Nepal, a country known for its cultural diversity and rich heritage, underwent a major political transformation in 2015 with the adoption of a new constitution. The constitution established a federal structure, dividing the country into seven provinces based on ethnic and regional lines. The goal was to address historical grievances and empower marginalized communities through ethnicity-based federalism. The intent behind this move was noble, but it is important to critically examine the potential long-term impacts of ethnicity-based federalism on Nepal’s economic growth. The ongoing issues in various parts of the country underscore the complex challenges this approach presents.
Around the world, ethnicity is a major cause of instability and conflict within states. Intra-state conflicts, such as those between different ethnic groups or between ethnic minorities and the state, are more common today than inter-state conflicts. It is therefore essential to find ways to ensure democratic participation for all ethnic groups within a state, while also managing ethnic tensions to prevent violence, instability, or state disintegration. The adoption of ethnicity-based federalism in Nepal is a bold experiment. It remains to be seen whether it will be successful in achieving its goals of promoting peace, stability, and economic development. However, it is important to be aware of the potential challenges and risks involved in this approach.
Experiences from Ethiopia
Ethiopia adopted a federal system of government in 1991, after the fall of the Derg regime. The new system was designed to address the country’s complex ethnic diversity and reduce conflict. However, ethnic competition and conflict remain a major challenges in Ethiopia. The 2023 Global Peace Index ranked Ethiopia 151st out of 163 countries in terms of peacefulness. Various reports suggest that Ethiopia’s federal structure has been a source of many communal and identity conflicts. These conflicts are often related to issues such as self-determination, resource sharing, political power, representation, identity, citizenship, and ethnic and regional boundaries. One of the main problems with Ethiopia’s federal system is the way in which boundaries were drawn. The boundaries were often drawn along ethnic lines, which has led to the intertwining of ethnicity, territory, and intra-federal boundaries. This has created a situation where different ethnic groups are often in competition for control of the same resources and territory.
The conflict resulted in the deaths of thousands of people and the displacement of thousands more. The experience of Ethiopia shows that ethnic federalism is not always a successful way to manage ethnic diversity and conflict. In some cases, it can actually lead to more conflict.
The Promise and Perils of Ethnicity-Based Federalism in Nepal
Ethnicity-based federalism in Nepal was born out of the desire to promote inclusivity and social justice by devolving power to historically marginalized communities. This form of federalism aimed to empower local populations, preserve cultural identities, and ensure fair representation in governance and resource allocation. However, the practical implementation of ethnicity-based federalism has proven to be a double-edged sword, with both promising outcomes and troubling challenges.
Proponents argue that this federal structure has given previously marginalized communities a voice in decision-making processes and a chance to uplift themselves socioeconomically. They believe that addressing historical disparities will lead to a more just society, fostering social cohesion and stability. Additionally, proponents point to international examples like Switzerland and Canada, where federalism has worked well to manage diversity and promote economic growth.
On the other hand, critics express concerns over the potential negative consequences of ethnicity-based federalism. They argue that this system might deepen ethnic divisions rather than foster unity, as it categorizes citizens primarily by ethnicity, potentially sidelining common national identities. Moreover, there are concerns about administrative inefficiencies, with provincial governments struggling to manage their newfound responsibilities and resources effectively.
Economic Implications and Ongoing Issues
One of the most important aspects to consider is how ethnicity-based federalism affects Nepal’s economic growth. While the long-term effects are still unfolding, there are already some ongoing issues that provide insights into the potential challenges and opportunities.
Ethnicity-based federalism in Nepal was intended to ensure fair resource distribution among provinces and diminish regional inequalities. However, there are still disparities across the nation. Provinces with greater access to resources, such as Province 3 and Province 5, have experienced more rapid development than less-endowed regions like Karnali and Sudurpashchim. This uneven development could perpetuate inequalities and hinder Nepal’s overall economic progress.
The transition to a federal structure has also introduced challenges to the investment and business climate. The additional layers of governance have led to bureaucratic obstacles and slower decision-making. This could deter businesses from expanding their operations beyond provincial boundaries, which would hinder economic integration.
