Nepal in 2050

Where will Nepal be in 2050? It is only 25 years away. The country’s population will be peaking at 36 million, the poverty rate will drop to near zero. Maternal and child mortality rates will fall further.

Nepal will be generating up to 40,000MW of hydro and solar power, more than half of that for export. Upgraded highways will improve connectivity, railways will make transport cheaper. Pokhara and Birganj will only be two hours away from Kathmandu. Nijgad airport could be Nepal’s new aviation hub, reducing Kathmandu’s congestion.

Nepal will hitch its wagon to the engines of economic growth in India and China. Investment and job creation will reduce outmigration, Nepal's data centres will be powered with surplus electricity. Remote areas will prosper with high-value tourists.

That is if all goes well.

But if Nepal’s politics remains dysfunctional with incompetent leadership, then the country will muddle along as it is doing now.

Society will be more unequal, public discontent may boil over as politicians resort to faith to hide failures, the exodus abroad of youth will continue.

Climate breakdown will exacerbate these crises. Global average temperature will have risen to 2.7°C above pre-industrial levels (it is 1.1°C now). The remaining Himalayan icecap will shrink by half, glacial lakes will threaten valleys. The hydrology of rivers will change, reducing dry season flow. Severe and prolonged heat waves in the Tarai will force people to migrate back to the mountains.

In the final analysis, it all boils down to a political system that is more accountable, and displays more integrity and efficiency.

Mission 2050

· Melamchi Water Supply Project

· Pokhrara International Airport

· Bhairawa International Airport

· Upper Tama Kosi Hydroelectric Project

. Kathmandu-Tarai Expressway

What do these biggest infrastructure projects in Nepal have in common?

All ended up being more expensive than they should, all have been delayed and are not fully operational, two were badly damaged in climate-related disasters that should have been foreseen.

The $800 million Melamchi is Nepal’s most expensive infrastructure project to date. It took 30 years to build, but was nearly destroyed by a glacial debris flow in June 2021. The headworks need major repairs.

The 456MW Upper Tama Kosi was severely damaged by a rockfall and floods in last September’s floods. It is still not operating at full capacity, and other hydropower plants were damaged in recent glacial floods.

Pokhara and Bhairawa airports were supposed to be the new aviation gateways to Nepal to take the pressure off Kathmandu, and become game changers for tourism and pilgrimage. Nearly three years later, both handle domestic flights.

Poor and inadequate design, kickbacks on contracts, cost overruns, failure of diplomacy to get India’s nod on air routes, and lack of planning and marketing have made the airports a pair of white elephants.

Some of these setbacks can be blamed on natural calamities, but mostly it is political incompetence and greed, lack of accountability and poor implementation. That is no surprise, since these are the hallmarks of doing business in Nepal, often delaying projects, adding to the cost, and even when completed they are already outdated.

That is the story of the last 25 years, are the next 25 going to be any different? Not if governance does not improve.

“What we really need for the future is vision, idea, and understanding, and then the domestic capacity to implement them,” says infrastructure expert Surya Raj Acharya, who laments the total absence of technical and planning expertise.

“None of our national highways meet technical standards, our cities are unplanned. The priority was never on quality. Politicians sold us short-term infrastructure that have now become a barrier to prosperity,” he adds.

One silver lining has been private sector involvement in hydropower, and the energy strategy aims to generate 11,769MW by 2030. But hydropower is high-investment, high-risk due to climate breakdown, and ecologically damaging.

“Hydropower is a good example of how government incentives and public-private partnership can work wonders, although we now have to take climate change into account,” explains economist Kalpana Khanal of the Policy Research Institute.

She adds, “We now have to identify other key infrastructure areas that also enhance the growth of other sectors.”

The National Planning Commission’s periodic plans guide overall social and economic strategy for the country into the coming decade. Nepal’s current five-year plan (2024-2029) has set a target of 7.3% annual economic growth against the current 3.9%, $2,351 per capita income up from $1,456 at present, and poverty reduction to 12%.

The plan aims to export nearly half the hydropower generated by 2030, earning the country Rs41 billion annually. But there is no real coordination between line agencies, and bureaucratic lethargy leads to constant delays, says former member of the National Planning Commission (NPC) Min Bahadur Shahi.

