Abstract
Governance refers to systems, processes, or structures in organizations, institutions, societies, or governments. Nepal has struggled to practice the dimensions of governance for a long time. It is the process of decision-making and the implementation of decisions within a particular context in the absence of all kinds of corruption. This research analyzed key governance indicators in Nepal from 2000 to 2020, revealing a fluctuating yet insightful trajectory of the country’s political and administrative landscape. The study explores six core indicators—voice and accountability, political stability, government effectiveness, regulatory quality, rule of law, and control of corruption—to assess Nepal’s progress through democratic transition and federal restructuring. Good governance is a significant issue in Nepal, hindering rural development and contributing to rural poverty. A study found that 63.3% of respondents were dissatisfied with service delivery mechanisms for the disabled, disadvantaged groups, and women in Godawari municipality. This study applied a descriptive research design to assess financial corruption and the challenges of good governance, particularly in the local government of Nepal. This is mixed-methods research collecting quantitative and qualitative data from different secondary sources available online. The sources were already published journal research papers. The study found that the dimensions of voice and accountability reflected an overall improvement, despite severe setbacks during the civil war, indicating advancements in civic freedoms and democratic participation. Political stability has notably improved, suggesting a decline in violent conflict and an increase in institutional stability. In contrast, government effectiveness and regulatory quality have experienced persistent declines, underscoring ongoing weaknesses in public administration, service delivery, and regulatory enforcement. The rule of law indicator shows a partial recovery, reflecting modest gains in legal institutions and public trust. Meanwhile, the control of corruption exhibits a mixed trend, highlighting inconsistencies in anti-corruption measures and oversight. The findings underscore that while Nepal has made strides in democratic governance, significant challenges remain in institutional capacity, accountability, and policy implementation. Strengthening governance structures and ensuring sustained reform efforts are essential to realizing Nepal’s development potential.
Governance refers to systems, processes, or structures in organizations, institutions, societies, or governments. Nepal has struggled with the dimensions of governance for a long time. It is the process of decision-making and the implementation of decisions within a particular context, such as corporate governance, global governance, and local governance (United Nations, 2025). It is essential for delivering effective and efficient services to service holders. Good governance is a further improvement of governance that refers to the fair utilization of resources, systems, structures, or rules of law in service management and delivery in the absence of corruption (Lamichhane, 2021). Good governance is a requirement for economic development in a country or any organizational entity (Magar, 2025). Good governance promotes not only economic development but also economic growth (Johnson, 2002). Good governance is inevitable for overall rural development in developing countries like Nepal. Good governance is a significant part of the sustainable development of rural areas in Nepal. It is directly associated with various aspects of rural development that talk about transparency, accountability, participation, and responsiveness in the overall practices of good governance in the process of rural development in the absence of all forms of corruption (Bhandari, 2023). This study assesses the satisfaction of people with the services delivered by the institutions and identifies the causal factors of financial irregularities at the local levels in Nepal. The World Bank (WB) has recommended six broad dimensions of governance for more than 200 developing economies over the period 1996-2023. Voice and accountability, political stability and absence of violence, government effectiveness, regulatory quality, rule of law, and control of corruption are the dimensions of good governance. These dimensions are to be addressed to ensure good governance (Worldwide Governance Indicators (WGI), 2023) in a government or organization.
