Call for Quotations: Team Leader and Research Consultants

Call for Quotations

Team Leader and Research Consultants

A Study on

‘Intergovernmental Relations in the Context of Public Financial Management’

Terms of Reference

1. Brief overview of the Study

Nepal’s fiscal architecture is yet to be completely fleshed out. Although Nepal has made arrangements for subnational grants and fiscal transfers, there are still issues that persist (ADB July, 2022). The National Natural Resources and Fiscal Commission, among other things, identifies the need to address both horizontal and vertical fiscal gap and the need to gear Fiscal Equalization grant, Special grant, Complimentary grant, and Conditional grant towards the same goal (NNRFC 2021). Moreover, subnational governments have often raised the issue of the federal government’s emphasis on conditional grants. A common justification on part of the federal government is the lack of capacity at the sub-national level, to the extent that there is a reluctance to completely devolve power (Shrestha 2019). There however have been no significant studies to determine which level of government is efficacious in terms of budget expenditure and year-on-year performance. Similarly, the need for evaluating Nepal’s fiscal architecture is often called for; yet there have been no significant studies till date.

If the current narrative i.e., a lack of budget absorption capacity and lack of human resources at the subnational level were to be true, larger chunks of finances should flow to sub-national governments that have performed well. Currently, a nominal share of the fiscal equalization grant is being disbursed based on the performance of sub-national governments (NNRFC 2021). This works as an incentive mechanism in the sense that better performing local governments will receive more performance based fiscal equalization grants. The NNRFC has continuously sought to increase the amount of performance based fiscal equalization grants (ADB July, 2022). At this juncture, there is a need to assess whether performance based fiscal equalization grants incentivizes local governments to perform better and whether there are any linkages between performance and fiscal equalization grant.

As stated earlier, Nepal’s fiscal architecture is not completely fleshed out. Correcting the short comings of the current fiscal transfer mechanism requires ascertaining the flaws that exist. This study intends to look at a Nepal’s fiscal transfer mechanism, the inter-relationship between performance and grants and the efficacy of capital spending.

2. Specific Research Question, and Scope of Study

The study seeks to ascertain whether local governments that have performed well are being allocated higher amounts of grants. This allows one to understand whether the current fiscal transfer mechanism is based on principles that are commonly adhered to in federal systems. Additionally, it also seeks to ascertain the effectiveness of the current policies on Nepal’s fiscal transfer mechanism. In doing so, it attempts to answer two pertinent issues. The first relates to the mechanism of fiscal equalization grant. The second is a comparative assessment of the local government and federal government’s capital spending capacity.

  1. Does performance affect the amount of fiscal equalization grant that local governments receive?
  2. Does Performance based fiscal equalization grant incentivize local governments to perform better?
  3. Which level of government (Federal Government v Local Government) is efficient in terms of capital spending?

The focus of the study is entirely on local governments. Provincial governments have suffered from the slow process of federal transition. Any analysis of provincial government’s performance to that extent will merely be a reflection of the federal government’s reluctance to complete the process of transition. Additionally, provincial governments are relatively new entities, whereas local governments have existed in the previous unitary structure. Local governments to that end, are able to draw from previous experiences and are able to navigate more effectively within the new governance structure.

3. Methodology

The approach is to investigate whether there are causal linkages between local government performance and the amount of fiscal equalization grants received. The study will rely on National Natural Resources and Financial Commission’s ranking of local government performance. The team will collect data for all 753 local governments for the fiscal year 2019/20, 2020/21, 2021/22. It will specifically collect data on the actual amount recommended by the National Natural Resources and Fiscal Commission and the final amount received. Details on capital and recurrent classification of the proposed grants will also be collected. To establish causal linkages, the research will employ quasi experimental design. Although this is subject to the robustness of the data and the actual econometric specification may vary.

For the second research question, a case study approach will be used. The team will select a sample of three local governments form each province. The selection of local governments will be based on the relative performance i.e. one best performing, one worst performing and one average performing local government. In order to ascertain which level of government is efficient in terms of capital spending, a detailed analysis of budget speech, the red book and the revenue and expenditure estimates, and other related reports and documents will be conducted.

