The Ministry of Agriculture and Livestock Development extends support to address key challenges and bottlenecks faced for investing in climate-positive agriculture in Nepal

Secretary Dr Sharma requested the stakeholders to propose an action plan, detailing required changes in the policy that will address the underlying issues limiting agriculture investment in Nepal.

The meeting progressed with three separate parallel panel discussions on three priority areas of interest and the champions discussed opportunities to call for action as follows

Enabling environment

• Improve policy while also focusing on the implementation and dissemination of existing policies
• Segregate agriculture loan portfolio mandated by the central bank (distinction of interest rates for production and trading)
• Standardise subsidy to the private sector importing chemical fertilisers. At the same time, encourage local industry to produce both organic and chemical fertilisers by reallocating subsidies to support local production

Investment opportunities and forms of capital

• Invest in processes and technologies (research and development, increasing pipeline, providing technical assistance).
• Try to align priority value chains for the government and profitable areas for the private sector
• Make funds available for catalytic/blended finance and warrantees to de-risk investment

Technical assistance needs

• Help SMEs understand the importance of technical assistance, so they are willing to pay for it, creating a sustainable market for business development services
• Accessible and digestible databases in the public domain, disaggregated by region, containing information on the agriculture sector (eg, climate predictive data) maintained by local government, and compiled centrally
• Help farmers and SMEs understand the prerequisites and documentation necessary for banks and other finance providers before applying for loans

The SMEs in Nepal have a low capital base, poor access to technology, and inadequate knowledge and information regarding business opportunities and marketing (Pandey 2004)¹. Similarly, SMEs in Nepal also suffer from poor access to finance brought about by high-interest rates, large collateral requirements, inconveniences associated with the process, a lack of information, and inadequate institutional capacity, among other things (NRB 2019)².  

The outcomes of the panel discussions were summated for the whole participants offering a platform to deep dive into specific investment constraints and opportunities in Nepal.

The Ministry of Finance (2016) mentions that SMEs contribute 22% to the gross domestic product (GDP) and employ around 1.7 million people, without specifying the basis for the numbers. The contribution of SMEs to output, employment, and exports in the manufacturing sector is unknown³.

“At present, Nepal invests only 1% of its total foreign direct investment in agriculture,” said Mr. Chandra Prasad Dhakal, Acting President, FNCCI. “Investors want security and return on their investment and Nepal must work towards providing an enabling environment if we want FDIs which could help our farmers modernize farming with the latest technologies.”

Swisscontact is committed to initiating dialogue between the policymakers, private sector, development actors and financial institutions in Nepal towards promoting Nepal as a global destination for agriculture investments and developing synergies across the agriculture investor community.

The CASA programme is implemented by Swisscontact, NIRAS, and CABI and is funded by the Foreign Commonwealth Development Office (FCDO).