– SAHESHA Upadhyay

BACKGROUND

The WHO recommends a minimum of 2.5 health workers per 1,000 population as a general benchmark to ensure adequate access to essential health services. This ratio appears as an unconvincing goal for Nepal given its current ratio of  8.52 per 10,000 (or 0.85 per 1,000 population). This presents a major challenge in terms of healthcare access, particularly in rural areas where mountainous terrain has impeded infrastructure development. The emergence of digital healthcare technology, including telemedicine, tele-visits, remote monitoring, IoT equipment, wearables, and digital healthcare database management, offers a promising solution to bridge this gap. The successful integration of a digital healthcare system requires efficient and dependable energy infrastructure as a foundation. Nepal, therefore, needs to align its healthcare and energy goals if it is to fully realize the potential of digital healthcare technology. 

Snapshot of Digital Healthcare in Nepal  

In recognition of the potential impact of digital health on healthcare accessibility and quality, Nepal’s Digital Framework 2019 has identified health as one of its eight priority sectors and established seven initiatives aimed at leveraging digital tools and technologies that include:

1. National Digital Healthcare Platform
2. Next-Generation Digital Healthcare Facilities
3. Electronic Health Records 2.0
4. Mobile Health Units 
5. e-Maternal Care
6. Drones for delivery of emergency medical supplies
7. Centralized Telemedicine Center

Several online platforms, including Jeeve, Hamro Patro, TeleCareNepal, Tele Upchar, and Hello Health, have successfully been delivering digital healthcare services in Nepal. Their services range from e-consultation and drug prescription to drug delivery to electronic management of healthcare records. Post-COVID-19, Nepal’s telehealth and digital health technology sector has witnessed a significant growth. Despite Nepal’s healthcare system being on the brink of collapse during the pandemic, the need for innovative solutions that could deliver healthcare services to people remotely was amplified. As a result, the utilization of Internet and telephone technologies for consultations skyrocketed in both hospitals and clinics, with numerous new and cutting-edge applications emerging. Furthermore, the country experienced a remarkable transformation in digital payment technologies and services, contributing to the widespread adoption of digital health channels.

Electrification and Healthcare

Despite all the possibilities that digital technologies offer, the challenge is to equip these technologies with the best resources that will keep them running smoothly. Electrical power remains the backbone of hospital operations; we need it not only for powering specific healthcare devices and technologies but also for basic office operations works including lighting, communication, and refrigeration. We cannot emphasize the term “reliability” enough when discussing the availability of electricity in regard to healthcare access. Interruptions in electricity, even for just a few minutes, can have dire consequences, such as life-saving devices failing during medical procedures, or critical medicines becoming spoiled due to loss of refrigeration. Likewise, tele-visits and remote-diagnoses are out of the question, when electricity is simply not dependable. Electricity must be ubiquitous in Nepal for healthcare access to be universal.

We cannot overemphasize the term “reliability” when discussing the availability of electricity in regard to healthcare access. The Energy Progress Report 2020  indicates that 90 percent of Nepal’s population has access to electricity, yet despite this achievement, frequent power cuts in rural areas continue to pose difficulties for the proper functioning of healthcare facilities. According to the Nepal Electricity Authority, several districts, including Ilam, Panchthar, Taplejung, Okhaldhunga, Khotang, Solukhumbu, Bhojpur, Sankhuwasabha, Udayapur, Kavre, Makwanpur, Dhading, Nawalpur, Darchula, and Dolpa have very low electrification;  Dolpa, Mugu, and Humla of Karnali Province have no connection to the national grid at all. The World Health Organization (WHO) also reports that only 65 percent of hospitals and 56 percent of non-hospital healthcare facilities in Nepal have a steady supply of electricity. Likewise, four percent of healthcare facilities in the country do not have access to any electricity supply. The issue of limited access to reliable electricity in healthcare facilities affects nearly one billion people globally, as reported by the United Nations.

For telemedicine and remote-diagnostic technologies to be successful, it is not only crucial for hospitals but also for individual households to have access to reliable electricity. Despite the widespread availability of affordable mobile devices and the expansion of 3G and 4G networks, which have led to a 90 percent coverage of wireless networks in Nepal, there are still significant gaps in coverage, particularly in rural areas. These limitations hinder effective telemedicine visits and remote diagnostics. As such, ensuring access to reliable electricity is essential for both powering devices and providing reliable broadband internet access.

