Road to prosperity riddled with problems

Kathmandu, June 16

Experts have said that policymakers have yet to present a clear vision to take the country forward towards the road to prosperity.

They cited the examples of many Asian countries having fallen into the middle-income trap as they were not successful in adopting technology in their industries to be competitive in production or turn themselves into creative, innovative and knowledge-based economy.

In this context, Nepal should have a clear vision to transform into a knowledge-based economy after being promoted to the league of middle-income countries by 2030, according to Bindu Nath Lohani, former vice president of Asian Development Bank (ADB).

“Nepal’s attempt to develop its supply chain manufacturing by attracting foreign direct investment has not delivered the desired result primarily because it has not diversified its agriculture sector,” said Lohani. “Diversifying agriculture in production and establishing processing plants and creating backward and forward linkages in the supply-chain are essential.”

Nepal is largely an agrarian country but due to lack of diversification and agro-processing, output from agriculture remains low. “Now three things must be done simultaneously to move forward to be promoted as a middle-income country with less income inequality,” stated Lohani.

“The country has to diversify agriculture and add maximum value through agro-processing in agro output; give priority to small and medium enterprises, including simple manufacturing that has comparative and competitive advantage; and also focus on supply chain manufacturing attracting FDI.”

Nepal has not been able to attract FDI in supply chain manufacturing in recent years. FDI in Nepal is far lower than the average of least developed countries. Average FDI in the least developed countries stands at 2.3 per cent of the gross domestic product (GDP), however, it is less than 0.4 per cent of the GDP in Nepal.

Along with this, Nepal should keep an eye on promoting the country as a knowledge-based economy as it can do better in agriculture and industrial production through the use of information technology and the optimum value addition of information technology is the need of the hour, as per Lohani.

The country should focus on connectivity and hydroelectricity and take advantage of the high number of working age population (15 to 60 years) by providing them quality education, skills so as to take advantage from maximum value addition in information and communications technology, he informed.

Lohani further said that skill enhancement of human resources eyeing the need for human resources in various sectors for the next 15 to 20 years must be started from now to take advantage of the high number of working age population in this period.