As Nepal approaches its ambitious targets of graduating from Least Developed Country (LDC) status by 2026 and meeting the Sustainable Development Goals (SDGs) by 2030, the nation finds itself at a critical juncture. The government’s aim to formulate an integrity policy or code of conduct for promoting good governance in all sectors, including international and national non-government organizations, has sparked intense debate about the role of civil society organizations (CSOs) and international non-governmental organizations (INGOs) in Nepal’s development landscape.

Current Landscape and Global Context

In addition to government projects in Nepal’s development sector, more than 50,000 Nepali non-governmental organizations and more than 175 international non-governmental organizations are active, in addition to many international development firms operated by various foreign embassies and international financial institutions. The government is yet to build an effective and transparent mechanism to account for all types of foreign aid coming into Nepal. From 2021/22 to 2023/24, project approvals and contracts worth about US$ 1.4 billion have been made through the Social Welfare Council (SWC). These institutions have played an important role in the progress of the country, especially in areas such as education, healthcare, and community development. However, recent developments signal a shift towards greater control and scrutiny of these entities, reflecting a broader trend seen in both developing and developed countries.

Comparative Analysis

Several countries have implemented policies regulating NGOs and INGOs, offering valuable lessons for Nepal:

  1. United States: The U.S. has a robust regulatory framework for NGOs, including strict financial reporting requirements and transparency standards. However, it also provides tax incentives for charitable donations, encouraging a thriving non-profit sector.
  2. Germany: The country has a well-established system of NGO regulation that balances oversight with support. NGOs enjoy tax benefits and government funding while maintaining their independence.
  3. China: The 2017 Overseas NGO Law significantly tightened control over international NGOs operating in the country. This approach has given the Chinese government greater control but has also raised concerns about the shrinking space for civil society.
  4. India: The country has taken a more decentralized approach, relying on sector-specific guidelines and voluntary compliance. However, the Foreign Contribution Regulation Act (FCRA) has been used to restrict foreign funding for NGOs, resulting in the cancellation of over 19,000 NGO licenses since 2014.
  5. United Kingdom: The UK’s Charity Commission provides oversight and regulation of NGOs while also offering guidance and support to help organizations comply with legal requirements.
  6. Canada: The country has implemented strict reporting requirements for charities and non-profits, particularly those receiving foreign funding, to ensure transparency and accountability. The country takes a balanced approach that aims to ensure accountability and transparency while also fostering a thriving non-profit sector.
  7. Australia: The Australian Charities and Not-for-profits Commission (ACNC) regulates the sector while also providing resources and support to help organizations thrive.

Potential Implications for Nepal

The implementation of a strict integrity policy in Nepal could have far-reaching consequences across financial, social, and political spheres.

  1. Financial Impact: Increased restrictions on foreign funding could significantly reduce the resources available to NGOs and INGOs. This is particularly concerning given that Nepal, like many developing countries, faces a substantial financing gap in achieving its development goals. Not just the SDGs but even to meet the internal objectives of growth and development, Nepal is yet to get ready for displacing foreign assistance.
  • Social Consequences: There are concerns about the potential weakening of civil society organizations and their ability to operate independently. Restrictions on advocacy work and limitations on NGOs working on sensitive issues could impact the sector’s ability to address critical social challenges.
  • Political Implications: The shift towards a more security-focused approach to NGO regulation signals a change in the government’s stance towards civil society. The use of vague terms like “national interest” to justify restrictions on NGO activities has raised concerns about potential limitations on freedom of expression and democratic participation.

Balancing Act: Integrity and Development

As Nepal strives to meet its development objectives, it must carefully balance the need for oversight with the valuable contributions of NGOs and INGOs. The country faces a significant financing gap in meeting these goals, with the government aiming to have 80% of domestic expenditures financed by revenue by 2030. This ambitious target underscores the continued importance of international support and partnerships.

The Way Forward

As Nepal navigates this complex landscape, several key considerations emerge:

  1. Stakeholder Engagement: The government should engage in comprehensive consultations with NGOs, INGOs, and other stakeholders to ensure that any new policies are practical and effective.
  2. Balanced Approach: While increased oversight may be necessary, it’s crucial to maintain an enabling environment for civil society. Nepal could learn from the balanced approaches of countries like Germany and the UK.
  3. Capacity Building: Significant investment in institutional capacity will be needed to effectively implement and enforce new regulations without causing undue disruption to the sector.
  4. Alignment with International Standards: Any new policies should align with Nepal’s commitments under international treaties and human rights standards. Nepal is a state party to several international treaties and forums and so the policy formulation aligning to them will increase the acceptance and credibility.
  5. Focus on Transparency: Emphasizing financial transparency and accountability rather than ideological control could help address legitimate concerns while maintaining the valuable contributions of NGOs and INGOs.
  6. Contingency Planning: The government should develop comprehensive plans to address potential gaps in service provision or development work if NGOs and INGOs are forced to scale back operations.

Conclusion

Nepal stands at a critical juncture in its development journey. The proposal of an integrity policy represents an important step towards asserting greater control over the country’s development processes. However, it also poses significant risks to the vibrant civil society sector that has played a crucial role in Nepal’s progress. As the nation moves forward, it must strike a delicate balance between ensuring accountability and maintaining the valuable contributions of NGOs and INGOs. By learning from the experiences of other countries, including democratic nations, engaging in meaningful dialogue with stakeholders, and focusing on transparency and capacity building, Nepal can forge a path that upholds integrity while harnessing the full potential of its development partners.

The decisions made in the coming months and years will have profound implications for Nepal’s ability to achieve its ambitious development goals. With thoughtful policy-making and inclusive implementation, Nepal has the opportunity to create a model for responsible and effective NGO regulation that supports sustainable, locally-driven development while maintaining the essential role of civil society in a thriving democracy.

(A translated version of this article in the Nepali language is published on Oct 21, 2024 at https://www.onlinekhabar.com/2024/10/1556185/dont-be-control-oriented-ethics-policy-aimed-at-organizations)