Fragile States Index 2020: Where does Nepal stand?

Background

Fragile States Index, formerly known as the Failed States Index, is an annual ranking of 178 countries based on various events surrounding the social, economic, and political pressures that each country faces. The fragility index measures the structural indicators of a nation which are grouped into four clusters, namely- cohesion, economic, political, and social and cross-cutting indicators. These clusters have different sub-indicators- for instance, indicators under economic development include economic decline, uneven development, human flight, and brain drain. The scores under each sub-indicators are distributed across a nine-point index wherein a score of one represents the best performing whereas the score of nine represents the worst performing in that cluster.

Figure 1 Indicators of measuring Fragile State Index

Source: Fragile State Index Report

The data from these indicators enable policymakers to evaluate the different characteristics of the state, overall fragility of the state, and identify the strengths and weaknesses as well.

By taking into account multiple relevant indicators of the various clusters, a multi-dimensional assessment is done. Such a methodology is adopted to understand the multi-causal nature of fragility and failure.

Fragility Assessment in the case of Nepal

The Fragile States Index 2020 report comprises data collected between 1 January 2019 to 31 December 2019. According to the report, Nepal ranks 49^th out of 178 countries in the Fragile States Index in 2020 and has achieved a score of 82.6 in comparison to 84.7 in 2019.

From the figures below, it is seen that while still fragile and considered ‘High Warning’, the overall fragility index score has been improving in the case of Nepal. Although it had witnessed setbacks during 2015 and 2016 post-earthquake, Nepal has been able to continually improve. It can also be seen that Nepal has performed the best in 2020 while it was the worst in 2009, with a score of 95.4.

Figure 2 Overall trend of FSI scores of Nepal

Source: Fragile States Index 2020

Figure 3 Overall indicators of FSI 2020 for Nepal

Source: Fragile States Index 2020

Likewise, from the table on the scores for each indicator, it is evident that Nepal has the weakest scores in Group Grievances (GG) followed by Factionalized Elites (FE) and Demography Pressures (DP).

Under GG, this indicator focuses on divisions between different groups in the society, particularly based on social or political characteristics. Considering this, the score under GG might have been significantly worst due to the political turmoil that the nation has been undergoinng, threat to self-determination or political independence, domination by few groups, corruption, and so on.

Similarly, under FE, this indicator measures power struggles, the fragmentation of state institutions along ethnic, class, clan, racial or religious lines, political competition, political transitions, and lack of credibility of electoral processes.

Elaborating for these indicators, Nepal has come a long way since the Civil War from 1996 till 2006, abolishment of constitutional monarchy in 2007, a series of consecutive governments characterized by instability and struggles for political control, the uprising of the Madhesi minority, a new constitution in 2015, presidential election in 2018, a devastating earthquake in 2015 followed by a blockade, tensions with the Indian government after releasing a map claiming Kalapani region as Nepali territory in 2019 and many others.

While the adoption of federalism in the Constitution of Nepal stands as an indicator of some degree of improved governance and governance stability to some extent, there are deep-rooted structural inequalities that stand as barriers to the implementation of federalism. The three tiers of the government in Nepal are not strongly equipped in terms of both human and capital resources which threatens their ability, stability, and capacity to govern effectively. Moreover, Nepali politics and government are still characterized by corruption which often goes unpunished.

Besides, the government has also been seen operating with opacity as political war still continues between the ruling political parties, both of whom have shown a poor record in managing the medical infrastructures needed to curb the spread of the second strain of the coronavirus pandemic. The laws that have been taken by the district offices are seen inconsistently enforced. Despite a slew of aid, projects, and programs from both donors and the government, Nepal still lacks key institutions for bolstering resilience and growth at the local stage.

All of this, collectively, suggests that weak governance is where Nepal performs the weakest, and the same has been reflected in the scores of GG and FE.

Furthermore, under DP, one of the dimensions that the indicator measures are related to demographic characteristics such as pressures from high population growth rates or skewed population distributions.

Given this, it is crucial to note that Nepal has been experiencing rapid demographic changes in the past few decades. As per the report ‘Demographic Changes of Nepal: Trends and Policy Implications’ published by the National Planning Commission and UNICEF, Nepal will become an aging society by 2028 and an aged society by 2054. This indicates that Nepal has a limited amount of time to take advantage of its demographic window as the population structure is deemed to undergo dramatic changes. However, political instability, ill-handling of political tensions

All of these points, taken together, pose a serious threat to Nepal’s fragility.

Policy options for Nepal to improve its fragility

Prior to the COVID-19 pandemic outbreak, the situation faced by weak performing states or most fragile states was already worrisome. It was because a number of studies indicated that the geography of poverty was changing around the world and it would have dreadful impacts on ‘failed’ or ‘fragile states’ as it could become more concentrated in these states in the days to come. Thus, it was expected that fragile countries would face more challenges in dealing with the various impacts of COVID-19.

Now, in the case of Nepal, during the current stage of combating the impacts of the COVID-19 pandemic, it has become critical to understand the core drivers of underlying challenges. Policy interventions are required but it is not wise to risk the interventions as being temporary solutions without addressing the core problem.

Thus, considering this and based on the above description under the weak performing indicators, it is evident that a primary driver of fragility in Nepal is weak governance and its changing demographic. The same has been analyzed in various research articles and journals as well. Given this, policy options relating to strengthening institutions are of utmost importance for the nation.

In my opinion, two of the most needed measures are to strengthen the tax system and the judicial system.

As stated in a policy brief published in 2019, strengthening the tax system can help open up an under-utilized but available source of national revenue, build a culture of voluntary compliance and reduce corruption in institutions as well as the tax-payer population. For actualizing this, the Inland Revenue Department (IRD) needs experts and analysts who can build a framework, design the operations and train its workforce acccordingly. Although there are risks associated with this option such as insufficient to overturn corrupt practices, inability to link between paying taxes and eligibility for benefits, and so on, it can at the least be started to create a much-needed path towards ultimately stabilizing the government.

Likewise, understanding that in the current state, the courts of Nepal are not meeting the needs of the country and its citizens, it has become most important to strengthen its judicial system so that it can put in efforts to create robust and well-functioning institutions.

Besides, there is a range of policy options provided by the international community including disarmament, demobilization and reintegration programmes (DDR), security sector reforms (SSR), direct budget support to government departments, service delivery arrangements, economic and structural adjustment reforms, trade and investment liberalization agreements and others. Most of these measures reach deep into the governance capacity of a nation and can reverse state fragility.