Vol 2 Issue 9 Jestha 2080

Rs 250‘‘Govt has
the key role
to bring thecrisis-prone
economy backon track’’N e p a l

Fostering HR & Business

CHANDRA PRASAD DHAKAL
President, Federation of Nepalese
Chambers of Industry andCommerce (FNCCI)

Federal Budget for FY2023/24

Bringing
EconomyBack fromthe Brink

EDITOR'S
NOTEW

ith the budget session of the federal
parliament starting on May 7, all eyes
are on the next fiscal year’s budget
which will be presented by Finance Minister Dr.
Prakash Saran Mahat on Jestha 15 (May 29) as
mandated by Nepal’s constitution.
It won’t be otherwise to say Dr. Mahat has amountain of challenges to overcome as the financeminister who is in the post for the first time in hislong political career. With the country’s economy
in the doldrums, he has to come up with a fiscal
policy that will bring the derailed economy backon track.
It is the first time in the country that thefinance minister is presenting the national
budget amid a resources crunch that has hit the
government finances so hard this year. So it canbe expected that Dr. Mahat will bring a budgetthat maintains a strict fiscal discipline. He
should not budge from the demands of his fellow
parliamentarians who are asking to restore theunproductive and controversial programs like the‘constituency development fund’ in the upcoming
fiscal year’s budget. Time and again, programs
like these have been proven as a waste of valuable
resources and foster corruption. At this point in
time, the Nepali economy is in dire need of a fiscal
policy that can boost economic productivity.
The past three years have been disastrous
for the Nepali business community. The seriesof shocks they have faced has weakened theirefficiency and confidence. From large businesshouses to small and medium enterprises (SMEs),
businesses of all scales have borne the brunt of theeconomic downturn. So it has become essential
for the government to bring programs and policies
to provide support to the ailing business sector in
the immediate and medium terms so that they can
get back on their feet again.
In the long term, it is the structural reforms
that will be important for the transformation of
the Nepali economy. Like what his elder brother
Dr. Ram Saran Mahat did in the 1990s as thefinance minister to transform the economy inthe era of liberalization, the current finance

PUBLISHED BY

Corporate Club Nepal Pvt. Ltd.

minister has the responsibility to work forstructural reforms keeping in mind the changes
that have taken place in the Nepali and global
economy. The current crisis thus can become an
opportunity to bring meaningful changes to facethe 21st economic challenges and the budget for
the next fiscal year should start that process. The
structural reforms have also become important toaddress the problems in the economy seen overthe past few years.
Sluggish capital expenditure has long beena problem affecting the country’s economy. The
upcoming fiscal year’s budget should break thischain of sluggishness which will have a range of
positive impacts from boosting infrastructuredevelopment to maintaining a good level of flowof money in the market. At this time of resource
crunch, we can hope the budget will be allocatedaccording to the priority of the development
projects.

Samjhana Sharma
EditorPublisher :	Mohan Ojha
Editor :	Samjhana Sharma
Asst. Editor :Rachhika Karanjit
Finance :	
Bijaya Shrestha
Office Support : Yashoda Timsina
Circulation : Maru Ray Yadav

Printed at: Society Printing Press P. Ltd.
Lalitpur, Nepal
Phone: 9851089516/ 9851077522

CDO Office Regd No. 351/2078/079 | Pulchowk, Lalitpur, Nepal | e-mail:info@corporateclubnepal.com

CONTENTS
n Vol 2 | Issue 9 n

Jestha 2080

18

REPORTFaces
32 Govt
Hard Choices

ECONOMY IN RECESSION:

COVER STORY

Federal Budget for FY2023/24

BRINGINGECONOMY 44
BACK FROMTHE BRINK

Strives38 Nepalfor Bigger Gainsin Access toFormal Financial
Services
The Big Battle

48 CEO SPEAK“We plan to expand
beyond internet
connectivity to cloudcomputing services”
DILEEPAGRAWAL |72 the HRM INTERVIEW“We believe that leadershipis not solely focused on
individuals but is morecollaborative in nature”
HEATHER CAMPBELL |Country Director, Save theChildren – Nepal and Bhutan

OPINION

Chimerical
54 Adieu
Leadership

VIJAY ANAND SHARMATIMILSINA

in at
80 Listening
Aryaghat
ANIL CHITRAKAR

and Creative
84 Green
Solutions for Nepal’s
EconomySAURAV DHAKALWorldLink
Communications
Ltd.

BRIEF
NEWS
Financial closure of Upper
Arun HEP by 2023: NEA
The Nepal Electricity Authority(NEA) has said it plans to conclude
the financial closure of the Upper Arun
Hydroelectric Project within 2023.
According to NEA, preparations havebegun for the financial closure of the
1,061 MW project with the World Bankand domestic creditors.
The government-owned power
utility initiated the development of the
project by establishing Upper Arun
Hydropower Limited. The developmentof the project is estimated to require Rs
214.86 billion, of which 70 percent or
Rs 150.40 billion will be raised throughloans. The World Bank has committed tolend Rs 97.06 billion to the project.
The Washington DC-based lender
will lead the group of international
financial institutions to finance theconstruction of the project which will
be built in the upper reaches of the Arun
River at Bhotekhola Rural Municipalityof Sankhuwasbha district.
The project's financing model will
be in the debt-to-equity ratio of 70:30.
According to NEA, the project will be

Around 500
MW added tonational grid8|

| Jestha 2080

funded with Rs 150 billion in loans,of which Rs 97 billion will be frominternational financiers and Rs 53 billion
from domestic lenders.
As planned, Rs 53 billion will beraised from a consortium of domestic
institutions including Hydropower
Investment and Development Company
Limited (HIDCL), Nepal Bank, Rastriya
Banijya Bank, and Citizen Investment

With the increase in power generation in
the country, around 500 MW of electricity,
generated by over 20 power projects, has been
added to the national grid in 2079 BS. Afterthe addition, the total installed capacity of
power projects in the country has reached2,689 MW by mid-April 2023.
The construction of the
Solukhola (Dudhkoshi)
Hydroelectricity Project, thelargest hydropower project
developed by the Nepali
private sector to date, wascompleted in 2079. Developedby Sahas Urja Ltd., the 86
MW project commenced its
commercial production on
March 1, 2023.
According to the Nepal
Electricity Authority (NEA),
the country's total installedcapacity is expected toTrust. A memorandum of understanding
was signed between Upper Arun
Hydropower Limited and the financial
institutions in August last year. NEAplans to sign the final agreementwith the World Bank and domestic
institutions at the same time. The Upper
Arun Hydropower Limited will have an
equity investment of 30 percent or Rs
64.46 billion in the project.

reach around 3,000 MW by the end of thecurrent fiscal year 2022/23. According to
NEA estimates, 811 MW will be added to
the national grid in the current fiscal year.
The state-owned power utility expects the
111 MW Rasuwagadhi, 57.3 MW Sanjen andUpper Sanjen, 102 MW Madhya Bhotekoshi,
and 54 MW Super Dordi to come online by
the end of the current fiscal year.
By mid-July, 2023, the constructionof additional 15 hydropower projects is
expected to be completed. In 2079, a total of
19 hydropower projects have come into fulloperation while the test of nine others hasreached the final stage.
According to Independent Power
Producers' Association Nepal (IPPAN),
some projects developed by private sector
companies are currently in the phase of the
15-day trial production and the projects will
start commercial production after the trial
production concludes.

BRIEFNEWS
NIA to extend deadline for
insurers to raise capital
The Nepal Insurance Authority(NIA) has instructed insurancecompanies that have failed to raise
their paid-up capital by mid-April,
to submit their applications to get an
extension for the capital increment
deadline. According to NIA, insurers are
required to furnish their clarification for
not being able to meet the new capitalrequirement.

deadline, NIA extended the deadline
to mid-July, 2023. Only four insurancecompanies have met the capitalrequirement so far.
Only the paid-up capital of Nepal
Life Insurance Company is above Rs
5 billion among the life insurancecompanies. In the non-life insurance
segment, Shikhar Insurance, Siddhartha
Premier Insurance and Sagarmatha
Lumbini Insurance have also met the
new capital requirement.

mid-March).
The revenue collection from suchtransactions also increased in Chaitra.
According to the department, the revenue
from land transactions amounted toRs 4.51 billion in revenue from landtransactions in Chaitra. The amount ishighest in the current fiscal year.
The economic slowdown coupledwith the restrictions on financing andReal estate transactions
bounce back

NIA announced the new capitalrequirement a year ago and required
non-life insurers to have Rs 2 billion in
paid-up capital and Rs 5 billion for life
insurance companies setting a deadlineof mid-April 2023. After the majority of
insurance companies failed to meet the

The real estate sector is gaining after
going through a decline for over a year.
The statistics of the Department of Land
Management and Archive show realty
transactions surged by 20.66 percent in
the month of Chaitra. According to thedepartment, 49,150 realty transactions
took place in Chaitra (mid-March to
mid-April). This is the highest monthlytransaction recorded in the current
fiscal year. There were 40,734 real estatetransactions in Falgun (mid-February toplotting of lands took a heavy toll on
the real estate market. The huge growthin the real estate market that was seen
during the Covid-19 pandemic as a resultof the cheaper loans soon faded away
as the financial system grappled witha severe shortage of investment-grade

Exports surge by 18.65 percent
Nepal's exports have surged in Chaitra (mid-March to mid-April) by 18.65 percent.
According to the Department of Customs (DoC), Nepal exported goods worth Rs 13.483
billion in Chaitra.
Exports had plunged to Rs 11.36 billion in Falgun, the lowest in the current fiscal
year on a month-to-month basis. DoC data shows Nepal exported goods worth Rs
118.27 billion till Chaitra compared to Rs 160.57 billion during the same period of thelast fiscal year. The massive decline in the exports of edible oils has dragged down the
country's overall exports in this fiscal year. The exports of soyabean oil and palm oilhave plunged to Rs 25.73 billion this year from Rs 74.07 billion in the last fiscal year
after India lowered its customs tariff.

MONTHLY EXPORTS
Chaitra		Rs 13.483 billion
Falgun		Rs 11.363 billion
Magh		Rs 12.624 billion
Poush		Rs 13.502 billion
Mangshir		Rs 12.530 billion
Kartik		Rs 12.954 billion
Ashoj		Rs 13.139 billion
Bhadra		Rs 13.870 billion
Shrawan		Rs 14.809 billion

10 || Jestha 2080

liquidity. Similarly, the tightening of
the real estate and housing loans by thecentral bank by reducing the loan-tovalue (LTV) ratio in the Kathmandu
Valley to 30 percent and 40 percent
outside the valley alongside therestrictions on land plotting due to thedelay over the classification of lands by
local units also affected the sector badly.

Govt introduces
automatic FDI approval of
up to Rs 100 mn
The government has implemented
the policy to approve foreign investmentof up to Rs 100 million throughthe automatic route. This was
first announced in the federal
budget for the current fiscal year
2022/23. The Ministry of Industry,
Commerce, and Supplies has madethe first amendment to the Foreign
Investment and Technology Transfer
Regulations 2077 to implement the

automatic approval mechanism.
The government said the system
will make ease the hurdles for foreign
investors to bring FDI to Nepal.
Currently, they had to visit various
government agencies to get FDI
approvals. According to Industry
Secretary Toya Narayan Gyawali, it
is now possible to establish a newcompany through the automatic routewith 100 percent share ownership or
joint investment. "In addition, foreign
investors of the companies that are
already in operation can now use thissystem to increase capital in suchcompanies," he said.

KTM-Terai Expressway construction deadline
extended by three years
The government has extended the construction deadline of the
Kathmandu-Tarai/Madhes Expressway Project by three years. The decisioncame after the government concluded that construction works of the projects
could not be completed on time. As per the last revised schedule, the Nepal
Army should have completed the work by mid-December 2023. However, with
only 22 percent of the physical progress achieved in the project by mid-March
2023, the government extended the deadline till the end of mid-March 2026 at
the request of the Nepal Army.
The government has entrusted the Nepal Army with responsibility for theconstruction of the national pride project. PM Pushpa Kamal Dahal during his
second stint as the prime minister had given this responsibility to the Nepal
Army. The 72.5 kilometers long fast track is the shortest route connecting
Kathmandu with the southern plain. Following the visit by the Prime Minister,
the government also
formed a committee
under the coordinationof Defense Minister
Purna Bahadur Khadka
to settle the land
dispute at Khokna,
the starting point of
the Kathmandu-Tarai
Expressway.

Google finallyregisters in Nepal's
tax system
Global tech giant Google
has become the first big
international tech company toget registered in Nepal's tax
system. The registration follows
the government introducing
rules to bring foreign techcompanies under the ambit of
the country's tax regime.

According to Raju Prasad
Pyakurel, Spokesperson at theInland Revenue Department, a
two percent tax will be leviedon every transaction on any of
the Google platforms from now
onwards.
The government provisioned
the registration of tech andsocial media companies for the
first time in the current fiscal
year budget. Accordingly, aprovision for the digital service
tax has been introduced.

Sebon allows Ghorahi
Cement to issue shares at
premium
The Securities Board of Nepal(Sebon) has granted permission to
Ghorahi Cement, which is jointly owned
by Vishal Group and Triveni Group, toissue an initial public offering (IPO) at apremium price of Rs 435 per share.
According to the documents filed by
Ghorahi Cement at Sebon, the company
is issuing a total of 7.943 million sharesworth Rs 3.44 billion. Of the total shares,
397,190 has been allocated to locals
affected by the project. The rest 7.546
million will be issued to the generalpublic. While the general public has topay Rs 435 per share, the locals can buy
shares at a discounted rate of Rs 400.

Jestha 2080 ||11

BRIEFNEWSThe company, which operates a plantin Dang, was converted into a publiccompany in March 2021. According toCare Ratings Nepal, the turnover of thecompany had increased by 7.35 percent
in 2021. Ghorahi Cement had a turnoverof Rs 6.9 billion in 2021.

Everest Hospitality's
income surged by 234
percent
Everest Hospitality and Hotel
Limited (EHHL), a MS Group
company which runs Hotel Marriot in
Kathmandu, has reported a whopping
243 percent growth in its operating
income. According to Care Ratings
Nepal, the company's total operating
income in the fiscal year 22 stood at Rs
1.02 billion, up from Rs 298 million in
FY 21.

Govt cuts provincial and local financial
equalization grant by half
Amid the resource crunch which has createddifficulties in managing finances, the federal
government has slashed 50 percent of the third
installment of the financial equalization grants to beprovided to the provincial and local governments.
The federal government will provide the otherlevels with only Rs 23 billion after cutting Rs 23
billion out of the Rs 46 billion allocated for the
purpose. A cabinet meeting on April 25 decided
to cut the amount by 50 percent and send only 50
percent of the amount for financial equalization.
On April 27, the Ministry of Finance wrote to the Office of the Financial
Comptroller General, asking it to transfer only 50 percent of the third
installment of the financial equalization grant to the local governments andprovinces in the current financial year.
According to Sub-section (3) of Section 4 of the Financial Equalization
Grant Allocation Act, 2079 BS, the final installment to be transferred in thecurrent fiscal year 2022/23 is Rs 9.94 billion to the provinces and Rs 13.20
billion to the local governments.

IBN approves investment
worth Rs 167.57 billion

Of the total income, 52 percent
came from room lodging and services
while 41 percent came from food andbeverage sales from Meetings, Incentives,
Conferences, and Exhibitions (MICE)
events. The room occupancy surged to49 percent in 2022 from 20 percent in
2021. Similarly, the average room rateincreased to Rs 13,190 in FY 22 from Rs
9,509 in FY 21.
The EHHL has already booked
revenue of Rs 745 million in the firsthalf of 2023, according to Care Ratings
Nepal. The average occupancy rateduring the first half of FY 23 is 68
percent compared to around 36 percent
during the first half of FY 22.

12 || Jestha 2080

The Investment Board Nepal (IBN)
has approved investments worth Rs
167.57 billion for five hydroelectric
projects. Of the total investment, Rs
146.2 billion is foreign direct investment(FDI) and Rs 21.37 billion is domestic
investment.
IBN approved the investmentof Rs 92.68 billion proposed by thedeveloper of the 669 MW Lower Arun
Hydroelectric Project. The board alsodecided to form a project development
agreement (PDA) negotiation committee
led by the IBN CEO.
IBN on July 11, 2021, signed a pactwith India’s state-owned Satluj Jal
Vidyut Nigam to develop the Lower
Arun Hydropower project in eastern
Nepal. This is the second mega project
undertaken by the SJVN after the $1.04
billion 900-MW Arun-3 hydroelectric
project in the Arun River.
The other hydroelectric projects
getting the IBN approval are 102 MW
Upper Marsyangdi-1 (Rs 33.19 billion),
70 MW Dudhkoshi-2 Jaleshwor (Rs
20.35 billion), 70.3 MW Simbuwa Khola(Rs 13.44 billion), and 43 MW Upper
Madi-0 (Rs 7.93 billion).
Among these five projects, FDI
worth Rs 146.2 billion was approved forthree projects that include Lower Arun,
Dudhkoshi-2 (Jaleshwor) and Upper
Marsyandi-1.

Govt's arrears amounted
to Rs 129.56 billion in FY
2021/22
The 60th annual report of the Officeof the Auditor General (OAG) showsthat distortions in government spending
are on the rise. The report said that thetrend of spending government resources
flouting the rules has increased.
The report has said that the arrearsof the government agencies -federal,provincial, and local levels stood at
Rs 129.56 billion in the fiscal year
2021/22. The cumulative arrears of thegovernment agencies had reached Rs
959.79 billion.
Among the federal ministries,
Finance Ministry has the highest arrears,
according to OAG. The report says
Finance Ministry's arrears stood at Rs

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GPO Box: 20600, Panipokhari, Lazimpat, Kathmandu
Phone: 4418113, 4006625, Fax: 977-1-4416427
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email: info@nlgi.com.np, nlgi@mail.com.np
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BRIEFNEWS
FDI commitments decline by 18.20
percent

The majority of industries approved are small-scaleindustries. 166 small-scale industries, 22 medium-level, andfour large-scale industries received approvals in the current
fiscal year.
The service sector topped the chart in terms of FDI
pledges. According to DoI, 45 percent of the registeredindustries are in the service sector category. The tourism
sector is the second most preferred sector with 36 percent ofindustries registered in this category.

Foreign direct investment (FDI) commitments havedeclined by 18.20 percent in the current fiscal year.
According to the Department of Industry (DoI), it registeredaround 200 industries/firms committing to investing Rs
28.129 billion in the nine months of the current fiscal year.
FDI commitments worth Rs 34.388 billion were registeredin the same period of the last fiscal year 2021/22.
Month-wise FDI Commitment
According to DoI, a total of 192 companies andfirms were registered in the review period and theMonth
FY 2021/22
FY 2022/23
department has also approved 53 technology transfer
agreements from foreign firms.

32.46 billion, followed by the Ministryof Physical Infrastructure and Transportwith Rs 8.79 billion.
The arrears of federal agencies stoodat Rs 56.31 billion, provinces at Rs 7.20
billion, and local levels at Rs 42.88
billion. Similarly, other government
agencies' arrears stood at Rs 13.38 billion.

Shangri-La, IHG ink deal
for four hotel projects
The British multinational hospitality
company IHG Hotels & Resorts has
signed a management agreement with
Shangri-La Hotel and Resort Group, aleading hospitality group in Nepal, todevelop four new hotel properties in
Nepal. Earlier, IHG was a management
partner of the five-star Soaltee Hotel

14 || Jestha 2080

ShrawanRs 5.535 billion

Rs 2.649 billion

BhadraRs 6.32 billion

Rs 3.446 billion

Ashoj

Rs 11.965 billion

Rs 1.854 billion

Kartik

Rs 0.98 billion

Rs 3.65 billion

MangshirRs 5.151 billion

Rs 0.808 billion

Poush

Rs 0.612 billion

Rs 4.852 billion

Magh

Rs 0.539 billion

Rs 1.39 billion

FalgunRs 2.023 billion

Rs 1.929 billion

ChaitraRs 1.802 billion

Rs 7.551 billion

Total

Rs 34.388 billion

Rs 28.129 billion

which ended in May 2021.
The new hotels under thepartnership with Shangri-La Group are
InterContinental Kathmandu, Lazimpat,
Hotel Indigo Pokhara, Gharipatan,InterContinental Resort Pokhara, Begnas
Lake, and InterContinental Resort
Chitwan, Meghauli. The partnershipaims to add close to 500 rooms to
IHG's portfolio in Nepal. Two of
IHG's global brands, InterContinentaland Hotel Indigo will also make theirdebut in the Nepali market. Currently
under construction, the new hotels arescheduled to open in the next 1-4 years.
InterContinental Kathmandu
Lazimpat will be redeveloped on thesame site as Shangri-la Kathmandu
Hotel, which is one of the iconic hotels
of Nepal. The Hotel Indigo Pokhara islocated in Pokhara’s Gharipatan areaand has 100 rooms. The InterContinental
Pokhara Begnas Lake is an 80 rooms
hotel. Similarly, the InterContinental
Resort Chitwan is located in the popular
tourist destination of Mehgauli. The
resort will feature 80 rooms.

Nepal asks India for three
more petroleum and gas
pipelines
Nepal has requested India to build
three more petroleum pipelines. Nepal
made such a proposal during the NepalIndia Joint Secretary Level meeting on
petroleum and gas supply last month.
The Nepali team requested the Indianside to build a natural gas pipeline alongwith two petroleum pipelines. Radhika

BRIEF
NEWS
Aryal, joint secretary of the Ministry ofIndustry, Commerce and Supply led the
Nepali side while the Indian side was led
by Isha Srivastava, joint secretary of the
Ministry of Petroleum and Natural Gas.
"We have requested to build a petroleum
pipeline from Amlekhganj to Lothar andfrom Siliguri to Charali and a natural gas
pipeline from Gorakhpur to Bhairahawa.
The Indian side is positive in this,"
said an official who participated in themeeting.

