Nepal 2030It’s possible for the country to become a $100 billion economy and graduate to a middle-income country by 2030
In Nepal, long-term thinking is always seen as a formality. The concept of long-term planning has never been embedded in our thinking, although culturally, we participate in many rituals and deeds that look beyond the present time to our afterlife. And this continues to be the paradox: People who perform rituals to “fix” their afterlife and ensure that their children continue them for the same purpose fail to focus on long-term planning for themselves, their family or their organisations. Many ‘poverty specialists’ attribute this phenomenon—where people are only focused on their day-to-day living and are unable to think beyond two square meals—to extreme poverty and a series of famines in earlier centuries. But perhaps, Nepal has come a long way as indicated by our achievements of Millennium Development Goals (MDG). Sailesh Tiwari, who authored a World Bank report titled ‘Moving up the ladder: poverty reduction and social mobility in Nepal’, explains how Nepal has been able to reduce poverty in a time span comparable with countries like China. It is important for Nepal to prepare for the future and set some long-term goals.
Culturally, the dependency syndrome that prevails in developing society like ours, fueled by the presence of free money, creates complications when it comes to vision for the future. In many Nepali families, a young man waits to furnish his room from the dowry he will receive. In villages, people who buy motorcycles, smartphones and lots of alcohol with their own money, wait for the assistance of some government body or NGO to build a toilet in their house. College kids rely on donations from companies and organisations to finance their fun-filled excursions, and political parties rely on anonymous funds, usually with strings attached, to help them run for elections. Banks with over half a billion of market capitalisation wait for some donor to subsidise the opening of a branch or the organisation of a programme. Dependency, in contrast to internal will, is one of the biggest impediments to making long-term plans. Dependency kills innovation, which is a key ingredient to envision the future.
Growth and investments
For Nepal to graduate to a middle-income country by 2030, when the country’s population will be around 36 million, it needs a $100 billion dollar economy with a per capita income of $2,500. To reach this mark, we need over eight percent growth each year. Economic growth can only occur if there are investments in infrastructure, entrepreneurship development and employment generation. This would require an investment of about $7 to 8 billion each year. Domestic investment capacities do not exceed $2 billion a year at present, which means we need foreign investment. Now if we are to attract foreign investment, we need a whole set of reforms that will enable us to compete with other nations. For many years, Nepal has been a country that receives one of the lowest foreign investments in the world. The inward looking Nepali society and businesses run by protectionist cartels and syndicates are keeping foreign investors at bay. We need to open up. What is the point of having a stock market with $15 billion market capitalisation when neither foreign investors are permitted to invest in it nor international players are allowed to recalibrate the market with an injection of contemporary technology and services? Cocooning ourselves from the outside world and finding newer protectionists strategies in the name of nationalism will continue to ail the country’s economy, a problem of over 200 years.
Certain milestones excite people globally. In the past, the turn of the century was a big one; 2020 is considered another big milestone that pushed countries like Malaysia to conquer poverty and unleash economic potential. There are many countries that have been able to grow at a fast pace in last two to three decades. Landlocked Ethopia, for example, increased its GDP four times from $16 billion to $60 billion in ten years. Rwanda, during the same time period, grew three times. Nepal, however, could only double its GDP in that period. Countries like Ivory Coast that were written off are on the march to attract billions of dollars in foreign investments to unleash economic growth.
Formal and informal
Given the performances of countries similar to Nepal, it is not impossible for us to grow to become a $100 billion economy and graduate to a middle-income country by 2030. For this, a big part of the informal economy of the country needs to be converted into the formal economy by acquiring reliable statistics and expanding the taxation net. A large chunk of our economy is informal, which is very common in countries like ours, but it needs to graduate to formal economy at a quicker pace.
The six months of black marketeering pushed many formal sectors into the fold of the informal, and the tendency to cheat the state and the consumers never ceases. Embracing global practices, facilitating tax payment, making government accountable and getting rid of a dependency mindset will all help us to convert a bigger part of the informal economy into the formal economy.
Nepal Economic Forum is publishing Nepal 2030 as its 25th anniversary issue of its publication nefport, bringing in many practitioners to share their thoughts on contextualising as well as comprehending the journey ahead for the country.