The month of March saw two leading private sector lobbying bodies launching two ambitious campaigns aimed at giving a much-needed fillip to the country’s economy.
The Confederation of Nepalese Industries (CNI) launched its ‘Make in Nepal-Swadeshi’ campaign. Prime Minister KP Sharma Oli unveiled the campaign on March 8. A few days later, the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) rolled out its vision paper for the National Economic Transformation Roadmap 2030. The FNCCI has said it would formally launch the roadmap by mid-April.
The CNI’s campaign focuses on establishing over 1,000 additional enterprises, generating export income of $5 billion per annum, and raising the industrial sector’s contribution to the gross domestic product to 26 percent by 2030. The FNCCI’s vision paper, on the other hand, includes plans to generate employment opportunities for an additional 2.2 million people, bridge the widening trade deficit, and expand the size of the economy to USD 100 billion by 2030.
The initiatives taken by the private sector bodies to transform the country’s economy are commendable. This is an acknowledgement that the private sector is equally responsible for the country’s development and shirking responsibilities and blaming the government for all the ills would take the country and the economy nowhere. This indicates the private sector, which has always faced the blame of being a rent-seeker, is gradually becoming mature and is now in a position to carry the torch for economic development. It is now the government’s responsibility to work as a facilitator and extend all the support to enable the private sector bodies to meet their objectives.
Although the objectives of the campaigns launched by the two private sector bodies may look different on the surface, they have a common goal: to give impetus to the moribund industrialisation process of the country. Since their end goal is not different it would be prudent for them to work in collaboration so that a synergy could be created. This could help generate even better results. Working in collaboration should not be difficult for the two bodies as they have formed common positions on some of the pressing issues related to the private sector in the past, including minimum wage.
The initiative to revive the industrial sector was long overdue. The share of the industrial sector in gross domestic product has fallen from 14.2 percent in fiscal year 2010-11 to 13.2 percent in the last fiscal year. This data shows that Nepal is currently in the deindustrialisation phase. The contraction of the industrial sector has created a shortage of jobs, which has forced hundreds of thousands of youths to migrate to foreign countries. The industrial sector is considered vital for the economy because it includes sectors such as manufacturing and construction, which can create jobs in massive numbers. Nepal needs to look at Bangladesh to find out what growth of the industrial sector can do to the economy and job creation. The South Asian country, which was once rife with poverty, is expected to surpass India in per capita income in a few years, as its industrial sector has been making a contribution of over 35 percent to the GDP. This has helped the country to create jobs in large numbers. Even developed countries like the US tend to protect their industrial sector as it is considered an engine of job creation.
But the industrial sector cannot grow on its own unless there is infrastructure such as good roads, airports and plants to generate energy. This is where Nepal lags behind. Nepal needs to invest at least 12 percent of its GDP per annum to bridge its infrastructure gap. But the government has been spending funds equivalent to 5.6 percent of the GDP per year in the last one decade. If the government is unable to overcome its inherent weakness of grossly underspending the capital budget, the initiatives taken by the private sector will not bear any fruit. The government thus needs to play its role properly. At the same time, the private sector should also focus on the implementation of programmes included in the campaigns. If programmes remain on paper, it would be tantamount to making empty promises, which Nepalis are tired of. Inability to translate visions into reality would only hit the private sector bodies’ credibility.