Legal hurdles abolishedfor registration of Nepalmade vehicles
The government has amended theTransport Management Procedures
Guidelines 2060 BS to remove legal
barriers to the registration of vehicles
manufactured and assembled in Nepal.

The latest move of the government cameafter the Nepali electric two-wheeler
company Yatri Motorcycles warned tocease its production as existing rules
continue to prevent registration ofdomestically manufactured vehicles.
Prime Minister Pushpa Kamal Dahal
instructed to amend the guidelines
to remove the legal complications fordomestic vehicle manufacturers.
According to the Department ofTransport Management (DoTM),
manufacturers can now register theirvehicles after the government revised
the guidelines and added a point '11.1.9'
to it which allows the registration ofvehicles that are assembled in Nepal byimporting parts from abroad or are fully
manufactured in the country.
After the amendment of theguidelines, producers have been
exempted from submitting proof of
opening the letter of credit (LC) for theregistration of vehicles. The revision of
the guidelines has cleared the way toregister all types of electric, petrol, anddiesel vehicles made in Nepal.

Dabur Nepal to reinvest
Rs 9.68 billion
Dabur Nepal has signed an agreement

Banks' average base rate declines to
10.51 percent
The base rate of Nepali commercial banks declined in
the third quarter of the current fiscal year as banks reduced
their interest rates on deposits. The financial reports ofcommercial banks show the base rate has declined by 0.28
percentage points by mid-April, 2023.
The average base rate ofbanks was 10.80 percent until
mid-January which came down
to 10.51 percent by mid-April.
Banks started reducing interest
rates on deposits in midJanuary. As their cost of funds
decreased, the base rate also
decreased accordingly.
According to the latest
decision of the Nepal Bankers'
Association, banks can

16 || Jestha 2080

with Investment Board Nepal (IBN) to
reinvest Rs 9.68 billion in Nepal. IBN
CEO Sushil Bhatt and Dabur Nepal'sBusiness Head Harkirat Singh Bedi
signed the agreement in the presence ofMinister for Industry, Commerce andSupplies Ramesh Rizal.
Dabur Nepal plans to invest themoney in three verticals. The biggest
investment will be made in the juice
segment. Similarly, the company will
invest in the consumer care division.
According to the company, the 30-yearold machine will be changed and a plantwith new technology will be installed.
The multinational company Dabur
Nepal which started commercial
production 30 years ago, had started
preparations for aggressive market
expansion by adding an investment of Rs
9.68 billion two years ago.
The company has been producing
and marketing around 10 brands in
Nepal.

determine the interest rate by adding a maximum of 5
percent premium to the base rate.
Among the 21 commercial banks, the base rate of the twobanks increased in the third quarter. The base rate of Nepal
SBI Bank has increased by 0.33 percent and Machhapuchhre
Bank by 0.08 percent compared to the second quarter. As
of mid-April, the base rate of five banks has come down tosingle digits. Among them, Rastriya Banijya Bank's base rate
stood at 8.47 percent, Standard
Chartered Bank Nepal's at 9.27
percent, Nepal Bank's at 9.92
percent, Everest Bank's at 9.94
percent and Nabil Bank's at 9.99
percent.
Currently, Sunrise Bank's
base rate is the highest amongcommercial banks. The bank's
base rate stood at 11.34 percent in
mid-April.

COVER STORY

Federal Budget for FY2023/24

BRINGINGECONOMYBACK FROMTHE BRINK
Never before has any finance ministerbeen forced to prepare a budget
with an acute scarcity of financial
resources as Dr. Mahat.
n the HRM

18 || Jestha 2080

Jestha 2080 ||19

COVER STORY

D

rafting a federal budget
has always been a heftytask as the Ministerfor Finance has to takecare of the aspirationsof many. From political head honchos
to local-level leaders, from the private
sector to civil service employees, all want
their interests and issues to be served by
the government’s fiscal policy.
As Finance Minister Dr. Prakash
Saran Mahat and his budget teamenter into the final leg of the draftingof the federal budget for the next fiscal
year 2023/24, there have never beenchallenges surrounding the economy
more serious than before. Never before
has any finance minister been forced toprepare a budget with an acute scarcity
of financial resources as Dr. Mahat.
In the last three years, the country’s
economy has remained in the doldrums
stemming from the Covid-19 pandemic.
The past one and a half years have been
exceptionally hard with the external
sector imbalance hitting the economy

20 || Jestha 2080

PRIORITIES OF NEW BUDGETn Control unnecessary expenses and improve capital expendituren Restore the confidence of the private sector
n Improve delivery of public services in all three tiers of thegovernment
n Align fiscal and monetary policies for a sustainable economyn Make the social security programs effective and manage
sustainable resources for the purposen Implement programs to reduce climate change effects
n Promote clean and green energy
n Implement programs to become self-sufficient in agricultural
products
n Provide fertilizers to farmers without hassles
n Prioritize the construction of cold stores for agricultural productsn Ease legal procedures to promote SMEs
n Promote the export of electricity and other potential goods
n Expedite construction of strategic projects like Kathmandu-Terai
Expressway, North-South Corridor, East-West Highway
n Provide vocational training to youths and create employment
opportunities

in the last fiscal year and a serious
imbalance in expenditure management
and public finance management in thecurrent fiscal year.
The fact that the Finance Ministry ina mid-term review of the budget slashedrecurrent expenditure by 20 percent isevidence of the widening gap between
the income and expenditure of thefederal government.
The mishandling of the economy,
especially during the tenure of Janardan
Sharma as finance minister, the bringing
of populist programs in the current fiscal
year budget, the sluggishness in revenue

populist programs, including raising thesalary of government staff by 15 percent
and lowering the eligibility age forreceiving an elderly allowance to 68 years
from 70 years. The salary increments
and lowering of the eligibility age for theelderly allowance created an additional
liability of around Rs 76 billion in thecurrent fiscal year alone. He was also
not logical enough to set the economic
growth target of 7 percent which wasunachievable given the adverse national
and international scenarios.  
In the last five years of federalism
practice in Nepal, the Ministry of

Rs 679billionRs 501billionRs 381billionRs 374billionRs 314billionCAPITAL
EXPENDITURE

Rs 753billion

RECURRENT
EXPENDITURE

collection, and import restrictions
coupled with rising interest rates havecrippled the country’s economy.
Given the scarcity of resources,
mainly due to the sharp decline inrevenue collection, the government
cannot do much even if it wants in theupcoming federal budget. For the firsttime since the fiscal year 1967/68 that thecountry has witnessed negative growth
in revenue collection.
Despite clear indications of possible
difficulties in revenue collection, the thenfinance minister Sharma brought the FY
2022/23 federal budget with a number of'022/23'021/22'020/21'022/23'021/22'020/21

FOREIGN
GRANTSRs 1474
billionFY2020/21

Rs 55 billion FY2022/23

BUDGET
SIZE

Rs 63 billion FY2021/22
Rs 58 billion FY2020/21
FOREIGN LOAN=

Rs 1793billionFY2022/23

Rs 1647
billionRs 298 billion FY2022/23

Rs 309 billion FY2021/22

Rs 242 billion FY2020/21

FY2021/22=

Jestha 2080 ||21

COVER STORY

Rs 981 billion'022/23

Rs 1025 billion

Rs 1240 billion

GOVERNMENTRESOURCESREVENUE'021/22'020/21

Rs 208 billion

Rs 167 billion

FINANCING

Rs 230 billion

FISCAL TRANSFER

Rs 366 billion| Jestha 2080

There is a consensus among
economists that there is no possibility
to increase the revenue estimate for the
next fiscal year given the precarious stateof revenue collection in the current fiscal
year. They say, if there is no increase inrevenue, there will be no space to bringmore programs.
Economist Keshav Acharya says thatin order to improve revenue collection,
the budget should prioritize policies that
increase revenue. A reorganization of
the bureaucracy is necessary to improve
capital expenditure, but the size ofthe capital expenditure should not be
increased. “The bureaucracy should be
mobilized in such a way that there is lessleakage of revenue,” he said.
The current problem of resourcemismatch, according to economists, ismainly due to the trend of introducing a
bloated budget every year. “In the past,
the government has brought in bloatedRs 387 billion

22 |being collected on a daily basis, it looks
quite impossible to meet the revenue
collection target in the last two months
remaining in the current fiscal year.
With the expenditure fast exceeding
the income, the country’s treasury has
been pushed into a deep fiscal imbalance
forcing the government to slash amounts
allocated to development and recurrent
expenditures in the current fiscal year’s
budget. The federal government has
cut 50 percent of the third installmentof the financial equalization grants tobe provided to the provincial and local
governments.
According to the Pension
Management Office, the payments ofpensions to 18,000 teachers for Chaitra
month (mid-March-Mid-April) got
delayed due to inadequacy of the budget
because the government had budgetedaround Rs 55 billion against therequirement of around Rs 75 billion.

Rs 430 billion

Finance has been facing huge pressure
to accommodate as many projects
proposed by local government, provincial
governments, lawmakers, and top
leaders. The magnitude of the pressure
can be gauged by the fact that the
National Planning Commission (NPC)
had received a total of 4,005 projects
totaling Rs 142 billion from the local andprovincial governments. Of these, the
NPC selected only 20 percent, or around
800 projects for complementary andspecial grants.
Economists say that given the state of
the economy, the finance minister must
control the temptation of increasing thesize of public expenditure. According
to them, the size of the next year’s
budget should be kept lower than thecurrent fiscal year without affecting
the overall economic objective. If the
weaknesses created and institutionalized
by the previous minister in the revenue
administration are corrected, the revenue
growth rate could return to its natural
pace in the next fiscal year, say analysts.
According to economists, the successof Dr. Mahat as the finance minister
depends on new policy arrangements toinstitutionalize balanced public finances.
They agree it is imperative to rationalize
the scope, and periodical increase ofsocial security allowances, which havebeen used as tools for political gains till
now.
“The priority for the next budget
should be to streamline both revenue
and expenditure. This means thatthe government needs to identify all
resources and ensure that revenue
is collected effectively. Similarly,
expenditure needs to be managed
efficiently to ensure that projects
are implemented in a timely mannerand deliver tangible results. It is also
important to examine the effectivenessof current policies aimed at stimulating
economic growth,” said Nara Bahadur
Thapa, former Executive Director of
Nepal Rastra Bank.
Managing the resources prudently
has become of utmost importance for
now as the government has been able tocollect revenue just over 50 percent of
the target. With revenue of Rs 2.5 billion'022/23'021/22'020/21'022/23'021/22'020/21

COVER STORY“Streamlining revenue andexpenditure should be the priority”
n Nara Bahadur Thapa, former Executive Director, Nepal Rastra BankT

he government should prioritize streamlining
revenue and expenditure in the upcoming
fiscal year›s budget. This means thegovernment needs to identify all revenue sourcesand ensure that they are being collected effectively.
Similarly, expenditure needs to be managed
efficiently to ensure that projects are implemented
in a timely manner and deliver tangible results. It
is also important to examine the effectiveness ofcurrent policies aimed at stimulating the economy.
For example, it is important to see whether these measuresrelated to tax relaxations and rebates are actually helping
to increase production. While the government provides
the VAT refund facility, it appears that only large businesshouses are benefiting from this policy while consumers
are not receiving any tangible benefits. Therefore, it isessential to restructure policies to ensure that they are
effectively targeting the desired outcomes. This might
involve reconsidering the criteria for eligibility to benefit
from these policies or finding new ways to support smaller
businesses and ordinary consumers. Ultimately, the goal
should be to ensure that all citizens are able to benefit fromthe government›s economic policies and that the country
as a whole can thrive.
Given the current state of the economy, it isparticularly important to review these policies to ensurethat they are not putting undue strain on the government’s
finances. Revoking the tax rebates and subsidies could
lead to an increase in revenue collection of up to Rs 300
billion. This would provide a much-needed boost to thegovernment’s coffers, which could then be used to fundpriority projects and initiatives aimed at stimulating
economic growth and creating jobs. By doing so, thegovernment could ensure that it is using its resources
effectively to benefit all citizens, rather than providing
unnecessary benefits to a select few.
It is clear that Nepal’s economy faces a number ofchallenges, particularly when it comes to supporting small
and medium-sized enterprises (SMEs). While big businesshouses often receive the lion’s share of government
support, SMEs are frequently left to fend for themselves
and may struggle to access the resources and support theyneed to succeed. To address this issue, the government
should consider introducing targeted subsidies andbenefits that are designed specifically to support SMEs.
This could include measures such as tax breaks, access

24 || Jestha 2080

to funding, and support for training and development
programs. In addition to these measures, the government
can also ease access to modern technologies and services
that can help SMEs to become more productive andefficient. For example, the government could work withprivate sector providers to set up factories or provide
other infrastructure that SMEs can use to improve theiroperations.
Investment is key to driving economic growthand creating jobs. The government needs to focus ondeveloping critical infrastructure, such as reliable
electricity and good roads, to support industries andpromote the movement of goods and services. One way
to achieve this is by allocating a significant portion of
the budget towards improving the quality of electricity
supply in major industrial estates. This would not only
benefit large businesses but also small and medium-sizedenterprises that rely on a consistent and reliable source ofpower to operate.
The government needs to work towards centralizing
the collection of agricultural products, which canhelp reduce imports of agri goods and promote theconsumption of domestically produced agricultural
products.
By digitalizing services and making them moreaccessible to the general public, the government canincrease revenue collection and reduce leakage. This
would not only provide much-needed funds for capital
expenditure but also help to create a more efficient andtransparent tax system. The government also needs toprioritize national pride projects, but with extreme
monitoring to ensure that there is no corruption or delays.
These projects can help to boost economic growth andcreate jobs, but it is important that they are implemented
in a transparent and responsible manner.
The government should also ensure that financial
discipline is maintained and that loans are invested onlyin the proposed sector, as this can help to bring SMEs
under the law and promote growth in this vital sector.
Overall, efficient resource management and investment
in critical infrastructure and projects are necessary for
driving economic growth and creating jobs in Nepal.
The government must prioritize transparency andaccountability in all its actions, and work towards creating
a more equitable and prosperous society for all Nepalis.

COVER STORY
budgets, only to cut them down after
six months. Therefore, the government
must be realistic when introducing theannual budget. In the next fiscal year,
the government should aim to reduce
expenses at any cost, while still building
national pride projects,” said economist
Govind Nepal.
RELOOKING TAXING MODELSThe government has been facing asignificant challenge in ensuring thatits revenue collection is efficient andeffective. In recent years, there has
been a significant leakage in revenue
threatening the country’s financial
stability.
One of the key areas where thegovernment needs to relook its policies
is the taxing model, according to

the economists the HRM talked to.
Economists have pointed out that thecurrent Value Added Tax (VAT) refund
policy of 13 percent is only benefiting
big business houses. This policy is nothelping small businesses or the economy
as a whole.
Additionally, subsidies for export
have not been of much help to boost
domestic production. Instead, many
import subsidies given to businesshouses are affecting the productionof Nepal. To address these issues, theFinance Ministry needs to re-evaluate its
taxing policies. The government should
revoke the import subsidies and othertax exemptions that are not beneficial tothe economy, they said. These policies
have only resulted in a revenue loss of Rs.
150 billion, according to a recent report

Budget needs tosupport the ailing
SME sectorn DB Basnet, Chairperson, Cottage and Small Scale Industry Committee, FNCCIT

he SME sector has been severely affected by a seriesof unfortunate events in the last three years withmany firms closing down and there is little hope forthe revival of such businesses. Although the government
introduces programs for SMEs every year, none of them are
effectively implemented. This is troubling, as the SME sector
is a significant source of job opportunities for a large numberof people, and without government support during times ofcrisis, many are losing their jobs. But the government is not fullycommitted to supporting the SMEs.
For example, the government levied taxes on domestic
sanitary products while lifting customs duty on sanitary
pads imported from India. As a result, domestic products areunable to compete with Indian brands and this has led to theclosure of 22 domestic sanitary pads producing industries.
This is one among many examples that show how policy
decisions negatively affect SMEs and how the government is
not prioritizing the growth and success of local businesses. The
budget for the upcoming fiscal year needs to break the chain ofwrong policymaking and support the ailing SME sector.

26 || Jestha 2080

by the Auditor General.
The exemptions did not benefit theconsumers in any way. It is, therefore,
prudent for the government to eliminate
tax exemptions from the next fiscal year
onwards. This will help in increasing
revenue and ensuring that the country’s
financial stability is maintained, say
experts.
“While the government offers a 13
percent VAT refund, it appears that
only large business houses are benefitingfrom this policy, while consumers are
not receiving any tangible benefits.
Therefore, it is essential to restructure
policies to ensure that they are effectively
targeting the desired outcomes. Thismight involve reconsidering thecriteria for eligibility to benefit fromthese policies or finding new ways tosupport smaller businesses and ordinary
consumers. Ultimately, the goal should
be to ensure that all citizens are able tobenefit from the government’s economic
policies and that the country as a wholeis able to thrive,” said Thapa.
According to him, in times of crisis
or even in normal circumstances, it isimportant for the government to ensurethat tax policies are implemented
effectively and equitably and it is not
logical for VAT to be levied on poor
people while rebates are given to richbusinesspersons. “Therefore, it may benecessary to reconsider current policies
and eliminate any subsidies, rebates, ortax incentives that are not serving theirintended purpose or are not contributing
to the economy. Revoking these rebatesand subsidies could lead to an increase
in revenue collection of up to Rs 300
billion,” he said, adding, “This would
provide a much-needed boost to thegovernment’s coffers, which could thenbe used to fund priority projects andinitiatives aimed at stimulating economic
growth and creating jobs.”
PRIORITIZING NATIONAL PRIDEPROJECTS
It is important for the government toprioritize certain national pride projects
in the face of resource constraints.
With limited funds and time, it issimply not feasible to allocate resources

to all such projects, say economists.
According to them, it is essential thatthe government prioritize projects thatalign with the goals and reflect the valuesof the nation. While the government
has allocated a substantial budget tonational pride projects in recent years,
the quality of these projects has been
largely unchecked and unmonitored.
To address this issue, the government
should implement a system of checks
and balances to ensure that theseprojects meet certain quality standards
and are executed in a timely and efficientmanner, they say.
“The government also needs toprioritize national pride projects, butwith extreme monitoring to ensure that
there is no corruption or delays. These
projects can help to boost economic
growth and create jobs, but it isimportant that they are implemented ina transparent and responsible manner,”said Thapa.

The economists who talked
to the HRM pointed out Sikta
Irrigation Project and Gautam BuddhaInternational Airport as ‘wasted
projects’.
The construction of the Sikta
Irrigation Project began in 2004, withthe aim of irrigating around 43,000
hectares of arable land in the Banke
district. The government spent nearlyRs 14 billion and close to two decadeson this project. However, the project
suffered major setbacks when the main
canal was heavily damaged at various
sections of a 5 km segment of the 45
km channel in June 2016 and July 2018
during test runs. However, the Apex
Court recently deemed the dissoluble
soil in the project area responsible for the
failure of the project.
Likewise, the Bhairahawa-based
Gautam Buddha International Airport
was built with an investment of USD 76.1
million. However, the mega project has

failed to attract international airlines,
and the airport wears a deserted look.
“In the next fiscal year, thegovernment should aim to reduce
expenses at any cost, while still building
national pride projects. Priority projects
should be identified from the national
pride projects, and budget allocation
should be made accordingly. Some
projects could be postponed for a year ortwo,” said Nepal.
It is a widely acknowledged fact thatnational pride projects have often beenmarred by poor quality and rampant
corruption. Delays in the executionof these projects have also led to asignificant increase in their costs. In
light of these challenges, Dr. Dilli Raj
Khanal says that it is essential that the
government prioritize its investments
in national pride projects based on
rigorous analysis of the expected returnon investment. “Instead of investing in
national pride projects haphazardly,

It will be prudent to abolish tax
exemptions from the next fiscal
year onwards
n Keshav Acharya, Former Executive Director, Nepal Rastra BankTo improve revenue collection, the budget
should prioritize policies that can
6+increase revenue. A reorganization of
the bureaucracy is necessary to improve capital
expenditure, but the size of the capital expenditure
should not be increased unnecessarily due to theresource crunch. It is important that existing
resources are utilized effectively. Additionally,
the constitution provides local bodies with theauthority to collect taxes on various subjects.
However, these bodies have only been collecting
taxes on aggregate goods. To improve revenue
collection, local bodies should explore other areas
where they can levy taxes as per the constitutionalarrangements.
According to a recent report from the Officeof the Auditor General, the government incurreda loss of Rs 150 billion due to tax exemptions andrebates. Unfortunately, these exemptions did notbenefit the consumers in any way. As a solution, it
will be prudent to abolish tax exemptions from thenext fiscal year onwards.
Furthermore, the government needs to focus on
increasing foreign aid rapidly, but there appears to
be a lack of will to do so. For example, the Chinese
government is willing to invest a significant
amount of money in road projects in Kathmandu
and elsewhere. However, there are complications
such as the presence of electric poles and issues
surrounding land acquisition that need to beresolved before the Chinese will commit to funding
the projects.

