32 % wholesale, retail outlets operating without registration: Survey

By Laxman Kafle,Kathmandu, Feb. 10: About 68 per cent of business establishments are registered with a government agency and 32 per cent are unregistered, according to Nepal Distributive Trade Survey, 2022.

The National Statistics Office (NSO) conducted the Nepal Distributive Trade Survey, 2022 (NDTS) to estimate economic indicators of the wholesale and retail trade sector for the national account estimation, including trade margin of goods and collect information on income, expenditure, investment, employment and compensation to the employees with 15,299 sample trade establishments.

The NDTS-2022 was the second such type of survey conducted after a gap of 14 years. The first distributive trade survey was conducted in 2008.

Launching the report on Friday, chief statistician at NSO Toyam Raya said that the objective of the survey was to measure the contribution of the wholesale and retail trade sector to the national economy as well as provide key indicators such as number of employees, salaries and wages, trade margin and income and expenditure of the trade establishments in Nepal.

The survey has covered all types of trade activities including motor trade and repair, wholesale and retail trades, he said. The survey has found that 68.2 per cent of trade establishments (wholesale and retail trade and repair motor vehicles and motorcycles) are registered in government agencies whereas 31.8 per cent remain unregistered.

Notably, Madhes Province has the highest proportion of unregistered establishments at 48.2 per cent while Bagmati has comparatively fewer unregistered establishments at 24.7 per cent.

The number of registered trade establishments was 44 per cent in Nepal Economic Census 2018.   As per the NEC, there were around 498,058 wholesale and retail trade establishments.

This indicates a significant increase in establishment registration during the period. The encouragement of local levels for registration might be a cause for the increase in registered establishments. In the retail trade sector, a significant 33.4 per cent of establishments are operating without formal registration under any regulatory authority.

An average 2 persons engaged in an establishment

According to the report, a total of 113,0645 persons have engaged in the wholesale and retail trade sector. Out of them, 64 per cent (726,681 persons) were males while 36 per cent (403,964 persons) were females. On average two persons engage in an establishment.  

The survey showed that 88.65 per cent of persons were involved in retail trade while 5.8 per cent were associated with motor trade and repair industries and 5.54 per cent in wholesale trade establishments.

Of the total persons engaged in this sector, only about one-fifth are paid.  The average annual wages and salaries per paid employee is Rs. 208, 494 (Rs. 17,374 per month). Among the total engaged individuals, the highest proportion, 32.90 per cent was employed in Bagmati Province followed by Koshi with 16.84 per cent. 

Likewise, of them, 16.34 per cent were employed in Lumbini and 14.29 per cent in Madhes Province.

The lowest percentage of engagement in this sector was observed in Karnali Province, with only 4.21 per cent. Additionally, Sudurpashchim Province had 5.92 per cent engagement while Gandaki had 9.46 per cent involvement.

Trade margin in Gandaki Province at 20.09 %

The report found that the national average trade margin in the reference year is 18.53 per cent. The motor and repair recorded the highest trade margin at 24.02 per cent followed by retail trade at 18.28 per cent.

The wholesale trade received the lowest trade margin at 13.01 per cent among the three trade categories.

It showed that the average trade margin percentage was the highest in Gandaki followed by Karnali and Madhes Province which were 20.09 per cent, 19.9 per cent and 19.34 per cent respectively. Koshi Province has the lowest average trade margin at 16.77 per cent.

The data showed that there was a significant difference among the provinces in the trade margin of motor trade and repair.

Highest operating cost per establishment in Bagmati Province

The report further showed that the average annual operating cost per establishment was Rs. 264,373 in the reference year.

Among the provinces, Bagmati Province had the highest average annual operating cost per establishment at Rs. 470,340 followed by Karnali Province at Rs. 243,796. 

On the other hand, Madhes Province had the lowest average annual operating cost per establishment at just Rs. 126,801 followed by Koshi at Rs. 155,283.

The annual operating cost per establishment in Gandaki Province stood at Rs. 238,728, in Lumbini, it was Rs. 181,970 and in Sudurpashchim Province it was Rs. 229,399.

The NSO said that wholesale trade establishment witnessed the highest operating cost per establishment amounting to Rs. 1,314,379, followed by motor trade and repair, incurring Rs. 583,393 and retail trade at Rs. 219,240.

The data revealed that at the national level, on average, 74 per cent of such trade establishments were owned by males while 26 per cent were owned by females.