Corruption in Nepal's Local Governments: A Case Study of Institutional Weaknesses and Citizen Outcomes

This case study deals with corruption in public procurement at the local government level in Nepal. Nepal established 753 local governments with substantial responsibility for public spending, including procurement of goods, works and services, following the adoption of the Constitution in 2015. Mostly today, public spending is the responsibility of local governments, especially on capital investment in infrastructure, such as roads, schools, health facilities and water supply systems. But the speed of devolution of responsibilities has not been matched by adequate systems of transparency, accountability and integrity. This paper explores the nature and extent of corruption in local government procurement in Nepal, drawing on publicly available data from the Commission for the Investigation of Abuse of Authority, Transparency International, the World Bank, the Asian Development Bank and government audit reports. The analysis shows that procurement is a high-risk area for corruption at the local level. Corrupt practices are many and include bid-rigging, inflated costs, shoddy work, kickbacks, collusion among bidders, political interference with contract awards, etc. The data show that many local governments do not follow procurement rules well, publish limited information and have weak oversight. Audit reports frequently find irregularities in procurement by local government. The paper investigates factors leading to procurement corruption including weak institutional capacity, political interference, lack of transparency, limited oversight by citizens and poor enforcement. The report ends with recommendations for improving procurement integrity, including better procurement rules, more transparency, capacity building, stronger oversight, more citizen participation, and accountability enforcement.