Strengthening subnational health systems through support to public procurement and financial management:
lessons from a technical assistance programme in Nepal

Partners: Oxford Policy Management, Nepal & UK, HERD International, Nepal and Queen Margaret University, UK

Study objective

The study aims to identify and document programme and stakeholder learning on improving public procurement and financial management (PPFM) in health in Nepal – a recently decentralised and fragile setting – in order to build understanding of strategies to strengthen subnational health financing in fragile and shock-prone settings. It analyses and builds on technical assistance (TA) work previously conducted by Oxford Policy Management (OPM) in Nepal (more on that work on the OPM website), under the FCDO-funded Nepal Health Sector Support Programme (NHSSP), a consortium programme that supports the Ministry of Health and Population (MoHP) and subnational governments to strengthen health system and improve health service access and quality.

Specific research questions will include:

1. What was the initial status of subnational public procurement and financial management for health, including gaps and challenges related to recent decentralisation and at policy, organisation, and individual level, and how did this status affect health system resilience?
2. What strategies and activities were implemented under the TA to strengthen subnational PPFM for health, including work at organisational levels, support to health managers to undertake public procurement and financial management functions in their municipality, and work to strengthen gender responsive public financial management (PFM)?
3. How did these strategies and activities affect subnational health PPFM practice, and through this, health system resilience, including areas of improvement and remaining weaknesses?
4. What TA programme approaches and aspects of the subnational or national context enabled and hindered implementation and sustainability of the new PPFM strategies, activities and approaches supported through the TA?
5. What are the lessons and recommendations from this experience for future support to subnational PPFM?

The study will focus on reforms in three provinces where OPM supported PPFM activities – Sududpaschim, Lumbini and Madesh Pradesh – and 38 municipal levels from these provinces. Lumbini is also the site of HERD International’s learning site which brings valuable insight to the study.

Background to the study

Nepal is a fragile setting that faces developmental, political and environmental challenges. Since 2015, the country has been transitioning to a federal republic with three tiers of government (federal, provincial and local or municipality), where authority is devolved to local or municipality governments to make their own plans and programmes including the delivery of basic health services.

The effects of decentralisation on a health system depend on a wide range of issues including whether reforms are accompanied with, and aligned to, the necessary reforms in PPFM. However, PPFM reforms often lag behind the decentralisation process which then fails to achieve the intended improvement in transparency and accountability for health spending. The interaction between decentralisation and PPFM has been identified as an area where more research is needed. Also, global reviews of the evidence on health financing have indicated a gap on how to strengthen PPFM and health financing data systems in such shock-prone settings.

Good PFM can be assessed in terms of the way health budgets are formulated and structured, and whether this is in line with sectoral priorities and offers flexibility of spending. Global reviews of the evidence suggest that health planning, budgeting and expenditure tracking functions are often not aligned and that health sector stakeholders have limited understanding of public budgeting rules, processes, and practices. In Nepal, the planning processes are not fully aligned with expenditure data, procurement plans and the budget calendar. This has resulted in delays in the flow of funds, delays in procurement, low budget absorption, and numerous audit observations.

OPM provided technical assistance to the federal Ministry of Health and Population in Nepal, and to the subnational level, known as the Nepal Health Sector Support Programme (NHSSP). HERD International has also conducted work on health financing in relation to resilience in Nepal. Together, this experience has indicated a range of lessons that can support efforts to strengthen public procurement and financial management at provincial and local levels, and through this subnational health systems resilience. Development and documentation of that learning could contribute to wider evidence on health system resilience.

 Further information

Related ReBUILD work which may be of interest includes:

• Disaster-resilient public financial management– webinar recording and brief
• Direct Facility Financing: what are the opportunities and challenges of PFM systems? – video presentation
• Exploratory review of financial autonomy at primary care level – presentation

Image: Female Community Health Volunteers and ReBUILD staff at Jahadi Health Post, Lumbini Province, Nepal