Investing in people

One of the greatest obstacles to better jobs and faster economic growth in Nepal today isn’t a shortage of natural resources, challenging geography, or limited access to finance. It is the unrealised potential of its people—not due to a lack of talent, resilience, or ambition, but because the country has not invested enough to unlock that potential.

Too many young Nepalis are growing up without the quality education, healthcare, and skills needed to succeed in the modern economy—especially those in poorer and more remote areas. As a result, much of Nepal’s human capital remains underdeveloped and underused, reinforcing inequality and holding back productivity, innovation, and inclusive growth.

This is not a challenge unique to Nepal. Around the world, successful economies are not those that only have abundant natural resources, but those that invest early and consistently in their people by ensuring access to quality education, healthcare, and nutrition. These are the building blocks for accumulating human capital.

When these foundations are strong, countries benefit from a more productive workforce, healthier communities, and faster economic growth. But when these investments are neglected, entire generations are left behind, trapped in cycles of low productivity and limited opportunity.

A new World Bank report—the Nepal Human Capital Review—finds that a child born in Nepal today is expected to achieve just 51% of their full productivity potential by age 18.

Limited access to quality education, healthcare, and nutrition means that half of a child’s productivity potential remains unrealised. This is more than a missed opportunity for the child— it represents a significant productivity loss for the country’s long-term growth.

Beneath this national average lie even deeper inequalities. Imagine two children born on the same day in 2020—one in the remote hills of Karnali, the other in the more urban and better-connected areas of Bagmati, near the capital. The child in Bagmati is far more likely to attend a school with better-trained teachers, benefit from better school infrastructure, and access qualified healthcare. The child in Karnali, by contrast, may never receive these basic services.

The statistics are striking—a child born in Karnali is expected to reach just 46% of their productivity potential, which is well below the average for lower-middle-income countries. Meanwhile, a child born in Bagmati is expected to reach 58% —a level comparable to upper-middle-income economies. These are not just numbers, they are life trajectories—shaped not by ability or ambition, but by the simple event of where a child is born and raised.

Even for those who manage to build their human capital, the labour market often fails to reward their efforts. Given the difficulties of finding a good job, a child born in Nepal today is expected to realise just 18% of their productivity potential—one of the lowest rates in the world. The reason is simple: there are too few quality jobs.

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Between 2010 and 2018, only four in ten new entrants to the working-age population were able to secure paid employment. Most jobs are informal, low-paid, and offer little in terms of security or career growth. The situation is especially challenging for young people—more than a third of those aged 15 to 24 are not in education, employment, or training. And for women, labour force participation remains stubbornly low at just 29%, about half the rate of men.

Nepal’s low levels of human capital—combined with the wide gap between the number of people seeking work and the availability of jobs—pose a serious threat to the country’s long-term growth and social inclusion.

INVESTING IN PEOPLE

To change the course of Nepal’s human capital trajectory and lay the foundation for a more prosperous future, public investments in education, health, and social protection must increase while ensuring that every rupee is spent effectively and reaches those most in need.

Investments must be targeted so that every child—regardless of where they are born—has access to early learning opportunities, qualified teachers, textbooks, nutritious meals, and basic health services. These are the corner stones to build human capital.

Just as important as building human capital is ensuring there are job opportunities. Over the next three decades, Nepal will need to create 6.5 million jobs just to keep up with its expanding working-age population. Therefore, the need to accelerate job creation at scale has never been more urgent. This requires more than business as usual. It calls for a fundamental shift from short-term fixes to long-term, strategic investments in people and systems.

Today, too many young people leave school without a clear path into the workforce—and that needs to change. Boosting youth employability demands stronger links between training and labour market needs, expanded reskilling programs, and developing public-private partnerships that deliver modern, relevant skills.

Young people must be equipped with quality technical and vocational education, digital skills, and lifelong learning opportunities—especially in underserved communities. These must become core elements of Nepal’s education system if the country is to be competitive in an increasingly fast-moving, technology-driven economy.

Local Employment Service Centers can also serve as key hubs for career guidance and job placement. At the same time, greater support for MSMEs, including through business incubators, can be a very important driver of job creation. Expanding access to affordable childcare is also critical to enable more women to enter and remain in the workforce.

The future of a Nepali child should not be determined by whether they are born in Karnali or Bagmati. This is a moment for bold action. Investing in people is not just the right thing to do, it is the smartest strategy for creating jobs, driving growth, and building a more inclusive economy where all young Nepalis can thrive.

David Sislen is the World Bank Country Division Director for Maldives, Nepal, and Sri Lanka.