The lack of good governance is one of the biggest administrative and social problems in Nepal that hinders rural development in countries like Nepal. Rural poverty is linked with the lack of good governance, in particular. Bad governance causes corruption that allows poverty (Pahari, 2025). The functioning of government practices in Nepal is not good. A study conducted by Rajan Binaya Pasa and his team found that 114(63.3%) of respondents were not satisfied with the service delivery mechanism for the disabled, the disadvantaged group, and women in Godawari municipality; a total of 35(19.40%) were found satisfied with the capacity of administrative staff in the process of service delivery (Pasa et. al., 2023). Many policy-level attempts are made in Nepal to ensure good governance; however, it is not yet fully realized at all levels. Service recipients have not yet fully realized the practices of good governance, particularly at the government levels in Nepal. Many obstacles stand in the way of utilizing good governance (Guragain & Adhikari, 2024). The transparency mechanism in Nepal needs to be emphasized to exercise local-level accountability that helps strengthen democracy in Nepal (Dhungana, 2019). The accountability mechanism is not effective in Nepal. It is necessary to make the mechanism strong to ensure accountability, contributing to the practice of local governance in Nepal. Financial corruption and irregularities are other striking problems of good governance in Nepal at all levels of government. This has not motivated the public towards ensuring good governance at the local level. It has reduced public trust in government. Weak institutions, political instability, lack of accountability and transparency, education gap, poverty, etc., are the major factors that challenge good governance in Nepal (Nepal, 2023). People are not satisfied with the service delivery in the country due to a lack of resources, poverty, inadequate laws and policies, among other factors. The effectiveness of good governance in Nepal is not yet fully realized (Gautam, 2023). The corruption cases increased in Nepal after decentralization. According to the Commission for the Investigation of Abuse of Authority (CIAA), 19106 complaints were filed against 753 local governments, accounting for 52.80% of all complaints in the 2023/24 fiscal year. Out of 7 provinces, Madhes province has the highest rate of complaints of corruption, whereas Gandaki province has the lowest rate of complaints (Sah, 2024).
Participatory governance theory, governance network theory, new public management theory, and the good governance index are the major theories that provide a context to understand the governance practices in societies and local-level governments. The participatory governance theory argues that actors or beneficiaries should be included in the decision-making processes to let them express their views, voice, and vote in the decision-making processes, which makes governance stronger and more participatory, giving great results (McNulty & Wampler, 2015). Different stakeholders should participate in the decision-making process to ensure good governance. How is it possible, then? A network of actors is necessary for that. An interdependency among the actors is important, that help them contribute to the decision-making process. They learn from each other and help each other to ensure good governance in their respective administrations. This can be known as the network governance theory in local government or public administration. This is suitable and practicable in the context of Nepal (Klijn & Koppenjan, 2012). Sometimes, governance should be practiced through the lens of New Public Management Theory (NPMT), also for more effective and efficient results at the local government or public administrative levels. The NPM theory suggests applying the received knowledge and experiences to get efficient and effective performance in the public sector (Indahsari & Raharja, 2020). It is good to comparatively measure the quality of governance practices among different regions, which helps them improve their governance practices in their regions. This is called the good governance index. This can be done within a country or region based on the dimensions of governance, such as following the rule of law, accountability, etc. This helps measure and improve the bureaucratic efficiency and effectiveness of service delivery in the government or any other institution that promotes the quality of service to holders (Malik, 2024). This is important in the context of Nepal to ensure good governance in decentralized local governments.
Different countries formulate and implement good governance-related policies to ensure good governance at the bureaucratic level, administrative level, etc., in their country. In the context of Nepal, the Ministry of Law, Justice, and Parliamentary Affairs has brought the Good Governance (Management and Operation) Rule 2065 into effect to improve good governance in the country. This policy strongly focuses on maintaining transparency in decision-making, position code of conduct, public participation, monitoring, and evaluation of public service delivery, etc. Similarly, the Commission for the Investigation of Abuse of Authority (CIAA) has brought the Corruption Niwaran Ain 2059 into effect to maintain and improve the handling of corruption cases at different levels in the country. The Act has issued various provisions to maintain monitoring and evaluation, reporting, documentation, and punishments in the case of corruption at all levels in Nepal. The most important policy document of Nepal is Muluki Aparadh Sanhita 2074, which has various provisions against breaching the rules of law in Nepal.
