Harnessing the Demographic Dividend

  8 min 9 sec to read
Harnessing the Demographic Dividend

Closing window of demographic opportunity calls for urgent action

BY Newbiz team

Home to nearly 30 million people
As per the latest census, Nepal’s population has swelled to nearly 30 million. The 2021 census puts Nepal’s population at 29,164,578. The census makes an interesting revelation: population grew at a slower rate of 0.92% in 2021, marking a stark decline from 1.35% in 2011 and a remarkable plunge from 2.25% in 2001. This signifies a noteworthy shift for Nepal as its population expansion has settled below 1% for the first time in 80 years. This downward trajectory can be attributed to a range of factors, including reduced mortality and fertility rates, the adoption of family planning practices, increased costs associated with raising children, and, importantly, the empowerment of women through expanded reproductive choices.
The latest census data unveils intriguing insights into the shifting demographics of Nepal, highlighting significant trends in population dynamics. There is remarkable decline in the population of children under the age of 15, primarily driven by diminishing fertility rates. In contrast, there has been a striking surge in the population of individuals aged 60 years and above. According to the census, the cohort aged 14 years and below now constitutes 27.83% of the total population.
A comprehensive analysis of the data reveals a noteworthy decline of 1.30% in the annual population growth rate of the under-15 age group since the previous census in 2011. This decline can be attributed to various factors like lower fertility rates and improved accessibility to family planning services. Such demographic shifts carry profound implications for societal structure, labour markets, social welfare systems, and the overall economic landscape of Nepal.
The dwindling fertility rates have potential implications for future labour supply, human capital formation, and dependency ratios in Nepal. With a decreasing share of the young population, there may be reduced need for investments in sectors catering to child-related services, such as education and healthcare. Moreover, the increasing proportion of individuals aged 60 years and above carries significant ramifications for social welfare programmes, healthcare expenditures, and pension systems. It necessitates strategic planning to ensure the provision of adequate resources and services to address the evolving demands and challenges associated with an ageing population.
The number of individuals above the age of 60 constitutes 10.21% of the total population, indicating that Nepal is transitioning into an ageing society. An ageing society typically refers to a population where individuals aged 65 years and older make up 7% or more of the total population. If this proportion exceeds 14%, the society is classified as an 'aged society'.
A 2017 report entitled ‘Demographic Changes of Nepal: Trends and Policy Implications’, published jointly by the National Planning Commission (NPC) and UNICEF, makes a significant forecast. The report anticipates a pivotal transformation in Nepal's societal structure, projecting the nation's trajectory towards becoming an ageing society by 2028, followed by an aged society by 2054. This groundbreaking revelation underscores the urgency of recognising and harnessing the demographic opportunities that lie ahead.
The report underscores the crucial importance of taking swift action to seize these opportunities as Nepal prepares to navigate the consequences of an ageing population. It emphasises the need for a strategic approach to guarantee the long-term sustainability of the country's social welfare systems, economic vitality, and healthcare provisions. By embracing proactive measures in a timely manner, Nepal can strengthen its resilience and effectively tackle the challenges associated with an ageing society.
Harnessing demographic opportunities
The findings of the report serve as a clarion call, urging policymakers, stakeholders, and society at large to adopt forward-thinking strategies that align with the evolving demographic landscape. By leveraging the demographic dividend and aligning policies to cater to the needs of the ageing population, Nepal can secure a prosperous and inclusive future.
The report serves as an invaluable resource, guiding decision-makers in formulating policies that foster intergenerational equity, promote social cohesion, and enhance the overall well-being of the Nepali populace. Through prudent planning, investment in human capital, and the establishment of robust support systems, Nepal can pave the way towards sustainable development amidst the demographic shifts on the horizon.
In line with the recommendations outlined in the NPC and UNICEF report, the latest census data shows a significant demographic shift in Nepal. Particularly notable is the substantial increase in the proportion of individuals aged 15 to 59 years, which now accounts for 61.96% of the total population compared to 56.96% recorded in 2011. This surge in the working-age population highlights the changing age composition and carries important implications for economic development and labour markets. Likewise, the 2021 census sheds light on the labour force dynamics in Nepal, as it reports that 65.5% of the total population is economically active. This statistic provides a valuable insight into the nation's productive capacity and underscores the significance of workforce participation in driving economic growth and development.
