The government of Nepal is hosting the Nepal Investment Summit in Kathmandu from 28 to 29 April 2024. This is the third Summit of its kind and has the objective to promote Nepal as a ‘highly promising’ investment destination. Foreign Direct Investment (FDI), i.e. attracting investment in Nepal from foreign citizens and companies, is identified as a priority area of the Summit.
On the eve of the Summit, in this article we explore an important yet untapped aspect of FDI that has the potential to be a game changer for Nepal’s economy.
The agenda of FDI is not a new topic for Nepal. The government’s past initiatives, broadly speaking, have delivered some degree of success in terms of number of investors and amount of investment. The government and relevant stakeholders’ focus until now seems mainly to be about promoting Nepal as an attractive destination for foreign investors.
In its efforts to attract FDI, the Nepal government continues to overlook one key stakeholder that is potentially a major investor group. This stakeholder is missing from the equation of Nepal’s foreign investors. The missing piece of the puzzle is the members of the global Nepali diaspora. In this context global Nepali diaspora are those individuals living across the world who are of Nepali origin and have adopted foreign nationality.
Why does it matter?
How can those who have left Nepal permanently and have adopted foreign nationality be a major investor in Nepal? That is a frequently asked question, and a reasonable one to ask. The answer to that question is that members of Nepali diaspora have vested interests to act in the interest of Nepal and Nepali citizens.
It is human nature that people are motivated when they have vested interests. This is even more so when it comes to making financial decisions. Personal reasons aside, the most important vested interest of the Nepali diaspora is the strong connection to their homeland.
Let’s do some simple math. According to the latest census figures, there are over 2.2 million Nepalis residing overseas. In addition, there is a growing number of second generation of global Nepali i.e. born overseas to Nepali parents. If one out of one hundred from those 2.2 million Nepalis residing overseas invested in Nepal, that would be 22,000 individual investors. If one person invested NRs 10 lakh (1 million), that would be NRs 22 Arab (22 billion) of investment. In US Dollars that is approximately $200 million. For the sake of comparison and scale, the hugely publicised Millennium Challenge Corporation (MCC) was a US $500 million deal between the MCC and Nepal.
How do we do this?
Through this article we propose a framework of FDI in Nepal from its global diaspora – One Nepali, One Investment, One Employment.
The idea is that one member of the global Nepali diaspora makes a commitment to invest in one enterprise, and generates one full time employment opportunity in Nepal. The individual investor is responsible and accountable towards their investment commitment.
Is this achievable? In our view, yes. 100%.
What is stopping us and what can we do about it?
To get to a stage of achieving a healthy scale of FDI from the current state of only a few, we have a long way to go. To reach the destination via our framework, both the demand side (Nepal) and the supply side (diaspora) have to row their boat in the same direction. Both sides must be willing to explore and work towards finding practical solutions about how to ease the existing barriers. In our previous article* we outlined key barriers and proposed a few solutions that could enable FDI in Nepal from the diaspora community.
Further to the points made in our previous article*, the next right step for the government is to clearly acknowledge its diaspora community as a key strategic partner in its pool of potential foreign investors. Once such a clear intention has been established at the higher level, the diplomatic missions present at each country must be the driver of groundwork required at each country level to achieve tangible results.
There are a few key aspects of Nepali diaspora investors that are worthwhile to outline. It is a fact that compared to a big multinational company, a Nepali diaspora investor is going to be smaller in monetary value. In our view, we have to consider a bigger picture rather than judging on the basis of monetary value of a single diaspora investor. If approached well, the collective investment from the diaspora community can be substantial. We demonstrated a potential scenario in this article above. The question we should be asking is how many multinationals have invested in Nepal so far since it opened its FDI doors to them? How many more are likely to be added? How does that compare with the potential investment from the diaspora Nepali?
Diaspora community, in their countries of residence, have held many discussions about investing in Nepal. A few investments such as those in hydropower materialised in the past. However, the investment growth is far from satisfactory. The challenge before the diaspora Nepali now is to walk the talk rather than keep repeating the same talk. Globally there is a substantial number of diaspora members who are successful entrepreneurs albeit involved mostly in small and medium enterprises. However, the diaspora community is hardly visible when it comes to business and economic activities in their adopted country as well as that in Nepal. If they are willing, what is stopping every member of the diaspora community to assume the role of an ambassador to direct investment in Nepal?
As the saying goes the devil is in the details, the seriously interested investors from the Nepali diaspora must start to delve down to the finer level of implementing their intention to invest in Nepal. The first and the foremost role a member of the diaspora can play is to start having conversations about investing in Nepal with other like-minded fellow members. They must seek ways how they can materialise their individual and collective intention to invest in Nepal. The diaspora community must actively lobby through their diplomatic missions to raise their voice and profile about their interest to invest in Nepal. Equally importantly, how to enable FDI from Nepali diaspora must be one of the key performance indicators of our diplomatic missions.
An attractive proposition for a multinational company might not necessarily be so for a diaspora investor. Diaspora investor’s motivation and reasons to invest in Nepal is going to be completely different. Both sides (Nepal and diaspora) must identify what is it that makes it a mutually attractive deal. One size fits all approach is not going to work. We would need to identify the nuanced reasons that would enable an investment environment and encourage both sides to find a win-win situation.
Conclusion
There is a huge untapped potential for investment in Nepal from its global diaspora. While there is still a long way to go until the current scenario changes, there are a number of steps that both sides must take. It is high time that the Nepal government acknowledges its diaspora community as a viable investment partner. Similarly, the diaspora community must step up to make itself count if it wants to be a key stakeholder in Nepal’s FDI sector. Conversations like these must start from and at both ends – Nepal as well as the country of residence of the diaspora community. The global Nepali diaspora is ready to play its part in partnering with the Nepal government to help the country realise its vision of prosperous Nepal.
At present it is a scenario of Nepal desperately needing investments and the diaspora eagerly willing to invest. However, there is a huge gap between these two demand and supply sides. To reduce this gap, the Nepal government must offer a more favourable investment environment to its diaspora community that is fit for the purpose. Similarly, the diaspora community must start heading towards delivering concrete results.
Our framework of ‘One Nepali, One Investment, One Employment’ discussed in this article could be a powerful vehicle to minimise the existing gaps in materialising FDI in Nepal from its diaspora community.
There is a huge untapped potential to channel a substantial scale of FDI in Nepal from its members of the global diaspora. We are looking forward to seeing a lively discussion held during the Investment Summit about how both sides approach this yet untapped potential.
Let the conversation begin.
(Dila Kharel is President of the Australia Nepal Chamber of Commerce based in Sydney and Raj Maharjan is President of the New Zealand Nepal Chamber of Commerce based in Auckland. Published with consent from writers. Originally published in Nepal Live Today)
