Along with the constitutional guarantee, a number of statutes provide for the formation of civil society organizations (CSOs) in Nepal. The Social Welfare Act 1992, the Ninth Plan document 1997-2002 and the Local Self-Governance Act 1998 have underlined a legislative framework for the operation of people's institutions, non-governmental organizations (NGOs) and civil society in local self-government and in the development process. Among them, Section 4 of the Assembly or Union Act, 1949 is particularly important as it specifically mentions that CSOs may "organize peacefully and operate for criticizing and exerting pressure for a policy change, and amending and repealing laws." This was the first ever statutory provision which dealt with the formation of CSOs in Nepal. However, this provision of the Act materialized after the peoples' movement in 1990 (first peoples' movement) as a number of NGOs came into being, especially after the promulgation of the Constitution of the Kingdom of Nepal 1990. The number of registered NGOs in Nepal skyrocketed during that period, growing in number from 220 in 1990 to somewhere between 10,000 and 15,000 by the commencement of the year 2000.

References: Peace Accord and Constitution

*Comprehensive Peace Agreement 2006

*Interim Constitution of Nepal 2007

*The Constitution of the Kingdom of Nepal 1990

Statutory Guarantees

*Assembly or Union Act 1949

*Citizens' Rights Act 1955

*National Directives Act 1961

*Institution Registration Act 1977

*The Cooperatives Act 1992

*Company Act 2006

*The Trade Union Act 1992.

The Law Commission of Nepal has listed a total of 168 Statutes/Acts (51 of them in translated English version and 117 in Nepali language) on its website. Most of the Statutes/Acts, therefore, can be found in [ LINK ], either in English or in Nepali version.

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[ LINK ], last visited on 10 September 2009.

[ LINK ], last visited on 10 September 2009.

The Social Welfare Act provides for the institutionalization, channeling, and control of the flow of both domestic and foreign assistance (grants and loans) to the non-governmental organizations (NGOs). Only with the approval of the SWC, should the NGOs be legally entitled to obtain any money, commodity, or technical expertise and any other form of assistance from the Government of Nepal (GoN), a foreign government, or international social organization/body/person. For this purpose, NGOs need to apply to SWC with the project proposal and funding details. The foreign organizations providing assistance are required to release funds to the local NGOs through the commercial banks of Nepal. Nepal based International Non-governmental Organizations (INGOs) are also required to operate their funds only by opening central accounts in any one of such commercial banks. They are required to conclude their agreements with the SWC before commencing work in the country.

Despite such explicit regulatory provision, many NGOs in Nepal, however, lack transparency, and they often flout legal provisions, as the SWC lacks a monitoring and follow-up mechanism, and some "powerful" NGOs can easily influence SWC decisions. Besides, there seems to have been no transparency of the total fund flow for various reasons, including non-submission of the audit reports by most of the NGOs.

References: *Social Welfare Act 1992 [Section 16, 12 (1), (2) and (3)]

*Donation Act 1973 (Section 3)

*Social Welfare Rules 1992 (Rule 20 and 12)

See also: Financial Accountability in Nepal: A Country Assessment, The World Bank, 2003, p. 122.

[ LINK ]

[ LINK ], last visited on 10 September 2009.

Peer Review Comments: In Nepal, the problem is not the lack of laws, but their ineffective implementation. So, the same thing applies here: There are laws, but they are often violated and action is rarely taken against those who bypass the law.

The accounts of the NGOs are subject to audit by the auditors registered at the Office of the Auditor General (OAG). The auditors are appointed according to the NGO statutes. The audit report with the physical verification statement is required to be submitted by the SWC related NGOs to the SWC within four months from the expiry of the fiscal year. The Auditor General audits the SWC. NGOs are required to submit their audit reports as: (a) NGOs registered under the Institution Registration Act 1977 to the AGM and the concerned District Administration Office (DAO); (b) SWC-affiliated NGOs to the SWC as well as the concerned DAO.

The DAO monitors the financial matters and has the authority to inspect nongovernmental organizations' (NGOs) funding. In addition, NGOs must submit a financial disclosure each year in order to renew their ability to function in the country. The designated local authority, the Chief District Officer (CDO), is entitled to authorize any officer at any time to inspect the amounts of the NGOs which are required to be compulsorily handed over on demand. In case of any misappropriation or loss of assets and abuse of authority that are found during the investigation, legal actions or court proceedings may be initiated under Institution Registration Act 1977 against the alleged NGO authorities.

The legal provision related to financial reporting and auditing requirements of the NGOs, including International Non-governmental Organizations (INGOs), is thus pretty much comprehensive in Nepal. However a majority of the NGOs, including INGOs, do not strictly observe the legal provisions. NGOs may flout the provisions of law by submitting fake documents, as no strict mechanism of effective scrutiny exists. There appears to be massive non-compliance with the law regarding auditing, particularly among local NGOs affiliated with the SWC, this is largely due to the fact that many NGOs are dormant. There seems to be lack of transparency in the total fund flow from various international NGOs, partly due to some INGOs choosing not to conclude agreements with SWC, or partly due to weak capacity of the SWC to monitor INGO compliance with relevant financial and banking regulations.

