After my last column entitled “There is no economic crisis”, I started getting calls and messages on what to do next for long-term economic growth. Yes, the perception of a crisis aggravated by people whose businesses are in disarray will go away, but we need to focus on the long term. I went back to read Unleashing Nepal, my first book that I wrote just after leaving a two-decade corporate career with the Soaltee/Tara Group. There are three key messages in the book. First, we need to move from a “rent seeking mindset” to an entrepreneurial mindset, which we have seen half happening in the last decade and needs acceleration. The second is to look at Nepal as a land of opportunity. Yes, Nepal is a $40 billion economy in real terms and is worth $140 billion in terms of purchasing power parity (PPP). We are land-linked to China and India with an internal market of 30 million people and half a billion people living within an hour’s flying distance. Third, the emphasis should be on investment and management to unleash Nepal’s potential. Perhaps, we have to revisit this.

Nepal needs $6-$8 billion in investments per year and our capital formation is low, which means we have to reach out to get more foreign direct investment (FDI). The scale of projects that need to come up has to be larger, which will also accelerate legislative and institutional reforms. I go back to the time when Bhote Koshi and Khimti power companies had sought foreign investments. The two companies combined had a project size worth 5 percent of the gross domestic product (GDP). This means we need projects that are on the scale of $2-3 billion that will bring in global companies and push for reforms. We must get out of enjoying inaugurating projects worth a few million dollars, which is about the cost of a piece of land in Lazimpat or Surkhet or Bardibas. For this, we need to be able to think big!

Mindset of management

Last week, a friend from a business group called me to say they were looking for a chief finance officer. I asked him how much he would pay. He said 150,000. I asked him if it was dollars per year; and he said no, it was rupees per month. I told him that if you pay peanuts, you will get monkeys. I told him that given your business’s size, you should be paying much more to attract the right talent. I also recall conversations with majority shareholders of banks, being very jealous about the money and perks their CEOs earn. Till we do not learn to value management talent and invest in it, as a firm, we will keep plunging into one crisis or another.

Nepal has a history of having some great talent working here. Managing director of Surya Nepal Sanjiv Puri is now chairman of global transnational ITC. Piyush Mathur, who began his career at Nielsen Nepal, became a global vice-president and now works in a c-suite (executive) position at Johnson and Johnson. There are many such examples. It has become harder to find good management leaders that inspire younger talents. The benchmark of evaluating a manager has to be performance and upward mobility, not the price tag of the vehicle or single malt brand. I continue to write that today’s Nepali firms are big. If we take banking, many have a market cap worth half a billion dollars or more. Multiple firms are the size of $250 million and above. However, investment in management prudence has been poor. I keep joking when negotiating assignments that you want to pay for peanuts, but you want to eat cashew nuts.

Corporate culture

The other area that I have been writing about ad nauseam is corporate culture. Having spent two decades in Nepal’s most professionally managed business group and groomed accordingly, I value a corporate culture that separates ownership from management and is systems driven. When I attend functions of even large corporates, I find them no different than an event of a cooperative or a political business cartel. One pays from one’s own company money to felicitate oneself. I just find this so bizarre. Some sycophants make the owner believe that this is the trendiest thing to do. Sadly, even international institutions now feel that this is Nepali corporate culture. Everyone is very quick to give lectures on poor governance in the Nepal government and political parties, and I keep asking them: What is the governance structure of your organisation? How is the board constituted? How are the powers delegated to management? How do audits take place? Is there a performance evaluation system? More questions than answers.

Economic growth cannot be driven by the government. As Biswas Gauchan correctly pointed out in his column in Kantipur last week, we cannot wait for political stability, and we need to push for the next wave of reforms. Yes, political uncertainty has been the only constant in Nepal in the past 73 years, we need to assume this as given. There is room for private sector thinkers and players to lead transformation, especially legislative, institutional and structural reforms, to attract FDI. We are doing as much as possible to spread this message despite the strong influence of business cartels on these issues to maintain the status quo or even be regressive. Hope we will have more parliamentarians talking about these issues in Parliament and helping people to think big!