Way Forward

The integration of alternative energy sources such as solar panels holds great promise as a transformative solution that can revolutionize healthcare services in Nepal. In many rural areas, solar power initiatives have already been successful, with 15 percent of the population gaining access to electricity through solar grids as reported by Nepal News news portal. Moreover, the cost of solar panels has decreased significantly in recent years, making it a more viable option for expanding healthcare services. By expanding these programs to rural healthcare facilities, Nepal can significantly improve the digitization of its healthcare technology and make healthcare facilities more reliable.

One way to achieve this is by implementing projects aimed at decentralizing electricity by providing every remote healthcare facility with its own solar panel grid. This not only has the potential to enhance service delivery but also make electricity access more resilient. Catastrophic climate events or any other national emergency will not interrupt the operation of specific healthcare facilities. A great example of this is St. Luke’s Hospital in Ethiopia, where a private renewable energy company provided assistance in implementing a groundbreaking solar hybrid system that delivers 320 KWh of electricity. This resulted in significant cost savings and improved service delivery.

In addition to its impact on healthcare delivery, the electrification of healthcare facilities can also have a profound effect on the distribution of healthcare professionals. A study has shown that access to reliable electricity and digital healthcare technology can serve as a powerful incentive for healthcare professionals, particularly in rural and remote areas. By making healthcare facilities more appealing and attractive, electrification can help attract and retain healthcare professionals in these areas, thereby increasing the availability of healthcare services for communities in need.

To ensure the longevity and effectiveness of these projects, regular maintenance of power plants and medical equipment, as well as personnel training, must be prioritized in the healthcare project design and budgeting process. Effective collaboration between stakeholders from both the healthcare and energy sectors, including public and private entities, can guarantee that healthcare needs are taken into consideration during the design and implementation of electrification projects. Finally, it is also important to draw attention to the fact that the adoption of digital healthcare, particularly telehealth, has far-reaching benefits that go beyond just improving individual health outcomes in rural areas. In addition to providing convenient access to medical services, by eliminating the need for frequent doctor-patient commutes, telehealth significantly reduces the carbon footprint associated with transportation

– ANKUR SHRESTHA

Introduction

Nepal, since time immemorial, has been regarded as an agricultural country. From most politicians’ speeches to our class textbooks, our idea of the Nepali economy has revolved around agriculture. Historically, that was true; in the late 1980s, it was the livelihood for more than 90 percent of the population – although only approximately 20 percent of the total land area was cultivable – and accounted for, on average, about 60 percent of the GDP and approximately 75 percent of exports – the numbers of drastically reduced as of today.

Evolving Trends

While some reports still claim that more than 66 percent of the total population is still engaged in agriculture, the contribution to GDP is declining each year compared to other key non-agriculture sectors. In the last ten years alone, it has declined from 32.7 percent of the total GDP to 23.9 percent in the previous fiscal year, FY 2021/22. Meanwhile, the contribution of the service sector has increased immensely, reaching 61.8 percent in the last fiscal year.

If one travels across Nepal’s villages, this decline in agricultural sector becomes even obvious. Most arable lands in the country remain empty, with workers traveling to foreign countries in search of better employment opportunities. The annual increase in remittances sent back reinforces this new economic reality. The villages are left chiefly with young kids and the older people who depend on remittances to sustain their livelihoods. Meanwhile, agriculture is still being done largely for sustenance rather than for commercial purposes, painting a bleak picture of the country’s agricultural endeavors. It is not remiss that out of our top five exports in the last fiscal year, namely soybean oil, palm oil, carpets, woven fabrics, and cardamom, only cardamom is commercially farmed, with other top exports being imported and exported again, with little value-added within Nepal. Interestingly, cardamom only contributes 2.4 percent of our total export value, while our top export, soybean oil, contributes 24.1 percent.

