Private fears

Over the last few weeks, this column has looked at ways for the government to revive Nepal’s economy and suggested measures it can take in certain sectors to boost activity. The government does not have enough in its coffers to kick start economic activity across multiple sectors and hence, the need for private participation and investment cannot be emphasised enough.  

It is abundantly clear that for Nepal’s economy to grow at anything more than 5 percent there is a need for considerable private investment in sectors such as tourism, hydropower, education, infrastructure and agribusiness. These sectors are key for the economy and present a plethora of opportunities for the private sector, either because Nepal has a distinct advantage in them, or because it has a dire need for services in some of them. Either way, there are opportunities for entrepreneurs.  

Over the last few years, large scale capital investment has slowed to a trickle in Nepal despite all these opportunities that we speak and write about. Sure, there’s a need for private capital and the returns from private investment in Nepal can be high – yet there’s a barrier preventing investments. 

This barrier is the presence of a government, and the lack of a functioning one. For all the opportunities that are seemingly available for private investors, there has been only minimal participation from them. This is largely because the government has not been able to create an environment conducive to private investments. The country has not had an elected government for the longest time now and there obvious problems with accountability. Needless to say, continuity in policy is now an almost alien concept.  

The writing of the constitution was of paramount importance before the constituent assembly failed miserably at doing so, and so now the focus has shifted to another election. So the political process in the country has actually moved backwards, contrary to what several observers believe. There are now parties working hard to ensure elections in November do not go ahead as planned. All the parties spend their time in trying to ensure they can come up with some sort of a working solution that is acceptable to parties along the political spectrum. It is not an easy task, because it is sometimes not clear what the parties themselves want out of this process.

As a result of all of this, the economy continues to be ignored and economic policy just remains a textbook phrase. With little to no attention from the politicians who are too busy buying time from one another to decide what it is they really want, Nepal’s economy continues to stutter along. From time to time, some senior politician or the other will play up the need for private investment and foreign investment in the country and perhaps assume that will do. Private entrepreneurs in Nepal are frustrated and have been experiencing what can only be described as an implementation of ‘how really not to run a country’ manual.  

For them to invest more in Nepal—with the continued policy paralysis and paralysis of all other kinds—is rather wishful. There are opportunities, but the environment needs to change and systems implemented. Give the private investor at least a degree of confidence to invest, and the money will come. If the trepidation investors have is not addressed, private investment will also become merely a textbook phrase.

 

(This was a column that appeared in the The Himalayan Times on 1 September 2013)