References: *Institution Registration Act 1977 (Sections 4, 9 and 10)

*Social Welfare Rules 1992 (Rule 2 and 20)

See also: Financial Accountability in Nepal: A Country Assessment, The World Bank, 2003, pp. 121-122.

[ LINK ], last visited on 10 September 2009.

Peer Review Comments: In Nepal, in principle all are agreed on the opinion that anti-corruption/good governance CSOs should publicly disclose their sources of funding. But there lacks strong legal provisions and effective monitoring mechanisms from the government to bring CSOs under this system. And this is why CSO sources of funding are not transparent.

People from all the different backgrounds, therefore, can easily organize into CSOs in Nepal, be it laymen, persons with a political affiliation, professionals and even former bureaucrats. CSOs have been a lucrative business for those who used to have decision-making power and who can now easily establish connections with different donors by the virtue of their former position. An anti-corruption/good governance CSO, thus, can easily be formed and operated in the changed political context. The data available in the District Administration Office, Kathmandu shows that a number of organizations registered with it have, in one way or the other, the anti-corruption or good governance agenda as their objectives for forming their associations.

References: *Comprehensive Peace Agreement 2006

Visit Assessment; and based on the data available with District Administration Office, Kathamandu.

For instance, many civil society organizations (CSOs) continuously pressure the government to reform different sectors, particularly the human rights situation and governance. One such organization, Pro-Public, has moved a couple of public interest litigations (PILs) relating to election integrity. The Supreme Court of Nepal has issued directives to successive governments to enact laws that address the issue of respect to human rights, governance reform and political party financing, including asset disclosure by candidates contesting elections.

However, the evolving civil society has had some deficiencies, perceived and real, with which to it has to contend. In Nepal, the civil society is identified largely with the non-governmental organizations (NGO) sector, and thus handicapped by the perception or sometimes the mere characterization of NGOs as being driven by purely pecuniary motives. The activities of nearly all NGOs are externally funded and sometimes supported by external ideas as well. The irony is that despite the good work of many NGOs whose activities contributed to the demand for democratization, this factor has not helped the image of the CSOs. Many civil society agents and institutions are also party-affiliated, calling their independence into question.

References: [ LINK ]

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Dr. Rohit Kumar Nepali and Uddhab P. Pyakurel, A Study of Nepal's Constituent Assembly Election: The Influence of Civil Society and the Multilateral System, Montreal International Forum, available at www.fimcivilsociety.org/en/library/RNepali2009.pdf, last visited on 11 September 2009.

Devendra Raj Panday, Role of the Civil Society and International Cooperation in the Peace Process in Nepal, available at [ LINK ], last visited on 11 September 2009.

Peer Review Comments: They do not actively engage. They only partially engage.

Peer Review Comments: I think the CSOs lately have been unable to contribute to the peace process and the overall restructuring of the state. The lead author is correct in describing their roles in the People's Movement in the spring of 2006. But after the success of the movement, CSOs lost their relevance and often the leaders resort to ego tussling, which tarnishes their image. But as mentioned, there are a few anti-corruption CSOs, such as Pro-Public, that are doing a good job.

References: Media reports.

[ LINK ], last visited on September 11, 2009.

Peer Review Comments: The Communist Party of Nepal (Maoist), affiliated with the Young Communist League (YCL), is not a governmental wing, organization or any authentic agency that can shut down CSOs. And there are no instances of such incidents related directly to Nepals official governmental institutions.

References: Interview with Mr. Krishna Bhandari, Executive Director, Reform Forum Nepal

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References: Media reports.

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References: Media reports.

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References: *The Interim Constitution of Nepal 2007

*The National Directives Act 1949

*The Trade Union Act 1992

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However trade unions are a part to the political discourse in Nepal because, in practice, they are the sister organizations of major political parties. For example, GEFONT belongs to Communist Party of Nepal (CPN-UML) whereas DECONT and the All Nepal Trade Union Federation (revolutionary) are the sister organizations of the Nepali Congress and CPN-Maoists respectively. Their orientation toward trade union rights, therefore, is politically motivated.

References: Dev Raj Dahal, "The Current Trade Union Situation in Nepal", available at [ LINK ].

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Peer Review Comments: In practice, citizens have full rights to be involved in trade unions. Since these trade unions are affiliated with political parties, rivalry between these political parties can sometimes bring differences.

Peer Review Comments: I think the score should be 75 because there were no incidents in recent years where citizens were barred form organizing into trade unions, provided that all the legal requirements were met.

Peer Review Comments: In Nepal, there are no such organizations where we cannot see trade unions. Most of them are run by Maoist-affiliated trade unions. Except in diplomatic missions and in some NGOs/INGOs, almost all organizations have trade unions. But the fact is that most such organizations were forcefully established without consent from concerned management teams/groups and are Maoist. Therefore the given score is less; the score should be more.