29 Dec 2017 - 4 jan 2018 #890

Towards 700% Growth

Federal Nepal is an opportunity to start growing your business in 2018
Anil Chitrakar
Many commentators have pointed to the expensive recent elections for seven provincial assemblies, the declaration of seven federal states and the search for potential capitals as money wasted. However, we can also look at it as offering an opportunity for all businesses to attain seven-fold growth.

As you read this column, supermarket chains, branded restaurants, tea and coffee shops, car rentals, hospitals and schools must already be having internal discussions and planning to open franchised outlets in the seven provinces. This also means that Franchising 101 classes will be in higher demand and will be part of the new curriculum at all business schools that generate the required human resources for the 700% growth.

Politicians have always stated their desire to decentralise power that was concentrated in Kathmandu. For business, it means an opportunity to really grow, hire, take loans, acquire land and other assets, and make a bigger profit. Elusive objectives like standardisation, quality control, digitisation, integration, team building, inspections and management of supply chains will have a whole new meaning to these businesses and will have to hire the people who know how to do them.

The governor of the Rastra Bank has gone even further and asked all commercial banks to expand branches to all 753 village governments just when bankers were just beginning to discuss ‘branchless banking’.

For national media companies the challenge will be to strike the right balance between local, national and international content. How much autonomy should the seven editors get and how much advertisement and circulation revenue can be raised locally? For many airlines there will be a boom in business as they open new routes as the volume of people travelling between provinces bypassing Kathmandu increases exponentially. Real estate agents and lawyers who do rent contracts and land sale papers will have to have seven teams on the ground all over Nepal.

For those who have not yet decided to expand their businesses you can be sure that land prices, rent, time to connect power and water lines are all going to go up. Think of all the people you will need to hire. The early bird will get the worm. If you arrive late you may not be hiring the best in the area and may have to pay more to bring people from the ‘outside’.

Federal Nepal is an opportunity to grow your business no matter what product or service you sell. For those who love to promote and use local products, here is an opportunity to scale up the manufacture of everything local and Nepali. From Palpa dhaka cloth to lokta paper, all could see huge demands if these governments planned it well. Nepal’s law says you have to buy Nepali products if the price difference is less than 15% over the import.

Depending on who you believe and who you wish to quote, the estimated cost of establishing the federal governments and local governments and the needed infrastructures is about $8 billion. The operations cost for the first three years will be $1 billion a year. The silver lining, we are told, is that the number of government offices all over Nepal are estimated to go down from 3,500 to just 2000 as a result of the restructuring. I recall a visit to Nigeria when they were moving the capital to Abuja. Due to lack of housing for civil servants, many had to share rooms. There was an HIV epidemic in the Nigerian bureaucracy.

If we provide the same level of facilities for the political leadership that we have seen in Kathmandu since Nepal became a republic, the seven chief ministers and their cabinet will need a lot of vehicles, luxury bungalows, and an army of support staff. Some day they will retire and will want free housing. This could be a great opportunity to restore the old palaces, like Shital Niwas, all over Nepal that are in a dilapidated state today. The fort at Sindhuli Gadhi, the palace at Gorkha, the governor’s complex at Palpa could all soon have new VIP residents.

Federalism need not be an expensive luxury, it can be a catalyst for growth.

Anil Chitrakar is President of Siddharthinc

Read Also:

Read Also:

Power without Paisa, Om Astha Rai

The Great Leap, Anil Chitrakar

Making Nepal FDI Friendly, Shyamal K Shrestha

Tags: Federalism, decentralisation, provincial election, business, opportunity, local election, federal states, expenses, business growth

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