Some Experiences from the Field

This is not to say that efforts are not being made or commercial farming is not being done. Local levels were primarily found to be proactive in this regard as well. In particular, our interviews (done as a part of NIPoRe-ALIGN research collaboration) with the local government chairs and mayors showed that many local levels had focused on agriculture to raise its population’s economic standards. In the Sisne Rural Municipality of Salyan, for example, the local government had made efforts to separate different zones of the municipality into various agricultural sectors. The local government assigned different zones to plant different types of vegetables and fruits depending on land conditions and weather to increase productivity. The lands were found to be productive for fruits such as kiwi and oranges. Similarly, in Ichhyakamana Municipality of Chitwan, the local government brought a provision to distribute NPR 5 for each plant planted by the locals to encourage farming. Additionally, the local government also offered subsidies for buying cows or buffalos. Similar efforts by local governments can be seen throughout the country. Development partners and the federal government have also encouraged farming by regularly training farmers and distributing much-needed seeds and fertilizers.

However, efforts many times look to be wasted. Various issues come to light in conversations with agricultural experts who have worked as consultants in this field for decades. Experts whom we met during our field visits (of NIPoRe-ALIGN research collaboration works) claim that distributing only seeds without proper technical know-how of crop cycles, crop placements, and timely fertilizer inputs has led to smaller harvests with less domestic consumption and export market potential. The distributed seeds are of high quality, but inadequate understanding of timely fertilizing techniques leads to low-quality outputs that are not marketable. Farmers who have contributed many years to grow oranges, for example, then can harvest it only for two-three cycles before the trees stop bearing fruits. This leads to frustrations among the farmers, who then move on to look for better alternative opportunities in other sectors or migrate to foreign countries, as is the case in Nepal. Training for farmers also seems to be provided most of the time to fill quota numbers. Any attendee of most trainings gets monetary incentives to join in. This causes training recipients to join just because of the incentives rather than actually learning the necessary techniques helpful for them. 

Rooms for Improvements

What, then, must be done to change this? At the policy level, the government has been proactive in giving out subsidies and creating tariffs to promote Nepali agricultural products. However, in reality, an assessment seems necessary to analyze who the subsidies are going to and who benefits from these tariffs. Additionally, the government needs to proactively work with local farmers in breaking the syndicate systems that have been established to get farming output to the markets. Nepali news platforms are rife with intermediaries cheating farmers of their hard-earned money and paying them drops compared to what the goods are sold in the market for. Strict quality control mechanisms are also needed if we want to be export-oriented. Quality testing facilities must be made available in major production centers so farmers can access them easily. This will serve to ensure quality goods come to domestic as well as foreign consumers. Nepal also needs to identify what products are viable to be grown in different parts of the country and determine which products have a competitive advantage. Focusing on specific products and actively working on ensuring storage facilities, testing mechanisms, and meeting international standards for those will be easier for a developing country like Nepal. The government can expand the list of identified goods as we develop our agricultural ecosystem and set better product standards. The Nepal Trade Integration Strategy 2016 was a good idea in regard to this. However, it needs to be immediately and regularly updated, keeping in mind our international export market, the value of our products, and the capabilities of upscaling our farmers.

And lastly, a provincial agriculture and trade policy seems instantly necessary to coordinate local efforts. Unfortunately, the trade data of our country still has not been able to shift to the provinces levels. With us not knowing the origin of our export products, we only have a disaggregated idea of which province is better at growing which products. Historically, some products have been raised in certain areas of the country, like tea in the eastern region, but focusing on different products means production data at local levels is a must. This will help direct our limited resources to build specific infrastructure and facilities for particular regions to increase the country’s overall export. Negotiations and identification of export markets, meanwhile, are also vital. Nepal has two large markets as its neighbors that have relatively fewer quality controls than, for example, the European Union. This means our diplomatic focus on export negotiations can be with these two large markets while we continue to improve the quality of our products and look toward other markets.

