Adept at reading the usual doom and gloom scenario in the national dailies, I was slightly taken aback by a few pieces of news - all incredibly positive in the context of Nepal's economy - published a few days ago.
The first one, published on "The Corporate Weekly", indicates that despite protracted political transition and an elusive peace settlement, Nepal received a record high commitment on foreign direct investments (FDI) for the upcoming fiscal year 2011/12. The figure of Rs. 13.2 billion (USD 180 million) in FDI commitments is approximately 45% higher than what the country received in 2010/11, when it received Rs. 9.1 billion (USD 125 million). However, it may be too early to express any meaningful exuberance as the bigger question is whether this growth can be sustained for a number of years to come. It isn't the first time that the country saw an astounding growth in FDIs, with the last such growth occurring in 2007/08, when it received Rs. 9.8 billion (USD 136 million), compared to just Rs. 3.2 billion (USD 44 million) in 2006/07, an increase of a whopping 206%.
The FDIs for 2011/12 have been committed in services (software), energy (hydropower), construction (cement), and tourism (hotels). And as usual, India continues to be the top foreign investor in Nepal.
The second piece of news that caught me off-guard was the results from the Nepal Living Standard Survey III (NLSS) conducted in 2010, which indicates that the absolute poverty declined to 13% of the total population, compared to 31.5% of the population in 2004 and 42% of the population in 1996. This is a startling revelation because the visible indicators around the country would suggest otherwise.
The news, published on Republica (http://myrepublica.com/portal/index.php?action=news_details&news_id=34274) further suggests that the NLSS uses 2,200 calorie consumption per day per person and access to essential non-food items as the yardstick to measure absolute poverty in Nepal. Based on current market prices, a person needs an income of at least Rs 14,430 per year to manage food items equivalent to 2,200 calorie per day and other essential non-food items. Any individual earning less than Rs 14,430 per year is therefore considered to be below the poverty line.
The article further suggests that even those that conducted the survey found this result too good to be true, however, with the survey getting technical support from The World Bank, the data demands more credibility than otherwise.
The survey also reported a decline in income inequality (between the rich and the poor) measured in terms of the Gini-coefficient, which has come down to 0.35 from 0.41. This is a slightly contradictory result to what has been happening in other growing economies such as India. In India, the economic boom has enabled many middle class to higher standards but has failed to uplift the people at the bottom of the pyramid from poverty.
Nepal isn't an emerging market yet, and will not be for quite some time, but if it continues to achieve similar progress on a continuous basis, the opportunities are boundless.
-SP
The first one, published on "The Corporate Weekly", indicates that despite protracted political transition and an elusive peace settlement, Nepal received a record high commitment on foreign direct investments (FDI) for the upcoming fiscal year 2011/12. The figure of Rs. 13.2 billion (USD 180 million) in FDI commitments is approximately 45% higher than what the country received in 2010/11, when it received Rs. 9.1 billion (USD 125 million). However, it may be too early to express any meaningful exuberance as the bigger question is whether this growth can be sustained for a number of years to come. It isn't the first time that the country saw an astounding growth in FDIs, with the last such growth occurring in 2007/08, when it received Rs. 9.8 billion (USD 136 million), compared to just Rs. 3.2 billion (USD 44 million) in 2006/07, an increase of a whopping 206%.
The FDIs for 2011/12 have been committed in services (software), energy (hydropower), construction (cement), and tourism (hotels). And as usual, India continues to be the top foreign investor in Nepal.
The second piece of news that caught me off-guard was the results from the Nepal Living Standard Survey III (NLSS) conducted in 2010, which indicates that the absolute poverty declined to 13% of the total population, compared to 31.5% of the population in 2004 and 42% of the population in 1996. This is a startling revelation because the visible indicators around the country would suggest otherwise.
The news, published on Republica (http://myrepublica.com/portal/index.php?action=news_details&news_id=34274) further suggests that the NLSS uses 2,200 calorie consumption per day per person and access to essential non-food items as the yardstick to measure absolute poverty in Nepal. Based on current market prices, a person needs an income of at least Rs 14,430 per year to manage food items equivalent to 2,200 calorie per day and other essential non-food items. Any individual earning less than Rs 14,430 per year is therefore considered to be below the poverty line.
The article further suggests that even those that conducted the survey found this result too good to be true, however, with the survey getting technical support from The World Bank, the data demands more credibility than otherwise.
The survey also reported a decline in income inequality (between the rich and the poor) measured in terms of the Gini-coefficient, which has come down to 0.35 from 0.41. This is a slightly contradictory result to what has been happening in other growing economies such as India. In India, the economic boom has enabled many middle class to higher standards but has failed to uplift the people at the bottom of the pyramid from poverty.
Nepal isn't an emerging market yet, and will not be for quite some time, but if it continues to achieve similar progress on a continuous basis, the opportunities are boundless.
-SP
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