Kathmandu, May 18
Nepal's private sector's
contribution to the national economy is estimated at 81.55 per cent of the
Gross Domestic Product (GDP), concluded a recent study 'The state of private
sector: Contributions and constraints' jointly published by the Federation of
Nepalese Chambers of Commerce and Industry (FNCCI) and the International
Finance Corporation (IFC), a member of the World Bank Group.
While the private
sector's contribution to Nepal's economy was projected from 71-75 per cent of
the GDP so far, the report prepared on the basis of comprehensive analysis of
sectorial data published by the National Statistical Office (NSO), Ministry of
Finance, FNCCI and various public and private enterprises has put it at 81.55
per cent, after adjusting the value addition of all 18 sub-sectors of the
national accounts.
However, the report
maintained that the overall private sector contribution in 2012/13 was
estimated at 86.67 per cent, but has since declined.
This is the first time
ever in the history of Nepal that the contribution of the private sector to the
national economy is estimated. Minister for Industry, Commerce and Supplies,
Ramesh Rijal, launched the report at a programme on Thursday.
According to the
publishers, the report analysed data from fiscal year 2011/12 to 2020/21,
evaluating the private sector's contribution and current context in Nepal. The
report is first such attempt to create a comprehensive baseline for the entire
private sector in Nepal. The report combines analysis of both published and
unpublished secondary data to offer a snapshot of the private sector
contributions to the Nepali economy.
Private sector expands 32
times
Earlier, a national
Economic Census 2018 conducted by the NSO had concluded that there were 923,356
business establishments in the country. This is a significant growth from
28,660 businesses in the country in 1983, according to the report. This is a
growth of 32-fold in the last three decades.
"The private sector is
also the largest employer in Nepal, providing employment to 85.6 per cent of
the total labour force. A substantial portion of the country’s labour force is
employed in agriculture, forestry, and fisheries (57 per cent) and wholesale
and retail trade, including vehicle repair (12.5 per cent)," said Chandra
Prasad Dhakal, President of the FNCCI.
Industries in these two
sectors are primarily driven by the private sector. In 2018, the private sector
employed approximately 5.5 million people, while the public sector employed
around 427,000 people.
COVID-19 affected 87%
businesses
Likewise, the report
includes a survey of 517 Nepali firms to gauge the impact of COVID-19 and their
awareness of sustainability and climate change. Half of the firms surveyed were
in wholesale and retail trade, 13 per cent were in the hotel and accommodation
sector, and 12 per cent in manufacturing. Half of the firms had borrowed from
commercial banks, and during COVID-19 restrictions, 87 per cent were affected,
with 63 per cent fully closed. A whopping 79 per cent experienced a loss of
revenue during the lockdown, but 50 per cent reported being profitable after it
was lifted.
Structural reform in
economy
Speaking at the report
launch programme on Thursday in Kathmandu, FNCCI President, Dhakal, said that there
is a need of a structural reform in the economy in order to allow the private
sector to function at its full capacity and enhance the ability of the
government in spending the capital budget.
According to him, private
sector leadership is needed for the sustainable economic development. He
demanded that the budget of the upcoming Fiscal Year 2023/24 should adopt a
policy of investment expansion, Public Private Partnership (PPP) for
sustainable economic development, and creation of skilled human resource.
"We are confident
that the country could come out of the economic recession as the external
sector has been stable recently. The private sector should be given opportunity
in the operation and management of industries and resources in competitive
areas," he said.
Published in Friday Supplement of The Rising Nepal Daily on 19 May 2023.
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