A study conducted by Ghimire (2022) argues that corruption cases in a country cause negative results in public investment, government revenue, and public resources, decreasing the living standards of people. It pushes the country to an underdeveloped status, damaging the socio-economic and infrastructural development of the country. Regarding the case file of corruption, it is continuously increasing. The corruption cases were fourfold more in the ordinary sector in Nepal between 2010 and 2015 (Gupta et al., 2018). Another similar type of qualitative study was conducted by Shah (2019), which presents that Nepal was ranked 121st in corruption in 2008/09, 154th in 2022/12, and 122nd in 2017/18. It can be concluded that Nepal is facing a great challenge to good governance in terms of corruption. The good governance directly connects the human development. The well-functioning of good governance either in a country or a particular region in terms of political, social, and economic bases contributes to various opportunities needed for people of that region, enhancing people’s living standards or human development, because the people of that region experience their voice heard; they get to participate in the decision-making processes, applying their needs (Chaudhary, 2020).
This study employed mixed-methods research. Qualitative and quantitative data on good governance were collected and analyzed, sourced from different secondary documents.
This study employed a quantitative methodology, collecting secondary datasets sourced from Nepal governmental agencies, published journal articles.
This chapter presents the results and discussion based on the data sourced from research reports, thesis reports, governmental documents, and other relevant sources.
Table 1: Rule of Law at a selected local government
| Items | N | Min. | Max. | X̅ |
| Political interference with service delivery | 180 | 1 | 5 | 2.42 |
| Violation of the code of conduct by administrative staff | 180 | 1 | 4 | 3.07 |
| Application of law fairly in the municipal/ward office | 180 | 1 | 5 | 3.32 |
| Administrative practices the rules transparently and inclusively by the municipal office or ward office | 180 | 1 | 5 | 3.32 |
Source: Pasa, et.al., (2022)
The table highlights the perception of governance in the government office related to the practice of the rule of law. Political influence or interference is observed with the lowest mean score of 2.42. It indicates that the respondents (180) perceived a relatively higher level of political interference in service delivery. It means that this is a problematic area. The code of conduct was violated by the administrative staff, scoring 3.07, showing it as a moderate concern regarding staff conduct. The score for practicing rules transparently and inclusively by municipal or ward officials is 3.32 mean score, which indicates respondents believe these aspects of governance are somewhat satisfactory, though still with room for improvement.
Table 2: Good governance indicators for Nepal over the past 20 years
| Years | Voice and Accountability | Political Instability | Government Effectiveness | Regulatory Quality | Rule of Law | Cases of Corruption |
| 2000 | 42.79 | 13.76 | 38.97 | 31.28 | 42.57 | 30.96 |
| 2002 | 24.88 | 4.76 | 38.27 | 33.16 | 38.12 | 43.94 |
| 2003 | 22.39 | 4.52 | 35.71 | 40.31 | 32.67 | 40.4 |
| 2004 | 17.31 | 2.91 | 23.15 | 31.03 | 27.27 | 20.98 |
| 2005 | 14.42 | 1.94 | 22.55 | 33.33 | 24.4 | 24.39 |
| 2006 | 23.08 | 4.35 | 19.51 | 32.35 | 31.58 | 28.78 |
| 2007 | 30.77 | 4.83 | 26.7 | 29.61 | 33.97 | 22.82 |
| 2008 | 32.21 | 6.73 | 21.36 | 29.61 | 28.37 | 21.84 |
| 2009 | 33.65 | 7.58 | 17.7 | 25.84 | 21.33 | 25.84 |
| 2010 | 33.65 | 7.58 | 20.1 | 25.36 | 18.01 | 27.62 |
| 2011 | 32.39 | 8.06 | 18.01 | 25.12 | 21.13 | 23.22 |
| 2012 | 28.17 | 8.53 | 17.54 | 23.7 | 28.17 | 22.75 |
| 2013 | 30.52 | 14.69 | 17.54 | 22.75 | 28.64 | 28.44 |
| 2014 | 33 | 21.43 | 18.27 | 22.12 | 30.29 | 33.17 |
| 2015 | 32.02 | 14.29 | 12.98 | 24.52 | 29.81 | 32.21 |
| 2016 | 37.93 | 17.14 | 19.71 | 23.56 | 21.15 | 22.12 |
| 2017 | 39.41 | 25.71 | 18.75 | 25.96 | 28.37 | 23.56 |
| 2018 | 39.61 | 26.42 | 16.83 | 23.56 | 33.65 | 27.4 |
| 2019 | 39.61 | 28.77 | 14.9 | 24.52 | 31.73 | 27.4 |
| 2020 | 42.03 | 41.51 | 15.87 | 24.52 | 34.13 | 29.81 |
Source: World Bank (2020)