Jestha 2080 ||27

COVER STORY
the government should focus onprioritizing two to three projects per
year that align with the nation’s values
and promote its identity. By investing
all of its efforts and resources into aselect few projects, the government canensure that they are completed on time
and within budget,” he suggested. To
prevent the mismanagement of funds
and the occurrence of corruption, thegovernment should establish a systemof oversight and accountability for theseprojects.”
TAKING THE PRIVATE SECTOR
INTO CONFIDENCE
It is crucial for the government totake the private sector into confidence
and work collaboratively to address
the current economic challenges. With
demand for goods and services in themarket dwindling and credit expansion
falling, economic growth has been slow,
with the government having to slash

its growth target from 8 percent to 4.5
percent. The World Bank and the ADB
have also projected Nepal’s growth to be
below 5 percent, highlighting the needfor urgent action.
The private sector is a criticaldriver of economic growth and job
creation, and the government must work
closely with businesses to create anenvironment that supports their growthand success. One of the significant
challenges faced by businesses, such as
the automobile industry, is the lack of
economic activities in the market. This
has resulted in businesses being hesitant
to clear customs of vehicles, as they
do not see sufficient demand to justify
bringing them in.
To boost the confidence of theprivate sector, the government must
implement policies that support
businesses and encourage investment.
This could include measures such asproviding tax incentives for businesses

that invest in research and development,
simplifying regulatory processes, andinvesting in infrastructure to create amore conducive business environment.
Business community members say
the government must also prioritize
the development of sectors with highgrowth potential, such as tourism andtechnology, to diversify the economy
and reduce its dependence on traditional
sectors. They ask the government totake urgent action to address the current
economic challenges and work closelywith the private sector to promote
growth and job creation. They say thatby implementing policies that support
businesses and create a conducive
business environment, the government
can boost confidence in the private
sector, encourage investment, and drive
economic growth.
According to Pashupati Murarka,
former President of the Federationof Nepalese Chambers of Commerce

Important for the govt to berealistic when announcing theannual budget
n Dr. Govind Nepal, EconomicstT

he management of resources is currently
a significant problem for the government,
as revenue collection has declined
dramatically. Due to economic activities shrinking,revenue collection has suffered, and therefore thegovernment’s current target should be to gain theconfidence of the private sector and consumers.
In the past, the government has brought inbloated budgets, only to cut them down after
six months. Therefore, it is important for thegovernment to be realistic when announcing
the annual budget. In the next fiscal year, thegovernment should aim to reduce expenses at any
cost, while still building national pride projects.
Priority projects should be identified from thenational pride projects, and budget allocation

28 || Jestha 2080

should be made accordingly. Some projects could
be postponed for a year or two.
The subsidies provided by the government
should be reflected in output. For example,
subsidies for exports and agriculture have been
provided, but production has not increased.
Therefore, mechanisms should be implemented
to identify whether subsidies are being utilized
effectively and whether production is increasing.
The government has recently lowered the age
requirement for receiving old age allowance to 68
years. This allowance has been used as a tool forpolitical parties to gain votes, but the governmentis currently facing difficulties in paying pensions
and salaries. Therefore, at such times, the approachshould be to cut expenses across the board.

and Industry, the major problem of
the economy is that there is very little
money flowing into the market currently.
“When you ask anybody, from thegeneral public to big corporate houses,
nobody has money. Why has thishappened? It is because the government
has failed to increase the money supply
in the market,” he said.
“To increase the money supply, thecapital expenditure must be increased.
This is the least expectation of theprivate sector for now. The governmentis the biggest buyer, and when capital
expenditure is improved, money isproperly supplied to the market throughcontractors,” he added.
The capital budget allocated for thecurrent fiscal year is Rs 380.38 billion. So
far, about 27 percent of the budget has
been spent. The progress of the capitalbudget expenditure in the first andsecond quarters was very low. Although
the expenditure has increased from thethird quarter, the government now needs
to spend Rs 277 billion capital budget in
the remaining three months.
REMODELING SOCIAL SECURITY
ALLOWANCESThe current social security system
in Nepal, with its 76 different schemes
spread across 10 different ministries,
has become a significant burden on
the government’s finances. Whilesocial protection is essential, the noncontribution-based social security modelthat Nepal employs has been increasingly
costly to maintain, economists say. As
per the World Bank report, Nepal has
been spending 1.7 percent of its GDP onsocial protection, which is higher thanthe South Asian and global averages.
The government has been struggling
to allocate funds for social protection
programs, and their budgets keepincreasing every year. The allocation forsocial security allowances alone was Rs

100 billion in the fiscal year 2021/22, asignificant increase from previous years.
The burden of non-contribution-basedsocial security has only increased withtime, and the government is facing ahuge financial burden in managing these
programs.
Economists and business community
members say revisiting the social
security scheme has become crucial intimes like these. According to them,while providing social protection
to needy citizens is necessary, thegovernment needs to explore moresustainable and cost-effective waysof providing it, and the current modelneeds to be reconsidered to ensure that itremains financially viable and meets theneeds of the population. The government
may need to explore options such as
contribution-based social security
systems, public-private partnerships,
or other innovative models to ensurethat social protection is accessible andFocus should be on increasing
industrial and agricultural
productivity
n Pashupati Muraraka, Former president, FNCCIAs the government is the largest purchaser inthe market, increasing capital expenditure
can boost the economy by infusing money
into the financial system. However, to ensuresustainable growth, internal production must be
increased, particularly in the agriculture sector.
This can be achieved by investing in agriculture,
which will not only increase production but also
save significant amounts of money currently spenton importing agricultural products from India.
Given that around 50 percent of Nepal’s
population still relies on agriculture, there needs tobe an agro-friendly policy that supports farmers.
However, one of the biggest ironies in Nepal isthat despite being an agricultural nation, farmers

do not receive fertilizers on time, which negatively
impacts agricultural production. Furthermore,
Nepal’s lack of modern technology limits crop
yields to one harvest per year, whereas foreigncountries can harvest crops up to three times ayear. If Nepal can modernize its agricultural sector,
it can become self-sufficient in food production.
The government’s claim of increasing
electricity production is commendable, but it fails
to provide adequate power to industries. This
creates obstacles for private-sector production
which ultimately increases the price of goods. To
increase production and ensure competitiveness,the government must prioritize providing
uninterrupted electricity to industries.

Jestha 2080 ||29

COVER STORY
sustainable in the long run, they say.
“The social security scheme in Nepal
has, unfortunately, become a tool forpoliticians to lure votes from the people.
The system has been exploited, andpeople who do not genuinely need social
protection have been taking advantage
of it. For instance, it is not uncommon tofind people with a house in Kathmandu,
which they rent out, claiming old
age allowance, which is a significant
problem,” said Nepal. “This culture of
expecting easy and free money from thegovernment needs to be addressed. The
government must ensure that the social
security system is not misused and that
only those who genuinely need it receive
support. It is crucial to have a strong
central bureau of statistics that cancollect data on who needs government
support and who does not.”Economists say the government must

identify the genuinely needy groups
and provide them with the necessary
support and take away the protection
from those who do not require it. This
will ensure that resources are allocatedappropriately, and the social security
system remains effective and sustainable.
According to some economists,
the old age allowance provided by thegovernment should be given to people
above the age of 75 years instead of thecurrent age limit of 68 years. This isbecause at the age of 72-75 years, people
become economically inactive, and it
would be an ideal time to provide themwith support. Instead of providing anallowance at the age of 68 years, thegovernment could consider providing
support to the elderly in terms ofhealthcare. As people age, they require
more medical attention, and the cost ofhealthcare can be a significant burden

Budget needs tosupport the ailing
SME sectorn Dr Dilli Raj Khanal, EconomistThe budget framework makes it challenging for thegovernment to meet all expectations, and Nepal collects
less revenue than other South Asian countries. In these
crucial times, the government needs to focus on managing
resources. The inflow of remittances was a luxury for Nepal, but
now this is no longer reliable. Capital expenditure is inefficient,with 50 percent of spending becoming useless, and manynational pride projects lack quality.
Unnecessary expenses should be reduced, and social
security allowances could be lessened in a way that ensuresthat needy people are not affected. Direct taxes that are due
must be collected, and the economy should be formalized.
Efforts are needed to control the black economy and massive
capital flight. Nepal can save an extra Rs 3 billion by reducing
unnecessary spending while ensuring maximum return on
investment. Furthermore, the government owes Rs 60-70 billion
to contractors which needs to be addressed.

30 || Jestha 2080

on their finances. Therefore, providing
healthcare support to the elderly would
be an effective way to assist them during
their non-economic years.
CUTTING UNNECESSARY
EXPENSESIn Nepa, the government’s spending
decisions have always come under
scrutiny. For instance, the allocation ofRs 7.5 billion for the Prime Minister’s
Employment Program last year wasquestioned due to its effectiveness.
Despite being announced to provide
employment opportunities to 200,000
people for 100 days, the program has only
provided employment to 171,000 people
for just 71 days, with reports of menial
tasks such as weeding and gardening.
Similarly, the decision to distribute
Rs 200,000 each to former combatants ofthe then People’s Liberation Army whowere not eligible for integration into the
Nepal Army and other security services
has added at least Rs 800 million to thestate coffer at a time when the country isgoing through an economic crisis. These
actions raise concerns about unnecessary
spending by the government.
According to Dr. Khanal, unnecessary
expenses should be reduced, and social
security allowances could be lessenedin a way that ensures that needy people
are not hit. “Nepal can save an extra
Rs 3 billion by reducing unnecessary
spending,” he said.
Economists also urged thegovernment to check the hefty expenses
it has been spending on the medical
treatment of VIPs abroad. Recently,
President Ram Chandra Paudel
was sent to India for treatment, andreports suggest that the total bill for
his treatment amounted to over Rs 20
million. This situation raises concerns
about the disproportionate allocation ofhealthcare resources in Nepal. “Whilethe country faces a range of pressing
healthcare challenges, including ashortage of medical personnel andfacilities, it appears that a significant
portion of the healthcare budget is being
spent on the medical needs of VIPs,” said
Khanal. “If the treatments could be donein Nepal, a huge amount can be saved.”

PRIORITIZING AGRICULTURALSECTOR
Despite relying on agriculture as theprimary source of livelihood for 50% of
its population, Nepal heavily depends
on imported agricultural products.
This has resulted in billions of dollars
flowing out of the country to countries
such as India, Ukraine, and the UnitedStates. To address this situation, Nepal
needs to introduce policies that promoteagriculture and reduce reliance on
imported agricultural products.
One way to achieve this is byincreasing investment in the agricultural
sector. This can be done by providing
farmers with better access to finance,
modernizing agriculture technologies,
and introducing incentives to promoteagriculture. The government can
provide subsidies on fertilizers, seeds,
and irrigation facilities to help farmers
increase their yields and reduce relianceon imported products.
“After that, the government needs towork towards centralizing the collectionof agricultural products, which canhelp reduce imports of goods from
India and promote the consumptionof domestically produced agricultural
products. This can not only help toreduce the trade deficit but also support
local farmers and promote agricultural
growth in the country,” said Thapa.
Another strategy could be to develop
agro-based industries to process
and add value to locally produced
agricultural products. This can create
jobs and boost the economy while also
reducing the need for imported products.
“The government can work towards
strengthening the agricultural supply
chain, including transportation andstorage facilities. This can ensure that
locally produced agricultural products
reach markets in a timely manner andreduce the need for imported products,”
said Thapa.
According to Murarka, to ensuresustainable growth, domestic production
must be increased, particularly inthe agriculture sector. “This can beachieved by investing in agriculture,
which will not only increase production
but also save significant amounts ofmoney currently spent on importing
agricultural products from India,” heopined. “Given that around 50 percent of
Nepal’s population relies on agriculture,
there needs to be an agro-friendly policythat supports farmers. However, oneof the biggest ironies in Nepal is that
despite being an agricultural nation,
farmers do not receive fertilizers on time,
which negatively impacts agricultural
production.”
According to him, Nepal’s lack ofmodern technology limits crop yields to
one harvest per year, whereas developing
and developed countries can harvest
crops up to three times a year. “If Nepal
can modernize its agricultural sector,
it can become self-sufficient in foodproduction,” he said.
SUPPORTING SMES
The Covid-19 pandemic has dealt asevere blow to Nepal’s small and medium
enterprises (SMEs), and the current
economic woes have only added to theirstruggles. Many SMEs are struggling
to stay afloat due to a lack of businessand the inability to pay rent. For SME
owners, access to loans has become
increasingly difficult which has only
exacerbated the situation and led tomany businesses closing down.
According to Thapa, it is clearthat Nepal’s economy faces a numberof challenges, particularly when it
comes to supporting SMEs. “While big
business houses often receive the lion’sshare of government support, SMEs are
frequently left to fend for themselves
and may struggle to access the resources
and support they need to succeed,” hesaid, adding, “To address this issue, thegovernment should consider introducing
targeted subsidies and benefits that aredesigned specifically to support SMEs.
This could include measures such as tax
breaks, access to funding, and support
for training and development programs.”
He is of the view that by providing
these types of resources, the government
can help to level the playing field for
SMEs and create a more supportive
environment for them to grow andthrive. “In addition to these measures,the government can also ease accessto modern technologies and services
that can help SMEs to become moreproductive and efficient,” suggested
Thapa. “For example, the government
could work with private sector providers
to set up factories or provide otherinfrastructure that SMEs can use toimprove their operations. By doing so,
the government can help to create a more
supportive environment for SMEs, andpromote the growth and developmentof these critical contributors to Nepal’s
economy.”Taxation without research has also
threatened the existence of SMEs. For
example, the government levied taxes
on domestic sanitary products while
making sanitary pads imported from
India tax-free. As a result, domestic
products were unable to compete with
Indian brands, leading to the closure of
22 domestic industries. According to
DB Basnet, Chairperson of the Cottage
and Small Scale Industry Committee ofthe Federation of Nepalese Chambers ofCommerce and Industry, the SME sector
has been severely impacted by the seriesof unfortunate events in the last three
years, with many firms closing down andthere is little hope for the revival of suchbusinesses in the foreseeable future.
“Although the government
introduces programs for SMEs every
year, none of them are effectively
implemented. This is troubling, as the
SME sector is a significant source of
job opportunities for a large numberof people, and without government
support during times of crisis, many arelosing their jobs,” said Basnet, adding,“Unfortunately, it appears that the
government is not fully committed to thesuccess of the SME sector. For example,
the government levied taxes on domestic
sanitary products while making sanitary
pads imported from India tax-free.” Asa result, domestic products were unable
to compete with Indian brands, leading
to the closure of 22 domestic industries.
According to Basnet, this policy decision
has adversely affected the SME sector,
and it shows that the government is notprioritizing the growth and success of
local businesses.

Jestha 2080 ||31

REPORT

Economy in Recession:

Govt Faces Hard
Choices
The economic growth estimate of 2.16 percent by NSO is the lowest after the
Covid-induced growth of -2.37 percent in FY 2019/20
n the HRM

W

hen thegovernment
announced thefederal budget
for the current
fiscal year, it had set an ambitious targetof eight percent of economic growth.
Despite challenges in the external sector,
the then Finance Minister Janardan
Sharma presented a bloated budget
increasing social security allowances andcivil servants’ salaries.
As import restrictions hit the revenue
collection, creating a mismatch in the
resource management, the government,
during the midterm review, cut down thebudget size, as well as slashed the growthtarget to 4 percent.
Now, even that four percent growthtarget is unachievable. The National
Statistics Office (NSO) in the first weekof May made published the National
Account Statistics saying the economic
growth will be limited to 2.16 percent.
The slowdown in economic activities
also hit the income of Nepalis. The percapita income growth of Nepalis has
stagnated this year as the NSO estimatedthat per capita GDP will remainunchanged from last year’s USD 1,399. Per
capita income means an average income ofa person in a year. The average per capita
income of Nepalis increased by USD 122
in the last fiscal year.
The NSO’s growth estimate for thecurrent fiscal year has clearly shown

32 || Jestha 2080

that a sharp slowdown in economic
activities, slackened domestic demand,tighter monetary policy, and persistentglobal headwinds have adversely affected
Nepal’s economy in the current fiscal year.
With an acute liquidity crunch,higher interest rates, rising inflation, andsluggish market demand, the country’s
economy has been under pressure fromthe start of FY 2022/23. While theeconomy grew by a meager 1.7 percent
in the first quarter of the current fiscal
year, the gross domestic product (GDP)growth was negative by 1.1 percent in thesecond quarter.
The slump in the construction,mining, transport, manufacturing,
and wholesale and retail trade sectors
dragged the overall economic growth. The
manufacturing, construction, and trading
sectors have all experienced negative
growth, contributing to the country’s
economic woes. Additionally, the growthof the agriculture sector, the major
contributor, has remained low, further
exacerbating the problem.
The construction sector contributes
5.52 percent to the national economy,
while the retail and wholesale sector
accounts for 15 percent, and theagriculture sector contributes a whopping
25 percent.
The NSO report says the construction
sector which grew by 7.08 percent in
the last fiscal year, is expected to remain
negative by 2.62 percent in this fiscal year.
Similarly, the wholesale and retailtrade’s growth has been projected to be
negative by 2.96 percent in this fiscal
compared to growth of 7.46 percent in thelast fiscal. According to NSO, the growthof the manufacturing sector is likely to
decelerate by 2.04 percent in FY 2022/23
due to higher interest rates, import
restriction measures, and the slowdown
in domestic consumption.
Ram Prasad Thapaliya, Chief
Statistician at NSO, says the economic
data does not look promising. “Thegovernment of all three tiers needs towork to improve the economy. The
contraction in economic activities has
badly affected the country’s economic
growth,” he said, “We have presented thereal picture of the economy in our reportbased on which the government can bring
the necessary policy interventions in thenext fiscal year’s budget,” he said while
unveiling the report.
According to economists, several
factors have contributed to the low
growth. Chandra Mani Adhikari observes
sluggish capital expenditure as one of
the main factors in this regard. “Dueto this, industries such as cement andsteel have not been able to produce attheir full potential, which has led to adecrease in overall economic activity.
Another important factor is the country’s
dependence on rainfall for agriculture.
Nepal is heavily reliant on the monsoon
rains to support its agricultural sector,
which accounts for a significant portionof the country’s economy. However,Sector wise growth
Industrial Classification

Deepening Economic Woes

FY 2022/23

Agriculture 	

2.73

Mining1.11– Nepal’s economic growth in FY 2022/23
projected at 2.16%

Manufacturing-2.04

Electricity 	

19.36

Water supply 	

2.16– Per capita income remains unchanged at $ 1399

Construction-2.62

Wholesale & Retail Trade 	-2.96– Negative growth in manufacturing, construction,
wholesale & retail trade sectors

Transportation

1.14

Accommodation & Food Service

18.56

Information & communication

4.07

Financial and Insurance Activities

7.29

Real Estate 	

2.17– Size of Nepal’s GDP estimated at Rs 5,381 billion– Energy and hospitality sectors to grow by doubledigits– Growth of mining and transportation sectors toremain lower than last fiscal year

Professional, Scientific & Technical Activities 4.30
Administrative Activities

5.01

Public Administration & Defense 	

5.30

Education

4.07

Human Health 	

6.51

Arts, Entertainment & Recreation 	

5.21

Nepal has experienced lessrainfall, which has severely
affected agricultural
productivity and led to a
decline in overall economic
growth,” he said.
According to Adhikari,
the country needs toinvest in its infrastructure
and industries to boost

6.01% FY2013/14

3.98% FY2014/15

0.43% FY2015/16

8.98% FY2016/17

7.62% FY2017/18

6.66% FY2018/19–2.37% FY2019/20

4.84% FY2020/21

5.61% FY2021/22

2.16% FY2022/23

GDP
Growtheconomic activity and reduce its
dependence on rainfall for agriculture.
“This could involve increasing
public investment in key sectors
such as transportation, energy, andtelecommunications, as well as providing
support for small and medium-sizedenterprises,” he said.
Economist Keshav Acharya says the
slowdown in demands across the sector
has exacerbated the economic woes.
“Nepal is struggling with a credit crunch,real estate slowdown, tumbling stock
market, and rising unemployment,” hesaid, adding, “Political instability hascaused the government to overlook the
economy, making it difficult to implement
effective policies. Urgent measures andpolicies are needed to address thesechallenges and support the economy.”
NSO’s projection is even lower
than the forecasts made by the WorldBank and the Asian Development Banka month ago. Both agencies estimated
Nepal’s economic growth at 4.1 percent
for the current fiscal year. Althoughmajor sectors have indicated depressed
activities, there are positive signs in
Nepal’s tourism and electricity sectors.
NSO projected that the electricity andhospitality industries will experience thehighest growth in the current fiscal year.
The electricity sector is expected to growby 19.36 percent, while accommodation
will increase by 18.56 percent.

Jestha 2080 ||33

INTERVIEW

Govt has the key role
to bring the crisisprone economy backon track
CHANDRA PRASAD DHAKAL, President,
Federation of Nepalese Chambers of Commerce and Industry (FNCCI)

N

ever before in thehistory of FNCCI, has
new leadership in theapex body of the Nepali
private sector been
forced to face turbulence
like in the present. With the country's
facing big external and internal
macroeconomic headwinds, the newly
elected executive committee of FNCCI
headed by President Chandra Prasad
Dhakal has a difficult road ahead of it tolead the business community which has
faced a series of economic shocks since
the last three years.
After assuming his office on April
16, the newly elected President Dhakal
has been focusing on working with thegovernment to take the economy outof the slump. In a conversation with
the HRM, he talked about how FNCCI
envisions bringing the derailed economy
back on track. Excerpts:

34 || Jestha 2080

Q: You have assumed the leadership of FNCCIat a time which is proving very difficult for thecountry. What will be your role to help take theeconomy out of the slump?

A: The country's economy is really in a difficultstate. The latest growth projection of the National
Statistics Office (NSO) indicates a disappointing
situation. Economic activities are very sluggish
currently. Even, the government is facing problems toprovide salaries to civil service employees.
However, as a private sector leader, my role islimited. Government and regulatory bodies have majorroles in revamping the economy and bringing it backon track. They should take the private sector into
confidence by creating an environment conducive todoing business, reviving economic activities, bringing
investment, and accelerating growth and development.
Q: What are your current priorities and plans

to support the ailing private sector? How do you
envision making the private sector capable toface future challenges?