– NISCHAL DHUNGEL

Quality digital infrastructure is the foundation of a fully-functioning digital economy. Digital infrastructure using any form of the technology enables a smooth flow of goods and services in the economy. The Government of Nepal (GoN) considers the advancement of digital technology as a crucial enabler of more resilient, inclusive, and growth-oriented development. The GoN came up with the Digital Nepal Framework (DNF) plan in 2019 to restructure the economy through integration of available ICT tools. It plans to do so by granting all segments of the population equal access to services and infrastructure, encouraging private sector innovation and competitiveness, and enhancing the delivery of public services. The DNF comprises 80 initiatives divided into eight categories – digital foundation, agriculture, health, education, energy, tourism, finance, and urban infrastructure. The Nepal Planning Commission (NPC) has deemed the DNF a game-changing initiative.

Before diving into Nepal’s digital landscape, it is crucial to understand the state of digital-related infrastructures in the country. Electricity is the backbone of digital connectivity in addition to availability of quality infrastructures. In this regard, electricity is fuel to develop any form of digital connectivity. Without proper access to electricity, it is almost impossible to foster digital connectivity in the desired way. Hence, access to electricity directly impacts the availability, adoption, and use of digital connectivity. Digital connectivity may be less readily available if a steady electrical supply is not always available. Even though the electricity supply has reached most of the population, the government needs to deploy base stations in non-electrified areas to ensure affordable and reliable electricity access for all Nepali citizens.

Figure 1: Access to Electricity, Nepal (Percentage of Population)

Source: Nepal Economic Survey 2021/22, Ministry of Finance *Till – Mid March 2022

More than 90 percent of the population have access to electricity as of mid-March 2022 (Figure 1). Access to electricity has considerably increased over past years from 88 percent in 2018/19 to 94 percent till mid-March 2021/21. During the same period, the Madhesh province has the highest access to electricity i.e., 99.66 percent of Madhesh population and the Karnali province has the lowest access to electricity 43.87 percent of Karnali population (Figure 2). In 2021–2022, the installed electricity capacity stood at 2,189.6 megawatts (MW). Increasing the installed capacity of electricity has made it possible to increase access to electricity. Nepal experienced power outages that lasted up to 18 hours a day for more than ten years, from 2006 to the mid of 2017. The country currently has surplus energy, primarily during the wet season, and “load-shedding” has almost been eradicated thanks to better management, leakage control, and increased power generation. Although electricity penetration in Nepal (90 percent of the population) as of 2020 is slightly low in comparison to South Asian (95.7 percent of the population) countries, Nepal stands in an excellent position to strengthen its digital infrastructure. Before the target year of 2030 was established by Sustainable Development Goal 7, the Nepal Electricity Authority (electricity regulatory body)  revealed its plan to achieve 100 percent electricity access by 2024. The plan is realistic to set a strong base for the uptake of other digital infrastructures.

Figure 2: Access to Electricity by Province (Percentage of Province Population)

Source: Nepal Economic Survey 2021/22, Ministry of Finance *Till – Mid March 2022

The Government of Nepal has placed great importance on transforming the potential of ICTs within the broader context of its ambitious developmental objectives, which are based on reducing poverty as its primary goal. The Information Communication Technology (ICT) Policy 2015 outlines the rules and practices for developing IT infrastructures and human resources for a knowledge-based society. ICTs have the potential, among other things, to help create the environment for better governance with more open, transparent and effective bureaucracies. ICTs can also address structural issues in education and health systems, enabling more access to education and health services and bridging quality gaps in education and health.

The internet is a crucial component of the digital economy. Over the past few years, Nepal’s technology and communication sector have experienced significant growth. Nepal Telecommunications Authority (NTA) is the telecommunication regulatory body of Nepal established to provide a favorable and competitive environmentfor the development, expansion, and operation of telecommunications services along with private sector participation. According to NTA Annual Report 2021/22, total broadband (mobile and fixed) internet subscriber has considerably increased over the past years, from 66 percent in 2018/19 to 131.6 percent in 2021/21. According to the same report, there are around 38.3 million broadband subscribers in Nepal, of which 28.7 million are mobile broadband subscribers and 9.6 million fixed (wire and wireless) broadband subscribers in 2021/22. While fixed broadband (wired plus wireless) penetration has reached 33.1 percent of the population, mobile broadband penetration is 99 percent in 2021/22. Mobile broadband peneration has significantly increased over the past years from 52% of population in 2018/19 to 99 percent of population in 2021/22. According to the report, mobile broadband is the most popular means of using the internet, and the trend of mobile broadband users is increasing faster than fixed broadband. With 3G and 4G internet service already in place, the government is advancing the testing of 5G technology.

