Procedural hurdles still hinder wider transformation
Kathmandu, July 17
Anita Basaula,
a woman entrepreneur from Birgunj, has been running beauty parlour business
informally. Nobody told her about the need and benefits of registering the business.
Meanwhile, after attending a two-day Formalize your Business training under the
'Empowered Women and Prosperous Nepal' programme organised at the Birgunj
Chamber of Commerce and Industry, she realised the avenues could be opened with
the registration of her business.
"I
will register my beauty parlour this month (mid-July to mid-August). Now I know
that formalisation opens doors to cooperation with banks, government bodies,
non-government organisations and other partners," she said.
According
to Anita, training provided her with clear and practical knowledge on how, why
and where to register a business. "All entrepreneurs who are yet to
register their businesses should be provided such training. It will provide
them legal knowledge and ensuring business sustainability."
Likewise,
Sunaina Thakur, owner of Mithila art-based enterprise Sunaina Arts in Janakpur,
has transformed her artistic skills and cultural identity into a business
venture and created jobs for local women. While she was in this business for
the last two-and-a-half decades, her business was running informally without
being registered at the concerned authorities.
Registering
her business was not 'all-pleasant' activity. "I encountered a few
challenges in the beginning. But when my business is registered, I could
participate in government projects, access loan from the banks and financial
institutions and collaborate with other companies and agencies," she
said adding that it supported in
expanding her network and growing business.
Sunaina
shared that running a business formally, getting it registered at the local or
federal agencies, allows entrepreneurs to have better and transparent
engagement with local producers. According to her, renewal process is easy and
it is mandatory to renew if you want to continue with your business.
Business formalization
has brought multitudes of benefits to entrepreneurs and supported in their
growth and networking.
"It does wonders
in creating an environment of trust and can have direct positive impacts on
business and related activities," said Niru Rayamajhi Khatri, Immediate
Past President of the Federation of Women Entrepreneurs' Associations of Nepal
(FWEAN).
Opening doors of opportunities
Many entrepreneurs,
especially micro, cottage and small (MCSEs), faced challenges in obtaining the
financing facilities from the banks and financial institutions (BFIs),
government incentives and other support in the wake of the COVID-19 because they were not
registered with the concerned government agency at any level.
However, with the
implementation of the federalism and local bodies beginning the business
registration, the scenario has improved significantly, said Khatri. Although
actual numbers are not available, the estimates from the Federation of Nepalese
Chambers of Commerce and Industry (FNCCI) tell that the numbers are
encouraging.
For example, about 85
per cent of the businesses in Tilottama Municipality of Rupandehi district are
registered. According to the Economic Census of 2018, about half of the
businesses in operation across the country were running without being
registered.
"We have been
calling on the entrepreneurs for the registration of their businesses and
timely renewal. Agricultural businesses get 50 per cent discount in the
registration fee while businesses run by women's group are entitled to 75 per cent discount," Krishna Prasad
Pandey, an officer of Tilottama Municipality Office said to The Rising Nepal.
Tilottama launched
business formalisation as a campaign since 2017.
Capital city Kathmandu
Metropolis and Dhangadhi Sub-Metropolitan City have also launched business
registration drive in their respective areas. Krishna Kumari Bista from
Dhangadhi said that following her business registration and quality products,
she has been awarded as the 'best entrepreneur' for multiple times.
Poor policy implementation
Meanwhile, Juna Mathema,
Chairperson of the FNCCI's Start-Ups and Innovation Forum, pointed to the need
for further facilitation in the registration process and timely implementation
of the government-announced policies.
"It's not that our
policies are bad. Problem is with their implementation. Although the government
announces various incentives and discounts to the entrepreneurs, their
implementation is most often delayed," she said.
For example, the
government announced registration fee waiver for entrepreneurs in the budget of
the current Fiscal Year 2025/26, it hasn't formulated a procedure for it. As a
result, concerned authorities will not be able to implement the provision.
"Entrepreneurs ask
the FNCCI when will they get the announced benefits and incentives. But it
takes months for their implementation," said Mathema.
Likewise, lack of
procedure to recognise the startup business has deprived the entrepreneurs from
the benefits. According to Mathema, most often, poor inter-agency coordination
is behind these shortcomings .
Complexities observed
These perspectives
reflect growing calls from employers to address existing bottlenecks, in
particular for women entrepreneurs. They include lack of coordination between
departments and agencies, reliance on intermediaries, requirement of rental
document and inconsistencies in defining industries has created problems in
enterprise registration process.
FNCCI is working with
the ILO and local governments in awareness and facilitation support with
priority in supporting women entrepreneurs. It is conducting training to women
entrepreneurs to educate them in business formalisation, through Women
Entrepreneurship Helpdesks in select districts.
Issues in obtaining
incentives for business registration and renewal are lack of policy clarity,
multiple taxation, need for physical visits, and ineffective operationalisation
of incentives. FNCCI has renewed calls for single digital registration and
renewal system for enterprises, building on recommendations from enterprise
formalisation paper developed by ILO under the national action plan on formalisation.
Likewise, issues relating
to compliance are emerging due to lack of monitoring, perceived excessive and
disproportionate punitive measures for non-compliance, lack of awareness of
regulation and requirements, and lack of digital data management.
Published in The Rising Nepal daily on 18 July 2025.
