Co-Creation Workshop on Own Source Revenue and Fiscal Federalism
The Co-Creation Workshop on Own Source Revenue (OSR) and Fiscal Federalism aimed to strengthen local revenue systems in Nepal by fostering collaboration among key federal ministries, local governments and other stakeholders, aligning ongoing initiatives, and identifying practical, scalable pathways for reform. The workshop focused on enhancing local governments’ capacity to mobilize revenue effectively, thereby improving accountability, service delivery, and resilience within Nepal’s federal system.
Participants: The workshop brought together a diverse group of stakeholders, including representatives from the Office of the Prime Minister and Council of Ministers (OPMCM), Ministry of Land Management, Co-operatives, Federal Affairs and General Administration, Financial Comptroller General Office (FCGO), representatives of local governments, representatives of local government associations. Participation also included development partners such as UNICEF, the European Union, the Embassy of Switzerland in Nepal, Norway, Asian Development Bank (ADB), Swisscontact, GIZ, and other governance experts and partners. About 50 stakeholders representing different insitutions, federal ministry joined the conversation.
PLGSP’s Role: The Provincial and Local Governance Strengthening Programme (PLGSP), with technical support from UNDP Nepal, convened the workshop as a collaborative platform to facilitate dialogue, promote coordination, and reduce fragmentation in ongoing efforts related to fiscal federalism. PLGSP played a key role in structuring discussions, enabling knowledge exchange, and ensuring that insights from local governments inform national-level policy and reform processes.
Key Discussions and Focus Areas
🔹 Challenges faced by local governments in revenue mobilization and administration
🔹 Gaps in valuation, compliance, and enforcement systems
🔹 Digital transformation and institutional strengthening
🔹 Coordination challenges across the three tiers of government
🔹 Evidence-based and locally grounded reform solutions
A strong shared understanding emerged throughout the workshop: strengthening Own Source Revenue is not only about increasing revenue collection. It is about building responsive and accountable local governments, improving public trust, strengthening service delivery, and ensuring that federalism delivers meaningful results for citizens.
With many local governments still heavily dependent on fiscal transfers, the workshop highlighted the urgent need for coordinated and system-wide reforms that connect revenue generation, fiscal transfers, PFM systems, and citizen-centered governance.
Through this initiative, PLGSP has initiated an important collective process to identify gaps, foster collaboration among stakeholders, and co-create a common approach for strengthening Own Source Revenue systems, improving fiscal transfers, and advancing fiscal federalism reforms in Nepal.
The programme is also supporting 25 local governments to strengthen their OSR systems and capacities, contributing toward more sustainable and resilient local governance.
Key Outcomes and Next Steps
The workshop resulted in a shared understanding of the critical challenges and opportunities in strengthening own source revenue systems. It reinforced the importance of coordinated, system-wide reforms and highlighted the need for improved clarity in revenue mobilization practices. Participants also contributed practical insights and recommendations to guide future policy directions and programmatic interventions.
The discussions underscored that strengthening OSR systems is essential not only for increasing revenue but also for enhancing local accountability, improving service delivery, and building citizen trust. The workshop further highlighted the urgency of reducing local governments’ reliance on fiscal transfers by advancing sustainable, locally driven revenue systems.
PLGSP will synthesize workshop findings into actionable recommendations to support ongoing fiscal federalism reforms. Follow-up engagements with stakeholders will help pilot and scale context-responsive solutions for strengthening local revenue systems.
