KATHMANDU, JUNE 2

Participants of an interaction programme held here today discussed opportunities to stimulate investments for small and micro enterprises (SMEs) while also examined the hurdles faced by SMEs in Nepal.

Talking about the current scenario of SMEs in the country, Raj Gyawali, the founder of Social Tours, shared that there are SMEs in all sectors but in the context of tourism, there are not many large players in industry. He said that although tourism is easy to get into, growth is difficult.

'Lack of technical manpower, knowledge on travel finance, and people with administrative skills are some reasons the SMEs within the country are finding it difficult to progress to the next level,' he said.

He said so during a panel discussion titled 'Unlocking investments in SMEs for inclusive economic growth' organised by Swisscontact - an organisation focused on promoting inclusive economic, social, and ecological development to make effective contribution towards sustainable and widespread prosperity in developing countries.

Another panellist, the former CEO of Mega Bank Anupama Khunjeli said that the banks and financial institutions lacking trust in SMEs is also affecting the growth of small enterprises in the country.

Stating that SMEs represent more than 90 per cent of enterprises in China and are one the highest contributors to the country's GDP, Khunjeli stressed on the need to establish SME-focused banks in Nepal. She also said that the lack of data for a clear overview on which sectors are fruitful for investment and segregation of SMEs in the annual budget by the government are also hindering their growth.

Meanwhile, Semanta Dahal, partner at Abhinawa Law Chambers, shared that compliance and corruption are among the major problems facing SMEs. 'Lack of specialised regulations, improper partnership agreements and institutional requirements are also some of the issues in SMEs.'

Dahal emphasised on the need to create financial awareness focused towards SMEs and a need for one-window approval mechanism for business operations.

Surya Karki, founder of Delish Dairy, said that the governmental, financial and market systems are posing some of the biggest challenges to the SMEs at the moment.

Chargé d'affaires at the Embassy of Switzerland Silvana Hogg and Chairman of Swisscontact Thomas D Meyer were among the panellists.

The panel discussed the opportunities around key drivers to stimulate inclusive economic growth through SMEs, key challenges for SMEs and their growth, new financing and investment opportunities for SMEs in Nepal and the role of development partners in stimulating SME growth/competitiveness, among others.

According to Swisscontact, the growth of SMEs in Nepal has been slow due to structural and contextual challenges. SMEs remain significantly underserved by banks and financial institutions (BFIs) because they face complex bureaucratic processes, extensive regulatory frameworks, information asymmetries, and high collateral requirements. In addition, there are low-quality and sparsely available business development services available to entrepreneurs, and few policies that effectively support the growth of SMEs.

Similarly, COVID-19 and Nepal's high dependency on external trade has also created an unfavourable business environment for start-ups and SMEs.

A version of this article appears in the print on June 03, 2022, of The Himalayan Times.