“Development in Nepal is still very much synonymous with building roads and bridges, and infrastructure is rudimentary,” he says. “Elsewhere in the world, digital infrastructure and governance go hand in hand, we are far behind.”

The frustration of a man who served in the National Planning Commission is an indication where the problem lies: in actually executing plans and implementing strategies.

“We need to prioritise projects based on our geography, climate, societal needs,” Shahi continues. “We want to push Nijgad airport when we can’t even operate Pokhara and Bhairawa. Have we even studied potential air routes and needs of international carriers?”

TARGET PRACTICE

Export of hydropower, manpower and lately information technology are the mainstays of Nepal’s economy, and will carry the country to its graduation from Least Developed Country status to a developing country in November 2026, and hopefully to middle-income by 2030.

Nepal has an installed capacity of about 3,800MW, most of it from hydropower, and increased adoption of electric cars has reduced the import of petroleum products, decreasing the trade deficit with India. Meanwhile, Nepalis abroad sent home $11 billion in remittances last year, and at least $900 million in backend IT exports.

But demographer Yogendra B Gurung is not impressed: “Despite the reduction in the poverty rate, and our improving income status, life expectancy, income, even maternal and infant mortality are not on par with countries with similar economic status.”

He says relying on remittances is an unsustainable economic model, vulnerable to external factors and remittances are mostly spent on day-to-day needs, and not invested in productive sectors.

Remittance is credited with reducing poverty in Nepal which is down to 20.27% from 42% in 1990. Money sent home by workers abroad has allowed families to afford basic healthcare and education, in turn helping to reduce childhood malnutrition and maternal mortality while improving female literacy.

But the progress has stalled in recent years, and many doubt Nepal will meet its Sustainable Development Goals (SDGs) targets. The National Planning Commission has said Nepal is likely to achieve just 60% of the targets by 2030. Sex ratio at birth, which is 112 boys to 100 girls in Nepal in particular, is worrying, as it is much higher than the biological ratio of 105 to 100.

This is much more pronounced in Karnali, Sudurpaschim and Madhes Provinces which suffer from historical neglect. Despite a rise in female literacy, patriarchy is still deeply entrenched and the provinces are behind the rest of the country for gender equality, education, healthcare, nutrition and economic opportunities.

“Karnali is resource-rich, especially hydropower and the recent discovery of the methane gas, but inequality is much greater,” says Shahi, who is with the Karnali Integrated Rural Development and Research Centre (KIRDARC). “Federalism in Nepal is only on paper, we need a total structural reform to devolve political power to really bring about change.”

Despite limited resources, Nepal also suffers from wasteful investment as a result of politically (mis)guided decision-making, instead of people-centric plans and policies, says demographer Gurung. “People are overwhelmingly moving to the cities but our leaders are hell bent on building roads to every village and now there are empty schools in the mountains,” he adds.

Nepal needs data-driven planning but its long-term economic vision 2020-44 seems more of a wish-list than realistic goals, including average annual GDP growth of 10.5%, $12,000 per capita income and population under the absolute poverty line at 0.

Other goals include raising electricity generation capacity to 40,000MW, access to motor transport to 99%, life expectancy at birth to 80, maternal mortality down to 20% and literacy to 99% and 100% access to the internet, among others. Meanwhile, Nepal is committed to net-zero by 2045 and 100% renewable energy by 2050.

“Our planners have no idea what kind of infrastructure we need 20, 30 years down the line to sustain and accelerate growth. We need a big structural change in the political leadership, in technocratic planning, and for policy implementation,” says infrastructure expert Surya Raj Acharya.

Meeting such targets would require large investment, and it would be unwise to rely on remittances for the longer run, especially as Nepal’s demographic dividend will diminish as it turns into an aged society by 2065.

Reversing out migration requires a favourable investment climate so jobs are created. Good governance marked by accountability and transparency are the basic prerequisite for ease of doing business. But lack of rule of law and illicit funds put Nepal in the grey list of the Financial Action Task Force (FATF), the global money-laundering watchdog.

“Everything comes down to a political will. The established parties must realise that if they don’t perform, they will be replaced by alternatives,” says Kalpana Khanal. “In the meantime, we must engage the youth and find ways to retain them as well as attract the diaspora to invest in Nepal.”