Capacity Development of New Municipalities (CD-Mun)

Project description

Title: CD-Mun – Capacity Development of New Municipalities
Commissioned by: German Federal Ministry for Economic Cooperation and Development (BMZ)
Country: Nepal
Lead executing agency: Ministry of Federal Affairs and Local Development (MoFALD)
Overall term: 2015 to 2019


With a score of 0.54, Nepal ranks 145th out of 187 countries worldwide in the Human Development Index (HDI). Women, marginalised social castes such as the Dalits and other ethnic groups all have a low social status.

Committed to implementing the 2030 Agenda and achieving the SDGs, Nepal issued a national report in 2015 detailing the measures required. It subsequently started allocating budget resources in 2016.

Adopted in 2015, the new constitution plans to introduce federalism and decentralised governance. In addition to existing central/federal and local levels, the provinces will each get their own government and administrative structures. As a result, many public services will be transferred from the national to the sub-national level. In keeping with the 2015 constitution, local governments will deliver a wide range of services and perform local development tasks previously conducted by the central government.

On 10 March 2017, the Government of Nepal started restructuring its local levels of administration, immediately cutting the number of local governments from 3,374 to 744 by means of mergers and consolidation. Following the local elections on May 2017, elected local representatives are set to re-introduce democratic local governance for the first time in nearly two decades. The constitution also provides for elections to be held at the federal province and federal/central level by the end of 2018.

The local level plays an important role in disaster preparedness and in resilience-oriented urban development and reconstruction. This is important given that Nepal is one of the most earthquake-prone countries in the world.

The key institutions in the local governance sector are the Ministry of Federal Affairs and Local Development (MoFALD) and the Ministry of Urban Development (MoUD). Spearheaded by MoFALD and funded by multiple international development partners, the Local Governance and Community Development Programme (LGCDP-II) is a major source of support. Furthermore, a Sub-national Governance Programme (SNGP) is in the pipeline, too. From 2019 onwards, its remit is to assist the Government of Nepal to implement the governance reforms set out in the new constitution.

In February 2015, the MoUD adopted a National Urban Development Strategy (NUDS) to help stem the country’s largely uncontrolled urban growth – by 2031, Nepal’s urban population is expected to increase from its present 4.9 million to a total of 17 million.

Local government capacity is of central importance for service delivery and development. Nepal’s local governments are poorly staffed and have a very low level of technical know-how as well as a poor administrative capacity. Territorial reform and restructuring will therefore pose an additional burden on the newly established local governments. The lack of proper coordination among central level institutions such as MoFALD and MoUD is another significant obstacle to effective and efficient local governance.


Municipalities are better able to implement local government reforms targeting service delivery and access.


Under the leadership of the Ministry of Federal Affairs and Local Development (MoFALD), the project operates at national level and in selected municipalities directly.

It focuses on three fields of activity:

  1. National level coordination of capacity development measures: The objective is to improve coordination among key national actors (e.g. MoFALD, MoUD/DUDBC, MuAN, TDF, UDTC, etc.) and to enhance the strategy used to implement municipal reforms.
  2. Citizen-friendly and service-oriented administrative structures: The aim is to give disadvantaged groups better access to services throughout the country via peer learning and networks.
  3. Capacity development for municipal services: Concepts/models are available for improving selected municipal services in priority areas of German Development Cooperation (i.e. health, renewable energy and inclusive economic development).


  • Service delivery in partner municipalities has improved, giving people better access to municipal services
  • Municipalities have used Integrated Property Tax (IPT) to enhance their revenue
  • Disadvantaged groups, such as ethnic minorities, Dalits and women, are now more involved in municipal decision-making
  • The Municipal Governance Coordination Committee has strengthened coordination among national level stakeholders