Figure 3: Broadband Internet Penetration (Percentage of Population)

Source: Nepal Telecommunication Authority, Annual Report 2021/22

Despite the progress in internet and electricity penetration, there are still issues with affordability, the digital divide, and digital illiteracy in many areas of Nepal. With regards to digital governance, the government has taken steps to digitalize public services, including, but not limited to, the digitization of data from land revenue offices, the introduction of the Nagarik App, the launch of the Nepal National Single Window (NNSW) system, the opening of the National ID card, and others. However, service seekers continue to encounter issues due to limited installed technology capacity and improper system management.

Workplace practices are changing due to disruptive technologies like artificial intelligence (AI), robotics, and the Internet of Things. The governments and businesses around the world are now able to fully realize the promise of exponential development because of digital technologies. Since the initial shutdown starting from March 2020 onwards (due to COVID-19), online commerce and digital payments have become more common. Also, the use of digital technology and GDP growth are closely related. A World Bank study found that a country’s economy grows by 1.3 percent for every 10 percent rise in internet access. Nepali pay more for internet connection than people in other South Asian countries, according to the Connectivity in the Least Developed Countries Status Report 2021. The report has emphasized a need for effective solutions in developing nations like Nepal to increase digital access and the need to develop specific policy proposals to hasten the transition to inexpensive and universal connectivity. 

Way Forward

The digital economy highlights the importance of digital technology in improving trade and competitiveness, economic opportunity and efficiency, and international economic integration of an economy. The COVID-19 pandemic and related lockdowns have sped up the uptake of digital services, making remote learning, e-commerce, and digital payments more crucial than ever. The pandemic has also made it clear how vital it is to adapt systems to accommodate shifting preferences, hastening the transition to a cashless and digitally aware society.  Supportive policies and investments in the workforce, vital digital infrastructure, and cybersecurity will have a long-lasting impact on leveraging the digital economy in Nepal. For Nepal to develop into a technologically advanced, rapidly expanding economy, digitalization and digital governance should be implemented, strengthening its digital-related infrastructure.

Recommendations

• Bring stakeholders from the public and corporate sectors and civil society to help shape digital policy in several key areas. 
• Encourage the adoption of inclusive digital policies and collaborate with the appropriate governmental entities. A working group on internet affordability should be established, with representatives from the private sector, civic society, ISPs, and regulators. 
• Build collaborations with the private sector to construct a digital economy that benefits all Nepalis.
• Concentrate on improving transactional efficiency, security, transparency, traceability, and financial inclusion. 
• Work with universities and technical schools to solve the cybersecurity workforce and research and development demands.
• Support the reform of IT curricula in higher education, work with the private sector to start apprenticeship or internship programs, and support the ICT initiatives of the Ministry of Education to increase the skill-building of the digital talent pool to match the demands of IT-sector employers better and increase Nepal’s competitiveness in the IT labor supply.

– SAMJHANA Karki

“Education is simply the soul of a society as it passes from one generation to another” – G.K. Chesterton

SUMMARY

Providing universal primary quality education to all is one of the Sustainable Development Goals (SDGs). Various elements influence the quality of education, such as student-teacher ratio, educational content, teaching pedagogy and learning environment. This article discusses how the student-teacher ratio for primary-level schooling fares across Nepal’s seven provinces for 2017-2019.

BACKGROUND

Education is an essential foundation for a more aware and progressive society. Moreover, education is crucial in helping communities worldwide achieve higher economic growth and maintain balanced social harmony. At the same time, the overall education system and educational infrastructures have significant roles in a country’s education quality. However, a country with a sound education system and state-of-the-art infrastructures, if does not have well-trained teachers, struggles to yield good educational outcomes. For this reason, teachers also play a key role in determining overall educational efficiency.

