Digitalization of Nepal – Few Policies and Possible Challenges

Pradhyumna Wagle Digitalization has been at the forefront of development in the last 50 years. It has allowed developing countries to access information and resources like never before. Often, it is suggested that digitalization would help underdeveloped economies to skip the industrial development phase and quickly catch up with the developed economies, a process known […]

Pradhyumna Wagle

Digitalization has been at the forefront of development in the last 50 years. It has allowed developing countries to access information and resources like never before. Often, it is suggested that digitalization would help underdeveloped economies to skip the industrial development phase and quickly catch up with the developed economies, a process known as leapfrogging. Increased internet access and rapid transformation of bricks and mortar to digital form after the mid-20th century has laid out a base for the so-called Fourth Industrial Revolution (4IR). A World Economic Forum report suggests that 4IR will be a fusion of technologies that is blurring the lines between the physical, digital, and biological spheres. It cannot be emphasized more on how quickly developing countries need to prioritize digitalization and thrive through the 4IR. On the other hand, there has never been a time in history where access to information and knowledge has been so available. Therefore, it is a perfect opportunity for small economies to absorb as much resources as they can and recognize digital transformation as the way forward.

Nepal’s inability to compete with other developing countries in industrial development, especially manufacturing, can be primarily linked to geographical structure and human resource, among others. While digital infrastructure would need geographical convenience at installation, connectivity and evolution do not. Nepal is in a good position to exploit the digital resources that are available, and the ones it can generate from within, like electricity, to climb up the development ladder. The base for digital infrastructure, electricity, can be accessed by 94 percent of the population and Nepal Electricity Authority plans to achieve 100 percent electricity access by 2024. Internet penetration is at an all time high with 99 percent of the population having access to mobile broadband connection. It is safe to say that the Government of Nepal has realized the importance of digitalization and recognized it as the future. Hence, it published the Digital Nepal Framework 2019 (DNF) which includes short-, medium-, and long-term plans to reshape Nepal’s economic and social structure. As the government plans to focus on transforming different sectors to digital infrastructure, I discuss a few specific policies, possible challenges and what we can learn from other developing countries.

Adoption of technology

While emerging technologies are readily available, there needs to be proper policies that welcome new technology and create a suitable environment for it to grow. A study by Samuel A. Ejiaku concludes that most developing countries have ineffective information technology policies, and this hinders the proper growth and application of the IT sector. Interestingly, Ejikau points out that developed economies also have not contributed much to assist developing economies. This is because exporting technology would need to be modified to suit the environment and culture of the target economy. This means there must not only be policies that make importing of technology smooth, but also emphasizes on the need of skillful people that can make the adoption of technology suitable to that location.

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Government of Nepal has identified digital foundation as one of the major sectors that needs to be addressed. Increasing quality digital access is the main goal of laying out the digital foundation. The government has recognized poor quality and connection strength, and digital literacy as the main problems that occlude the digitalization process. Hence, DNF includes plans to train all government employees using a proposed e-learning platform that is publicly available. It is expected that the training program would help increase digital literacy and the learning platform would generate awareness in the public as well as maintain the supply of digital trainers. The former makes sense, but the inclusion of the latter is vague. It is not clear if the platform would be used in schools or only the government agencies, but unless there are incentives to learn and teach, it would be difficult to consistently find digital trainers.  Also, there is a plan to establish ‘knowledge-parks’ in special economic zones, but this has only been linked to economic growth. Skillful manpower is one of the vital aspects of digitalization, but DNF does not include priority plans to increase technology-friendly workers in all aspects. The government should focus on changing the academic structure to push institutions to use available technology. This would help make the workforce ready and well equipped with technological knowledge. Training programs could then be used to focus on a certain technology.  

Government Services

DNF has focused on changing government agencies’ structure: from paper to digital. This includes structural transformation from within the agency: recordkeeping, budgeting, and cybersecurity as well as in the services provided: public service applications, document processing and digital signatures in national identity cards. This is promising and has already come to implementation in many offices. But there is a serious lack of maintenance among the installed technologies. Lots of public service offices showcase themselves as being ‘online accessible’ but people need to show up in person and that violates the entire purpose of making the system online. A study in Ghana about the barriers to digitalization of government budgeting in developing countries identifies outdated laws and culture of paper document flows as the institutional barriers to digitalization in public service sectors. Literature in this sector identifies culture and structures of government agencies, pre-established hierarchical structures within the organization, operational divisions and politics and resistance to innovation as the main barriers to digitalization. All of these can be associated with Government of Nepal’s offices. Hence, it is important for the government to think about tackling these issues alongside the implementation of digital platforms. Most of the plans regarding within office digital transformation listed in the DNF are longer-term and those about public services are short term. I believe that this should be the opposite. Making the internal systems secure, stable, and efficient would then pave the way for service-oriented technologies like payment systems, online registrations, and administrative works. So, there is a dire need to identify what plans are short, medium, and longer term to make the digitalization process smoother. 

Small and medium enterprises

With the wave of digitalization, all forms of market transform structurally. From production to sales, every aspect of the economy is affected by digitalization. While big organizations and manufacturers have early access to new technology using their power and accessibility, the government must ensure that small and medium enterprises are well placed to take advantage of digitalization. New technology provides small and medium enterprises comparative advantages especially in local markets and that is very important for the economy. Within the execution plan of the DNF, most plans focus on the agro-economic sector like training farmers about digital platforms and pre-season education, quality check of agricultural equipment using technology, and smart irrigation facilities. There are a few short-term plans about facilitating e-commerce services, digital payment systems and development of mobile apps for transportation and healthcare. However, all these plans require governmental support and political stability: which is missing in Nepal. A similar study about digitalization of small and medium enterprises in Yemen, whose numbers regarding digital penetration is similar to that of Nepal, finds that economic and political instability, and lack of support for small and medium enterprises to thrive, as the major challenges. What the government could do is learn from developing countries that have undergone digital transformation like Rwanda. Rwandan government is well known for creating an environment for small and medium enterprises to adopt technology and thrive, mainly through innovation support. Government of Nepal’s plans are good in a sense that they want small and medium enterprises to grow, there is no specific plan that promotes innovation. Small and medium enterprises excel mainly because of the uniqueness of their products and services and innovation is necessary for them to survive. The government should aim to remove bottlenecks in the creation of new enterprises and even if they fail, provide support to regrow through improved digital access and minimizing administrative hurdles, mainly in technological import, export, and deployment.  

Concluding Remarks

Digital access is penetrating every aspect of society today. When it comes to digital transformation, it is not if but when. The most important step developing countries like Nepal could take is to open all possible pathways to welcome and integrate digitalization into the society as smoothly and quickly as possible. In terms of time, the more time it takes for an economy to digitalize, the loss in potential to develop is exponentially worse. Therefore, it is high time Government of Nepal takes necessary progressive steps towards digitalization.