What's to hope for in 2011 for Nepal? Most Nepali wishlists would have: a national constitution, general elections, and a fresh start for a newly elected government. Specifically, what should businesses and development agencies hope for?

All of the above, with one specific addition: speedy re-establishment of elected local governments in districts, towns and villages.

Elected local government = good for all. Last week, for two days, villagers padlocked The Last Resort's (TLR) bungee bridge, and threatened to close the resort, which had earlier been featured prominently in a Nepal Tourism Board promotional video.

In a press release, TLR complained that despite what it had done for the local villagers over the last decade in terms of providing employment, supporting health posts, building toilets, and starting income-generating projects, it had to endure the threat of a forced closure on the eve of Nepal Tourism Year 2011. Happily, TLR has since re-negotiated with the villagers, and is now open for business.

But the incident reveals a deeper problem in the Nepali countryside. There has been no elected, accountable local government in Nepal's 3,915 VDCs and 58 towns since 2002, when Sher Bahadur Deuba dissolved all local governments. In the intervening years, the space for local governance has been usurped by the local branches of national political parties, which are often rabidly partisan.

Mirroring their national brothers, these local parties quarrel with one another, or team up with one another to gang up against a third, and basically force their various party agendas onto the table even if that means acting against the interests of the very villagers they are supposed to represent and serve.

The villagers dare not speak out publicly because of security reasons or because, in most cases, many of the young people who could have spoken up have left for jobs in the Gulf or Malaysia. Since there are no local elections to hold them accountable, most local politicians thus have an incentive to lord it over villages and towns with a degree of unaccountable power, which has, no surprise, corrupting influences.

What results is a nightmare for development agencies and businesses, though they choose to keep quiet, lest they attract unwanted attention.

Say you are a hydropower company. Instead of negotiating with one elected local government for a predictable period of time over a lease agreement of a water body, you now have to continuously negotiate with all the local parties and keep them all happy – years before you see a single paisa of profit, if you see it at all. If one political party is unhappy with you for any reason, it can force your business to shut down, regardless of what positive work you have done in the villages. In such an environment, who wants to think long-term for investments?

In essence, what the absence of accountable local governance has done is increase the elements of uncertainty and unpredictability, and thereby raise the costs of doing development or commercial work in villages and towns. If one gets to do the work, it's hard to build up locally sustainable institutions in politically charged locations.

So, here's my wish for 2011. I am not sure whether the CA members will actually draft and ratify the constitution in May. But if they only find ways to take steps to re-establish the process of elected local government in all VDCs and towns, the process of local accountability and development could continue at a faster rate. That way, at least the rest of the country need not remain hostage to the mind-numbingly dumb antics of a few infantile netas at the top.