This year's budget statement has repeated the promise to provide seed capital to start-ups to promote youth entrepreneurship and innovation, but a work procedure needed to make this happen is yet to see the light of day.

Without the work procedure, no money can go to the targeted beginners with growth potential, and they have been left hoping for years.

Presenting the budget for fiscal 2022-23 last Sunday, Finance Minister Janardan Sharma said the government had earmarked Rs260 million to provide seed capital to start-ups.

The money will be issued as loans based on projects or venture capital. Youth entrepreneurs and migrants who have returned from foreign employment are among the intended beneficiaries.

The budget has also mentioned providing funding as venture capital to encourage study and research in start-up businesses.

“Subsidised loans will be provided to encourage businesses operated by youth entrepreneurs and people who have returned from foreign employment. A challenge fund will be set up for this purpose,” Sharma said.

The budget for the ongoing fiscal year ending mid-July also contains this loan scheme, but it has not been implemented.

Entrepreneurs say the government has been announcing the programme annually, but nobody knows when it will actually materialise.

The budget also speaks of operating business incubation centres in all seven provinces including Hetauda Industrial Area to support entrepreneurship based on knowledge cooperation with the private sector.

“The government actually does not know how start-ups will benefit entrepreneurship and the economy,” said Pavitra Gautam, chairperson of the start-up committee at the Nepalese Young Entrepreneurs’ Forum.

“There are no concrete plans on how many youth entrepreneurs or start-ups will benefit from the programme announced in the budget,” she said. “Obviously, there are questions regarding its intention.”

Gautam says everybody knows this is a populist budget and an election oriented budget. “We doubt the seed money will benefit start-ups.”

Frequent changes in government officials have hindered the proper implementation of the programme.

The then Prime Minister KP Sharma Oli had announced providing seed money to entrepreneurs. The government then began to draw up a work procedure to distribute the funds. It’s been years, but the work procedure remains a work in progress.

The budget for the previous fiscal year 2021-22 had announced issuing Rs2.5 million in seed capital at 1 percent interest against the project as collateral to encourage youth entrepreneurs.

The government has allocated Rs1 billion to provide subsidised loans to start-ups which will be issued as per the Business Credit Flow Work Procedure 2021 prepared by the Ministry of Finance.

Nepali youths are going abroad for education in droves. Insiders say lack of employment in the country has been forcing young people to migrate abroad every year.

"This trend shows that people are not hopeful about the government and its youth retention programme," said Gautam.

According to entrepreneurs, the country lacks national level mechanisms to harness the energy of youths to invigorate the national economy.

The government has not prepared any policy document for start-ups; and as a result, private companies that created mechanisms to invest in them are finding it difficult to do so, insiders say.

Even banks and financial institutions are confused about investing in start-ups because of the absence of a definition of a start-up, they say.

The government has talked about establishing incubator centres in all seven provinces, but it does not have a work procedure to do that either. Incubator centres are a must to develop start-up ideas and businesses, experts say.

According to the Central Bureau of Statistics, 54.5 percent of all establishments in the country, or 450,464 out of the 923,356 firms, are owned by young entrepreneurs.

But entrepreneurship has never been easy in the country due to lack of skills, capacity and entrepreneurship oriented programmes, bewildering paperwork and difficult access to finance, said entrepreneurs.

Economists say the country does not lack a productive age group, but the contribution of young people to Nepal's economy is less as the government has failed to create an environment to groom youth entrepreneurs.