The student-teacher ratio is one of the prime indicators for assessing the quality of education delivery. It provides us with an outlook on the strength of the educational system of the respective country. The student-teacher ratio at the primary level means the number of primary school students divided by the number of primary school teachers. Simply put, it is the average number of students per teacher in a particular school. For better educational outcomes, it is better to have fewer students per teacher as it allows the teachers to provide more attention to the needs of the students, including one-to-one personal guidance. On the contrary, a single teacher governing a class of many students can be chaotic.

According to the 2019/20 Flash Report published by the Ministry of Education, Science and Technology (MoEST), 254,578 teachers trained 5,319,004 primary-level students in Nepal for the year 2019., i.e., a student-teacher ratio of 20.89, comparable to South Asain average of 20:1. 

Province-wise Status of Student-Teacher Ratio

Fig: Province-wise student-teacher ratio of Nepal for the year 2017-2019 (CEHRD, 2017, 2018, 2019)

The above figure shows the province-wise student-teacher ratio of Nepal for the years 2017-2019. For all three years, Madhesh province lags behind all the provinces while Gandaki Province stands on the top in terms of the ratio. For example, in 2019, Madhesh had ratio value 42.12 compared to Gandaki, which had a value of 12.52. Comparing these data with the national average of 20.89, Madhesh’s ratio is almost twice the value of national average and the Gandaki has almost half of that of the national average. Since the student-teacher ratio is a reverse indicator (higher the value lower the performance), Madhesh, with the highest score for all three years performs worst under this indicator while Gandaki, on the other hand, performs best among seven provinces with the lowest scores for all three years. However, on the positive side, the overall student-teacher ratio across all the provinces in on decline.

On the other hand, the highest student-teacher ratio for Madhesh Province reflects that this area has been poor in terms of having enough teachers for the existing students. To make things a bit better, in 2018, the Provincial Government launched the Beti Padhau, Beti Bachau campaign. 4,373 girls under 18 years have benefited from the scheme so far. Under this campaign, 14,000 bicycles were distributed to girls, and 100 toilets were constructed for girl students during the last fiscal year. The major issues that Madhesh faces, as highlighted by the locals and education experts, including most local-level education branches being run by retired teachers and the local education department struggling to fill all available teaching positions and frequent transfer of teachers to other schools.

Some Issues Nepal’s Education System Faces

Nepal has long faced a shortage of teachers in the remote northern districts. Even though the government has determined a required teacher-student ratio, it has not been able to send additional teachers to the rural parts of the country to meet its specified ratio. Consequently, most public schools, especially those in the rural parts of the country, have fewer teachers than required. The main reasons behind these limitations include the government’s low priority towards mobilizing more teachers in the rural areas and lower preference and commitment by the teachers themselves.

The constitution of Nepal (2015) provisions the citizens’ inherent rights to free and compulsory education for school-going children. Yet, unfortunately, a substantial number of the most vulnerable and marginalized children are still out of school. As per the Economic Survey 2019/20, over two-thirds of the students enrolled in grade one get out of the school system by the time they reach grade 12. Furthermore, as reported in The Kathmandu Post, out of 100 students enrolled in grade one, 36 leave their studies by the time they get to grade 10. Over the decades, however, Nepal has seen improvement in the overall education system. The country currently has a net enrollment rate of 97 percent. In addition, past initiatives such as free mid-day lunch, free sanitary pads for about 1.35 million girls, and scholarships for girls students from marginalized communities have contributed to lower school dropout rates. To ensure easy access to quality education and reduce the existing gaps, the parliament of Nepal has enacted the Compulsory and Free Education Act, 2018. 

Government Efforts

In the budget speech of FY 2021/22, the Government of Nepal has appropriated a budget of NPR 180.4 billion out of the NPR 1.64 trillion national budget for the education sector for the upcoming fiscal year. The government plans to adjust the number of teaching positions based on the student-teacher ratio. However, the real challenge lies in its implementation. There should be a transparent implementation and monitoring of other scholarship-related programs, including teacher vacancy matching. While government budget provision is essential, it is even more important to understand education spending and available resources to identify resource and demand/supply gaps.

