Nepal has achieved significant poverty reduction over the past decades, alongside notable advancements in infrastructure, education, health and digital connectivity.

The next step is to transition from foundational development toward sustainable, inclusive and transformative growth. This requires creating jobs, especially for youth and women, modernising agriculture, improving urban infrastructure, enhancing service delivery and building resilience in a country highly vulnerable to natural disasters and climate risk.

Nepal’s young workforce, projected to reach 22 million by 2030, is crucial for driving growth, making job creation that reduces poverty and supports national development increasingly urgent. However, many still seek opportunities abroad, relying on remittances that sustain households but without strengthening the domestic economy. It is time to rewrite this story.

Nepal's young workforce and emerging private sector offer a springboard for progress. By investing in job creation, strengthening the private sector, and fostering partnerships between government and private enterprise, Nepal can turn its demographic dividend into a true engine of growth. The goal is not just to reduce the outflow of talent, but to create an economy where Nepalis can stay, contribute and thrive.

The job creation conundrum

Today, 82 percent of Nepal’s workforce is in informal employment—one of the highest rates in the region and globally. Behind this statistic lies a challenge: Limited opportunities and structural barriers that inhibit progress.

Real exports have flattened, manufacturing has shrunk, tourism remains underdeveloped, and hydropower, despite its promise, hasn’t delivered on its full potential. Weak infrastructure, regulatory bottlenecks, limited connectivity and digital literacy gaps further constrain Nepal’s competitiveness.

The human capital story is equally sobering. A child born in Nepal today is expected to achieve only half of their potential productivity due to gaps in education, nutrition and job readiness. Women face even steeper barriers, with labour force participation at 27.6 percent and limited access to quality jobs and skills development.

At the same time, rapid urbanisation is reshaping the country. Cities like Kathmandu could become hubs of opportunity, driving investment and job creation. However, unplanned growth and underdeveloped infrastructure limit their potential. Strategic planning and investment in urban infrastructure are essential to harness the full promise of urbanisation.

With the right investments and reforms, Nepal can unlock job-creating growth across sectors. Here’s how:

Build human capital: Equip Nepalis, especially women and young people, with the education and skills to lead in a modern economy. Expanding access to quality education, vocational training, and entrepreneurship can bridge the skills gap, boost productivity and unleash innovation at scale.

Empower the private sector: Small and medium enterprises (SMEs), which make up 90 percent of industrial firms and employ more than half the workforce, are the backbone of Nepal’s economy. Strengthening their foundation and improving the business environment means catalysing job creation, investment and long-term economic resilience.

Focus on strategic sectors: From the majestic Himalayas to vast hydropower potential and a growing digital economy, Nepal holds untapped sources of sustainable growth. Targeted investment in tourism, energy, and digital services can spark new and green jobs, provided environmental and social safeguards stay central to development.

Strengthen local capacity: Even the most ambitious plans will fall short without effective implementation. Investing in local governance, improving service delivery, and building institutions that turn policy into real-world results will ensure that progress reaches people and places that need it most.

A new roadmap for impact

Maximising these opportunities will require bold and decisive actions. At the World Bank Group (WBG), creating more and better jobs is central to our mission. Our new Country Partnership Framework (CPF) focuses on job-creating growth, resilience to natural disasters and aligns with the Nepali government's 16th Plan.

The CPF prioritises four areas for sustainable, inclusive development: Improving the business environment to boost competitiveness and investment, advancing urban development and tourism to create jobs, expanding digital connectivity to drive innovation and competitiveness, and strengthening disaster resilience to safeguard lives and infrastructure against climate risks.

Unlocking Nepal’s economic potential relies on a strong foundation, with the private sector playing a leading role. The International Finance Corporation (IFC), the Multilateral Investment Guarantee Agency (MIGA) and the World Bank will drive private sector solutions and capital inflows to support job creation and key sectors such as clean air and tourism. Achieving this requires reforms, supported by World Bank policies and IFC advisory efforts, to enable private enterprise growth and investment, backed by WBG guarantees where needed.

Each of the World Bank Group institutions brings instruments and expertise to support Nepal’s economic transformation. The World Bank aims to make available $1.9 billion through development policy financing, performance-based operations, programmatic approaches, investment project financing and analytical and advisory services. IFC plans to invest $750 million in Nepal, focusing on MSME on-lending (including women), hospitality, energy, transport and infrastructure. It aims to expand its pipeline through advisory services that provide technical expertise and strategic guidance to government and businesses to attract private investment, one WBG collaboration and innovative financing, contingent on reforms to enable private capital and greater private sector participation. MIGA has already provided a guarantee for a hydropower project in the country. Nepal can further leverage guarantees to attract foreign direct investment in key infrastructure sectors.

Nepal is on the precipice of a new era of progress, with a young, dynamic population; a private sector with immense growth potential; and a government committed to reform. The moment to act is now. The World Bank Group stands shoulder-to-shoulder with Nepal to seize this opportunity, unlocking its vast potential, empowering its people, and charting a path toward enduring prosperity and resilience.