'Fear of failure has inhibited entrepreneurship development'
A large number of the country’s youths are flying abroad every day seeking employment opportunities. Similarly, those who have been operating businesses in the country often complain of having to face hurdles for business growth.
Sujan Dhungana of The Himalayan Times spoke to Mangesh Lal Shrestha, President of Nepalese Young Entrepreneurs' Forum, to know about the current state of entrepreneurship development in Nepal, along with its prospects and hurdles. Excerpts:
How do you see entrepreneurship development in Nepal?
In recent years, the number of entrepreneurs has been growing in Nepal. This is basically due to two reasons — prevailing underemployment and unemployment among the youths. Due to these setbacks, today's youths in Nepal want to do something on their own and become self-employed. The new generation is coming up with fresh business ideas and innovations, which are crucial for entrepreneurial development and overall economic growth of the nation.
This shows that entrepreneurship in Nepal is growing albeit gradually. However, the growth is unstructured and it is the responsibility of all stakeholders to bring the current entrepreneurial growth into a structure. Similarly, the volume of entrepreneurial growth is also insufficient. If you go to a college today and take note regarding a student's willingness to become an entrepreneur, I believe that less than two per cent will show any interest. However, this is not because they do not want to become an entrepreneur but because of the fear of failure. The reason many are not very interested in entrepreneurship is also due to lack of financial access.
How would you define the role of Nepalese Young Entrepreneurs' Forum (NYEF) for entrepreneurship development in Nepal?
NYEF has a distinct roadmap to promote entrepreneurship where we try creating new entrepreneurs through the exchange of ideas, experiences, fellowships, education, training and advocacy. First of all we search for entrepreneurial visions and ideas from young people. After collecting the best business ideas, we host different boot camps where we analyse success rates of those business ideas. After formalising ideas through the boot camp, we incubate those ideas. Nepal does not have a good incubation centre to help ideas flourish. We have a programme called 'Enterprise', which facilitates such selected business ideas and enterprises. During this programme, we meet private investors and banks and financial institutions and show them the investment opportunity in such enterprises. Similarly, we are also working closely with the government to develop start-up policy. In coordination with the Ministry of Industry (MoI) we are planning to run a 'Start-up Nepal' campaign to develop a start-up culture in Nepal. There is lack of technological and technical knowledge among Nepali entrepreneurs, basically in small and medium enterprises (SMEs), which needs to be identified and addressed. Basically, NYEF is a platform where new and innovative business ideas are promoted. Currently, we have a presence in nine districts and will soon expand to 21 districts. Enterprises are concentrated in Kathmandu Valley and everybody looks for opportunities in the capital only. But the fact is that there are business opportunities in other places beyond the capital. Building a strong nationwide network, NYEF aims to take business ideas and visions to different parts of the country. Similarly, we also provide an international platform to budding entrepreneurs as NYEF has direct network linkage with 15 countries.
Limited access to finance is said to be a major setback for entrepreneurial growth in Nepal? What do you have to say on this?
There is no doubt that small entrepreneurs have limited financial access in Nepal. Project funding is very low for new businesses and start-ups. Financial institutions seek collateral for loans and many do not possess sufficient collateral. Even if they give loans in the SMEs sector, the interest rate is high. Also we have a trend of not promoting businesses that have faced losses in the initial stage in Nepal while financial institutions and the government in other developed countries provide financial help if the business does have potential for future growth. The success rate of business ventures across the world is only 10 per cent but in developed regions they have a culture of accepting failure. Though enterprises have low access to finance through banks and financial institutions, a parallel ecosystem is being developed in Nepal where private investors collect funds and collective investment is being made in businesses.
Which sectors do you think have high potential for entrepreneurship development in the country?
This has to be identified by the government. Entrepreneurs are unaware about which sector has comparative benefits. Nepal is a naturally and culturally blessed country. We have diversity in nature and culture because of which tourism is the foremost sector with high entrepreneurial potential. Similarly, Nepal is a traditionally agricultural community. So, there are prospects of high-value agriculture in the country. Though our topography does not allow farming in a large scale, nature has given us the prospects for high-value agriculture. Similarly, we have potential in niche high-value manufacturing like in handicraft industry. Service sector is also booming. If our youths are provided technological and technical knowledge, they have high potential for growth in the service sector. There are business opportunities in the industry sector too. However, only a limited number of people have the ability to make huge investments.
Nepali youngsters today are into different start-up ventures. What do you think is crucial to sustain their businesses?
Sustainability of start-up businesses is a must because they are also the drivers of the national economy. For this, what we have to do is generate skilled manpower which can be done through training at the local level. What we also need to do is go to different schools and colleges and encourage students to be entrepreneurs and give them entrepreneurial ideas. This will encourage youngsters to come up with new business ideas. The next thing is we need to have different incubation centres where people can come and test their business ideas and visions by paying limited fees. Providing seed capital by the government and increasing entrepreneurs' access to finance are other ways to sustain any business. Above all, the government should ensure availability of proper infrastructure for any business, which includes both physical infrastructure like roads and electricity and digital infrastructure like technology. The government should also introduce start-up policies and strategies to support such ventures. This will reduce the fear of failure among entrepreneurs. The government lately has realised the need to promote entrepreneurship which is very important. We are launching 'Start-up Nepal' campaign within the next three to four months together with the government. Effective implementation of this campaign is expected to support entrepreneurial growth in the country and create new job opportunities for the people.
What are the other hurdles you see in entrepreneurship development?
We do have enough business ideas and vision in Nepal. But the fear of failure is stopping people from attempting to become an entrepreneur. This is the major setback to entrepreneurial growth in the country. Similarly, lack of opportunity linkage and market linkage to our products and services is another factor which discourages entrepreneurs. The government instead of assisting entrepreneurs to link themselves with the market nationally and globally is only focused on identifying ways to regulate them. The government should develop a core governance foundation and then develop infrastructure in the country to ease the operation of any business. Likewise, it should encourage investment in different sectors under public private partnership model.