Province 1 has taken some steps at the provincial level after the local elections in 2017. To ensure quality education, it has started an electronic attendance system to monitor the entry and exit timings of the teachers, established transport services, focused on research and practical-based education and merged schools as per the number of students and geography. These initiatives have created a positive impact on improving the quality of education in community schools. For instance, the number of students attending classes increased to 284 from 258 since the school started the bus facility in Rong, a rural municipality in Ilam. Similar initiatives and learnings can be transferred and practised by other provinces too.

Way Forward

Although Madhesh Province is comparatively more advanced than other provinces in terms of transportation and communication connectivity and the availability of infrastructure, available details show that this province has low education quality as it has the highest student-teacher ratio. Inefficient implementation of teacher management could be identified as one of the primary reasons behind it. Hence, the prime concern of the current and future policy stakeholders in the province should be to improve teacher management mechanisms even further. Finally, local governments and school management teams could work collaboratively to ensure safe and stimulating learning spaces where teachers are well trained, prepared, supervised, and monitored.

– ANUSHA Basnet

Foreign Direct Investment (FDI) is defined as a “category of cross-border investment” in which an investor from one country invests in another country wherein the investor has significant control over the business it invests in (IMF, 2009). It may also involve a “transfer of technical know-how, managerial and organizational skills”. For a country aiming to expedite its development process, FDI has been one of the factors aiding the development process of Nepal especially in recent years. The government has also made provisions to make Nepal a more investment friendly country. Acts such as The Foreign Investment and Technology Transfer Act (FITTA) 2019 and Foreign Direct Investment Policy 2015 have been created by the government in an effort to create a better environment for foreign investors. The FITTA states that “investors need to bring 25 percent of the pledged investment within a year from the date of registration, 70 percent by the start of operation, and the remaining 30 percent within the next two years.” The Department of Industry (DOI), Nepal Rastra Bank (NRB), and Investment Board Nepal (IBN) are three agencies that implement the laws regarding FDI. 

As of 2018/19, the stock of FDI in Nepal was Rs. 182.92 billion of which 48.2 percent was paid-up capital, 42.8 percent were reserves, and 9.0 percent was loans. Of the total FDI stock, the service sector accounts for 51.1 percent and the industrial sector accounts for 48.8 percent. Furthermore, within the industrial sector manufacturing, mining and quarrying industry accounts for 28.6 percent and electricity, gas, and water sector accounts for 20.0 percent of FDI stock. While the level of FDI pledge is high, the actual inflow of FDI is still low. 

Looking into the provincial breakdown of FDI statistics, we see the following numbers:

Figure 1: Provincial Breakdown of FDI figures (Data taken from NRB)

From the above graph, we can see that Sudurpaschim province has received the least amount of FDI in all three years (2017, 2018, 2019). The province received FDI of Rs. 13.2 million, 10.8 million, and 27.93 million for the years 2017, 2018, and 2019 respectively. The increase in FDI for the year 2019 can be attributed to the investment brought in for the manufacturing sector (cement industry) and information technology sector (software development industry). Comparatively, Sudurpaschim province lags behind other provinces in terms of being able to attract foreign investment. Years of lack of concrete development plans from the central government, lack of investment in the infrastructure sector and other factors such as a difficult geographical terrain have caused the province to lag behind in terms of development which has affected its current ability to seek investment. Furthermore, delays in current projects have not inspired confidence from the investors. 

However, the provincial government in Sudurpaschim has made efforts to bring in foreign investment. The provincial government has started a process to create a Provincial Investment Board in order to streamline projects that require higher investment (projects requiring investment from Rs. 1 billion to Rs. 5 billion). The government also put in extra effort to woo investors during the Investment Summit organized by the Nepal Investment Board. In terms of attracting foreign investment, tourism, manufacturing sector, energy sector, and transportation sector are few sectors that are being prioritized by the provincial government. The provincial policies and programs for the fiscal year 2078/79 has emphasized completing the ongoing projects in order to attract new investment. The recent agreement between the Investment Board of Nepal and NHPC for the development of Seti river hydropower projects also shows promising signs for the province. 

As the Sudurpaschim government has been creating ambitious plans to expedite the development process of the province, FDI will play an important role in the process. While the province has a lot to do in terms of catching up to other provinces for bringing in FDI, the steps initiated by the government show their commitment and dedication to the economic development of the province.