Nepal relies heavily on imports of goods and services to meet the demands of its population. According to data from the Nepal Rastra Bank for the fiscal year 2020/21, the country imported goods valued at Rs 1,500 trillion and exported goods worth Rs 141 billion. Key imports include fuels, machinery, steel and iron, cereals, electronic equipment, pharmaceuticals, and vehicles. Import values have consistently risen year on year, with an annual increase of over 20% compared to the fiscal year 2019/20.
Sanitation Landscape in Nepal
As per the 2021 census, there are a total of 6.66 million households in Nepal. While 4.47 million households are located in urban municipalities, 2.19 million are in rural municipalities. Examining the types of toilets used in these households, 653,000 have flush toilets connected to public sewerage systems, 3.67 million have flush toilets with septic tanks, and 2 million households use pit toilets. This breakdown provides an overview of the sanitary ware usage in Nepal based on household preferences and infrastructure.
Remittance and Urbanisation Dynamics
The significance of constructing toilets and bathrooms has evolved from an afterthought to a prioritised aspect for Nepali citizens. This reflects a shift in societal trends attributed to increased prosperity. This prosperity can be linked to the rise in out-migration for economic reasons, as indicated by the 2021 census, which reports that 2.1 million Nepalis currently reside abroad. In the fiscal year 2020/21, remittances from these individuals amounted to Rs 961.05 billion, a 9.8% increase from the previous fiscal year.
According to the Nepal Living Standard Survey, 2011, approximately 80% of remittances are utilised for daily consumption, followed by loan repayments, household property acquisitions, education expenses, capital formation activities, and other purposes within Nepal. Notably, a growing trend involves remittance funds being invested in urban property, contributing to the construction of new houses equipped with a decent level of amenities, including modern sanitary ware.
According to the 1952/54 census, only 2.9% of the population resided in 10 urban centres of the country. Over the next five decades, by 2001, the urban population had increased to 13.9% with an urban growth rate of 6.65%. The reclassification of urban areas further accelerated urbanisation, reaching 27.2% by 2014 and a remarkable 66.2% by 2021, with urban dwellers distributed across 293 urban areas. Kathmandu Metropolitan City, which houses a majority of the federal government's central offices, issues permits for the construction of 40,000 houses annually. Other significant urban centres beyond Kathmandu are also experiencing rapid growth, highlighting the ongoing and prospective trend of urbanisation in Nepal.
Trends in the Use of Sanitary Ware
With 86% of Nepali households owning homes, as revealed by Nepal's 2021 Census, and an increasing desire for a more comfortable lifestyle, the use of sanitary ware is undergoing notable transformations. Industry experts, featured in a 2021 article in the New Business Age, affirm this shift. Yogendra Bajracharya, with 16 years of experience in the sanitary ware business and associated with Nepal Marble Bath House, said architects and homeowners are beginning to give priority to bathrooms. "Urban Nepalis are becoming increasingly conscious of design and the use of space, and are even willing to spend big bucks," he added.
Komal Prasad Mainali, managing director of Mainali Business Concern Pvt Ltd, specialising in the trade of sanitary ware, including jacuzzis, taps, toilet commodes, kitchen sinks, and silk plaster, an eco-friendly alternative to wallpapers, said that sanitary products were witnessing sales growth of 10-12% annually. "Although it might sound counterintuitive to some people, the Nepali market in the urban area has matured and people are willing to pay higher price for and demand higher quality goods and its related services," he added.
A growing trend involves remittance funds being invested in urban property, contributing to the construction of new houses equipped with a decent level of amenities, including modern sanitary ware.
Dependence on imports
While the sanitary ware industry in Nepal experiences robust growth, it faces notable challenges. The industry relies on imports from China, India, Spain, and Italy. Although the custom duty on bathroom installations remains low, duty on tiles can go as high as 70%. Nevertheless, the construction of apartments and hotels, along with the renovation of older houses seeking modernised bathrooms, has contributed to an upswing in consumer purchases of sanitary ware. The increasing urbanisation trend, coupled with a growing preference for such products in households and commercial buildings, paints a promising picture for the industry's future.
However, since the business is heavily dependent on imports, it is susceptible to fluctuations in market conditions and international relations. While some products like pipes and tiles are manufactured locally, the current production is insufficient to meet the demands of Nepal's construction sector. To mitigate these challenges, there is a need for a government plan to boost manufacturing - first for import substitution and for exports in the long-run. The model of the cement industry, which successfully transitioned from import substitution to becoming an exporter to India, could serve as a template for the sanitary ware industry.
Drawing inspiration from successful models in other sectors, Nepal has the potential to position itself as a frontrunner in the dynamic and evolving landscape of sanitary ware.
Conclusion
The sanitary ware industry in Nepal holds immense potential driven by a flourishing market and increased consumer awareness. While the convenience of imports persists, sustainable advancement calls for a commitment to enhancing domestic production. Drawing inspiration from successful models in other sectors, Nepal has the potential to position itself as a frontrunner in the dynamic and evolving landscape of sanitary ware.
