Gen Z Revolt: Nepal’s Political Awakening, Economic Reckoning

The recent Gen-Z uprisings deserve huge appreciation for sending a powerful message against corruption. Organized largely through internet platforms such as Discord, these young protesters demanded accountable governance, transparency and integrity. Their actions compelled the resignation of the Prime Minister, led to the dissolution of parliament and prompted the formation of a new caretaker government. Although questions remain about how the political situation will unfold, the caretaker government has already announced that new parliamentary elections will be held within six months. The courage and commitment of these youths are commendable. But the change came at a heavy price: 72 innocent lives were lost. The new government now bears the responsibility to thoroughly investigate these deaths and prosecute those found guilty to uphold justice.

The Cost of Protests

While the uprisings achieved a political breakthrough, they also caused enormous economic and social damage. Widespread arson targeted industries, private property and historically significant public infrastructure, including Singha Durbar, the Office of the President, the Supreme Court, the Parliament Building and hundreds of federal, provincial and local government buildings.

In the name of Gen Z protests, demonstrators looted and set fire to industrial sites, business houses and private properties such as Chaudhary Group, Bhat-Bhateni and the Hilton Kathmandu Hotel. These entrepreneurs are acclaimed nationally and internationally, and they are among the country’s largest taxpayers as well as providers of essential services. The targeted attacks have, therefore, sent severe shockwaves through Nepal’s private sector.

Preliminary estimates suggest losses of 4–5% of GDP, or roughly $10 billion. However, many incidents remain unreported, and a final tally is still pending. The National Planning Commission (NPC) is currently compiling a detailed assessment. It is imperative to establish a high-level inquiry commission to identify perpetrators and ensure accountability.

Economic Confidence: The Real Loss

Nepal’s economy had only begun to recover from the severe impacts of COVID-19. GDP growth, which had been projected at 8–9%, collapsed to 2.5% in 2019/2020 due to the pandemic. Thousands of Nepali people lost jobs both domestically and abroad. Small and medium enterprises suffered the most, with many industries shutting down, unable to repay loans and facing disrupted supply chains.

By mid-2025, industries were gradually returning to business, but investment remained sluggish. Private sector credit grew by only 0.2%, compared to 0.7% in the same period of the previous year. The recent wave of targeted attacks has further eroded investor confidence. Entrepreneurs now fear for their personal safety, let alone undertaking new investments.

This decline in confidence threatens to slow economic growth to just 1–2%, a sharp drop from previous projections of 4–5%. Restoring private sector confidence through strong security measures and credible governance reforms is now critical to safeguarding Nepal’s economic future.

Impact on Foreign Direct Investment

Nepal has historically been one of the lowest recipients of Foreign Direct Investment (FDI) in South Asia, with inflows remaining at 0.1% of GDP. High business costs, outdated laws, poor inter-agency coordination, bureaucratic rent-seeking, and policy hurdles, such as difficulties in securing forest clearance and land acquisition, have long discouraged investors. The recent attacks on industries, multinational companies, and high-profile establishments such as Hilton Hotel in Kathmandu are likely to deter foreign investors further, reinforcing perceptions of insecurity abroad.

The tourism sector, which has attracted substantial private investment over the past decade, is particularly at risk. A survey conducted by the National Statistics Office between July 2022 and June 2023 found that the private sector invested Rs 543.25 billion in hotels and restaurants, much of it financed through loans. Such heavy reliance on borrowing leaves the sector especially exposed in times of crisis.

Opportunities for Reform

The Gen-Z uprisings, however, also present a unique opportunity to reform and transform Nepal’s economy. Good governance, the central demand of the protests, is the foundation of sustainable development. Studies show that corruption reduces GDP growth by 0.5–1% annually, and that countries plagued by high corruption have 20–30% lower per capita GDP compared to relatively cleaner nations with similar conditions.

Recent uprisings in Bangladesh (2024), Sri Lanka (2022) and the Arab Spring (2010–2012) have common characteristics: they were largely led by educated youths and triggered by systemic corruption, poor governance and lack of transparency. The Gen-Z movement in Nepal follows this same pattern. To capitalize on this momentum, government and society must work together to address these entrenched problems by minimizing corruption, improving governance and building accountable institutions.

At this critical juncture, it is also important to acknowledge the private sector’s central role in Nepal’s economy. The private sector currently contributes over 80% of GDP through job creation, revenue generation and other economic activities. This contribution deserves not just recognition but concrete support from policy makers and citizens alike.

At the same time, the industrial sector has declined in relative importance. Its share of GDP has dropped to around 11-12%, compared to 13-14% a decade ago. Reversing this trend requires renewed focus on industrial growth and investment.

Changing the Narrative on Wealth Creation

Nepal has developed a deeply negative narrative toward wealth and wealthy individuals—a perception shaped by media, political parties, bureaucrats and society at large. For Nepal to prosper, this mindset must change.

For example, Deng Xiaoping (1978–1997) transformed China’s economy by challenging Mao’s perception of wealth. Believing that wealth creation was essential for national progress, he encouraged people to become rich, famously declaring: “It is glorious to get rich.” This shift in thinking paved the way for China’s economic rise into a $20 trillion economy.

Nepal needs a similar shift in narrative. Entrepreneurship and wealth creation should be celebrated, not vilified. Industrialists and entrepreneurs are national assets; they generate employment, create revenue and drive innovation. But investment will not come unless entrepreneurs feel secure, both for their capital and for their lives.

Therefore, the government, policymakers and society as a whole must value and respect investors while promoting entrepreneurship. Only by doing so can Nepal unlock its economic potential and secure a more prosperous future.

This opinion article was originally published in October 2025 issue of New Business Age magazine.