A: The private sector's contribution is quite
huge to Nepal's economy. It contributes more than
80 percent to the national GDP, government revenue
and employment. Therefore, until and unless thegovernment acknowledges the importance of the private
sector and brings them into confidence by providing an

Jestha 2080 ||35

INTERVIEW

encouraging environment to expand theirbusinesses, there is no way out to get ridof this crisis-prone economy.
I mentioned five major areas ofintervention during my speech at theoath-taking ceremony for restoring thissluggish economy back on track.
The first and foremost is the common
understanding of all the economic
stakeholders, government, development
partners, regulatory bodies, economists,
and the private sector about the current
economic situation. For this, I haveproposed to have a national economic
symposium on the current economic
situation, which will discuss the present
economic situation and find a way outthat would bring all of us on the same
boat.
Second is the creation of a conducive
business climate. This is the preliminary
requirement for fostering any businesses
in the country.
Third is the public-private
partnership. We need huge investments
in large infrastructure projects. For this,we want the government's partnership insoliciting funds for large infrastructure
projects.
Fourth is the production of skilledhuman resources. Skilled humanresources are the foundation of any
country's development and prosperity.
And, fifth is the creation of encouraging
environment boosting psychology of theprivate sector providing social recognition
and respect.
These are a few of the many agendas
and issues that we need to address
to make a friendly environment forinvestment in the country.

Q: How will you work with thegovernment and the country’s
political leadership to makethem understand the problems
faced by the business communityand persuade them for policy
departures?

A: The government has the keyrole to bring the crisis-prone economy
back on track. The government must
create a conducive business climate tofoster and grow the private sector so
as to expand businesses, create jobs

36 || Jestha 2080

and collect revenue. As the private
sector's contribution to national
economic activities stands quite high,
it is the government's role to gain theirconfidence, boost their morale and trigger
growth and development.
As a leader of the private sector, I
would convince them that none of thecountries in the world have developed
without proper growth of the private
sector and their investment. Therefore,
the government and private sector should
go hand in hand, facilitating one another,helping one another, and supporting one
another so as to take mutual benefits ofdevelopment and prosperity.
I often mention that the private sector
is the partner of the government. The
revenue and taxes paid by the private
sector to the government are the major
sources of development and recurrent
expenditure for the government. I would
try my best to convince the politicalparties that the private sector can only
grow if there is an environment forbusiness. This may be improved byamending policies and laws, building
large infrastructure, or simply boosting
morale.

Q: How serious have you found thecountry’s political leadership about
resolving the economic problems?

A: After the new leadership in
FNCCI was elected, we paid courtesy
calls on the Prime Minister, chairpersons
of major political parties, the financeminister, and the central bank governor,
among others. All of them are well awareof the present economic situation andquite serious about it. They also havecommitted to go hand in hand with theprivate sector to bring normalcy back to
the economy.
Q: What is the role of the FNCCI

leadership to help the government
to get the derailed economy back on
track? What problems FNCCI has
identified in this regard?

A: As we have been saying thatthe current economic problem is theimpact of the Covid-19 pandemic, theRussia-Ukraine war, and the control
measures taken by the regulators in fearof Sri Lankan economic trouble. The
overreaction of the regulators might haveshrunk the economic activities, which
finally led to the current problem. The
government and the regulators have toplay a key role in bringing the derailed
economy back on track. The governmentand regulators should create a conducive
environment by bringing new measuresand policies for fostering business andeconomic activities.
Our role will be to support them byexpanding businesses, creating morejobs, and paying more tax and revenue.
I already mentioned five key areas ofintervention for the immediate recovery of
the economy. I believe if these issues wereaddressed properly, the economy would
move ahead smoothly and take the right
direction for the time being.

Q: Many see the current crisis also

as an opportunity for kickstarting
the next generation of structuralreforms in the economy. How doyou view this proposition? Whatrole FNCCI will play in this regard?

A: Of course, for the long-term
solution to the current economic problem,
we have to carry out structural reforms.
There are age-old policies, guidelines,
and laws that are controlling businesses.
Such rules need to be amended to suit thepresent-day and future needs.  
As the leading private sector
organization, FNCCI will lobby thegovernment and regulators to bring in
new programs and policies that would
drive the private sector and attract moreinvestment.
Q: It has been seen that FNCCI has

become weak as a lobby as it was in
the 1990s and early 2000s to makethings happen for the private sector.
Is it so?

A: I do not think so. FNCCI has
not become weak. It has become further
stronger. Its national and international
network has expanded further.
Government and regulators have also
started to pay heed to the advice ofFNCCI.

REPORT

Financial Inclusion

Nepal Strives forBigger Gains in Accessto Formal Financial
Services
The expansion of BFIs, SACCOS, and insurance companies have helped toincrease Nepalis’ access to formal financial services

n the HRM

N

epal has madesignificant strides inadvancing financial
inclusion, with 90
percent of the country’s
adults using formal channels for financialtransactions. According to a joint reportby the International Finance Corporation

38 || Jestha 2080

(IFC) and the UN Capital Development
Fund (UNCDF) titled ‘Nepal Financial
Inclusion Report 2023’, the use of formal
financial services is strong across thecountry with the growing number ofcitizens now has bank accounts, availof banking services as well as purchaseinsurance policies.
The report states that as of 2022, 90

percent of adults use formal financial
services (bank accounts, savings, credit,
payments, and insurance), up from 61
percent in 2014. Of the people withaccess to the formal financial system,
81 percent use banking services, while
9 percent use other types of formal
financial services such as those provided
by savings and credit cooperatives

(SACCOS), compared to 40 percent
using banks and 21 percent using otherformal channels in 2014.
The uptake of insurance has seen anotable growth from 11 percent in 2014
to 29 percent in 2022. The number ofadults who have their savings in formal
financial institutions has increased to 63
percent in 2022 from 40 percent in 2014.
This remarkable progress has been
driven by the expansion of banking
and microfinance institutions as wellas insurance companies along withgovernment policy interventions.
The mandatory branch expansion ofbank branches at all local levels, andthe distribution of social benefits via
bank accounts are some of the defining
factors that led to the increased accessto formal banking services. The growth
in insurance penetration and usage wasdriven by the expansion of the National
Health Insurance Program, compulsory
life insurance for migrant workers, andthird-party liability vehicle insurance.
The report has rightly underscoredthese facts. “The uptake of overall formal
financial services has been largely driven
by both banking and insurance sector
service expansion across the country
under the new federal structure, andthe uptake of digital financial services
amidst the growing mobile and internet
penetration,” reads the report.
The most promising development
during this period is a significant surge

THE REPORT SAYSl

90 percent of Nepali adults use formal financial services, up
from 61 percent in 2014.

l

Only 4 percent of adults use informal channels.

l

Of those using formal channels, 81 percent use banking
services while 9 percent use other formal financial serviceslIn rural areas, the use of formal financial services increased to88 percent in 2022 from 58 percent in 2014.

l

Only 50 percent of adults from rural areas have an accountat a financial institution, whereas, 60 percent of urban adults
have bank accounts.

l89 percent of women and 90 percent of men have access toformal financial services which was only 57 percent and 64
percent respectively in 2014.

l

Access to formal financial services is highest in Gandaki
Province at 96 percent, followed by Bagmati Province at 91
percentl

The uptake of insurance has seen a notable growth from 11
percent in 2014 to 29 percent in 2022.

l

7 percent of adults have accessed insurance services via
banks in 2022, and 22 percent of adults accessed insurance
through other formal sourcesl

The usage of formal insurance has increased in both rural andurban areasl

Rural areas have seen a significant increment from 8 percent
in 2014 to 26 percent in 2022.

l

There has been a significant rise in access to insurance
among female adults, from 7 percent in 2014 to 28 percent in
2022

l

The access to insurance by farmers increased to 23 percent in
2022 from 8 percent in 2014l

In the last four years, the number of life insurance policies
sold has increased by a whopping 413.4 percent

in the usage of formal financial services
in the rural areas of the country. The
report highlights that the usage of formal
financial services has risen to 88 percent
in rural areas in 2022 from 58 percent in2014. Among those who have access toformal financial services in rural Nepal,
77 percent utilize banking services while
11 percent utilize other formal financial
services.
Experts attribute the significant
increase in access to formal financial

Jestha 2080 ||39

REPORT
services in rural areas to various factors.
These include the mandatory andfocused expansion of bank branches at
all local levels post the country adopted
the federal structure. Additionally,
the distribution of social benefits via
bank accounts and collaborative efforts
between local governments and theprivate sector to promote financial
services have also contributed to thispositive trend.
According to former banker Bhuwan
Kumar Dahal, the policy of the Nepal
Rastra Bank (NRB) that mandatorily
required banks to establish branches in
753 local units has played the role of acatalyst in this regard. “People living innooks and corners across the country
now have access to formal banking
services which was not the case before,”said Dahal.
As BFIs reach almost all local levels,
people in remote areas now have accessto a wide range of financial services.
And, few policy interventions by thegovernment in recent years have also
been instrumental to increase formal
financial services access. The federal
government has made it mandatory forpeople to receive old-age allowances
through formal banking channels. “Thismove is aimed at promoting financial
inclusion and encouraging people to use
formal banking channels. This has led to
an increase in the number of people using
formal banking channels to receive theirold-age allowances. This has resulted in
the surge in the number of people using
formal banking channels” said Dahal.
Bankers say the increased financial
access can bring about a range of benefits
to both individuals and the country’s
economy. When people have access toformal banking services, they will able tosave their money more securely and earninterest on their savings. This encourages
people to save more, which in turn canlead to greater financial stability andsecurity for themselves and their families,
they say.
Gender parity is another encouraging
development of the past decade. The
gender gap has also significantly
narrowed with 89 percent of women
having access to formal financial services

40 || Jestha 2080

Access to insurance growthreaches 29 percent
The cross-selling of insurance products by banks, mandatory life
insurance for people going to foreign employment, and the implementation ofagri-insurance have led to the growth in insurance penetration. The uptake of
insurance has seen a notable growth from 11 percent in 2014 to 29 percent in2022.
7 percent of the country’s adults have accessed insurance services via
banks in 2022, and 22 percent of adults accessed insurance through otherformal sources which are primarily insurance companies.
The usage of formal insurance has increased in both rural and urban areas,
while rural areas have seen a significant increment from 8 percent in 2014 to
26 percent in 2022.
There has been a significant rise in access to insurance among female
adults, from 7 percent in 2014 to 28 percent in 2022.
The implementation of the Agricultural and Cattle Insurance Directive
2020 has been a catalyst in the growth of agri-insurance. “The access toinsurance by farmers increased to 23 percent in 2022 from 8 percent in 2014,
which can be attributed to the increase in uptake of agriculture insurance
driven by the implementation of the Agricultural and Cattle Insurance
Directive 2020, which requires non-life insurance companies to allocate
5 percent of their insurance portfolio to agriculture and cattle insurance
products,” reads the report.
According to the report, the overall increased access to insurance isprimarily driven by the expansion of life insurance services. In the last four
years, the number of life insurance policies sold has increased by a whopping
413.4 percent, from 2.73 million in FY 2016/17 to 13.09 million in FY 2021/22.

REPORT
in 2022 compared to 57 percent in 2014.
However, there is still a gap in theuse of banking services with 83 percent
of men using banking services compared
to 79 percent of women. In terms ofaccount ownership, 50 percent of womenand 56 percent of men have an account at
a financial institution.
The growth and the narrowing of
the gender gap, according to bankers,
has happened due to gender-balanced
regulations, and government-supported
access programs such as concessionalloans targeted towards women.
Access to formal financial services
is highest in Gandaki Province (96percent), followed by Bagmati Province(91 percent). Likewise, Gandaki Province
has the highest percentage of adults withaccess to formal savings at 73 percent,rising from 40 percent in 2014 to 63
percent in 2022. Of those with savings
in formal institutions, 36 percent have
opted for banks, while 27 percent preferother financial institutions such as
SACCOS.
Interestingly, while the growth inbank savings has been significant, withan increase from 27 percent in 2014 to 36
percent in 2022, the growth in savings
with other formal financial service
providers, mainly SACCOS, has beeneven higher, increasing from 13 percent in2014 to 27 percent in 2022.
According to the report, the usageof formal savings mechanisms is higher
among women, with 66 percent of themsaving using formal channels (banks –33 percent and other formal financial
service providers – 32 percent ) while

The uptake of overall formal financial
services has been largely driven byboth banking and insurance sector
service expansion across the country
under the new federal structure, andthe uptake of digital financial services
amidst the growing mobile andinternet penetration.
followed by Sudurpaschim (69 percent)and Bagmati Province (66 percent). In
Gandaki Province, 42 percent have banksavings while 31 percent save at otherformal institutions.
Gandaki Province has the highest
usage of banking channels for payment
services at 85 percent, followed by
Sudurpaschim Province at 83 percent,and Bagmati Province at 77 percent.
MORE NEPALIS ARE SAVING
The number of Nepali adults who
save their money in formal financial
institutions has substantially increased,

42 || Jestha 2080

men are trailing lower at 59 percent(banks – 38 percent and other formal
financial service providers – 21 percent).
Urban adults have higher usage of formal
savings channels at 64 percent, while
rural adults have usage at 58 percent.
The number of savings account has
increased significantly in the last decadewith the government encouraging
citizens to open bank accounts withinitiatives such as the “One Person, One
Bank Account” campaign, and the needfor a bank account to receive social
security payments.
The growth in formal savings has also

been driven by other policy initiatives
such as the mandatory requirement ofbank accounts for migrant workers to
get foreign employment permits, andthe additional one percent interest on
remittance deposit accounts.
The more access to financial
institutions, the more people aretaking credits from banks and financial
institutions. The use of formal credit
in the past decade has increased to 47
percent in 2022 from 14 percent in 2014.
Of this 47 percent, 34 percent usedbanks while 13 percent used other formal
financial channels.
Bank credit usage has grown acrossurban and rural areas and reached 45
percent of the rural and 49 percent of theurban population. It was only 17 percent
and 21 percent respectively in 2014.
Bankers have a word of caution here.
They say despite the significant progressachieved in increasing access to formal
financial services, there remains a need toenhance financial literacy and knowledge
about the banking system in Nepal.
“Many people in rural areas requireassistance from others to access banking
services, indicating a lack of knowledge
about how the banking system operates.
Therefore, efforts should be made toincrease financial literacy to ensure thatpeople are aware of the benefits of using
formal financial services and can accessthem independently. For the same, banks
have been doing that,” said Nishchal Raj
Pandey, CEO of Sanima Bank.
According to him, there is still asignificant gap in financial literacy
among the uneducated population,
who often prefer to keep their money
at home rather than deposit it in abank. “To bridge this gap, awarenesscampaigns and other interventions arenecessary to educate people on the basicsof the banking system and the benefitsof using formal financial services,” hesaid, adding, “Banks have recognized
this need and have been working on
increasing financial literacy in rural areas
to encourage more people to use formal
financial services. Through these efforts,banks hope to reduce the reliance on
cash and promote financial inclusion in
Nepal.

REPORTThe Big Battle
The fight for a new stock exchange license is the biggest competition among
Nepali corporate groups in recent times
n the HRM

If there is one topic that has
dominated the Nepali corporate
talks in recent days, then it has
to be the fight for a license for a
new stock exchange. The raceto acquire a license for a new stock
exchange has turned into the biggest
corporate battle in recent times.
Except for a few, almost all big namesof the Nepali corporate world including
Non-Resident Nepalis (NRNs) are in
the fray. There is one group comprising a
powerful and politically well-connectedcommission agent and influential
businesspersons, the other group
comprises NRNs and business houses,
and the third one is led by a media baron.
The licensing for a new stock
exchange has been a high-stake gameever since the Securities Board of Nepal(Sebon) began the process. The entryof Ramesh Hamal as Sebon Chairman
last year accelerated the process. Sebon
on the second week of September
2022 amended the Securities Market
Operation Regulation 2064 BS, paving
the way for establishing the second stock
exchange in the country.
As soon as Sebon invited applications
for a new stock exchange, thecontroversy started with a section of
the corporate group questioning thewhole process, arguing that certain
business groups are being favored. This
led to a legal battle that stalled theprocess for more than five months. The
licensing process finally resumed after
the Supreme Court in the second week ofApril 2023 dismissed the petition.

44 || Jestha 2080

Three companies are now in the raceto acquire a license for the country's
second stock exchange. Himalayan Stock
Exchange, National Stock Exchange,
and Annapurna Stock Exchange haveapplied for a license after Sebon invited
applications on April 13.
The major promoters of theHimalayan Stock Exchange are theShanker Group and Deepak Bhatta
Group, while former FNCCI presidents Bhawani Rana, Pashupati Murarka, andShekhar Golchha alongside Rajendra
Khetan, Saurav Jyoti, Vivek Dugar,
Kumud Kumar Dugar, and Amit Kumar
More are also the promoters of thecompany.
The National Stock Exchange has
been backed by NRN businesspersons,
Agni Group, Kedia Group, and RelianceGroup. The NRN businessmen Upendra
Mahato, Jiba Lamichhane, Badri KC, and
Kul Acharya are among the shareholdersof this proposed stock exchange.
Similarly, Deepak Timilsina, Mahesh
Kumar Shrestha, Rishi Aggarwal, Ankit
Kedia, and Ramji Regmi have been
proposed as the board of directors of the
National Stock Exchange.
The Annapurna Stock Exchange

is led by a team of businesspersons
led by the media and aviation tycoon
Rameshwor Thapa. The Annapurna
Stock has seven directors as Ganesh
Kumar Shrestha, Mukti Bodh Neupane,
Anil Sapkota, Prakash Kumar Shrestha,
Shekhar Subedi, Balram Upreti, andSurendra Raj Wagle.
The way the political-businessmen
nexus works in Nepal, it is hard to
predict which group will get the license
as all are politically well-connected. The
way Deepak Bhatta managed to edgeout rivals in the license issuance of theHimalayan Reinsurance, the country's
second reinsurance company, in 2021,
many corporate people believe that theHimalayan Stock Exchange has an edge
over the other two.  
There was fierce competition
among the top corporate houses
during the license issuance for thesecond reinsurance company. While
five reinsurance companies sought thelicenses, it was Himalayan Reinsurance
that came out as the winner. The
company is promoted by Nepal's leadingbusiness houses, namely Golchha Group,
Shanker Group, Lucky Group, Ramesh

HIMALAYAN STOCKEXCHANGE
Major Promoters : Shanker
Group, Deepak Bhatta
Group, Bhawani Rana,
Pashupati Murarka,
Shekhar Golchha, Rajendra
Khetan, Saurav Jyoti, Vivek
Dugar, Kumud Kumar
Dugar, and Amit Kumar
More.

Corp, Murarka Group, and KL DugarGroup, among others.
Who will come out as the winnerof the much-talked-about corporate
battle for the new stock exchange will beknown within a month as the Sebon has
already formed an evaluation committee
to recommend the name. This contest
is being observed closely as it is also
expected to redefine the power equationin the Nepali corporate sector.
For the past 30 years, the Nepal
Stock Exchange (Nepse) has been
operating as the country's sole stock
exchange. Initially, it was establishedwith working capital of Rs 35 million,
with joint investments from thegovernment, Nepal Rastra Bank, andthe Nepal Industrial Development
Corporation. At present, Nepse has a
paid-up capital of Rs 1 billion and the

NATIONAL STOCKEXCHANGE
Major Promoters : Agni
Group, Kedia Group,
Reliance Group, Upendra
Mahato, Jiba Lamichhane,
Badri KC, and Kul Acharya.

government has a majority stake in thecompany.
While there have been talks ofbringing strategic investors into the
Nepse, the process has not moved ahead.
A section of people including Nepse
employees have also begun to question
the whole licensing process for thesecond stock exchange. They claim thatgiven the state of the capital market andthe size of the population, Nepal does
not need another stock exchange arguingthat a country like India has only two
stock exchanges.
However, capital market experts
say another stock exchange is necessary
for Nepal because the current market
has not adequately safeguarded small
investors, leading to organized groups
being the primary beneficiaries of themarket. “The Nepal Stock Exchange(NEPSE) has failed to implement newtechnologies and tools, which has
adversely affected small investors,” said
Mukti Aryal, a capital market expert.
“Despite the introduction of an
automated trading system (TMS) by
Nepse in mid-2018, it has received
criticism for being outdated comparedto advanced systems used inneighboring countries. Unfortunately,

ANNAPURNA STOCKEXCHANGE
Major Promoters :Rameshwor Thapa,
Ganesh Kumar Shrestha,
Mukti Bodh Neupane,
Anil Sapkota, Prakash
Kumar Shrestha, Shekhar
Subedi, Balram Upreti, andSurendra Raj Wagle.

being a government entity, Nepse has
encountered difficulties in improving its
system. As a result, the capital market
has remained underdeveloped. The lackof a pragmatic approach from both Sebon
and Nepse, combined with policymakers'
indifference towards Nepse, has
contributed to the sluggish growth of
Nepal's capital market,” added Aryal.
While the government is in fullswing to provide a license to a new stock
exchange, there is much confusion about
the existence of Nepse, clearing house,and how the new stock exchange would
operate.
According to Sebon Chairman
Hamal, the rationale behind the second
stock exchange is to foster competitionin the capital market. "The companies
listed on NEPSE can also be listed on
the new stock exchange. A company
can do business in both exchanges or
get listed on just one exchange. Like
the companies, brokers can also getregistered for two different exchanges, orjust one,” he said.
Although Aryal agrees Nepal needs
another stock exchange, he says that theprovision of dual listing will bring inmany problems. “It is good to get listed
on stock exchanges of two different
countries. But being listed in two
exchanges of the same country can bringproblems like dual pricing,” says Aryal.
According to Sebon, investors can use
the same demat account to trade andinvest in companies listed in the newstock exchange.

