ENTREPRENEURSHIP DEVELOPMENT IN NEPAL

The Government of Nepal has been making sustained efforts to promote

industrialization throughout the period of planned development beginning
in 1956. Towards this end the Government enacted the first Industrial
Enterprise Act in 1961. This Act specifies various concessions and
incentives for the establishment and operation of small enterprises in the
Kingdom. It provided a greater fillip to industrial promotion specially to
small and medium enterprises.
In order to accelerate the process of industrial policy, in1974, the
government promised various tax incentives, extension services, free
licensing, training facilities etc. to cottage and small industries. In spite of
these liberal concessions and incentives the pace of industrial
development was below the desired level. It was realized that greater
attention should be paid to implementation of policies and the provision of
a package of integrated services in order to accelerate industrial growth.
Keeping this in mind the new industrial policy of 1974 was revised in
1980.
Some of the special features of the revised policy of 1980 are:
(a) Priority will be accorded to the promotion and development of labour-
intensive cottage and small industries with a view to expanding
employment opportunities, meeting the domestic demand and increasing
exports.
(b) Special programmes to promote cottage industries will be launched
with a view to employing more unemployed or under-employed manpower
on self-wage employment. More emphasis will be given to self-
employment; that is, to producing entrepreneurs.
(c) Institutional arrangements will be made to provide, on an integrated
basis, facilities such as finance, technical assistance, extension and
training services, raw materials supply, tools and market research
facilities in respect of cottage and small industry products.
New Approach to Small and Cottage Industries Development in
Nepal
From the experience of small and cottage industries development, it has
been found that itis absolutely necessary to carry out an integrated
programme if Nepal is to increase the rate of growth in this sector. The
following are considered important elements of the integrated
programme:
(a) Project identification and promotion;
(b) Access to and availability of easy cred it for the purchase of machinery
and raw materials;
(c) Assured supply of raw materials;
(d) Training and extension services;
(e) Marketing.
With the assistance of the World Bank and UNDP Nepal has launched a
programme which encompasses an integrated package consisting of the
elements listed above. This programme is being launched in 9 districts
(out of 75) in the vicinity of the capital city, Kathmandu. A special feature
of the programme is that its successful implementation will lead to small
industries production and exports. On the basis of the lesson of this
experiment Nepal will adopt a policy of carrying out such programmes
with modifications as required on a country-wide basis.
One of the problems faced in this programme is lack of entrepreneurs.
There are three main aspects to the problem:
(a) Social - Low or no education; social milieu is conservative;
(b) Cultural- Ancient tradition, ritualism, superstitions etc.;
(c) Psychological - Lack of courage to take risk and responsibility.
The Government has realized this, and has recently emphasized
entrepreneurship development to accelerate the pace of industrial
development.
Entrepreneurship development is probably one of the most elusive,
complicated and perplexing issues in the promotion and growth of small
enterprises. Recently, a number of development agencies have been
involved. However, in spite of all these efforts, there have been only a few
partially successful programmes, and many colossal failures in the field.
The stimulation of entrepreneurship is a function of both internal
and external variables. The presence of certain personal qualities
in an individual is a requisite. Some of the findings about
entrepreneurs in Nepal are as follows:
(a) Mainly there are two types of entrepreneurs: The Government and
private individuals. The Government has invested more than Rs. 2,500
crores, mostly in areas where the private sector is shy. Private sector
business/industries are mostly run by families.
(b) In a family-run business the entrepreneur is owner as well as manager.
Entrepreneurs are frequently found to have parents who were engaged in
business-related occupations. Membership in certain types of communities
(Newars, Marwadis, Gurungs etc.) is highly correlated with
entrepreneurship.
(c) Many people who migrated from the hills to the southern part of the
country (Terai) and returned have become entrepreneurs.
(d) In the family, a change is taking place. Now the educated young
members are becoming entrepreneurs rather than the head of the family
who generally is old.
(e) The new industry policy, 1980, has given fiscal and tax incentives.
Along with accelerated promotional activities, these incentives and
finance have worked as a stimulus to entrepreneurship development.
Banks are financing artisans, skilled people and unemployed graduates to
establish their businesses. Before 1980, less than 10,000 small/cottage
industries were registered in the organised sector but in the year 1983
only, with the banks' revised financing policy, more than 5,000 units were
registered in the organised sector. In some of the areas the percentage
increase is quite impressive.
Promotional activities are intended to motivate entrepreneurship, and
encourage the dispersal of industrial activity all over the Kingdom.
These promotional campaigns aim at mobilising, motivating and
facilitating access to new investment opportunities in the cottage and
small industries sector. Technical and financial evaluation reports of
opportunities in various industries were prepared and distributed free of
cost.
Promotional activities along with free consultancy to entrepreneurs led to
significant additional investments. One of the major factors which diverted
people towards industries from traditional agriculture is awareness and
getting to know more about industries. To make people aware of industrial
opportunities, the Government launched the entrepreneur training
programme in 1981.

The economic development of a country depends basically on the

development of its industries. The Government of Nepal aims to stimulate
the development of small/cottage industries to create an economic
climate which will promote sustained growth. To transfer Nepal's economic
base from agriculture to industry, it has to motivate people to select
industry as a career. To do so, it has to identify and develop
entrepreneurs. The Government must also assist the entrepreneurs and
provide suitable infrastructure so that they may function efficiently to
build up a strong and self-reliant economy.