Nepal's Youth Embracing Startup Culture Amid Rising Unemployment ➤

Nepal’s Youth Embracing Startup Culture Amid Rising Unemployment

Government's Startup Loan Scheme Fuels Entrepreneurial Dreams, Receives Overwhelming Response

Amidst soaring unemployment rates in Nepal, a burgeoning interest in startups has emerged among the country’s youth. Young entrepreneurs are increasingly drawn to the prospect of availing concessional loans to kickstart their business ventures, a trend that has been further catalyzed by the government’s startup loan scheme.

The Ministry of Industry, Commerce, and Supplies has unveiled the Startup Enterprises Credit Fund Working Procedures, a ambitious initiative aimed at providing concessional loans at a mere 3% interest rate to entrepreneurs equipped with the latest knowledge, thinking, skills, and abilities. The scheme offers loans of up to Rs 2.5 million (approximately $20,000), sparking significant interest from aspiring entrepreneurs across the nation.

Despite the Industrial Enterprise Development Institute initially planning to extend startup enterprise loans to around 200 individuals, a staggering 1,600 applications have been received. Umesh Gupta, a representative from the institute, acknowledged the overwhelming response, stating, “As many as 1,658 people have applied for the call for proposals. The screening of project proposals is currently underway.”

Gupta highlighted that a substantial number of applications have been received across diverse sectors, including agriculture, tourism, and information technology (IT). The institute has set a target to disburse around Rs 250 million (approximately $2 million) in startup loans.

The eligible startup ventures span a wide range of industries, encompassing agriculture and livestock, forestry, tourism promotion, entertainment, hospitality, human health services, education, teaching-learning, transportation services, automobiles, traditional technology, product and service improvement processes, mining and mineral research, household and daily living, food production and processing, waste management, environmental protection, disaster management, alternative and renewable energy, and climate change mitigation.

The lending process involves a multi-step approach, with the institution sending the proposer to a designated lending bank for credit appraisal. Upon approval, the bank will disburse the loan, retaining the approved business or project as collateral. Entrepreneurs are responsible for insuring their respective ventures.

To mitigate risks, the procedure mandates that 25% of the disbursed loan be kept in a startup enterprise loan protection fund within the approved budget limits.

The government has allocated a substantial Rs 1.25 billion (approximately $10 million) for the current fiscal year to support startups by fostering innovation, enhancing knowledge, skills, and capabilities, and providing much-needed capital to aspiring entrepreneurs.

This initiative aligns with the government’s broader policy of encouraging entrepreneurship among those hindered by lack of capital, promoting innovative and creative thinking in the development, production, operation, and distribution of goods, services, and processes.

Furthermore, the government aims to provide financial and non-financial facilities for enterprise promotion and development, capital mobilization, domestic and foreign investment attraction, management support, capacity building of stakeholders, partnership facilitation, and necessary support in manpower management. Entrepreneurs will also be encouraged to expand their businesses abroad.

The regulatory framework requires startups to comply with monitoring procedures, provide necessary information and data, submit quarterly progress reports to the lending bank, and adhere to instructions from the establishment, committee, and bank.

In addition to the government’s efforts, private sector organizations such as the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) and the Confederation of Nepalese Industries (CNI) have been actively supporting startups and entrepreneurs in small and medium industries. The CNI, in particular, has been encouraging startups that contribute to the digital economy, local knowledge-based employment, curbing talent drain, increasing exports, and attracting foreign direct investment.

As Nepal’s youth embrace the startup culture, the government’s loan scheme has emerged as a catalyst, igniting entrepreneurial dreams and providing much-needed financial support for innovative ideas to take flight.