Jestha 2080 ||45

FACTS & FIGURES

Govt raises over Rs 100 billion thru infrastructure tax
The government has collected
more than Rs 100 billion in eight
years from the infrastructure tax
imposed on petroleum products.
Nepal Oil Corporation (NOC) has
been paying the tax at the customs
point while importing fuel into thecountry.
From 2015 to March 29, 2023,
the government collected Rs
109.4 billion in infrastructure tax
from petroleum products.
The government in thebudget for the fiscal year 2015/16,
had introduced a provision of
tax of Rs 5 per liter on petroleum
products for the constructionof the infrastructure of the 1,200
MW Budhigandaki Hydroelectric
Project.
At present, the government
is collecting a tax of Rs 10 per
liter.
The government collected
Rs 1.16 billion in FY 2015/16,
Rs 9.43 billion in FY 2016/17,
Rs 11.36 billion in FY 2017/18,
Rs 12.41 billion in FY 2018/19,
Rs 13.97 billion in FY 2019/20,
Rs 22.86 billion in FY 2020/21 andRs 24.95 billion in FY 2021/22.
Similarly, Rs 13.29 billion tax has
been collected till March 29, 2023.

Infrastructure
TAX
Collection

Amount in Billions

Fiscal YearRs. 1.16

2015/16

Rs. 9.43
Rs. 11.36
Rs. 12.41
Rs. 13.97
Rs. 22.86
Rs. 24.95
Rs. 13.29(Till March 29, 2023)

2016/172017/18
2018/192019/20
2020/212021/222022/23

Nepal's external debt third lowest in South Asia
While concerns are growing over therise in internal and external debt burdensof the country, Nepal is seemingly in asafe position in terms of indebtedness
compared to most South Asian countries.
A report published by Debt Justice,a UK-based INGO, said that Nepal’s
external debt to revenue ratio is the third
lowest after Afghanistan and India in theSouth Asia region.
Nepal’s projected external debt
PERCENTAGE OF EXTERNAL DEBTAGAINST GOVT'S REVENUECountry

46 |

Year
2019

2020

2021

2022

2023

Nepal

3.3

3.5

3.2

4.2

4.3

India

2.9

5.3

2.5

3.2

3.1

Banglaesh

7.1

6.8

7.6

8.3

9.6

Bhutan

9.1

6.2

14.4

38.9

31.9

Sri Lanka

47

59.3

57

81.4

75

Pakistan

20.4

22.9

30.9

40

46.7

Maldives

27

26.2

53.3

36.8

21.2

Afghanistan

0.9

0.7

1.8

1.5

1.6

| Jestha 2080

payment in 2022, 2023,
and 2024 stands at 4.2
percent, 4.3 percent, and
4.5 percent, respectively, of
total government revenue,
according to the report.
Sri Lanka is in the mostvulnerable position followed
by Pakistan.
According to the Nepal
government's Public Debt
Management Office, thecountry's total outstanding
external debt stoodat Rs 1,102.5 billion
out of a total of Rs
2024
2,070.5 billion as ofthe second quarter of
4.5
the current fiscal year
3.3
2022/23. Nepal’s total
debt to Gross Domestic
10
Product (GDP) ratio as
37.5
of the second quarter
78.6
of this fiscal stood at
42.67 percent and the
42.5
share of external debt
14
was 22.72 percent.
1.7

Surge in import of EVs
The imports of electric four-wheelers have surged by 59.21
percent in the current fiscal year. The Department of Customs(DoC)'s recent data shows Nepal imported EVs worth Rs 6.840
billion in the nine months of FY 2022/23 compared to Rs 4.296
billion in the corresponding period of the last fiscal year.
2,451 electric four-wheelers were imported till mid-April

2023, which was 1,463 in the same period of the last fiscal
year. Nepali automobile dealers have imported EVs from fivedifferent countries. The highest number of EVs has come from
India, followed by China and South Korea.
Of the total imported EVs, the share of EVs up to 100KW is
the highest. In fact, 97 percent of the imported EVs are 100 KW.

EV IMPORTS
Up to 100KW
Numbers: 2379
Rs. 6.528 billion
Up to 100-200KW
Numbers: 65
Rs. 0.271 billion
Up to 100-300KW
Numbers: 7
Rs. 0.040 billion

Imports surged to Rs 143.123 billion in Chaitra
Nepal imported goods worth Rs 143.123 billion in the
ninth month (Chaitra) of FY 2022/23. Data publishedby the Department of Customs show Nepal's importin Chaitra (mid-March to mid-April) is the highest of
the current fiscal year on a month-to-month basis. The
country's imports have started to surge again after thegovernment lifted the import restrictions.
The country had imported goods worth Rs 139.22
billion in Falgun (mid-February to mid-March), up 10
percent from Magh (mid-January to mid-February). Nepal

had imported goods worth Rs 142.31 billion in Bhadra(mid-August-mid-September), the second highest on amonth-to-month basis in FY 2022/23.
However, the country's total imports in the first ninemonths of the current fiscal year are lower than the last
fiscal year. According to DoC, Nepal imported goods worth
Rs 1,201.508 billion in the current fiscal year compared to
Rs 1,466.662 billion during the same period of the last fiscal
year. The imports during the first nine months of this fiscal
have declined by 18.08 percent.

Rs. 143.123 Billion

Rs. 139.22 Billion

Rs. 126.499 Billion

Rs. 127.92 Billion

Rs. 132.055 Billion

Rs. 131.693 Billion

Rs. 127.399 Billion

Rs. 142.313 Billion

Rs. 131.286 Billion

MONTHLY IMPORT BILL

ChaitraFalgun

Magh

Poush

Mangsir

KartikAshoj

BhadraShrawanJestha 2080 ||47

CEO SPEAK

We plan toexpand beyond
internetconnectivity to
cloud computing
services
DILEEP AGRAWAL, Chairman & Managing Director, WorldLink Communications Ltd.

W

hat started as a store-and-forward email service over a dial-up link in aroom with a single computer in 1995 by a 22-year-old Dileep Agrawal
is now the Nepali internet giant WorldLink Communications Limited.
The company is regarded for innovative and reliable services that it has
expanded to nooks and corners of the country. Recently, the company
received Rs 1.98 billion in foreign investment from British International Investment (BII), which
the company will invest in expansion plans and other strategic initiatives.
the HRM sat down with Agrawal, Chairman and Managing Director of WorldLink, at his
office in Kathmandu, to talk about the foreign financing the company has received, its plans,
market prospects, and challenges, among other topics. Excerpts:

48 || Jestha 2080

CEO SPEAK

Q. WorldLink Communications

recently received Rs 1.98 billion
in funding from the British
International Investment (BII) andDolma Impact Fund which is thelargest combined in the internet
sector in Nepal to date. How is thecompany utilizing this investment?  

A. The World Link has brought thebiggest FDI in Nepal's corporate history
worth USD 31 million in two phases. But
this has also presented a challenge for
us to utilize the fund and provide good
profits to the investors. If successful, it
will set a benchmark and attract more
FDI to Nepal.
There is a question of why foreign
investment is required in the internet
services business. It is because, to provide
basic internet service, massive investment
is required to expand the fiber network
service. However, this investment willtake time to yield returns. At present,
domestic investors are not interested toinvest in this sector and banks do nothave the necessary funds due to liquidity
issues.

Q. What areas the company isfocusing on with this investment?

Currently, urban households andmajor towns already have broadband
internet access. However, the focus now
is to expand to more rural areas acrossall corners of the country. The target isto provide internet access to 70 percent
of households through WorldLink.
The network has already reached 2.2
million units of land, which means
people in those areas can connect to the
network. Currently, our total number ofsubscribers is 780,000.

Q. What changes have been

there in services and coverage ofWorldLink from previous foreign
investments?

The first FDI was used to build fiber
networks in smaller towns in Nepal.
Prior to that, WorldLink did not have apresence along the East-West Highway.
However, the investment enabled andmotivated us to work better and we
gained confidence. It wasn't just the sizeof the investment, but also the validation

50 || Jestha 2080

that WorldLink is doing great work.

Q. It has been almost three decades
since WorldLink started. How has
the company contributed to thedevelopment of internet services in
the country?

A. Over the past 27 years, WorldLink
has always believed that connectivity
is important. The company has worked
with the ethos of connecting everyone,
anywhere, all the time, and has been at
the forefront of expanding connectivity.
For example, WorldLink was the firstcompany to expand its services outsideof the Kathmandu Valley, even before
state-owned Nepal Telecom. Despite
not having access to technology like
spectrum and ADSL service, WorldLink
innovated and found new ways to serve
customers through wireless and cable
services.
In a country where affordability
is a major concern among consumers,
WorldLink has always been trying topush the boundaries for connectivity.
Nepal has the lowest GDP per capita
compared to other economies in SouthAsia, which means WorldLink has had
to build its product and price it in a
way that is affordable. We have beensuccessful in doing so. Moreover, Nepal is
the only country in the world where themajority of users consume the internet
not through mobile networks but
through WiFi, thanks to WorldLink's
push for high-speed, unlimited fiberconnectivity where telcos were limited
to voice. WorldLink's role in Nepal has
been to democratize data and makeconnectivity accessible to everyone.
Q. How do you see the changes

occurring in the internet
connectivity landscape in Nepal?

A. The growth of internet use

is exponential, with each internetconnected household now using around
180 GB of data per month. This is due
to several reasons, including high-speed
internet, unlimited data, widespread
access to smartphones, and theabundance of data to consume. Likewise,social media platforms like TikTok,
YouTube, and Facebook have contributed

to the increase in data consumption.
I believe that this trend is unlikely tochange anytime soon.

Q. What would it take to makecompetition fair? Has the Nepal
Telecommunications Authority(NTA) been playing its role as theregulator to ensure fairness in themarket?

A. I believe that competition toprovide better services is good. However,the competition has been unhealthy due
to some service providers undercutting
prices. In some cases, the pricing is evenlower than the cost of buying bandwidthfrom overseas. This is a very unhealthy
form of competition. Pricing should
always remain fair to avoid predatory
pricing in the market. Service providers
should not enter the market just to gaincustomers and then jack up the pricelater.
In India, Jio offered internet at acheap rate but later increased the prices.
The long-term impact of predatory
pricing can result in consumers
eventually paying higher prices forinternet services.
We have been advocating for fairpricing in the market and urging the
NTA to monitor the pricing of internet
services. I think the NTA should ensurethat the pricing is fair by taking into
account the procurement capacity,
operating cost, and manpower costof the service providers. NTA should
set a minimum price below which theservice providers cannot go. This will
prevent predatory pricing and ensurethat companies are pricing their services
logically.

Q. What challenges exist for an

ISP like WorldLink at present?
How is the company facing thosechallenges?

A. We have been facing a number ofinternal and external challenges that arehindering the growth of my company.
One of the biggest internal challenges isfinding and retaining good manpower.
We've had discussions with our HR
team to come up with solutions to thisproblem.

On the external front, taxation has
become a major hurdle for us. We haveaspirations to expand our services tothe rural market, but affordability is amajor issue there. Providing the same
service in Kathmandu and Karnali comesat a significantly higher cost in Karnali,
almost 40 percent more.
Unfortunately, people in rural areas
cannot afford to pay those prices. We've
approached the government for a solution
to this problem, and we believe that
reducing taxes for service providers inrural areas will help improve penetration
and benefit the people there.
Currently, we sell internet in
Kathmandu for Rs 1,000 a month outof which Rs 300 go directly to thegovernment as taxes. If these taxes are
removed or lowered, we could offer more
affordable prices to our customers. As
it stands, only the rich in rural areas areable to afford our services. To address
this, we've started providing free WiFi
hotspots in every marketplace.
Overall, we believe that the
government needs to prioritize digital
infrastructure and encourage service
providers in order to achieve theire-governance and digital Nepal plans.
Reducing taxes for service providers inrural areas would be a big step towards
achieving these goals.

Q. Is WorldLink planning to

expand beyond internet services
such as mobile services? How is
the company working to step into
the mobile services business in theforeseeable future?

A. Our current primary focus is on
WorldLink, and we are working hard
to secure an additional 40-50 million
dollars in investment for the company.
This is our top priority, and we are fully
dedicated to achieving this goal.
While we remain committed to
staying ahead of industry trends, weunderstand the importance of not blindly
following them. Instead, we believe that
it is crucial to focus on our core businessand ensure that we are delivering the best
possible service to our customers.
However, we do have plans for the
future, and one of our goals is to become a

Jestha 2080 ||51

CEO SPEAK

mobile operator if the government grants
us a license. We recognize that wired
internet connections are not feasible forall households, and providing wirelessservices is essential to reaching more
people and offering high-quality internet
access.
We are actively working towards
achieving this goal and are committed
to investing the necessary time andresources to make it a reality. Ultimately,
our aim is to provide reliable, high-speed
internet access to as many people aspossible, regardless of their location or
circumstances.

Q. Are telecom companies a threat

to internet service providers (ISPs)
in Nepal?  

A. It is unlikely that telcos will beable to surpass ISPs in Nepal at thispoint. Consumers in Nepal have become
accustomed to receiving unlimited data
at a very low price point. For example,
if there are four people in a household
and pay Rs 1,000 per month for internet
services, each person is only paying Rs
250, with no data cap. Additionally,
WorldLink consumers can also takeadvantage of free WiFi outside of theirhomes. The speed at which ISPs are

52 || Jestha 2080

improving their services is much fasterthan that of mobile operators.
However, there is still a niche market
for mobile operators. For instance, whenpeople need data while on the move,mobile operators are the go-to option.
In these situations, the convenience andreliability of mobile operator services are
essential.

carefully assessing the market conditions
and exploring all available options before
proceeding.
If market conditions permit, we plan
to proceed with the IPO in the next
fiscal year. We are optimistic about thepotential benefits of this move and areworking diligently to ensure that allnecessary preparations are made.

Q. You said during WorldLinks’s

Q. Where would you like to see

A. We have started discussions withissue managers to explore the possibilityof issuing shares to the general public. Asa public limited company, we are audited
by international audit agencies due toour investment from BII; our governanceis highly robust as BII has been a board
member and shareholder in the company
for five years.
However, our main concern
regarding issuing IPS is the process ofbook building. No company in Nepal
has successfully listed through bookbuilding, and we are unsure if the market
has the appetite to subscribe to an IPO
through this method. Therefore, we are

A. WorldLink's long-term vision
is to transform into a comprehensive
digital infrastructure company thatprovides a broad range of digital services
to its customers. We plan to expand ourservices beyond internet connectivity to
cloud computing services through theestablishment of data centers. Our goal is
to meet the growing demand for cloudbased solutions in Nepal.
Likewise, we plan to expand ourmobile services to reach more customers
and offer a full spectrum of digital
services. Our aim is to provide a onestop shop for all the digital needs of ourcustomers, including internet, mobile,cloud computing, and other digital
services.

26th anniversary that the company
is planning to issue IPO to go
public. Where has this planreached?

WorldLink 10-15 years down theline?

n Vijay Anand Sharma Timilsina

OPINION

Leadership: Reflections of a Journeyman

Adieu Chimerical Leadership
Leaders have to enact multiple roles even if they do so unwillingly.
ALL THAT GLITTERS IS NOT GOLD!
Leadership is an enigma. It is present
everywhere. No collective humanendeavor can happen without leadership,and yet we are not sure how to objectively
assess its impact. Enigmatic also becausea universally accepted definition andmeaning still elude us (Bennis, 1995;
Grint, 2010; Meuser et al., 2016; Silva,
2016; Stogdill, 1974). Lack of consensus
on its denotations and connotations
despite its ubiquity - always being in
the public domain, openly practiced,
researched, taught and talked about, andnever hushed in or kept in deep shrouded
mystery, makes it an enthralling enigma,
to say the least.
With so little consensus in the
midst of so much that is available about
leadership, it is no surprise that its
landscape is fertile with polemic ideas,
thoughts, beliefs, theories, and practices.
In my previous write-up (Vol 2, Issue 8
Leadership: Reflections of a Journeyman),in addition to presenting the enthrallingenigmatic nature of leadership, I had
also attempted to argue that in order tounderstand leadership better we must
be cautious of ‘Stockdale Paradox’ oralternatively ‘Toxicity of Positivity’.
The majority of contemporary
leadership approaches, in academia, in the
popular press, and various other online
platforms, focus overwhelmingly on thepuritan in it - ‘the unalloyed goodness’(Alvehus, 2021; Crawford et al., 2020;
Gemmill & Oakley, 1992; Hammond

54 || Jestha 2080

et al., 2021; Haslam & Reicher, 2012;
Meindl et al., 1985; Schyns et al., 2007;
Steffens et al., 2015; Steffens & Haslam,2022). This blind devotion to only thepristine virtues is, I believe, burdening
leadership with such high expectations
that it is destined to crumble and shatter
into pieces under its weight. “Beware thatyou do not lose the substance by grasping at the
shadows” is attributed to Aesop, a Greek
fabulist and storyteller. Ironically, there
is no substantive evidence that Aesop
ever existed! The fascination is akin to
expecting divinity from humans who are
but mere mortals. The unfortunate andabsurd expectations must be reined in, or
else leadership practice and research will
be reduced to a hullabaloo. This write-up
gives continuity to the idea of purging
notions of divinity from leadership.
‘Whatever the act may connote,leadership is practiced by a leader,whomever it may denote’ – this whomever will
not be a cherubic messiah endowed onlywith perfection and goodness, but will
be as human as you and me, with all ournuances (the good, the bad and the ugly)of being human! Our present popular
notions of leadership are chimerical , I
appeal that we bid those notions adieu.
TO LOL IS TO ROL!
Necessitous yes, but is it as paramountas we make it to be? Accepting thatleadership is ‘necessary’ for any collective
human endeavor is less contentious
compared to a consensus on objective

measurement of how paramount it isfor the outcome(s). Despite an apparent
lack of ‘sufficiency’ of leadership in
determining outcomes of collective
endeavor, the majority of us are most
likely to pay heed to Napoléon Bonaparteand go to war against an ‘army of lions led bya rabbit’ rather than an ‘army of rabbits led bya lion’! This lionization of leadership - LoL,is as deceptive as it is high-sounding. For
those who insist on LoL - exalting andfetishizing the abilities of heroic few atthe expense of subduing and muting themasses (Gemmill & Oakley, 1992), foronce, please take the trouble of asking thearmy personnel (the lions and the rabbits
alike) that regardless of who would beleading them, if they had to go to war, andwere also given a choice, would they go asa lion or as a rabbit?
Why do we LoL then? No, it is not theclichéd million-dollar question anymore.
The answer is, we LoL because we RoL- Romance of Leadership (Meindl et al.,1985). Intrigued with the prominence ofleadership in the collective conscience,
Meindl, Ehrlich, and Dukerich set out
to explore why is it easier to ‘believe
in leadership than to prove it?’ The
unfounded belief they warned, was a
double-edged sword. If on the one hand,
it would give too much credit for success,then on the other it would also hold themsolely accountable for failures. Standing
on a ‘constructionist’ world-view
paradigm, they did three archival studies;
The Wall Street Journal from 1972-1982,

Thesis dissertations from Dissertation
Abstracts International between 19291983, and to represent practitioner’s
perspective they included publications
from Business Periodical Index between
1958-1983. The archival studies were
followed by three experimental studies
involving undergraduate students anda leadership vignette. They were able
to empirically confirm the hypothesisthat ‘people tend to overuse and glorify
leadership as a causal category, due
primarily to a psychological need to‘make sense’ of complex organizational
phenomena’ (Bligh & Schyns, 2007).
This is a very acceptable rationale as
speaking metaphorically and going by
the recorded history of modern sciences
then, before Copernicus did we not ‘makesense’ of the day-night phenomena by‘believing’ that it was the sun which wentaround and not the earth? With sincere
gratitude to whatever Gods there be forthe compulsive urge in humans to ‘makesense’ of happening(s) around us, we mustalso remain ever cognizant of potential
naivety in conclusions we draw about
cause and effect. To err is human, and so
is to reflect, revise, and redefine. Leadercentrism is as invalid as geocentrism.

interesting storyline. A local newspaper
under new management decides on somelayoffs. One reporter who is upset atbeing laid off, vents out the frustration by
writing as her final article for the daily, aletter of suicide in the name of a fictitious
person Aazaad. In the letter, fictitious
Aazaad announces suicide by jumping off
a high rise on Independence Day of India if
certain ills of the society (corruption, thewidening divide between have and havenots, etc.) are not corrected. With twists
and turns in the plot, the letter gains
traction from the public and the reporteris re-hired. With more twists and turns,
Aazaad is given a real human face (Guru– played by Amitabh Bachchan) who is a
nobody and agrees to be Aazaad’s face forsome easy money. With some more twists
and turns, the reporter starts writing
speeches and Aazaad starts orating them.
Masses throng to the orations not only
from the neighboring cities but from all
across the country as they see in Aazaad
their ‘knight with shining armor’. Now,
finally, all they had to do was follow him
devotionally and everyone would live in

Utopia forever after. To cut a long story
short, Guru is overwhelmed by the hopeand devotion of the thousands, becomes
Aazaad and in the final scene jumps fromthe 30 storied high-rise instead of letting
the hopeful devotees know that Aazaad
was just a figment of imagination.
Leaders have to enact multiple roles
even if they do so unwillingly. Bernard
Bass who is best known for his workon ‘Transformational Leadership’ andRobert House who is equally wellknown for developing the concept of‘Charismatic Leadership’ have included
Impression Management (IM) as a corecomponent of their approaches. They
contest that IM is necessary not justfor the leaders to bolster their image ofcompetence but also to instill complianceand faith in the followers. Followers
accept influence from individuals who

