Nepal has held at least six major investment summits since 2017. Hundreds of billions of rupees in commitments have been announced across those years. Big numbers, delivered from podiums, printed in press releases. But only a fraction of that money ever showed up in the real economy. The gap between what was promised in a conference hall and what was actually built on the ground is the only number worth paying attention to. Everything else is just another summit announcement.

The data tells the same story. The Nepal Rastra Bank figures show a persistent gap between approved and realised foreign direct investment (FDI) over the past decade, with only a small proportion of committed capital ever coming through. The World Bank’s Business Ready Profile makes that gap even harder to ignore, scoring Nepal at 61 on regulatory framework, 42 on public services and 56 on operational efficiency, each out of 100, with business insolvency sitting at just 24. Peer economies that have successfully attracted sustained FDI flows typically score 70 or higher on these dimensions within a decade of serious reform. Nepal is nowhere close.

This becomes apparent the moment a serious investor undergoes the approval process. Company registration, tax registration, environmental clearance, land acquisition, sectoral permits and foreign exchange approvals are handled by separate offices, each operating independently, with no shared timeline and no obligation to coordinate. Files move between ministries for months. Identical documents are requested more than once. Approvals go silent without explanation. The problem is not the investor's appetite. It is the system they are asked to enter.

Nepal has taken meaningful steps to address this by reducing the minimum investment threshold, introducing one-day approvals for qualifying investments up to Rs500 million and shifting much of the process online. These changes are real. Yet the operational environment, where investment decisions ultimately succeed or fail, has changed far less. Converting legislative gains into actual capital formation requires implementation capacity, inter-agency coordination and credible consequences for non-compliance. At present, no single institution holds authority to enforce deadlines across the approval chain.

The more fundamental problem is what this environment does to investment decision-making. A fiscal cost, however large, is a defined variable, it can be modelled and weighed against projected returns. Regulatory uncertainty operates differently. It introduces open-ended risk at every stage, with no quantifiable ceiling and no determinable timeline. For infrastructure funds, pension capital and development finance institutions, this kind of uncertainty is often a decisive barrier, not because project fundamentals are weak, but because the surrounding process cannot be relied upon. The question an infrastructure fund asks is not whether Nepal's rivers can generate power. It is whether the institution approving that project will still exist, in the same form, with the same mandate, by the time financial close is reached. Opacity around the exit compounds this further, forcing investors to apply higher discount rates, rendering marginal projects unviable and shifting capital toward markets that offer greater certainty.

The repatriation environment reinforces the same calculus. The central bank has made procedural progress on dividend repatriation and foreign exchange frameworks, but each step still depends on public institutions that operate on no consistent schedule. The worth of a capital commitment is not solely a function of the returns it generates. It is equally a function of the confidence with which those returns can be accessed when needed.

The Investment Board was established to address the coordination failure at the heart of all this. Conceived as the central facilitation authority for large-scale investment, it was intended to hold the approval process together and bring projects to market. It was not given the tools to do so. The agencies controlling land, permits and dispute resolution remained outside its effective authority. When transactions stalled, no institution had standing to intervene. Over 15 years, more than a dozen governments compounded the problem by disrupting policy continuity and eroding investor confidence in the durability of commitments. The Board became a reception desk for projects that then disappeared into the same ministries it was created to bypass. Addressing this requires statutory enforcement authority, a performance framework anchored in measurable outcomes, and sufficient insulation from political cycles to function consistently across administrations.

The same structural disconnect is evident at the macroeconomic level. The World Bank's November 2025 Nepal Development Update records growth at 4.6 percent, moderating inflation and lending rates at a historic low of 8.7 percent. The conditions for private capital mobilisation were in place. The mobilisation did not follow. Non-performing loans continued to rise, and banks responded by tightening criteria, demanding collateral and requiring documentation that most smaller enterprises cannot meet. Capital accumulated on one side while productive uses remained inaccessible on the other.

The transmission mechanism between available capital and productive deployment has broken down. Low lending rates have not produced credit expansion because the risk-pricing frameworks banks apply bear no relationship to actual enterprise performance, they reflect collateral positions and political exposure instead. The result is a liquidity trap at the sectoral level: monetary conditions are accommodative, but the intermediation channels required to move capital toward productive uses are structurally blocked. Until credit allocation is governed by forward-looking risk assessment rather than backward-looking collateral requirements, the gap between macroeconomic conditions and ground-level investment activity will persist regardless of what the policy rate does.

Nepal does not need another taskforce to study the required interventions. They are well known: a single investment facilitation authority with genuine statutory coordination power, not advisory, but with actual authority to enforce timelines; legally binding repatriation windows administered as a service delivery obligation; a project preparation facility properly resourced to bring priority investments to a financeable standard before they reach the market; a credit guarantee fund capitalised at scale, structured to operate at commercial speed, and targeted at growth-stage firms that have exhausted their collateral. Nepal has produced proposals like these before. The persistent gap has never been the idea. It has always been the institution behind it.

Nepal will hold another summit. Commitments will be announced, hands will be shaken, and familiar photographs will be taken. Then the months will pass, and the investment will not materialise. These are not failures of ambition. They are failures of institutional design and they carry a real cost: in capital not deployed, in jobs not created, in businesses that cannot grow past the ceiling the system imposes. The summit communique will record none of this. The economy will.

This piece is part of an op-ed series in collaboration with The Nepal Discourse, a convening at Harvard University and MIT focused on shaping Nepal’s strategic vision for the next decade.