The rising share of the working-age population, coupled with a substantial proportion of economically active individuals, presents both opportunities and challenges for Nepal. It signifies the potential for leveraging this demographic advantage to foster economic productivity, promote entrepreneurship, and enhance human capital development. However, it also underscores the need for appropriate policies and strategies to harness the economic potential of this demographic segment, ensuring the creation of sustainable employment opportunities, skills development, and inclusive growth.
The rising share of the working-age population, along with a substantial proportion of economically active individuals, presents both opportunities and challenges for Nepal. It signifies the potential to leverage this demographic advantage to foster economic productivity, promote entrepreneurship, and enhance human capital development. However, it also highlights the importance of implementing appropriate policies and strategies to harness the economic potential of this demographic segment, ensuring the creation of sustainable employment opportunities, skills development, and inclusive growth.
Preparing for the future
The census findings provide a valuable tool for policymakers, economists, and stakeholders, offering a nuanced understanding of Nepal's evolving demographic landscape. It underscores the importance of crafting policies that harness the potential of the growing working-age population by aligning investments in education, skills training, and job creation. This approach is crucial for unlocking Nepal's full economic potential and promoting robust and inclusive economic progress.
The latest census reveals that Nepal currently benefits from a demographic dividend, commonly referred to as a "population dividend" or "youth bulge," where the young population comprises a significant portion of the total population. It is worth noting that individuals aged 10 years or above are considered economically active. Experts recognise this as a unique opportunity for Nepal to leverage its population bonus for economic growth and prosperity. They emphasise that effective investment in human capital is essential to fully capitalise on the advantages of having a young population.
The consensus among economists and demographers is that a larger working-age population has the potential to boost productivity and drive economic growth. With more individuals participating in the labour force, there is an increased capacity for economic output. Furthermore, as more people work and earn, there is a subsequent rise in consumer demand for goods and services, which further stimulates economic growth.
According to Dr Jagadish Chandra Pokharel, former vice chairman of the National Planning Commission, the population dividend can create a virtuous cycle of economic and social development, leading to improved living standards and greater prosperity for the Nepali people.
Yogendra Gurung, a professor at the Central Department of Population Studies, Tribhuvan University, emphasised the need to invest in human capital. "This population needs to be educated, skilled, and healthy so that they can earn a sustainable living and contribute to the country's development," he added.
Countries such as China, South Korea, Taiwan, and Singapore, along with Indonesia, have successfully harnessed their demographic dividends by heavily investing in education and healthcare, resulting in remarkable economic achievements. “Nepal should learn from their experiences,” said Professor Gurung.
The NPC and UNICEF study serves as a warning that Nepal has a limited timeframe to seize the benefits of its demographic window. According to the report, Nepal's demographic window of opportunity began in 1992 and will last for a total of 55 years. "We don't have the luxury of time. The demographic window of opportunity is closing fast. We must take action now," Dr Pokharel added.
Dhundi Raj Lamichhane, Director at the National Statistics Office, said Nepali youth should be employed and engaged in the service and agriculture sectors, emphasising that sending them abroad for employment should no longer be the top priority. “Nepal may not be able to compete with its larger neighbouring countries in terms of industrial production, but we can involve the youth in trading, entrepreneurship, tailoring, and other skilled-based jobs,” he added.
According to the latest census, 34 districts in Nepal have experienced a decline in population over the past decade. “Our land in the mountain region is lying barren as our youth are flying abroad in search of jobs. We should focus on retaining these youth in agricultural works,” he added.
The 2021 census reveals that 34.3% of the population is not economically active. With the increase in the dependent population (children and elderly), experts caution that a significant amount of money must be allocated towards their care, while also implementing social protection measures such as pensions and healthcare spending. 
"The demographic window of opportunity for Nepal is not going to last forever. It will end in the next two and a half decades. So, Nepal should be fully prepared to reap benefits from the ongoing demographic dividend for the economic prosperity of the country,” Lamichhane said. "We don't have the luxury to fail." 


No comments yet. Be the first one to comment.