ALL THE WORLD’S A
STAGE, AND LEADERS ARE
ACTORS TOO!
Mein Aazaad Hoon, a 1989
Bollywood film (remake ofMeet John Doe, a Hollywood
film released in 1941) has an

Jestha 2080 ||55

OPINION
meet their perceptions of what it means
to be a leader, and IM is an important
way of impacting those perceptions(Peck & Hogue, 2018). Quintessential tocontemporary approaches to leadershipis the ability to inspire and energize
the followers to exhibit extraordinary
effort in pursuit of superordinate goals(Gardner & Cleavenger, 1998). In thistussle of ‘extraordinary effort’ and the‘superordinate goals’, leaders are boundto be entangled in the web of ‘social
desirability bias’. Social desirability biases
are the tactics leaders use to satisfy thecompulsive human desire to present
themselves in a socially approved manner.
It has been argued that leaders distort
their self-attributions to reflect idealized
or romantic images of themselves/
leadership and are motivated to transmit
these images through IM to woo followers(Gray & Densten, 2007). Moreover,thanks to easy and near omnipresent
access to social media, it does not takelong for a regular but lucky/conniving
CEO to become a Celebrity CEO. Lee
et al., (2020) were able to establish thatcelebrity CEOs’ engagement in Corporate
Social Responsibility (CSR) activities
is an IM tactic and CSR engagement
increases when uncertainty surrounding
a firm’s expected performance is high,when the firm’s performance is low, andthe competitive intensity of the industry
is high. Additionally, IM does not always
play out as expected. For example andbased on the assumption that today’s
problems are complex needing broader
perspectives and expertise to solve them,
Bharanitharan et al., (2021) hypothesizedthat leader humility may prove beneficial
to increasing open interaction between
leaders and followers to find thosesolutions. However, interestingly what
they found was that perceived leader
humility and IM attributions interact toinfluence followers' perceptions of leader
hypocrisy as well. Enacting IM evencommendably, let alone with perfection
is too arduous so as to be mythical. Abouthalf a century ago, Henry Mintzberg in his
book “The Nature of Managerial Work”
had identified no less than 10 roles fora manager/leader. Add to these 10 roles
the necessity of work-life balance, role56 || Jestha 2080

conflict, and ambiguity are natural byproducts. Gardner et al., (2005) argue for
Authentic Leadership (AL) to navigate
the necessity of living compartmentalized
lives where inadvertently only a few will
fare well while the majority will suffer.
AL calls for ‘self-awareness’, ‘internalized
moral perspective’, ‘balanced processing’,and ‘relational transparency’ on part ofthe leader. However, I couldn’t agree
more with Ford & Harding, (2011)
when they assert that “AL model refuses
to acknowledge the imperfections ofindividuals and despite its attestations
to seeking ‘one’s true, or core self’ itprivileges a collective (organizational)
self over an individual self and thereby
hampers subjectivity to both leaders andfollowers.”
Some readers familiar with the worksof Shakespeare would have alreadysensed the Shakespearean tragedy in thissection. For the less familiar, I cap thissection with two quotes to help them
contemplate further its philosophicalessence:"All the world's a stage, and all the men andwomen merely players. They have their exits andtheir entrances, and one man in his time plays
many parts."
As You Like It, Act 2, Scene 7"To be, or not to be – that is the question,
whether 'tis nobler in the mind to suffer the slings
and arrows of outrageous fortune, or to take arms
against a sea of troubles, and by opposing end
them? to die, to sleep…"
Hamlet, Act 3, Scene I
KNOCK, KNOCK! “WHO IS THERE?”“LEADERSHIP.”, “LEADERSHIP,WHO?”
Sir Karl Raimund Popper (1902 – 1994,
Knighted by Queen Elizabeth II in 1965),
best known for ‘Science of Falsification’,
was an Austrian-British philosopher,academic and social commentator. He was
the lecturer of Philosophy & ScientificMethod at the University of Vienna andfearful of the Nazi occupation of Austria
and wishing to avoid the totalitarianregime, he moved to New Zealand in1938 accepting the position of a lecturer
in philosophy at Canterbury University
College in Christchurch. Later with theend of WWII, he moved to the UK towork for the London School of Economics.
In his book, The Open Society and Its
Enemies Volume 1 – The Spell of Plato,
Chapter 7 (The Principle of Leadership),Popper presents an intensely thoughtprovoking insight: “It is clear that once thequestion ‘Who should rule?’ is asked, it is hard to
avoid some such reply as ‘the best’ or ‘the wisest’or ‘the born ruler’ or ‘he who masters the art ofruling’ (or, perhaps, ‘The General Will’ or ‘The
Master Race’ or ‘The Industrial Workers’ or ‘The
People’). But such a reply, convincing as it may
sound – for who would advocate the rule of ‘theworst’ or ‘the greatest fool’ or ‘the born slave’?
– is, …, quite useless.” Based on the premisethat seldom, if ever, we are fortunate
to have a ruler who is wise and good ora government on whose goodness andwisdom one can implicitly rely, Popper
argues that we should prepare for worse
forms of leadership/government from thevery beginning before giving ourselves
the luxury of hoping only for the best. In
essence, he calls for a new approach andin his own words: “…replace the question: Whoshould rule? by the new question: How can weso organize political institutions so that bad orincompetent rulers can be prevented from doing
too much damage?” I agree, completely!
Conventional wisdom suggests that
we dig deep at the same place rather thandigging in multiple places in search ofwater. My learnings as a journeyman inthis odyssey of leadership are shouting at
me to take the risk of digging elsewherein search of meaningful, if not complete,answers to the enigma that is leadership.
In the next and last part of Leadership:
Reflections of a Journeyman, I will explore
the ideas of Evolutionary Leadership
Theory (ELT) and those of Followership.
If the basic premise of ELT is that allof the usual reasons aspiring rulers
give for seeking high office are simply
rationalizations by them to do what they
are socially and ‘biologically’ driven to do(Ludwig, 2002), then, followership, on
the other hand, can be best introduced byquoting the French philosopher PierreJoseph Proudhon who said: ‘Great men are
great because we are on our knees’.

Timilsina is an academician. He canbe reached at vastimilsina@gmail.com.

n Sai Kumar Chandran

STRATEGY, CULTURE & LEADERSHIP

Building Strategic
Resilience - Ideas andApplications for Small andMedium Businesses
Strategic resilience enables SMBs to adapt quickly to changing market conditions, reducesrisks, promotes innovation, builds a stronger brand, and enables long-term sustainability.

The business world has
become increasingly
volatile and unpredictable,
and small and mediumsized businesses (SMBs)
must develop strategic resilience to face
unexpected challenges and disruptionsin the market. The COVID-19 pandemic
has made this even more urgent, withbusinesses needing to prepare for the
unknown and be agile enough to pivot
in response to changing circumstances.
Strategic resilience enables SMBs toadapt quickly to changing market
conditions, reduces risks, promotes
innovation, builds a stronger brand, andenables long-term sustainability.
Here are some practical ideas andapplications to help SMBs build strategic
resilience:
1. Develop a Risk Management
Plan: This identifies potential
risks that may impact the businessand outlines strategies to mitigate
them. For example, after a recall of
its yoga pants in 2013, Lululemon

58 || Jestha 2080

implemented a risk management plan
to ensure quality control and prevent
future recalls.
2. Diversify Revenue Streams: By
diversifying revenue streams, SMBs
can ensure that they have a steadyincome even if one source of revenue
is impacted. For example, during
the COVID-19 pandemic, Starbucks
began selling its coffee beans ingrocery stores, which helped to offset
the impact of declining foot traffic in
its coffee shops.
3. Build a Strong Online Presence:
Having a strong online presenceis critical for SMBs in today's
digital age. Building a strong online
presence includes creating a userfriendly website, developing a social
media strategy, and implementing
search engine optimization (SEO)
strategies. For example, Warby
Parker developed a user-friendly
website and implemented a strong
SEO strategy that helped it tobecome a leading online eyewear
retailer.
4. Cultivate Strong Relationships
with Suppliers and Customers:
Strong relationships with suppliers
ensure a reliable supply chain, whilestrong relationships with customers
increase brand loyalty and canprovide a cushion during times ofcrisis. For example, Zappos is known
for its exceptional customer service,
which has helped to cultivate a loyal
customer base.
5. Implement Lean Management
Practices: Implementing leanmanagement practices can help
SMBs build strategic resilience
by reducing waste and increasing
efficiency. This includes streamlining
processes, reducing inventory, andoptimizing resource allocation. For
example, Toyota’s lean management
system has helped to ensure a reliablesupply chain and minimize waste.

OPINION

6. Develop a Crisis Management
Plan: This outlines strategies forresponding to unexpected events,
including natural disasters, cyberattacks, and other emergencies.
For example, Coca-Cola’s crisis
management plan includes
strategies for communicating withstakeholders, ensuring employee
safety, and maintaining business
continuity during a crisis.
7

60 |Invest in Employee Development
and Training: Well-trained andmotivated employees are better
equipped to handle unexpected
events and adapt to changes in
the market. Investing in employee
development and training also
increases employee retention
and can improve productivity
and efficiency. Several industryleading organizations provide
ongoing training and development| Jestha 2080

opportunities for their employees.
8

Embrace Innovation andTechnology: Embracing innovationand technology is essential forbuilding strategic resilience.
This includes implementing newtechnologies and business models
that can help SMBs adapt tochanging market conditions. For
example, companies are increasingly
using artificial intelligence (AI) andmachine learning to improve businessprocesses and make data-driven
decisions. SMBs with independentfacilities can use some of the space
to generate green energy – either orboth solar and wind to reduce theirenergy bills.

By adopting these practicalstrategies, SMBs can build strategic
resilience and thrive in the face ofadversity. And as said earlier, they

will be able to respond swiftly tochanging market conditions, reducesrisks, promotes innovation, builds astronger brand, and enables long-termsustainability.
This approach of Strategic Resilience
to business is a major shift in mindset
and attitudes of the leaders andemployees. Such farsightedness cango a long way in not just stability, butalso opening-up of opportunities for
growth and diversification. An additional
benefit of building strategic resilience is
the improvement of quality of decision
making and resource utilization in SMBs.
Reference Sources: articles and influencers
available on social media

Sai Kumar Chandran is thefounder of OrbitShift. He is a coaching
and consulting practitioner and an
entrepreneur at heart. He can be reachedat saikumarchandran@orbitshift.com.

MANAGING PEOPLE

We encouragelearning opportunities
and provide
employees withtechnology to help
them work smarter
Rajesh Sharma Adhikari, Manager, Human Resources & Administration, Nebico Pvt. Ltd.

S

tarting as National Biscuit and Confectionery Pvt. Ltd in 1964,
Nebico Pvt. Ltd. is a pioneering company in Nepal in biscuits
and confectionaries. The company has a diverse portfolio of
manufacturing and represents various brands of biscuits andconfectionaries that are regarded for quality in the domestic market.
Nebico also is among the few Nepali manufacturing companies
that have the best people management practices in place. Rajesh
Sharma Adhikari, Manager of Human Resources & Administration at Nebico, says
effective people management has been the key to the company's success over theyears. In a conversation with the HRM, he talked about the company's approachto managing, the importance of training and development, and current challenges,
among other topics. Excerpts:

62 || Jestha 2080

Jestha 2080 ||63

MANAGING PEOPLE

Q. Nebico Pvt. Ltd. has a historyof 59 years as a manufacturing
company. How has people
management played a rolein keeping the company as a
top biscuit producer in Nepal
throughout the years?

A. We have always believed that
our employees are our greatest asset
and have always strived to create a
supportive and collaborative workplaceenvironment that encourages innovationand creativity. We also have ensured that
our employees are well-compensatedand provided with opportunities for
growth and development. Our people
management strategies have been
designed to create a culture of excellence
and continuous improvement, which
has helped us maintain our position as aleader in the industry.
Q. How has people managementchanged in the company over these
five and a half decades?

A. Over the years, people
management has undergone significant

64 || Jestha 2080

changes in Nebico. We have always
been committed to continuous
improvement and have adapted ourpeople management strategies to meetthe changing needs of our employees
and the industry as a whole. Our focus
has shifted from traditional management
practices to more modern approaches
that emphasize employee engagement,
collaboration, and innovation.
We believe in caring for thenation, nature, and employees throughcontinuous improvement and profit.
We have focused on strengthening theculture of our organization and arecommitted to the respect and dignity ofour people as part of our HR policy. Our
corporate policy further enshrines ourcommitment to diversity and prohibits
any form of discrimination. We believein equal employment opportunity andour recruitment and selection practices
are open, competitive, and merit-based.
We have a zero-tolerance policy whenit comes to harassment and misconduct
such as physical, verbal, or psychologicalharassment.

We are dedicated to abiding by laborlaws within the country and have aligned
our business practices with national andinternational best practices. At Nebico,
we center our business activities on theconcept of humanity.
There have been notable changes
in people management in our industry
over the past 59 years. The company has
witnessed a significant shift towards
automation and digitization. This has led
to the adoption of new technologies suchas ERP (Enterprise Resource Planning)systems, supply chain management tools
and advanced analytics, which havestreamlined processes and reduced theneed for manual labor.
Over the past few decades, there
has been a growing emphasis on
diversity and inclusion in the workplace.
Nebico has been actively working
towards creating a more inclusive work
environment that values diversity interms of gender, race, ethnicity, andother factors. Similarly, we have started
to recognize the importance of employee
well-being with many offering flexible

work arrangements to promote work-lifebalance.
We have developed a culture thatseeks to develop respect and attention
to human rights among our employees,
customers, suppliers, and producers of
the products we sell. We respect humanrights in all our business processes andrequire that our management, leaders,and suppliers monitor progress daily
in protecting human rights. We haveencouraged our staff to report any
violence or bullying or health risks to the
management.

Q. What challenges have been

there to manage the factoryand corporate workforce in thecompany?

A. One of the biggest challenges
we face is ensuring that our employees
are motivated and engaged in theirwork. We have addressed thischallenge by providing our employeeswith opportunities for growth anddevelopment, as well as creating a
supportive work environment thatencourages collaboration and innovation.
We also provide our employees withcompetitive compensation packages that
include benefits such as health insurance,
paid time off, and retirement plans. We
are compliant with the Labor Act.
We believe that our employees are
our single most important asset. We
have more than 500 employees working
with us in both our factory and corporate
offices. Our age diversity ranges from
20-58 years, which helps our company
because we need individuals withdifferent levels of experience to reachour goals. At all levels, we have a goodmix of female and male employees. Of
the 500 individuals, 60 percent are maleand 40 percent are female, leading to a
male-female ratio in the workplace of
60-40 percent. At the most senior level,
there are male and female managers witha range of ages across the spectrum.
We maintain ethnic diversity
proportionately in all our departments.
We accept no violence or setting people
at risk and encourage our employees toorganize in collective agreements andunions. We hold a seat in the Employers

We believe incaring for thenation, nature,and employees
through
continuous
improvement
and profit.

of Service Management to securemaximum influence on human rights andproper business standards.
We emphasize quality of life outside
working hours and are committed
to eliminating all forms of forced orcompulsory labor and discrimination in
respect of employment and occupation.
We believe in freedom of association andthe effective recognition of the right tocollective bargaining.

Q. What are the key focuses of

Nebico in people management for
employee productivity?

We believe that by investing in
our employees, we can increase theirproductivity and create a more efficient
workplace. To achieve this goal, we
provide our employees with training anddevelopment opportunities that help
them acquire new skills and knowledge.
We also offer incentives for meeting
performance targets, such as bonuses orpromotions.
We have implemented policies andpractices that have increased employee
engagement and decreased turnover.
Our strong brand identity has elevatedproductivity and has transformational
power. We recognize top performers andhave an effective onboarding process that
ensures new employees are integrated
into our healthy team environment.
Our HR team makes sure thatworkplace rules, policies, practices,and behavior are fair and do notdisadvantage employees' potential. All
workers are valued and respected andhave opportunities to develop theirfull potential. We have a ‘Grievance

Procedure’ in place and offer mediation
to staff at work as a first-stage resolution
to any problems experienced in theworkplace.
We often have a high volume of
employees working across different
functions including production, sales,
brand & marketing, quality assurance,engineering, administration and finance.
To ensure employee productivity, we
focus on recruitment and selection where
we opt for effective processes that are
essential to ensure that our organization
attracts and retains high-performing
employees who can contribute to thecompany’s success. This includes usinga range of sourcing channels, developing
job descriptions, and conducting
rigorous interviews and assessments.
Nebico invests in training programs
that are relevant to the specific needsof our employees and the company’s
goals. Yearly performance appraisals
help us to identify areas of strength andimprovement for each of our employees,
allowing for focused development andgoal setting. We have also establishedclear performance targets and provide
ongoing feedback and coaching to help
employees achieve their objectives.
Our other focus is on employee
engagement as engaged employees
are more likely to be productive andcommitted to their work. We encourage
their engagement by providing a
supportive work environment, offering
opportunities for feedback andcommunication, and recognizing andrewarding employee contributions.
Similarly, the health and safety of
employees is another area of focus. Beingan FMCG company, we prioritize thehealth and safety of our employees,
especially those working in production
and maintenance. This includes
implementing safety protocols, providing
necessary equipment and training, andcreating a culture of safety awarenessand responsibility.

Q. What plans the company has
to increase the productivity of
employees?

A. We plan to increase theproductivity of our staff by continuing toJestha 2080 ||65

MANAGING PEOPLE

invest in their growth and development.
In order to improve efficiency andstreamline our processes, we also
intend to integrate new technology andprocedure. We are looking to the use of
automation technology, for instance, toassist in reducing waste and enhancing
quality control.
At Nebico, we believe that
productivity is key to our success. We
encourage learning opportunities andprovide employees with technology tohelp them work smarter, not harder.
We emphasize company culture andstrengthen communication protocols
to ensure that everyone is on the same
page. We identify and align goals
with performance and encourage
collaboration to ensure that everyone isworking towards the same objectives.
We diversify work areas to keep
things fresh and interesting and facilitate
training and development to help our
employees grow both personally andprofessionally.

Q. How Nebico ensures that its

employees are happy and satisfied?

A. We believe that happy

employees are productive. To ensure that
our employees are happy and satisfied,
we provide them with a supportive
work environment that encourages
collaboration and innovation. We also
provide our employees with competitivecompensation packages that include
benefits such as health insurance, paid
time off, and retirement plans, and otherperks that can improve the quality of
their life.
Recognizing and appreciating
employees’ contributions can boost
their morale and motivation. We
offer incentives, awards and publicrecognition for outstanding work andachievements. We have organizedrecognition awards for women
employees for their outstanding
contributions to the company. We
offer training programs, mentoring, andopportunities for advancement within
the company for career development.
We consistently thriving to create apositive workplace culture by promoting
diversity and inclusion, providing a safeand healthy work environment, andRecognizing andappreciating
employees’
contributions
can boost theirmorale andmotivation.
We offer
incentives,awardsand publicrecognition
for outstanding
work andachievements.

66 || Jestha 2080

encouraging open communication andcollaboration among employees.
In addition, we try to align thecompany’s goals such as profit andquality with the goals of the employees
such as safe and meaningful work. We
understand that this can be achieved
only through mutual trust.

Q. The industrial sector is facing

multiple challenges stemming fromrising inflation, decreasing market
demand and disruption in theinternational supply chain. How
challenging is it for a company like
Nebico in terms of managing people
in the current situation?

A. Undoubtedly, it is extremely
challenging for industries to maintaintheir operations amidst the current
economic climate. Managing people insuch circumstances poses a significant
difficulty. We are encouraging our
employees to put in more effort than everto overcome the situation and ensure thefinancial stability of the company. Somecompanies have resorted to downsizing,
but we are committed to retaining ourstaff in the hope of a brighter future.
We have been able to manage ourpeople well in this current situation bykeeping them motivated and engaged
with various training programs andincentives that help them stay focused on
their work while also ensuring that they
have a good work-life balance. Becauseof our prudent management and effective
human resources planning here wesomehow handle this situation.
Q. How much priority does thecompany give in training anddevelopment of employees?

A. Training and development of
employees is a top priority for Nebico
as it helps increase staff knowledge andproductivity which in turn increases
staff productivity. We conduct various
team building exercises which are very
important for team spirit and we equallyfocus on human resource developmentin the means of succession planning,skilling, reskilling and upskilling. This isalso a growth strategy for innovation andproductivity of employees.

n Sohan Babu Khatri

OPINIONTHE YIN-YANG OF INNOVATIVE CULTURES

Discipline Your
Experimentation

An innovative organization systematizes the process ofexperimentation through discipline.

