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November 18: Nepal can boost sustainable investment and accelerate productivity with a comprehensive growth strategy that focuses on enabling the private sector and removing constraints to competitiveness by focusing on five priority sectors—tourism, agribusiness, education, health, and information technology, according to a new study by the World Bank and IFC.
The two institutions’ first joint Country Private Sector Diagnostic for Nepal found that institutional challenges and a demanding geography have made it difficult for Nepal to build on its unique advantages. These obstacles can be overcome with a new approach that focuses on strengthening institutions, infrastructure, and connectivity, while removing investment barriers, reads a joint statement issued by the two institutions.
Prepared in close consultation with the government and other stakeholders, the report, Creating Markets in Nepal, assesses opportunities and provides recommendations and policy reforms that could enable the growth of a competitive private sector.
“Cross-cutting constraints need to be addressed to attract private investment and expertise,” the statement quoted Nena Stoiljkovic, IFC Regional Vice President for Asia, as saying. “Simpler regulations, better infrastructure, stronger institutions, and more developed human capital can open the doors to investment.”
In recent years, Nepal has made considerable progress in reducing poverty—from 46 percent in 1996 to 15 percent in 2011—but remains one of Asia’s poorest and slowest-growing economies, the report said.
According to the World Bank, over the past 20 years, Nepal’s real GDP growth rate has hovered around 4 percent per year, 2.5 percentage points below the South Asian average. Remittances from Nepalese working abroad play a significant role in the country’s economy, accounting for 26 percent of the GDP in 2017, but can fluctuate greatly because of shifts in global economic conditions.
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