The table presents the fluctuating trends in voice and accountability in Nepal from 2000 to 2020. It shows an overall upward trend, rising from 42.79 (2000) to 42.03 (2020). The lowest point was 14.42 in 2005 during the civil war period in Nepal. Since 2010, this dimension has consistently remained above 30, indicating improved civic freedoms and democratic engagement. Political stability and absence of violence were at a score of 13.76 in 2000, the lowest score, with 1.94 in 2005, facing conflict intensity. It rose to 41.51 in 2020, likely influenced by the post-conflict stabilization of the federal system in the country. Despite this rise, the volatility suggests ongoing political instability. The next dimension, government effectiveness, has a gradual decline over 20 years. It was 38.97 in 2000, whereas it was 15.87 in 2020. The lowest point (12.98) was in 2015. It may be due to political instability and transition, bureaucratic inefficiencies, and earthquake disruption in the country, causing weak public service delivery. The regularity quality in Nepal was at 31.28 in 2000, which reached a peak point in 2003 of 40.31 points, then it declined steadily to around 24.52 by 2019/020. This reflects challenges in policy formulation and implementation, particularly related to the business environment and market regulation in the country. The point of practicing the rule of law in Nepal was 42.57 in 2000, which declined the next year and continued to follow the same trend of 18.01 in 2010. The indicator shows recovery in the later years, reaching 34.13 in 2020. This trend indicates improved perception of law enforcement and the legal framework in Nepal. Regarding corruption control in Nepal, it shows a mixed trend, with a peak of 30.96 in 2000 and 43.94 in 2002. It rose slightly to 29.81 by 2020, reflecting modest improvements in the anti-corruption measures in Nepal.
Table 3: Good governance practices in Nepal and Norway
Source: (World Bank, 2020)
Nepal’s overall governance performance has shown concerning trends. In 2020, it ranked 113th out of 180 countries in Transparency International’s Corruption Perceptions Index, dropping 11 places from 2018. Amnesty International reported restrictions on freedom of expression and privacy, arbitrary detentions during the COVID-19 pandemic, and a lack of justice for past human rights violations. Issues such as forced evictions, gender-based violence, and inadequate protection for migrant workers also persist. However, these assessments reflect national-level data and fail to capture variations across Nepal’s 761 provincial and local governments. Evaluating governance at all levels is crucial to identify successful practices and support improvements in weaker areas.
Challenges of good governance in Nepal
The situation of good governance in Nepal is further worsened by low levels of civic literacy and limited public engagement. Civil society is neither impartial nor well-organized. According to Dahal (2017), numerous obstacles hinder the effective implementation of good governance. He notes that the armed conflict of the 1990s resulted in political instability, bureaucratic inefficiencies, and increased corruption, which in turn weakened civil society, led to an unregulated private sector, and contributed to rising unemployment. Persistent issues such as lack of professionalism, excessive bureaucracy (red-tapism), nepotism, and favoritism in both politics and administration, along with a weak state mechanism and an opportunistic private sector, are major barriers to governance reform. In rural areas, these challenges are further intensified by low literacy, limited awareness, insufficient financial resources, and poor access to modern tools, technology, and knowledge. Low civic engagement and literacy further compound the problems. Furthermore, civil society lacks organization, strength, and impartiality.
The analysis of governance indicators in Nepal from 2000 to 2020 reveals a fluctuating trajectory over the past 20 years in Nepal. These indicators offer insights into Nepal’s governance landscape, democratic transition, and federal restructuring.
The voice and accountability score shows an overall improvement, rising from 42.79 in 2000 to 42.03 in 2020, despite a low of 14.42 in 2005 during the civil war. The scores above 30 since 2010 suggest notable progress in civic freedoms and democratic participation, likely influenced by the political change and the promulgation of the Constitution. However, the relatively modest score in 2020 indicates that while progress has been made, challenges in media freedom, public engagement, and institutional inclusiveness remain. Political instability shows remarkable improvement, from 1.94 in 2005 at the height of conflict to 41.51 in 2020.