“The reasonspeople who want
to work in an
organization where‘innovation’ ispart of the desired employee behavior
and organizational culture and factors
playing a role for innovative cultures
they cite are – fun, freedom, flexibility,
fellowship, and flatter organizations.
Imagine fun without results,
freedom without responsibility,
flexibility without discipline, fellowshipwithout accountability, and flatnessof organization without leadership;
it’ll be total chaos. Innovative cultureis hard to create and sustain within
an organization. When it comes to
execution, it can get puzzling and evenparadoxical, even to the best of thecorporate leaders. The major reason is innovative cultures are misunderstood.
The tensions created by such puzzles
and paradoxes need to be balanced andmanaged well; or else, all the efforts put
on to create an innovative organization
goes to waste; and sometimes, even be
perilous.” (The Ying-Yang of Innovative
Cultures: Learn to Manage and Thrive inContradictions; the HRM, Vol 2, Issue 8,

68 || Jestha 2080

Baishakh 2080).
There is no doubt in the fact that
innovative organizations encouragelots of experimentation, which
increases their likelihood of coming up
with something new and innovative.
However, the relationship between‘being experimental’ and ‘being
innovative’ may not always have thecause and effect relationship. Comfort
with uncertainty and ambiguity may not
produce desired results if the discipline
has not been well integrated into theorganizational culture. On the other
hand, an organization that has leadershipthat thinks they know or pretends
to know all the answers upfront andencourages experiments that need todeliver results that justify their so-called‘known answers’ wanders around the
misconception of ‘being innovative’
rather than truly being innovative. A
truly innovative organization experiment
to learn rather than to produce a productor service that immediately succeeds inthe marketplace.
Some leaders even tend to resort
to ‘random new actions’ in the nameof experiments. They end up creating
a bunch of kids out of their employees,

who keep on trying new things aimlessly– probably motivated to kill the boredomout of the regular job, hoping they deliver
the results; and sometimes, they evenmay. In the lack of discipline, they canjustify any new kind of action as anexperiment.
However, an innovative
organization systematizes the process
of experimentation through discipline.
It’s almost like creating a culture ofmanaged chaos within the organization,
but such chaos can be re-produced
and akin to productive results in termsof learning that are valuable. Suchdiscipline-oriented cultures devise waysof selecting experiments and selection
criteria generally are – potential learning
value and cost-effective designs thatyield more learning to the organization
relative to the costs. Such organizations
set multiple gates of criteria at theoutset for flagging ‘go’, ‘stop’, or ‘pivot’to their carefully selected experiments.
They do not shy away from the facts
and information generated by theirexperiments. They do not have diffident
leaders who avoid admitting that they
were wrong prima facie and if needbe, will kill the experiment or pivot

the initial hypothesis. That’s where
they nurture the discipline of taking
harsh decisions related to unyielding
experimental projects and make it lessrisky to launch new experiments.
Let me give an example of ahypothetical IT company to explain
how such cultures of disciplined
experimentation can get manifested.
This company has a formal ‘search’process whereby all teams (theorganization has a project-team basedorganizational structure) within theorganization, under the direction of oneof the senior management members,
undertake an explorative search foropportunities to develop new systems,
software, or applications. The only
criteria the company has at the outset
comes from its vision and values ofdeveloping IT solutions that impact
the broad ecosystem of business
communities; irrespective of theindustries. The team members explore
various sources of information related
to the pertinent problems of various

industries and sectors. They engage thecompany’s broad network of advisorsand clients to conceive new insights into
the problems which are creating majorbottlenecks in the process of creating
strategic or operational advantages forthe businesses. Such processes of seeking
opportunities are initially unconstrained.
All kinds of ideas are entertained – nomatter how unrealistic, unreasonable,or far-fetched they seem at first glance.
They do not look for validating data inorder to support the idea. Instead, they
ask a few interesting questions:l Does it match our strategic intent?
l Would we pursue this idea, if wewere to start our organization anew (startup point of view – where,
tolerance to failure is very high)?
l Does it carry the potential to solve
the problem(s) of the broader
business ecosystem (of that industry/
sector)?
l If the initial hypothesis comes true,
would it be valuable?
l What are the points we think we arelvery confident about regarding the
success of the idea?
If we fail, what are we going to learn?
And how much learning would
help the organization in spite of
the absence of the related project/product/ service?

During the process of explorationand subsequent (and multiple)
discussions, teams are expected toformulate venture hypotheses that are
testable. The central theme then becomes
experimentation with discipline – that’s
how they pick up ideas among many,
reframe them, unroll them, and getthemselves into the process of evolution.
Major aspects of discipline lie in thefollowing aspects of this company:l They do not experiment to validate
the ideas and concepts held
earlier (initially). Instead, teams
are expected to design “foolproof
experiments” that maximize theprobability of exposing an idea’s
imperfections.

Jestha 2080 ||69

OPINION
l

l

l

l

They do not commit too many
resources and time in the first roundof iterations of the experiments – as if
more resources would do wonders to
the frequency and timing of success.
They bootstrap their experiments– relying more on the capacity ofhuman capital in designing frugal,
but effective experiments.
They take a lean approach, whichenables them to learn, pivot and at
the same time know earlier in thecycle, what is going wrong – so thatthey can move quickly toward morepromising directions.
They either kill or reformulate theirideas on the basis of data generated
by the experiments. As stated earlier,they design experiments in a way
where such data is exposed to themin an easier way, sooner, and in a
cost-effective manner. Ignoring
experimental data in favor of ‘good
news’ (which was never there) is
considered a sin in this company.
The performance incentives are
not tied to the success of theexperimental projects – rather
they are tied to the criteria of thedisciplines of the experiments.
Rather than trying to justify an
experiment, they are better off
joining a new one, and that canhappen only when you stick to thediscipline of experimentation.

Many companies cannot design theirperformance measures around criteriaof disciplined experimentation; rather
they design their reward system aroundthe success of the experiments. Such aneffort is akin to the efforts of a sports
coach trying to produce an Olympian
gymnast without any injury during
practice.
In order to build an innovative
company, a leader should strike aproper balancing act of disciplined
experimentation. One cannot demanddata too soon, killing the game ofcreativity; nor should one reward theperformance, which encourages ‘letting
the losses run too long’ in bad ideas.
Leaders need to be brutal enoughto sometimes, even kill the projects

70 || Jestha 2080

Comfort withuncertainty andambiguity may
not produce
desired results
if the discipline
has not been wellintegrated into
the organizational
culture.
In order to build an
innovative company,a leader should strikea proper balancing
act of disciplined
experimentation.

l

l

l

l

l

championed by one, when mandated by
the data coming out of well-designed
experimentations.
Few recommendations at the end:l Encourage all to come up withideas, but make it a point that yourorganization’s vision, mission, values,
and strategic intent are clear enoughto everybody.
l Develop and communicate a few
higher-order criteria for idea
selection. Such criteria should
allow enough play of creativity
among employee members of theorganization.
l Do not seek initial validation of ideas
through already published data or
already tried methods outside theorganization.
l Encourage employees to come up
with clear hypotheses around theidea and its key metrics which
defines the success of their ideas.
(not targets)l Encourage employees to design leanand ‘killer’ experiments which serve
as foolproof methods of testing thelideas in cost and time-effective ways.
Let experimental data decide
whether to go ahead, drop or modify
the innovative ideas.
Design performance management
systems around the quality of ideas,
experimentations, and learningderived rather than the success of theexperiments.
Strike a proper balance between thefreedom to generate ideas and the
responsibility of designing foolproof
experiments that truly test the ideason their merits.
Create such a discipline ofexperimentation, where everybody
within the organization understands
that they are free to generate ideas
and experiment around it; but are
not free to come out of it withoutvaluable learning for the organization– does not matter whether the idea/
experiment succeeds or not.
Another aspect of such discipline isthat everybody should understandthat the uncertainty prevailingaround the initial idea is ok, but thesame degree of uncertainty aroundthe design of experiments is a sin.
Devise a proper system and culture
within the organization thatlets the leader understand, what
exactly failed and why? Was it
the idea? Or people’s capabilities?
Or the organizational system?
Or regulations and policies? Or
the wrongly devised key metrics
of success? Or was it the ‘mustsucceed’ mentality while designing
experiments?

The American author andmotivational speaker Simon Sineksays, “The value of experimentation is not
the trying. It’s ‘the trying again after theexperiment fails." But the ‘trying again’
can only generate results when the ‘firsttry’ was disciplined enough. Planned
ideas are rarely innovative, but plannedexperiments carry the worthiness ofunearthing the value of unplanned andinnovative ideas.

Khatri is a Management Consultant
and Educator.

the HRM INTERVIEW

72 || Jestha 2080

We believe thatleadership is not
solely focused on
individuals but ismore collaborativein nature
HEATHER CAMPBELL, Country Director, Save the Children – Nepal and BhutanThe UK-based
INGO Save theChildren has
been operatingin Nepalsince 1976
and has madesignificant contributions to childrights helping Nepal make strides
in addressing child mortality,
malnutrition and child marriage,
among other issues. Heather
Campbell is the Country Directorof Save the Children for Nepal
and Bhutan. In a conversation
with the HRM, she explains how
Save the Children is working in
Nepal to achieve its objectives,
organizational policies andpractices, and the challenges it
faces currently. Excerpts:

Q: Save the Children is present in
Nepal since 1976. Can you tell us more
about the work that the organization
does?

A: Since 1976, Save the Children
has been unwavering in our belief thatevery child deserves the right to survival,
education, and protection in Nepal. As
part of our Country Strategic Plan, weare prioritizing several key areas. Firstly,
we are collaborating with children
and youth to promote climate change
initiatives. Secondly, we are investing ininnovations and strategies to reach the mostmarginalized communities, while leveraging
shock-responsive social protection. We arealso addressing the learning loss resulting
from the Covid-19 pandemic, ensuring thatchildren can safely return to school, andbuilding resilient education systems towithstand future shocks. In addition, weJestha 2080 ||73the HRM INTERVIEW

are shining a spotlight on the mental
health and Sexual and Reproductive
Health and Rights (SRHR) of children
and adolescents.
Our integrated nutrition programs
aim to meet the nutritional needs ofchildren and young mothers while
addressing malnutrition and its longterm consequences on both physical andcognitive development. Furthermore,through our Global Fund Grant, we are
implementing programs to respond todiseases such as Tuberculosis, Malaria,
and HIV in Nepal. It’s worth noting that
Save the Children has programs in all
77 districts of Nepal, ensuring that wereach and serve as many children andcommunities as possible.

Q: Save the Children was recently
awarded the “Excellence in
Employer Branding Award” inthe HR MEET 2023. What makes
Save the Children the organizationof choice for many development
practitioners in Nepal?
A: I can think of many things, butthen, the topmost reason definitely
would be the enabling and positiveenvironment that Save the Children
provides. Our staffs are leaders in theirown fields, and at Save the Children
we provide them with the resources,
tools, and development opportunities
to lead cutting-edge actions. We ensurethat our ‘talent’ are provided with theinvestment that they need to grow.
Also, one of our values is to celebrateachievement – big or small, as we prime
our staff as leaders, we also ensure that
staffs, despite their position have a
say in decision-making. The open andhonest culture, collaborative decisionmaking, autonomy, and enabling work
environment are what make Save theChildren the organization of choice.

Q: Do you think for an organization
to grow, it needs to celebrate andrecognize the achievement of staff
members?

A: Of course! Save the Children staffs
are the backbone of the organization, andin the very truest sense, their dedication,
work ethics, and commitment to making

74 || Jestha 2080

a better future for the children of Nepal
is what makes Save the Children one of
the most sought-after organizations in
Nepal. I believe that acknowledgmentof work or contribution, be it small orbig, if rewarded and celebrated supports
building trust, mitigating conflict,increases commitment, strengthensaccountability, and drives results.
Remember that great teams are made ofgreat team members.

Q: What is Save the Children’s
definition of leadership?

A: At Save the Children, we
believe that leadership is not solely
focused on individuals but is morecollaborative in nature. We encourage
every member of our organization topractice ‘collaborative leadership’ which
is an amalgam of shared values, vision,and participatory decision-making. I
believe when we practice collaborative
leadership, it not only paves the way
for an enabling and positive work
environment, but then it encourages aculture of innovation, creativity, andmost importantly accountability where
staffs themselves demonstrate greater
accountability to deal with complex
situations with a solution-oriented
approach, keeping the best interest of theorganization, and our mission at heart.
But most importantly, collaborative
leadership helps us to adapt and become
more agile to situations and challenges,

where we can bring together collective
wisdom to make meaningful decisions.

Q: Diversity, Equity, and Inclusion(DEI) seem to be a mandate foralmost all organizations. How does
Save the Children look at DEI?

We believe thatleadership is not
solely focusedon individuals
but is morecollaborative innature.

A: We don’t look at DEI as amere tick-box exercise but take nonnegotiable steps to ensure that diversity,
equity, and inclusion are reflected
in all levels of Save the Children’s –operations, programming, advocacy,
and partnership. There is greater
realization and acknowledgment thatin Nepal, we still have groups andindividuals, historically marginalized,
and have been denied a level playing
field. This curbs their access, influence,and participation, and are often deniedopportunities to lead, contribute, andinnovate. Through our DEI policies, we
are working towards challenging thesesocial strata and challenging harmful
norms and systematic barriers to ensurethat individuals regardless of their race,
ethnicity, gender, sexual orientation,socio-economic status, ability, or age,have equal access to opportunities
to develop their skills, participate indecision-making, and advance theircareers.
Our human resources (HR) teamhas taken deliberate measures toensure an inclusive work culture thatvalues and embraces diversity. This
includes recruiting and retaining adiverse workforce, providing training
and development opportunities tostaff, promoting gender equality, andcreating an environment that is safe andrespectful for all. Therefore, we focus
on consistent and intentional practice,
to ensure that our commitment to DEI
is reflected in our actions and decisionmaking.

Q: In the face of the current global
economic downturn are there
any challenges in maintaining
operations and resources?

A: These challenges are inevitable.
But then, we at Save the Children havealways believed that organizations likeours need to have an agile system. Thismeans we need to adhere to the spirit oflocalization.
Q: Can you elaborate on this?
A: The goal is to shift power toour partners, ensure the sustainabilityof our actions, and complement the
government’s vision of localization.
We through our graduation model ofpartnership have been practicing thisshift, which will ensure that we best
utilize the resources, and optimize
operations via a nimble approach.
Also, we believe that federalization
is an opportunity to meaningfully
implement this shift and to build
on resources locally, with strategic
gatekeeping and support fromorganizations like us. This thought is acontinuation of many such conversations
that Save the Children has initiatedinternally, and we are confident that thisthought leadership will be the answer
to sustainability which adheres to theprinciple of localization.

Jestha 2080 ||75

FACE TO FACE

DishHome cantarget several
areas for further
business
expansion
SANJAY RAJBHANDARY, Deputy General Manager, Dish Media Network Limited

S

ince its inception in 2010, Dish Media Network Limited(DishHome) has set industry standards in the TV
broadcast business in Nepal as the only DTH services
provider. Over the last few years, the company has
ventured into internet and IPTV services that havereceived a warm welcome from customers.
Sanjay Rajbhandary, Deputy General Manager ofDish Media Network Limited, says the company will
step into new areas of business in the future after making carefulmarket assessments while expanding and bolstering the current
services. In a conversation with the HRM, he talked about the factors
behind DishHome's success as a DTH brand, its foray into new areas,
the expansion of services, and how the company is utilizing digitalmarketing to reach out to customers. Excerpts:

76 || Jestha 2080

Jestha 2080 ||77

FACE TO FACE

Q: DishHome has been the top

DTH company since its inception in2010. What factors have helped in
DishHome’s success as a DTH brandin Nepal?

A: DishHome's success as a DTH
brand in Nepal can be attributed toseveral key factors. It is the only DTH
service provider in the country withhigh-quality service, has products that are
favorable to Nepal's geographic condition,competitive pricing, and an exclusive
and wide variety of content. We havewide coverage all across the country andensure robust 24/7 customer support.
DishHome's effective sales and marketingstrategy has also played a key role in thecompany's success.
Q: DishHome ventured into

internet services with the launchof DishHome Fibernet in August2020 amid the surging Covid-19
pandemic. How have been thesethree years for the company as aninternet services provider? Whatmajor achievements do you like tohighlight?

A: Amid the Covid-19 pandemic,
DishHome Fibernet, the internet servicesof DishHome, faced unique challenges andopportunities in Nepal's evolving internet
services landscape. The pandemic caused
an increase in demand for high-speed
internet. Most of the workplaces, schools,
and colleges were online during thisperiod. The competition was tough in themarket, but DishHome Fibernet managed
to expand its customer base faster thanother brands.
During the pandemic, we expanded
our infrastructures and services all across
Nepal and we continued to work hardon delivering high-quality service andcustomer experience.
Q: In the current fiscal year,

DishHome’s internet business hasgrown remarkably. As DishHome
goes for DH Fibernet service
expansion, how important will
be internet service for the overallbusiness of the company? How areyou expanding the new services
across the country?

78 || Jestha 2080

We have wide
coverage all acrossthe country andensure robust 24/7
customer support.
DishHome's
effective sales
and marketingstrategy has also
played a key rolein the company's
success.

Internet has become an integral partof modern life with increasing demandfor high-speed internet connectivity
for remote work, online learning,
entertainment, e-commerce, and otherdigital services. With more people relying
on the internet for many aspects of their
daily lives, DishHome's reliable, highquality internet service can be a key factor
in customer retention and acquisition.
Expanding internet service offerings
will bring new revenue streams for
DishHome, diversify its business portfolio,
and potentially increase its market
share in Nepal's highly competitive
telecommunications industry. Providing
reliable, high-speed internet service
allows DishHome to attract and retain
customers, strengthen customer loyalty,
and build a strong brand image as areliable internet service provider.
We are continuously expanding
our internet service across the country
depending on market demand and ourbusiness strategy.

Q: As a multi-platform television

Digital marketinghas emerged
as a powerfuland costeffective tool
for businesses
to efficiently
reach their target
audiences. Asa business,
it is nowimperative for
us to establish
a strong online
presence.

distribution company, DishHome
was earlier focused on DTH services.
Now, it has internet as well as Videoon Demand (VoD) service as well.
What are the new areas of businessthe company is targeting to growfurther?

A: DishHome can target several

areas for further business expansion,
including value-added services,
smart home solutions, cloud services,
e-commerce, advertising and sponsorship,
internet-of-things (IoT) services andcorporate solutions. However, carefulmarket assessment, feasibility analysis,
and strategic planning will be crucial for
successful expansion and growth in the
new business areas.

Q: As ISPs are also focused on IPTV,
how will be the business of a multiplatform television distribution
company in the country in the
future?

A: The future of the multi-platform
TV distribution company's business may
be shaped by several factors includingchanging consumer preferences,

technological advances, market
competition, diversification of revenue
streams and regulatory changes.
So adapting to evolving market
dynamics and leveraging technologicaladvancement beyond the traditionalmodels will be key strategies for successin the future.

Q: Digital marketing seems to haveovertaken traditional marketingand promotion over the past three
years in Nepal. How is DishHome
utilizing digital means to reach out
to customers across the country?

A: Digital marketing has emerged
as a powerful and cost-effective tool
for businesses to efficiently reach theirtarget audiences. As a business, it is
now imperative for us to establish astrong online presence. We are currently
utilizing several digital marketing
channels, including social media platforms
such as Facebook, Instagram, Twitter,
TikTok, YouTube and Google Display
Network for search ads, banner ads, andvideo ads.
These platforms have allowed us
to engage with customers, raise brandawareness, generate leads, and drive traffic
to our websites. Google Ads has been
instrumental in improving our website's
search engine ranking, making it easierfor potential customers to discover us
online. Our social media promotions have
not only created brand awareness but also
resulted in revenue generation throughsales conversions.
During our recent POD launch, weleveraged social media to create prelaunch hype for a week, using static
images and videos targeted specifically tothe relevant areas. This strategy helped
us connect with potential customers andgenerated positive results. Even after
the launch, we continue to aggressively
promote our offers and schemes, and wehave been seeing promising outcomes.
In summary, digital marketingis a vital and highly effective tool for
DishHome. It is essential in today's
world as it enables us to reach ourtarget audience, build brand awareness,and drive sales through various online
channels.

Jestha 2080 ||79

n Anil Chitrakar

OPINION

Listening in at Aryaghat
The central issue we need to understand here is whether our business was started tohelp society move ahead or to simply enrich ourselves and our shareholders.