Infrastructure development is also uneven across provinces. Some provinces have made progress in this area, while others lag behind due to geographical remoteness and limited resources. This could stifle the potential for balanced economic growth across the country.
Nepal’s tourism sector also varies in effectiveness across provinces. Those with well-developed infrastructure and proximity to popular tourist sites reap greater economic benefits, while others struggle to tap into this potential revenue stream. This highlights the need for comprehensive and inclusive tourism strategies.
The agricultural sector is another important part of Nepal’s economy. The division of provinces along ethnic lines has led to different agro-ecological conditions in each province. This could lead to comparative advantages in specific crops, but only if there is effective inter-provincial cooperation.
Another challenge is youth outmigration. Many young people from rural and underdeveloped areas leave their homes in search of better opportunities elsewhere. This could erode Nepal’s demographic dividend, which is the advantage of having a large population of young people.
Navigating the path forward
To ensure that ethnicity-based federalism in Nepal has a positive impact on economic growth in the long run, a nuanced and pragmatic approach is required. Here are some considerations for policymakers:
Facilitating Inter-Provincial Synergy: Recognizing the diverse challenges unique to each province, fostering a spirit of cooperation and collaboration stands paramount. This entails establishing platforms for sharing best practices, orchestrating seamless coordination for vital infrastructure undertakings, and collectively addressing cross-border concerns, including the intricate realm of water resource management. Such cross-provincial collaboration can catalyze a harmonious and interconnected Nepal, where each province’s strengths fortify the nation’s collective stride towards prosperity.
Upholding Equitable Resource Allocation: The foundation of inclusive progress rests upon resource allocation rooted in necessity rather than ethnicity. Prioritizing infrastructure and human capital development in historically marginalized regions emerges as a pivotal strategy. This deliberate investment in underdeveloped provinces not only has the power to rectify disparities but also holds the potential to sculpt a level playing field that supports comprehensive economic advancement across Nepal.
Customizing Economic Policies for Inclusivity: The fabric of Nepal’s provinces is woven with distinct threads, necessitating economic policies that resonate with individual regional needs. Tailoring these policies to capitalize on local strengths and opportunities is paramount, whether through targeted investment incentives, tailored business support mechanisms, or finely tuned agricultural strategies. This targeted economic approach has the potential to forge a collective economic momentum that elevates the entire nation.
Nurturing Human Capital through Investment: The bedrock of sustained economic growth is the nurturing of human capital. Fostering a skilled and knowledgeable workforce through strategic investments in education and skills training across all provinces is instrumental in bridging regional divides. Empowering the local workforce not only diminishes disparities but also kindles the flames of diversification, creating a robust economic landscape that resonates with Nepal’s potential.
Fostering a Unifying National Identity: Navigating the intricate nexus between addressing historical inequities and fostering a national identity that transcends ethnic boundaries demands a delicate equilibrium. While redressing historical grievances remains pivotal, nurturing a shared national identity that harmonizes diverse ethnicities can precipitate social cohesion. This unity, in turn, becomes a potent force propelling Nepal’s provinces toward a collective economic destiny.
The adoption of ethnicity-based federalism in Nepal was a bold move to address historical injustices and ensure equitable representation. However, its implementation has revealed a complex web of challenges and opportunities that require careful navigation. One of the main challenges is striking a harmonious balance between addressing ethnic disparities and bolstering economic growth. This requires visionary leadership, inter-provincial collaboration, and inclusive policymaking. Another challenge is the potential for ethnic tensions to flare up. This is especially true in areas where there is a history of conflict between different ethnic groups. It is important to manage these tensions carefully in order to prevent violence and instability.
Despite the challenges, there are also opportunities associated with ethnicity-based federalism. For example, it can help promote local development and empower marginalized communities. It can also help foster a sense of ownership and belonging among different ethnic groups. The ultimate goal is to create a Nepal where ethnicity-based federalism works in tandem with the country’s pursuit of sustained and inclusive economic advancement. This can only be achieved through thoughtful adaptation and careful management of the challenges and opportunities that lie ahead.
