annual progress appraisal Annual progress appraisal
3 Annual and quarterly progress report Grant utilization and accounting Annual and quarterly progress report
4 Internal audit and VDCs final audit Final audit Account operation of Municipality Fund
5 Account operation of District
Development Fund
Inventory management Tax and record of internal revenue source
6 Information and record management Social security program Audit and irregularity rectification
7 Final audit and record of irregularities Personnel management Assets management
8 Inventory management Building construction and design
approval
9 Personnel management Publication of revenue and expenditure
details and tax rate
10 Personnel management
12. (2) Performance Measures (PM)
PMs provide a range of score in different functional areas that
help to assess the service delivery capacity and efficiency. LBs
annual grant will depend on the scores achieved in PMs.
These indicators direct the LBs to monitor its own function, to
improve internal working capacity and to compare its activities
with other LBs.
A kind of third party monitoring and bench marking.
13. (2) Performance indicators
Thematic areas Remarks
DDC • Planning and Budget Management
• Resource mobilization and financial management
• Budget release and program implementation
• Monitoring, Assessment Communication and Transparency
• Organization management and work responsibility
Thematic areas-5
Total number of indicators-
46
Municipal
ity
• Local governance
• Financial resource mobilization and management
• Plan and program management
• Organization and HRD
• Urban basic resource management
Thematic areas-5
Total number of indicators-
40
VDC • Formulation of participatory village development program, Target group
program
• Release and expenditure status
• Publication of income and expenditure statement
• Implementation of social security program
• Personal record database, VDC profile
• Citizen charter, Public audit, public hearing
• Internal resource management
Thematic areas-13
Total number of indicators-
100
14. How MCPM works ?
Source: LGCDP, 2010. P.19
It affects the
relations-
Between
Center and
Local
government.
Local
politicians and
People.
Local
government
units and their
Clients.
15. Assessment Method
Assessment will be done on the set indicators
For MC, only 2 option– Yes or No
For PM, There is total 100 marks.
Free License Experts (Evaluators)
Reporting to LBFC, MoFALD and MoF
Appeal to LBFC
The result is used to allocate the grants
16. Criteria for Additional Grants
S.N. Performance rating and conditions Reward/ sanction Staff incentives
1 3 topmost DDCs/Municipalities
1 top VDC in each district
20% addition in grant • First DDC/ Municipality – NPR 300
thousand
• Second DDC/ Municipality-NPR 250
thousand
• Third DDC/Municipality- 200 thousand
2 Top 25% DDCs/ Municipalities/VDCs (First
category)
15% addition in grant NPR 125 thousand for DDCs &
Municipalities
3 Second top 25% DDCs/Municipalities/VDCs
(Second category)
10% addition in grant NPR 100 thousand DDCs & Municipalities
4 Third 25% DDCs /Municipalities/VDCs ( Third
category)
10% deduction in grant
5 Last 25% DDCs/Municipalities/VDCs (Lowest
category)
15% deduction in grant
6 MC met but failed in PM
(DDCs/Municipalities/VDCs)
20% deduction in grant
7 MC not met (DDCs/Municipalities/VDCs) Lose all formula based
grant
Note- In case of VDCs, DDC makes
decisions
17. Why this System is Sustaining?
The results of
MCPM
are linked with
grant of LBs.
Provision of
prize/rewards.
Resham Kandel,LDO, Dolakha - Awarded as second best performing DDC
18. Effect of this system: How the performance status changed
DDCs-District Development Committees
20. How was this system initiated?
Learning from abroad !!!
Supported by (UNCDF)
Uganda-Piloting 1997, full fledge 2003, Kenya & Mali-2001,
Tanzania-2004, Bangladesh- piloting 2003, full fledge 2007,
Indonesia,& Pakistan- 2005, Ghana-2008
The concept has been transferred from developed countries
Lessons from Uganda (MCPM) and Philippines (LGPMS) were in
center.
Who was the Leader?
Team effort - Bureaucratic Team within LBs, Forum of local leaders
Relation with Stakeholders & Commitment in Implementation
Support from Development Partners
21. How the system mainstreamed?
The first stage
Piloting in 20 districts in 2004 - DFDP districts
The result was used to allocate unconditional (block) grant and
some project specific grants (e.g. LGCDP funding)
Second Stage
Remaining 55 districts in 2006
To assure the trust (validity and reliability) of assessment process
and result, quality assurance mechanism was developed.
Replication of learning.
Continuation of Implementation and DP’s trust.
22. How the system addressed in Government Policy ?
After seeing positive outcomes (in improving service delivery,
planning and monitoring culture, spending capacity, record
keeping and so on), Government formally accepted this system
from FY 2006/07 and aligned in National System.
Case (how does this system affect?):
“Kathmandu Metropolitan City failed in FY 2008/09 in MC/PM. This
triggered the local politicians who questioned the staff why it happened.
Then, the things started improving.
23. Components for sustaining the system
This system is legalized by LSGA, 1999 and its regulation 2000.
It is accepted as a part of regular government function and resource
allocation
Support from DPs.
Local Bodies Fiscal Commission-LBFC (independent body) is assigned
to execute the assessment process
Linkage with financial incentives and penalties
Ownership:
Lead by central govt. agency
Fully accepted by LGs
24. Issue for further improvement
Improvement of Indicators (process based
indicators to outcome based indicators),
Linking the results to other governance indicators.
25. Conclusion
Team effort and co-ordination between stakeholders is one important aspect of
its success
Commitment in implementation from government is another factor.
(Government has taken lead role)
Keys of success
Simplicity of assessment manual,
Quality assurance,
Assessment by third party (Team composition: local governance expert and
financial management expert), and
Transparent indicators & process, and appeal system.
26.
27. References:
Local Bodies Fiscal Commission (LBFC). (2015). An Analysis Reports of MCPM in
Local Bodies of Nepal: Kathmandu. www.lbfc.gov.np
Local Governance and Community Development Programme (LGCDP). (2010).
Analysis of the minimum conditions and performance measurement (MC/PM system) in
Nepal.
Local Self Governance Act (LSGA). (1999).
Local Self Governance Regulation (LSGR). (2000).
United Nations Capital Development Fund (UNCDF). (2010). Performance-based
grant systems: Concept and international experience.