T

his is a strange way to start
an article that discusses
business and the people
who lead these businesses
here and globally. Imagine
the day you are being laid on a pile ofwood to be cremated at Aryaghat along
the Bagmati River. You have the special
power to listen in on the conversationthat is happening around you. What
will people who came to your funeralbe telling each other about you? Even

better, what do you want them to saythings about you as the fire begins to
consume your mortal remains? Thequestion becomes even more relevant
because none of us know how much time
we have left to influence what people
will say about us. This can be depressing
for some but has motivated many people
throughout history.
Mark Twain's two phrases will help
us to understand why you may want tocontinue to read this article. He famously
said, “There are two important days in aperson’s life. The day you were born; andthe day you find out why.” Celebrating
the day we were born is a commonplace
event. We used to do it by lighting
the oil or butter lamps, but as we“developed” we do it by blowing out
some candles on a cake.
Celebrating the day you foundout why you were born is a bit
more complicated and not yet
commonplace. It could become goodbusiness if we found a way to help
people celebrate this key day in one’s
life. It needs to be recognized as a very
important day in a person’s life andcelebrated accordingly. The
Buddha celebrated the day at
the age of thirty-five.
BUY LOW AND SELL HIGH
Everyone understands profit
and the basic principle behindthe concept. One just needs tobuy at a lower price and sell at

80 || Jestha 2080

a higher price. It is quite simple. Across
Nepal, people are buying low and sellinghigh and making a profit. Outsourcing
also often has the same meaning where
you win a contract to perform a piece ofwork and then find someone who cando the work at a lower price and makea profit. Running a proper business andmaking a profit at the end of each fiscal
year is a bit more complicated. What
we are discussing here is the concept oftackling society’s toughest problem withbusiness tools and measuring the impactthat we have created. In the process,we need to generate a positive revenue
stream so that the business idea can be
replicated and go to scale.
IMPACT AND PROFIT
The central issue we need tounderstand here is whether our business
was started to help society move ahead
or to simply enrich ourselves and ourshareholders who expect a dividend.
What processes were used in the supply
chain, how is the product designed andproduced, what are the distribution
channels, and what happens to thepeople who consume, and the mostimportant question today is what
happens to the waste generated. Impact
needs to be understood in this broad
sense and is clearly much more thansimple profit. Are we making choices toensure that our carbon footprint is being
reduced? Do we care about resource
depletion, pollution and the needs of

OPINION
future generations? What form of energy
do we use and is our manufacturing
process efficient?
LEVERAGING PAST INVESTMENTS
Nepal is fortunate to have thebirthplace of the Buddha at Lumbini andthe brand new international airport near
the site. The million-dollar idea here is
to figure out how one can leverage these
two assets to end poverty in this partof the Terai region. In a recent dialogue
with local governments, many came up
with good reasons why this will never
happen. Social entrepreneurs are theones who take the first few steps toattain this goal. Every society and thewhole world is out looking to invest inthese special people. Not everyone cando it, let alone succeed. These people
need to be rooted in strong values, andwill not stop when challenges come up
in the process. Are you one of them?
DID EVERYONE ARRIVE?
We live in a competitive world
where the only thing that matters is therace and the classification of winners
and losers. Societies and the history of
conflicts teach us that no one likes tolose, at least not all the time. The losers
may pick up the gun and come after the
rest. Wars and long drawn conflicts
make everyone pay over the long run.
Migration and refugees are often the
results, and as history has taught us, war
can begin when we want, but no one canpredict when it will end. When we leavebehind the people who did not “win”,
they come back at a huge cost to all of
us. Drug addicts, the sick, the mentallychallenged, the homeless, landless, all
become a bigger cost to society overtime. Nepal has learned this lesson thehard way and we have determined that
we must ensure an inclusive system.
Some have already forgotten.
BASE OF THE PYRAMID MARKETSThe reason why Bangladesh isdoing economically better than manyof its neighbors could be because of thework done by people like Mohammad
Yunus and the Grameen Bank hecreated. Dr. Yunus is fond of telling82 || Jestha 2080

Nepal has justannounced thatit produces more
green energy thanit consumes. This isa great opportunity
to become a world
leader and decarbonize theeconomy.

us that he realized that the poor werebankable when a group of women heinvested in showed their ability to pay
back. Grameen Energy, telecom and somany other initiatives followed thathave helped create a market for people
who lived at the base of the economic
pyramid. The base of the pyramid has
more people and hence more clientsand consumers. Many markets choose
only to serve those at the top. The social
entrepreneur recognizes this unique
opportunity and initiates the design androllout of products and services for thismarket segment. This unserved market
is where the real growth is and it willcontinue to grow rapidly.
PRICE THE POOR IN
Many products can be madeexpensive or affordable. Many services
can be designed so that more people canand will use them. For example, energy
can be priced differently depending on
how much the meter readings show
you consumed. This allows poorer
households and people to pay a much
lower rate than say a commercial orindustrial complex. There is a priceyou can charge if people want to own aproduct and a lower price if they only
want to use it. There are peak time
prices and off-peak times when things
can be made cheaper. The economy ofscale can be leveraged to reduce the perunit price of any product or service.
Fruits and vegetables can also be priced

differently depending on the seasons.
The social entrepreneur knows thatthese strategies can make products andservices affordable to people who werepreviously not reached or not served. It
is much more complicated than simply
buying low and selling high.
ONLY ONE PLANET
In the last 30 years, Nepal has
been able to increase its forest cover tonearly half of its land and substantially
increased the wildlife population, andprevented their extinction. The wholeworld admires these achievements, but
we need to move ahead. The numberof tigers increasing is only a part ofthe story and the challenges we face.
Waste management, air pollution,
traffic congestion, food security, andmany more challenges loom before us.
The government thinks many of these
problems can be regulated. It may
not be that simple. We will require
many new ideas, innovations, andsocial entrepreneurs to protect Nepal’senvironment and help eight billion
people to live a good life on our only
planet along with all other beings.
GREEN ENERGY-POWERED NEPAL
Nepal has just announced that it
produces more green energy than it
consumes. This is a great opportunity to
become a world leader and de-carbonize
the economy. The west became rich byburning too much carbon and causing
climate change. Nepal can show theworld how to decarbonize agriculture,
cooking, transportation, and industrial
production. We have set 2045 as thetarget year to achieve this goal. This is sodifferent from making a profit with noregard to our climate and the wellbeingof all forms of life on earth as we know
it. We shall also have to adapt to change
in the short term. All this will requirevery special people, their ideas and theirentrepreneurial attributes. There is avery exciting world out there for those
who feel they have what it takes.

Chitrakar is a social entrepreneur,environmentalist and author. He canbe reached at anilchitrakar@gmail.com.

n Saurav Dhakal

OPINION

Green and Creative
Solutions for Nepal’s
EconomyA creative green economy can be a medium through which humans seek meaningful
work, and contribute to the economy, without harming the planet and people.

On my recent bicycle
trip, I went to Nagdaha(Snake Lake), a pond
located in Dhapakhel,
Lalitpur. The lake isspread over approximately five hectares
and the main inflow source is a natural
spring, while the water flows out to form
two small wetlands.
This lake is known as a natural
habitat for a variety of aquatic plants,
fish, and migratory birds. Many
species of native fish such as Barbs andSnakeheads are abundant. The area
is also home to several bird species
including Black Kite, Black Drongo,
Cattle Egret, Oriental Magpie Robin,
Common Myna, Rose-ringed Parakeet,
and Red-Vented Bulbul are some of
the resident birds. Migrants include
Cuckoos and Eurasian Coot. All thesemake the vicinity of Nagdaha probably
the best place to watch birds in the
Kathmandu Valley.
On the other hand, the lake has beenused for various human activities likewashing clothes, bathing, fishing, andirrigation, as well as religious purposes.
However, the lake is not open for boating

84 || Jestha 2080

and swimming due to safety concerns.
The increase in human activities andpollution have threatened the existenceof the lake. But local residents of thearea and authorities have been trying topreserve the integrity of the place lately.
I met a few young people who
are working with Water lettuce.
Water lettuce is an invasive plantthat has covered large portions of
Nagdaha, choking the native species
and depleting the aesthetics of thewetland area. The group of youths got
involved in the cleanup of the lake but
a lack of public space resulted in theextracted weed being disposed of near
the wetland shores. This resulted inanother ecological impact due to its
rapid decay, causing a horrid smell anda decline in water quality. This is where
the team ‘Wetlands for Nepal’ decided
to work on managing the invasive
species prototyping, biopesticide called‘Jholmal’. The biopesticide can be usedby the ‘Mali family’ (traditional flower
growers) who live around the lake andthat flower is used for the worship of the
Nag (serpent god).
Around the lake, there are many

restaurants. The restaurant is famous
among the holiday crowd for serving
tasty and homely food.
From Nagdaha, it was 30 min cycling
on to Chapagaon. I visited the Pyan
Gaon, a small and beautiful centuries-old
crafting village of Newars in Chapagaon,
Lalitpur. The village got its namefrom the unique profession of making
beautiful bamboo buckets
used to measure grains.
These buckets became
regional standard
measurements inunits called Maana
and Pathi. The
bamboo is called‘Pyang’ in the Newari language. The
skill of making bamboo baskets not
only identifies their villages but also
represents a unique heritage. Hence, it
played an important role in supplying
traditional bamboo units to measure andweigh goods. The bamboo bins are used
for multiple purposes such as storing
food grains, spices clothes, medicines,
and important papers and documents,
and are constructed in such a way that
insects, mites and rats cannot damage
them.
However, urbanization has been
taking a toll as people are gradually
moving away from traditional

craftsmanship. But now a group of local
youths is working to revive it by training
artisans to make new designs as per andinterest of buyers that can also replace
the plastic containers.
Nepal, like many other countries
around the world, is facing thechallenges of climate change andenvironmental degradation. As a result,
there is a growing need to shift towards
a more sustainable and environmentallyfriendly economy. In the early 1950s,
the country opened up to the outside
world and since then, the market thatpushes plastics has replaced some of the
traditional craft. A good example is thereplacement of Sal (Shorea) leaves plateswith plastic plates.
Today, we also have a younger
generation that cares and wants to takepositive action. They are now exposedto the world and hence appreciate
what they have even more. They arealso caught between the need to makea living and support their families andthe desire to conserve their traditions. In
many areas, we see short-term economic
activities winning. This has a longerterm negative impact on the natural
resources, the people, and ultimately
their skills and knowledge.
Hence, the creative green economy
has a critical role to play to support
sustainable development goals. It
supports entrepreneurship, encourages
innovation, and brings people together
in a creative way. Whereas, the green
economy is a need today that reduces
environmental risks and ecologicalscarcities while contributing to social
equity and the well-being of humans.
Today more than ever, it has become ourcollective responsibility to decarbonize
the economy and manage the full life
cycle of products. Therefore, a creative
green economy can be a medium throughwhich humans seek meaningful work,and contribute to the economy, withoutharming the planet and people.
30 million Nepalis have the samedevelopment aspirations as anybody elseon the planet. What we need to learn isthat the model for development needs tochange. We have learned the hard waythat exclusion leads to armed conflicts
and destruction. Climate change will
increase our suffering in terms of waterand food security and even the need tomigrate. Many of us are already having
to adapt to changes we may not havecontributed to. Nepal is determined to becarbon neutral by 2045 and we must allcontribute to achieve this objective.

Dhakal is an environmental activist
and entrepreneur. He is the Founderand Curator of Story Cycle, analternative media platform.

Jestha 2080 ||85

MY FIRST JOB

86 || Jestha 2080

Entryinto theinsuranceindustry
was ablessing
in disguisefor meNIRAJAN KANDEL, Deputy CEO, Sanima Reliance Life Insurance

Jestha 2080 ||87

MY FIRST JOB

F

or Nirajan Kandel, his professional career has been full of changes and learning opportunities.
Kandel, who is the Deputy CEO of Sanima Reliance Life Insurance, started as an Assistant at
Siddhartha Bank in 2006. He joined Citizens Bank International in 2007 and worked there
for three years before joining Standard Chartered Bank (Nepal) where he worked for sevenyears in different roles and responsibilities. A big shift in his career took place in 2017 when hejoined Reliance Life Insurance (now Sanima Reliance Life Insurance) as the Deputy CEO at the age of 34.
In a conversation with the HRM, Kandel talked about his entry into the banking sector, transition
to the insurance industry, and why venturing to another area can actually be good for career growth.
Excerpts:

Q: Tell us about your first job.
A: I started my banking career in2006 at Siddhartha Bank as an Assistantat the age of 23. The bank announced avacancy for the post in a newspaper withsome stringent criteria. I applied and got
a call from an outsourcing company fora written test. After a couple of weeks,
I got a call from the bank and came toknow that I passed the written test andwas asked for an interview and finally
got selected. I still vividly remember the
day of our orientation with the bank's
then CEO DC Khanna. The experience
was quite enriching and enlightening.
Despite being an elderly person, his
approach was quite youthful andinspiring.

Q: How did you get into the job?
A: Back then, every management
student would aspire to get into a bankjob. Banking was the most interesting
and glamorous career for most job
seekers. The situation is not the same
now. As I mentioned earlier, the selection
criteria used to be very stringent andcompetition was really stiff. For the same
Assistant position to which I appliedin 2006, more than 1,000 candidates
showed up for the written exam. The
examination was conducted in Nepal
Administrative Staff College situatedin Jawalakhel in shifts. Further, there
were intense group discussions followed
by interviews. So, it was tough. But
looking back now, it feels good that I
went through the entire process and got
selected.

Q: What were the challenges after
joining the job?

A: There were a lot of challenges.
I want to talk about our education

88 || Jestha 2080

system to connect to this question. I
think anyone who completes a bachelor's
degree should have a certain level ofpractical exposure and I believe such
exposure can only be passed on with
scientific teaching and learning methods.
Our education system is such that many
students learn almost nothing more thananswers to some WH questions. Thisis really unfortunate. When I joined thebank, I realized whatever I have studied
or whatever my college has given to me
was enough just to pass the exam andto get an academic degree. It was not
adding much value to the professional
world. So, I faced similar challenges. I
was pretty much a novice and it wascompletely learning by doing for me.

Q: What lessons did you learn
from the first job? How did theexperiences help in shaping yourcareer?
A: I have learned lot many thingsfrom my first job. First, I learned that it
is very important to keep an eye on verysmall things and give attention to details.
In school and college days, making
mistakes is about learning but in the

Globally we haveseen people shifting
their careers
from banking totelecommunications,or manufacturing toservices, and they
have done well.

professional world, you have to pay foryour mistakes.
Initially, I was placed in the internal
audit and finance department and mymajor task was to check the entire
transactions of the bank that wererecorded on documents of more than
30/40 pages. And I had to check everytransaction and see if it matched withthe dockets. It was quite an irritatingtask, to be honest. I even complained
to my manager for giving me such aridiculous task. But now I realize that it
was a very good learning that helped me
to pay attention to details.

Q: What major achievements
were there for you professionallyand personally?

A: I did not stay much in my firstjob. I left the bank after working forjust nine months. But it was very goodlearning for me and built a very goodfoundation to switch to another bank.
I also want to mention my intention
to find another job in just nine months. I
think we all have certain traits, and it isimportant to know about our strengths
and weaknesses. I realized from the very
beginning that it was not my kind of job.
I was basically placed in a back-officerole (internal audit and finance) and I
literally felt I would do better if I get an
opportunity to work in the front line,
driving business, making strategies,
and building relationships. So I joined
Citizens Bank International Limited in2007 as the Relationship Officer.
Q: After spending 12 years in thebanking sector, you joined theinsurance sector in 2017 with
the inception of Reliance Life
Insurance. What led your career toshift from banking to insurance?

A: It was not planned. I neverthought to get into the insurance sector.
But there are surprises in life. On one
fine morning, I got a call from KFA
Business School which was given thetask of headhunting of CEO, Deputy
CEO, and other roles for the upcoming
Reliance Life Insurance. KFA initiallyoffered me the post of CEO and also
asked me to make a presentation topresent to the board. At that time, I was
not ready to become CEO as I was just34 and I worked in a highly systemdriven organization. Then I was offered
the position of Deputy CEO. I did apresentation to the board of directors of
the company. They even hired an expert
from LIC India for theselection process. I went

through all processes and entered theinsurance industry and I think it was a
blessing in disguise for me.

Q: How have you found working
in two different industries in thefinancial services sector? How has
this shift been for you?

A: Both banking and insurance deal
with money and they are very muchpart of the financial services industry.
Insurance companies also collect moneyfrom people at large slightly in different
business models than banks and invest
in infrastructure and other areas. So I
do not find much difference. While inbanking, I was in business and strategy
roles throughout my career and it has
been the same for me in insurance.
However, there are differences inwork culture, ways of doing things, andprocesses between the two sectors.
There is a notion in Nepal thatbankers should only stick withbanking and somebody working intelecommunications should remain in
the sector only and somebody working in
manufacturing should stay in the sector
only. But this is not true. Globally wehave seen people shifting their careers
from banking to telecommunications,or manufacturing to services, andthey have done well. The principles ofdriving business are always the samein any industry. For me, the transition
was smooth and enriching in terms oflearning.  

Q: How do you see the prospectsof growth for young graduateslooking start careers in insurance?

A: I think there is a huge
opportunity for young graduates in
the insurance sector. There are highly
technical areas like product pricing
where the use of mathematics andactuarial science is massive. I have also
seen a lot of young students pursuing
actuarial science courses as there is ahuge opportunity in this particular area.
Besides, areas like reinsurance, productdevelopment, digital branding, coding
and programming are the next big job
opportunities in the insurance industry.
The industry has a lot of headroom for
growth and from that perspective also
opportunities will come in days ahead.  
Q: What advice do you havefor them to become successful
insurers?

A: I would suggest sticking to thebasics. Always maintain a high standardof integrity. Work on your skillset andinvest in yourself to find your better
version. And I think in any industry
there is no alternative to hard work andthere is no shortcut. Younger generations
especially Gen Z are very impatient andI think this is not a very good sign. Long
term view is also important. While they
are extremely innovative and smart, it
is equally important to work hard andmaintain patience. And if they can blend
these things they can do wonders.

Jestha 2080 ||89

A P P O I N T M E N T S
90 |Pokharel appointed
Finance Secretary
Arjun Pokharel has been appointed
as Secretary of Finance. He wasworking as Secretary at the Office of
the Prime Minister and Council of
Ministers. In the Ministry of Finance,
Pokharel has replaced Toyam Raya
who has been posted to the Office of
the Vice President. Pokharel entered
the civil service in 2051 BS as an officer.
He has worked in key revenue agenciesof the government such as the Internal
Revenue Department, Department
of Customs, and Customs Office of

Tribhuvan Airport.
He also worked as the Headof the Department of Money
Laundering Investigation,
Spokesperson of the Ministry of
Finance, Chief District Officer of
Kapilvastu and Rupandehi districts,
Chief Secretary of Sudurpaschim
Province and Madhesh Province, andSecretary of the Public Service
Commission. He has also
held responsibilities as
Industry Secretary andSecretary Ministry ofFederal Affairs andGeneral Administration.

Thakali appointed as CEO of
Kamana Sewa Bikas Bank
Dinesh Thakali has
been appointed as CEO
of Kamana Sewa Bikas
Bank. Earlier, he was
Deputy General Manager(DGM) of Prabhu Bankand worked there as Chief
Business Officer. He
was the Managing
Director of Prabhu
Capital Limited
for two years prior to becoming the bank’s DGM.
He joined Prabhu Bank as Chief Operations
Officer (COO) in 2018 prior to which he was
Officiating CEO in Shangri-la Development
Bank. A chartered accountant by profession,
Thakali has experience in deposit management,
marketing, and the securities market. He is also
the former General Secretary of the Associationof Chartered Accounts of Nepal.

Acharya appointed CEO of
Lumbini Bikas Bank
Suman Acharya
has been appointed
as the Deputy CEO
of Lumbini Bikas
Bank Limited. Earlier,
he was AssistantGeneral Manager(Credit Business| Jestha 2080

Chief) of Civil Bank Limited (now Himalayan
Bank) and Chairman of Civil Capital Market
Limited. Acharya, who has 23 years of experiencein the banking sector, started his career asa management trainee at Nepal Credit &Commerce Bank in 2000. He has worked in NIC
Asia, Himalayan Bank, Sunrise Bank, and Civil
Bank in different roles and responsibilities. He
holds an MBA degree from Tribhuvan University.

Awasthi promoted to DGM of
Nabil Bank
Ganesh Prasad Awasthi has been promoted
to Deputy General Manager (DGM) of Nabil
Bank. He was previously the Assistant General
Manager working as Chief Business Officer inthe bank.
Awasthi has over two decades of experiencein the banking sector. He started his banking
career in 2001 at the then NIC Bank (now NIC
Asia). After working as the head of a branch of
Kumari Bank, he joined Global IME
Bank in 2008 and worked there for
13 years before joining Nabil Bank.
Awasthi is known for his expertisein credit management and customer
services. He holds a master's degreein economics and managementfrom Tribhuvan
University. He has alsostudied Disruptive
Strategy at Harvard
Business School.

A P P O I N T M E N T S

Kumar appointed
CEO of LIC (Nepal)

92 |Pranay Kumar has been
appointed as CEO of Life
Insurance Corporation (Nepal)
Limited. He will be in the post
for the next three years. Prior
to his appointment in LIC (Nepal), Kumar was
working as Senior Divisional Manager (Senior
Divisional Manager) in the Nagpur Division of LIC
India.

Shrestha
appointed
CEO of Laxmi
Laghubitta

Sundar Prasad
Shrestha has been
appointed as CEO of
Laxmi Laghubitta Bittiya
Sanstha Limited. His appointment to the post cameafter the tenure of Prakash Raj Sharma ended on
April 30. Shrestha, who has been working in Laxmi
Laghubitta for the past 10 years, is currently the
Deputy General Manager of the company. Shrestha,
who has 20 years of experience in the microfinancesector, started his career at Nirdhan Utthan
Laghubitta Bittiya Sanstha Limited.

Pokharel takes
charge of Namaste
Pay as CEO
Prabin Raj Pokharel
has been appointed as CEO
of Namaste Pay, a digitalwallet company. He has a
track record of over 27 years working in leadingbanks and financial institutions, electronic
payment systems, and fintech companies. Pokharel
has worked as CEO of f1Soft International and
MNepal Ltd. He has worked in senior management
positions at Global IME Bank, Nabil Bank, Bankof Kathmandu (now Global IME Bank) and
Himalayan Bank.

Shrestha named
Chairman of Salt
Trading
Pradip Lal Shrestha| Jestha 2080

has been appointed as Chairman of Salt Trading
Corporation Limited. Shrestha is the eldest son of
the late Ishwor Lal Shrestha, one of the founders ofSalt Trading and the former President of the Nepal
Chamber of Commerce.

Sapkota
become CEO
of JHCL
Sanjay Sapkota
has been appointed
as CEO of Jagdulla
Hydropower
Company Limited(JHCL) throughopen competition. Sapkota, who is working in thecompany for the last four years, is also the Headof the 106MW Jagdulla Hydroelectric Project. He
previously worked as Acting CEO of the company.

Shah elected HAN President
Binayak Shah has been unanimously elected
as the President of the Hotel Association Nepal(HAN). Shah, who is the owner of the Airport
Hotel, was previously the First Vice-president of
HAN. Similarly, Prabin Bahadur Pandey has been
elected First Vice-president, Binay Tuladhar Second
Vice-president, Sajan Shakya General Secretary, andYubraj Shrestha Treasurer of the association.
Likewise, Bidhita Shrestha, Jaydin Shrestha,
Sarik Ahmad Lari, Binod Shankar Shrestha, Bishal
Kumar Kaith, Dinesh Shrestha, Rajendra Bhatta,
Thakur Prasad Pokhrel Ram Kumar Puri, Laxman
Aryal, Biplav Poudel, Gopal Rana, Rajan Shrestha,and Suman Ghimire have been elected Members of
the new working committee.