Agencification in Nepal

 Agency is an organization that is structurally disaggregated from the government or from units within the core ministries and operates under more business-like conditions than the government bureaucracy.

Basically, agencies have some capacity for autonomous decision making with regards to management or policies. Compared to the bureaucratic system, agencies face less hierarchical and political influence on their daily operation. Thus, semiautonomous agencies operate at an arm’s length of the government, but still they are formally under the control of ministers & ministries in terms of control as stakeholder and market regulator. These bodies are mandated to carry out public tasks including regulation, service delivery & policy implementation. More flexible, responsive, customer friendly public services are vital to maintain or recreating popular support for public friendly services. Agencies have been one method for creating such flexibility and responsiveness.

Agencification in a service delivery is the idea of creating autonomous, or semi-autonomous, agencies within the public sector, in order to improve, in the way of doing works of government. It this process, new agencies are created, or existing agencies are given more autonomous. It is also the process of creating semi-autonomous public organization which we call executive agencies. In many cases this is done by splitting up ministries or major departments into corporate unit with specialized task & resources. Different instruments such as legislation, executive order, decree or constitutional requirements are some of the means by which agencies are created.

OECD states the aim of Agencification as:

a.      Increased efficiency

b.     Responsibility and accountability

c.      Encouraged and professional administration

d.     More service-oriented administration placed close to the citizens.

Sweden is a glaring example of Agencification. The notion of Agencification has been seen in many Jurisdiction as a key tool for “unbundling” the bureaucracy and creating more flexible, performance oriented public organizations. This is necessary for wide range of political, policy & administrative reasons. In administrative or managerial terms, Agencification has been seen as a key tool for delivering efficient services. Clogged-up bureaucracies, bogged down in red tape and undisciplined by market forces can be revitalized & re-energized by being reorganized into focused, performance oriented and more easily manageable units.

Agencification started after 1990 during the decade of New public Management and has been continuously used. The complexity of public service is one of the major reasons for the concept of Agencification. The main values & norms for Agencification is that policies are formulated by efficient core executive and implementation should be done by effective & professional management which are autonomous on executive part. Even though, agencies are accountable & responsible towards government (executive bodies). The implementation of public policy becomes effective when political interference is limited in execution part. The three elements on implementation of agency theory are:

a.      Structural separation and/or creation of task specific organizations.

b.     Managerial autonomy in making decisions concerning personnel and financial management through target setting, monitoring and reporting.

c.      Managerial accountability over personnel, finance and other management matters.

Service suitable for Agencification

Generally, it is said that, major services of state like (security, defense, foreign relation, law making, Judgement & fiscal policy) should not be done Agencification. Some of the suitable sectors for Agencification are regulatory bodies, general service delivery and training & research center.

a.      Regulatory Bodies (Civil Aviation, Food technology & quality control, Central Bank, Quality & weight control, medical standard etc).

b.     General Service Provider: Airport, Statistics department, Survey department, company registration & licensing, banks, insurance etc.

c.      Training & Research center: Civil personnel training institute, Accounting and account training institute, building and urban development research institute, tourism and hotel development institute.

History of Agencification in Nepal

It started in Nepal with the very beginning of the concept of Agencification in world. Specially, after the establishment of democracy in 1951 AD, first elected government with majority formed a high-level administrative reform committee. The committee reported that service delivery of government agencies are very poor to meet the expectation of general people, services are not reachable to targeted population, quality of service providers and services are not satisfactory and the resources (human, financial and others) are not utilized effectively and efficiently.

In order to address the problems & hurdles identified by the committee, government introduced a policy of promoting private sector, utilization of private and non-governmental organizations, liberalization, deregulation and formation of specialized and autonomous public agencies. Many autonomous bodies outside the administrative structure of government (enterprises, authority, institutes, boards, committee, fund) were established under the fundamental policy of government but providing internal operation and management autonomy. Under the administrative structure, some of the instruments like management contract, performance contract has been practiced these days.

Some models in Nepal are:

a.      Autonomous Institutions (TU, NEA, NRB, CAN)

b.     Public company (Insurance company, Nepal telecom, Agriculture dev bank, Krishi samagri company)

c.      Development committees (Hospital development committee, Pathivara dev committee, municipality development committee, irrigation development committee etc)

d.     Boards (Investment board, cooperatives board, KUKL)

e.      Funds (Municipal development fund, poverty alleviation fund, Pashupati development fund)

Some other models practiced are

1.     Public Private Partnership

2.     Management contract, performance contract

Although, autonomous and semi-autonomous agencies are established by government, the service delivery of the agencies are not found satisfactory in Nepal. The agencies are supposed to be free from political intervention in daily operation and management. But there is unwanted interference and the management of agencies are not accountable and responsible. Corruption is increasing in those agencies significantly. The appointment of chief executive officers and members of the board are always controversial due to different political interest. The qualification and competency of appointment is always suspected due to nepotism and favoritism. Due to these reasons, most of the public agencies are in loss and often criticized by the people. Thus, establishment of agencies and Agencification is not a panacea for the service delivery. The principle and concepts of Agencification should be implemented holistically. Nowadays, management contract and performance contract has been practiced in most of the public organizations. Whatever, is the type of organization, the most important thing is that, the execution authority should be given autonomy in operation and management so that expected outcome and targets can be achieved easily.