Innovate To Elevate

Nepal is set to graduate to the status of developing country from the least-developed one in 2026. This will be indeed a significant milestone in the country's development trajectory. However, the transition is likely to bring a set of formidable challenges. The duty-free market access and special privileges Nepal is currently enjoying in international trade will come to an end, forcing it to compete with advanced economies on an equal footing. In order to navigate the impending difficulties successfully, fostering innovation in micro, small, and medium enterprises (MSMEs) and start-ups is essential.

The establishment of a dedicated MSMEs development centre is a positive move. By providing technical guidance, marketing support, and modern production techniques, this initiative aims to empower small businesses to adapt and thrive. The centre will provide the necessary skills, technology and training for business operations. However, the real test lies in execution. Well-intentioned programmes have faltered due to bureaucratic hurdles and lack of follow-through in Nepal. This centre must break the mould, offering practical, accessible support to entrepreneurs and ensuring that its impact reaches even the most underserved sectors of the business community.

Despite these efforts, the broader economic environment remains a concern. MSMEs, which form the backbone of Nepal’s economy, are struggling due to waning domestic demand and insufficient resources. The government’s role here is indispensable. Policies must be restructured to create a business-friendly ecosystem. Outdated regulations and cumbersome procedures for business registration and renewal continue to pose as barriers against growth. Simplifying these processes is long overdue, as is reforming the tax system to encourage innovation and investment.

It is equally important to redefine what innovation means for Nepal’s context. While technology adoption is a critical aspect, innovation must also involve rethinking production methods, exploring niche markets, and leveraging the country’s comparative advantages. For instance, the unique crafts, organic agriculture, and tourism potential of the country remain underexploited on a global scale.

The concerned sectors should invest in research and development, which can enable Nepal to offer distinctive products that stand out in international markets. A coordinated effort involving the private sector, academia, and international organisations is essential, as the government alone cannot shoulder the responsibility. The public-private partnerships could fund R&D initiatives, while universities could play a crucial role in nurturing innovation through skill development and entrepreneurship programmes.

Similarly, political stability is another critical factor. Businesses cannot thrive in an environment of uncertainty. The private sector needs assurance of consistent policies and long-term planning. Political leaders must prioritise economic reforms over short-term populist measures. Stability fosters confidence, and confidence attracts both domestic and foreign investments.

While the path ahead is daunting, it is also an opportunity to reimagine Nepal’s economic course. The focus must shift from dependence on external concessions to self-reliance and competitiveness. MSMEs, given their significant role in the economy, are uniquely positioned to lead this transformation. But they require a conducive environment — one that encourages innovation, provides access to resources, and reduces administrative burdens. The proactive measures can propel the country towards sustainable growth and prosperity. The country must seize this moment to chart a future defined by resilience, creativity and competitiveness.