BY Sanjaya Golchha
Nepal, with a median age of 22 years, boasts the youngest population in the world. Around 30% of the population has higher education in engineering, science, or management, making the country rich in demographic equity. While Nepal's traditional economy has opportunities in natural resources and tourism, it is time to tap into the potential of the educated youth and embrace a ‘new economy’ based on the knowledge economy.
The New Economy embraces businesses specifically focused on emerging technologies. They are driven by out-of-the-box thinking based on knowledge, and are not based on legacy business models of producing and selling. Instead, they are based on solving larger problems and monetising through value additions. Nepal has the potential to take advantage of this in many areas, such as IT, e-commerce, clean energies, AI, biotech, robotics, fintech, edtech, healthtech, and more. These businesses are all based on the use of knowledge and technology, unlike legacy businesses that are heavily reliant on capital base.
Outlined below are some of the areas that cannot be ignored any more. Since we have missed many opportunities in the past due to issues within the country, we must not miss any more in the future. Here's what we need to do:
Becoming back-office of the world
One significant opportunity for Nepal is to become the ‘back-office of the world’. In the past, Nepal missed out on the outsourcing boom that India capitalised on during the Y2K problem. However, today, Nepal is witnessing an increasing number of international companies setting up offshoring operations, providing employment to thousands of talented youths. With a large pool of skilled professionals in sectors such as software development, medical data processing, graphics and animation, engineering services, and accounting services, Nepal has the potential to meet the global demand for back-office jobs, especially in the post-COVID era where remote work has become the norm. India alone employs three million people in the business process outsourcing (BPO) sector. Nepal can follow suit, creating jobs, earning foreign currency, and leveraging years of investment in education and infrastructure.
However, there are challenges to overcome. Nepal's education system needs improvement, with issues such as limited seats in universities, quotas on new colleges, and the quality of education not keeping pace with international trends in technical fields. Additionally, there is a need to create modern infrastructure and urban facilities to attract and retain the youth, who are knowledge workers and require a competitive environment. This includes factors such as modern working environments, job security, and recreational facilities. Nepal must also address issues such as difficulties in attracting foreign direct investment for multinational companies, inadequate infrastructure, and government policies.
Digitising the economy
Another significant opportunity that exists in Nepal is the digitisation of the economy in every aspect of citizens' lives, including agriculture, health, education, finance, and entertainment. While the startup culture is prevalent in our country, it will be more accurate to term it as digitising the economy. Digitisation offers numerous benefits, including providing access to even illiterate and remotely located citizens, reducing the cost of scaling up services, and introducing innovative products.
We have observed numerous initiatives in the past decade, but many of them seem to be mere replicas of use cases from developed countries. To truly benefit our economy, we need to reinvent and customise these initiatives to suit our unique needs. There are vast opportunities for innovation, particularly in agriculture where technology can enhance transparency and streamline the ecosystem by eliminating unnecessary layers. Additionally, government citizen services should be made more accessible to entrepreneurs by improving system access, and private organisations could benefit from utilising national IDs for simplified KYC processes, such as purchasing internet subscriptions. Digitisation can also be explored at the community level to create local opportunities, as demonstrated during the 2015 earthquakes when local entrepreneurs offered innovative services to mitigate challenges faced by the people.
Digitisation has the potential to impact not only the social aspects but also everyday life, creating opportunities in various sectors. For example, social media platforms like TikTok have indirectly contributed to the growth of domestic tourism. There are numerous other examples of such possibilities in various sectors.
The shift towards a knowledge-based economy offers the potential to foster a culture of entrepreneurship. Throughout the world, economies have thrived due to the ingenuity of entrepreneurs introducing innovative products.
Robots will actually create jobs
The notion that robots will inevitably replace human jobs is not entirely accurate. Robots are essentially automated machines, and it is necessary to conduct research to determine where and how they can be effectively utilised. In fact, robots have been shown to add value to economies by creating new job opportunities. For instance, using robots to deliver essential medical supplies to remote locations could present a lucrative business opportunity for a startup.
Agricultural mechanisation has long been a challenge in Nepal due to its rugged terrain. However, if we can develop robots capable of performing agricultural tasks in difficult terrains, it could be a game-changer for the country. Since we have become successful in manufacturing electric two-wheelers locally, why not explore the possibility of developing electric tillers?
Nepal's young demographic presents a unique opportunity to create a knowledge-based economy. By positioning itself as a global back-office and leveraging its talented youth, Nepal can generate employment, earn foreign currency, and prevent brain drain. However, to make this a reality, Nepal must address critical challenges such as improving its education system, creating modern infrastructure, and attracting foreign investment. The time has come for Nepal to seize this opportunity and realise its demographic dividend.
(Sanjay Golchha is Founder/ Managing Director of Neoteric P Ltd.)