In addition to this, a theory-based policy analysis will also be conducted to analyze the policies related to Nepal’s fiscal Transfer mechanism. The team will use the Policy Triangle Analysis (Walt and Gilson 1994) and the Policy Network analysis (Coleman and Perl 1999) to investigate the processes, actors and their motivations with regards to Nepal’s Inter governmental fiscal transfer.

4. Outputs

  1. Two summarized briefs (one in English and another in Nepali) will be prepared from the policy note.
  2. Two articles covering the findings and policy recommendations made to the federal government to enhance the effectiveness and efficacy of grants, and ensure that transfer of funds follows a pattern that incentivizes the local governments to spend well.
  3. Two infographics are to be presented featuring the findings of the study
  4. One short (up to three-minute) summary/promotional video is prepared highlighting the issues covered, findings and recommendations of the policy brief prepared in such a way as to be palatable to general Nepalis, and shared via social media platforms.
  5. Figures/diagrams also can be presented in the text to highlight the key messages, which are important ingredients for policy uptake and could be eye-catching for decision makers.
  6. One public-private dialogue upon the completion of the research project to share the findings as well as take the issues to a public discourse among federal and sub-national government officials, political leaders, journalists, academicians, public intellectuals and other Civil Society Organisations.
  7. The research is expected to enable necessary reforms on the current modalities of distributing fiscal equalization grant to the sub-national governments. A targeted reform, to the extent that it is supported by the research as well, will be to increase the contribution of performance-based component on the fiscal equalization grant.
  8. 1-2 scientific policy case documentation will be done for its up-scaling and out-scaling of policy disseminations.

5. Call for quotations

In order to deliver this project, Samriddhi invites quotations from interested consultants for the following tasks and responsibilities. Interested individuals or consulting agencies are requested to send in detailed quotations including estimated costs, and detailed resumes to:

Either [email protected] (Samriddhi Foundation), [email protected] (Nabina Prajapati) via email, or, hand deliver the quotation to Samriddhi premises at 664, Bhimsengola Marga, Minbhawan Kharibot, Kathmandu, Nepal.

Kindly mark the positions that is being applied for on the cover of the envelope. The quotations should reach Samriddhi by 22 May, 2023. Contract award will be communicated by 29 May, 2023 to the selected candidates.

5.1 Team Leader (X1)

The Team Leader will:

  • Lead the overall operation of the team
  • Based on the scope of the research and methodology approved by Samriddhi,
    • Synthesize and analyse data,
    • Design empirical strategy and identify all data analysis tools to be used in the study,
    • Engage with relevant stakeholders including but not limited to NNRFC, NPC and MoF,
    • Initiate and participate in consultations with relevant stakeholders,
    • Provide regular updates to the Contracting agency,
    • Prepare draft report of the study.
  • Act as a liaison between the research team and Samriddhi Foundation
The Consultant should have the following qualifications:
  • Have a Master’s degree or higher in Social Science (prefereably Economics),
  • Have at least 5 years’ experience of working in Nepal-based organisation studying public policy,
  • Understand policy process in Nepal,
  • Prior experience of having led research projects and research teams

Preference will be given to candidates who have participated in policy reform process in the past

Duration: The consultant will work on this project for a total of 15 days

Remuneration: Negotiable. The Consultant is required to offer their quotation first.

5.2 Research Consultants (X2)

The Research Consultants will:

  • Collect data from all relevant sources,
  • Conduct desk review of all relevant policy and government documents,
  • Conduct literature review and synthesize literature in the manner prescribed by the lead researcher,
  • Identify all relevant stakeholders,
  • Engage with relevant stakeholders,
  • Assist the lead researcher in conducting Key Informant Interviews,
  • Synthesize qualitative data from KIIs in the manner prescribed by lead researcher,
  • Assist the lead researcher (team leader) in providing regular updates to the contracting agency and preparation of draft report of the study.

The Research Assistant should have the following qualifications:

  • Have a Bachelor’s degree or higher in Social Science (preferably economics),
  • Understand policy process in Nepal,

Preference will be given to candidates who have participated in policy reform process in the past

Duration: Two Research Assistants will work on the project for 12 days each.

Remuneration: Negotiable. The Consultant is required to offer their quotation first.