Third wave of pandemic threatens to push startups over the edgeThe government had announced providing seed capital of Rs2.5 million to innovators at 1 percent interest to help them survive, but the pledges are limited to paper, entrepreneurs say.
In the first lockdown, which lasted for almost four months in 2020, there were mass cancellations of tourists trips, weddings, anniversary parties, and religious celebrations.
The second lockdown, which too lasted for four months, maintained the status quo.
A large number of people who had planned marriages and other religious celebrations in 2020 and 2021 watched the pandemic put a dampener on their plans. Hotels saw no guests.
Amid this disappointment, startups saw their business run to the ground.
“Both the lockdowns almost killed our business," Mrigendra Karn, founder of Washmandu, an online on-demand laundry, told the Post. “The third wave of Covid-19 pandemic is already here with the cases rising by the day.”
“Closing down for eight months in one and half years brought us very close to financial ruin,” Karn said. “We cannot afford another lockdown.”
Even after the lockdown was lifted in September last year, the economy slowed down. Hotels were not able to operate fully.
Washmandu used to get most of the business from the hotels. “It all stopped,” said Karn.
“I had taken loans before the pandemic to expand the business. With the two back-to-back lockdowns, I am again taking out loans to pay my workers and repay my previous loans,” Karn said.
Washmandu was established in 2017 and has been providing employment to nine people.
“The startups have already faced the first and second wave of the pandemic, they do not have enough funds to grow now,” said Kavi Raj Joshi, founder and managing director of Next Venture Corp, a support system for entrepreneurs to start and grow their ventures in Nepal.
“The third wave is going to be terribly painful for entrepreneurs.”
“If the government fails to address the grievances of the startups, it could spell disaster for upcoming startups,” said Joshi.
Although there is no actual data, it is estimated that about 25 percent of startups have folded up within a year and a half since the pandemic began.
Entrepreneurs said that the business environment is not positive for startups who are facing challenges and the political instability has made the situation worse.
With the beginning of the third wave, there is uncertainty again. On Tuesday, Nepal reported record-high single-day Covid-19 infection cases jumping to 10,258 from just 216 cases on January 2, according to the Health Ministry.
Being one of the key ministries, the Ministry of Industry, Commerce and Supplies, is stumbling along without a minister for a long time.
Insiders say that the country is facing stagnation in all three sectors—industry, commerce and supplies.
In the current fiscal year 2021-22, the erstwhile KP Sharma Oli administration had announced providing seed capital of Rs2.5 million to innovators at 1 percent interest. The government then drafted the Business Credit Flow Work Procedure 2021 that was expected to get implemented from mid-July 2021.
Again on October 8, Finance Minister Janardan Sharma of the coalition government promised that the work procedure would be implemented soon and it would be “simple and quick” to promote startups and innovators.
Months have passed and there is no sign of any development.
“We were called by the National Planning Commission thrice to discuss the fund flow,” Joshi said. “Nothing has happened yet. We are tired of giving recommendations.”
Startups are in serious trouble and need cash injections, Joshi added.
But bureaucratic hurdles everywhere have made the situation worse for startups, insiders say.
“The fund for startups has been allocated by the Finance Ministry but has been put on hold at the National Planning Commission,” said a private sector member, who has been engaged in the policy-making team at the planning commission.
Ritesh Kumar Shakya, spokesperson at the Ministry of Finance, said he has no idea when the work procedure will come into implementation.
“There was zero support from the government to startups. All commitments and pledges have remained on paper only,” Joshi told the Post.
Startup funds and necessary policies to encourage them to grow were announced by the government during the second wave of the pandemic that started in late April last year.
Startups say that during the first wave of coronavirus, their savings somehow helped them survive. “The second wave pushed them to the edge,” Joshi said. The liquidity crisis in the commercial banks was another problem hurting startups since they could not get loans.
Online laundry owner Karn, who is struggling to survive, sees the third wave as another disaster waiting to strike his business again.