Sep 14, 2014

Promoting Entrepreneurship in Nepal

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Lately entrepreneurship has become a buzzword in Nepal. Entrepreneurship development seems to have caught the attention of the non-profit sector as well as the private sector, even the government to some extent for better or worse. Non Government Organizations (NGOs) and International Non-government Organizations (INGOs) are trying to incorporate entrepreneurship component in their areas of work, private sector has started experimenting venture capitalism and the government has come up with plans to dole out money in the name of entrepreneurship. Increased interest in entrepreneurship among the various actors in the society is appreciable. Entrepreneurship is the ladder delivering economic growth and development in any society regardless of its current economic status. Hence, recognition of entrepreneurship as an important issue for the society can be considered a step in the right direction. Better late than never.

However, entrepreneurship as a skill set or as a resource of the society is different than any other resources in the society. Treating entrepreneurship development like any other developmental issues is likely to corrupt it and lose its value for the developmental sector, if not for the society. As Dr. Ernesto Sirolli, the world renowned entrepreneurship development consultant pointed out during his visit in Kathmandu last week, thousands of initiations by international donors in developing societies like Africa have done more damage than good despite their noble intentions. The major mistake made by the donors is to assume that they know better than the locals and patronize them. The follies made by international donors in developing societies of which Sirolli was once a part has given him a simple but difficult lesson to make economic development initiations more effective i.e. shut up and listen.

Understanding the real problems

Unlike other issues, entrepreneurial journey is about innovating and taking risks to produce something of value to the society which in turn brings revenue to the enterprise and uplifts the living standard of the people involved. Entrepreneurship is not for everyone and even for those who aspire to be entrepreneurs, success is not guaranteed. Hence, entrepreneurship promotion is a job that requires detailed observation and continued support during the various stages of the entrepreneurial journey.  

One time intervention and misguided help may in fact do more harm than good in promoting entrepreneurship. One classic example is the case of doling out money with the intention of promoting entrepreneurship like the Government of Nepal did with Youth Self Employment Fund. Contrary to the popular belief, having easy access to finance may not promote entrepreneurship. In fact, easy money could easily kill the entrepreneurial spirit and creativity making the person dependent on donations. Despite spending huge amount of money, Youth Self Employment Fund barely had any impact in developing entrepreneurship in Nepal as a large volume of low interest loan was lent to speculative business instead of new ventures that create employment opportunities. Similarly, the notion in the development sector that entrepreneurship is equal to sum of accounting, technical skill and a team is also misguided. Entrepreneurship is always more than the sum of these various aspects. Besides uncertainty is always a constant factor in any entrepreneurial venture.

Hence, promoting entrepreneurs requires understanding the various aspects of an entrepreneurial journey and identifying at which an entrepreneur is and providing help accordingly. It is essential to shut up and listen to the entrepreneurs and understand the ground reality that an entrepreneur is operating in. As Sirolli points out in his popular TED speech, small scale entrepreneurs are generally besieged by lack of expertise required to delegate the major aspects of businesses and grow the business into another level. Entrepreneurs find it difficult to get support in these areas regardless of where they live and operate. The civil society organizations as well as the private organizations aspiring to develop entrepreneurship in Nepal should take heed of these lessons if they want to be effective in their efforts. 

Ensure Safety of Life and Property

Similarly, in the context of Nepal, various political and social problems pose a serious threat to the existence and growth of any enterprise. The security of life and property is so weak that people still hesitate to expose their success to the society for the fear of being extorted or attacked. It is a shameful thing that it is usually the political parties themselves who are involved in extortion and disruption of businesses. Frequent bandas and strikes pose another major problems for small scale entrepreneurs who face severe losses if the operation of their enterprises is disrupted even for a few days.

Lack of infrastructure and government’s apathy towards infrastructure development has resulted in increased cost of doing business for any enterprise regardless of its size. The increased cost of doing business usually affects the small and medium scale enterprises more than the large scale enterprises. Lack of infrastructure and rule of law also discourages the aspiring entrepreneurs from embarking into the entrepreneurial journey.

The government bears the ultimate responsibility in making the provision for the infrastructure development as well as maintenance of law and order. If the Government of Nepal wants to help thousands of entrepreneurial individuals across the country rather than just a few large scale enterprises, it should focus on developing infrastructures that ease up the cost of doing business and ensure safety of lives and property of its citizens so that more and more people are encouraged to dream big and make it big in the entrepreneurial journey.

(Published in The Himalayan Times- Perspectives of 14th September, 2014)