In contrast, government effectiveness demonstrates a worrying decline over the period. From a score of 38.97 in 2000, it fell to 15.87 in 2020, with the lowest point in 2015, possibly linked to the political transition and the devastating earthquake of that year. This decline reflects persistent issues in public administration, service delivery, and bureaucratic efficiency, highlighting a gap between policy formulation and actual implementation. The regulatory quality indicator, which peaked in 2003 at 40.31, has steadily declined to 24.52 by 2020. This trend suggests increasing difficulties in regulatory enforcement and in creating a business-friendly environment. Weak governance capacity may have contributed to this decline.
The rule of law indicator also declined from 42.57 in 2000 to a low in 2010, with a partial recovery to 34.13 in 2020. The improvement in recent years indicates growing public confidence in the legal system, possibly supported by judicial reforms and increased public demand for accountability. Finally, control of corruption shows a mixed trend. It was at its peak at 43.94 in 2002, and declined and then slightly improved to 29.81 in 2020. This suggests that while anti-corruption frameworks exist, their implementation has been inconsistent. Political interference, weak oversight mechanisms, and a lack of enforcement contribute to the cases of corruption in both the public and private sectors. These findings emphasize the need for institutional strengthening, political accountability, and sustained reforms across all levels of government to realize the full potential in Nepal.
The analysis of governance indicators from 2000 to 2020 highlights the complex and evolving nature of governance in Nepal, shaped by its democratic transition, post-conflict recovery, and move toward federalism. While notable progress is realized in areas such as voice and accountability and political stability, the overall governance performance remains uneven across other key dimensions. Improvements in civic freedoms and public participation reflect the positive impacts of political reforms and constitutional changes. However, the persistent challenges in government effectiveness, regulatory quality, and the rule of law indicate significant gaps in administrative capacity, policy implementation, and equitable justice delivery. Similarly, the control of corruption continues to face structural limitations. These findings underscore the urgent need for sustained reforms aimed at institutional capacity building, enhancing transparency, ensuring accountability, and promoting inclusive governance. Strengthening local and provincial governance under Nepal’s federal structure will be critical to translating democratic ideals into effective public service delivery. Coordinate and committed approach to governance reform is essential at the local government levels to achieve long-term stability and development in Nepal.
The findings of this research have important implications for governance reform and policy-making in Nepal. The fluctuating trends across key governance indicators from 2000 to 2020 highlight the need for a more strategic, inclusive, and sustained approach to strengthening Nepal’s governance system. The gradual improvements in some dimensions suggest that democratic reforms and civic participation mechanisms are beginning to yield positive results. However, to sustain and expand these gains, the government must invest in further empowering citizens, protecting media freedom, and enhancing institutional inclusiveness at the local government levels. Persistent decline in some dimensions calls for urgent reforms in public administration and policy implementation. This includes improving bureaucratic professionalism, minimizing political interference, and modernizing public service delivery systems to ensure timely and efficient responses to citizens’ needs. The mixed trends in some dimensions like rule of law and control of corruption indicate that legal and institutional reforms alone are insufficient without strong enforcement, independent oversight, and public trust. Strengthening judicial institutions, ensuring equal access to justice, and enhancing anti-corruption mechanisms are essential to foster a culture of accountability and fairness.
Additionally, the implications are particularly relevant for rural and marginalized regions, where poor literacy, limited access to technology, and weak governance structures further hinder progress. Tailored interventions and capacity-building efforts in these areas will be crucial to achieving balanced development and inclusive governance under the federal system.
Finally, this research underscores the need for disaggregated and localized governance data to better understand performance variations across Nepal’s local governments. Such data would help identify best practices, support evidence-based policymaking, and promote peer learning among local and provincial units. In conclusion, the study highlights that while progress has been made, realizing the full potential of federal governance in Nepal requires deep institutional reform, strong political will, and meaningful citizen engagement across all levels of government.
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