South Asia

IFC, Partners, and Nepal Chart a Growth Path for a Promising Future

March 19, 2012 -- Nepal, a country of 26 million that has experienced conflict, is poised to take a big leap in its development, thanks to the help of IFC and its partners. IFC is engaging with private sector players, multilaterals, government, and other stakeholders to implement an integrated development agenda.

The government announced this year as the Year of Investment and IFC is supporting this initiative by facilitating foreign and domestic private investment, as well as contributing to reform efforts to improve the business environment.

IFC has already been investing in Nepal with a committed portfolio of $25 million that includes projects across various sectors, including power, air transport, banking, microfinance, and trade finance lines.

Additionally, IFC is supporting investment climate improvements, strengthening local financial institutions, improving access to finance, promoting trade, and helping address the impact of climate change.

The Corporation is also working on a payment reform project and an advisory team is making important progress by building partnerships between the government and private sector through the Nepal Business Forum.

IFC Helps Nepal Overcome Tough Challenges

Nepal faces tough challenges: a quarter of its population is poor, with many living in remote rural areas. The country loses 1,200 citizens everyday to jobs overseas. The severe energy shortfall has had strong consequences for private sector growth, competitiveness, and the quality of life for Nepal's citizens.

Remittances help steer the economy, but the country needs to build infrastructure and to meet energy needs, revive private investment, encourage agriculture, and make finance accessible to small enterprises, especially those led by women. IFC investment and advisory teams are engaged in developing opportunities across all of these areas.

Harnessing Untapped Potential

But the country also has tremendous potential: one example is the hydropower sector. The promise to develop over 80,000 MW economically-feasible hydropower against a mere 700 MW of installed capacity is an attractive proposition for most private sector developers. Traditionally having supported hydropower projects, IFC invested in a run-of-river hydropower project with a local company, Butwal Power, last year.

The project benefits the local community by expanding access to reliable and below national-cost energy. IFC's financing is also helping to renovate and upgrade the power plant, including the replacement of 100-year old turbines with modern and efficient technology. Output is expected to increase by 50 percent.

During a recent meeting with Prime Minister Baburam Bhattarai, IFC EVP and CEO Lars Thunell spoke of ramping up IFC’s work in the country. “IFC sees great potential in Nepal, particularly in essential infrastructure projects like hydropower,” said Thunell.

Looking to the Future

Going forward, IFC’s strategic agenda in Nepal includes the priority sectors of infrastructure, finance, including access to finance for SMEs and women entrepreneurs, tourism, and agribusiness. With the Corporation's growing investments and advisory assistance, IFC is set to play a key role in Nepal, a country with abundant resources and a vital population.