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

Sustainable agriculture
On 8th December, Swisscontact’s Commercial Agriculture for Smallholders and Agribusiness (CASA) programme in partnership with the Federation of Nepal’s Chamber and Commerce (FNCCI) organized the “Nepal Agriculture Investment Meeting” with more than 100 stakeholders – comprising of investors, government, small and medium enterprises, financial institutions, service providers and development partners. The one-day action-oriented meeting seeks to enhance the enabling agriculture investment in Nepal.
"The cost of production for Nepalese farmers to harvest tomatoes is NPR 17/kg while its Indian counterpart spends only NPR 2.5/kg. Couple that with the inconsistent agriculture policies; our farmers may never see a profit."
Dr. Govind Prasad Sharma, Secretary, Ministry of Agriculture and Livestock Development
Dr. Govind Prasad Sharma, Secretary, Ministry of Agriculture and Livestock Development presents the real scenarios of smallholder farmers 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
Participants registering for the event
Heidi Tavakoli, Deputy Development Director , British Embassy Kathmandu, Nepal

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.

"CASA has worked with more than 20 SMEs in Nepal and now two businesses – Kheti and Paicho Pasal Pvt. Ltd is seeking combined additional investments of pound 2.3 million (NPR 345 million). The CASA programme in Nepal supports Agri SMEs with significant smallholder supply chains to prepare for and secure investment. These businesses are investment ready, and SMEs in Nepal are ready for business"
Mr. Siddarth Khadka, Country Manager, Swisscontact 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).

1) Pandey, G.D. (2004). Problems and Prospects of SMEs in Nepal. In N. Dahal. and B. Sharma (Eds.), WTO Membership: Opportunities and Challenges for SMEs in Nepal. Kathmandu: SMEDP and SAWTEE.

2) Nepal Rastra Bank (NRB). (2019). Nepalma sana tatha majhaula udhyamma bittiya sadhan parichalan [SMEs Financing in Nepal]. Kathmandu: NRB.

3) The Census of Manufacturing Establishments, 2011/12, which collected more detailed information than the National Economic Census, 2017/18, enumerated firms with ten or more employees only, and its raw data are not available in the public domain. The Survey of Small Manufacturing Establishments 2008/09 sampled firms with less than 10 employees in the manufacturing sector, but its raw data are not available in the public domain

CASA team from Nepal and London
Nepal, Rwanda, Ethiopia
Sustainable agriculture
Commercial Agriculture for Smallholders and Agribusiness Programme
The project aims to involve smallholder farmer businesses sustainably in agricultural value chains, thereby improving their living conditions and economic situation. By building inclusive agricultural systems, smallholder farmers will have improved access to markets, information, and means of production. Additionally, the project emphasizes...