Retrofitting Nepal for future shocks

In the very first page of the first chapter of Nepal 2043: The Road to Prosperity are two maps. The first places Nepal right at the epicentre of Asia, and in the second the Kathmandu is at exactly the midpoint between Mumbai and Beijing.

With his trademark optimism, author Sujeev Shakya says Nepal is not land-locked but land-linked to three billion people in China and India. We just need those two economic engines to pull us in the same direction.

‘With China and India becoming the two largest economies in the world in the next two decades … Nepal is the most valuable piece of real estate in the world,’ Shakya writes.

For one thing, Nepal does not look beyond India and China for tourism — with the right policies it can attract millions of tourists just from those two countries.

Nepal is set to graduate from a low- to a middle-income country by 2026 and to a high-income country in 2043 — hence the name of the book. The year 2043 in the Bikram Sambat calendar is also 2100 — a new Nepali century.

The book delves into the past, present and future of Nepal and analyses enablers including hydropower, a fundamental transformation of which will drive the 2043 goal. The commoditisation of electricity will be the biggest transformation.

Nepal can deploy ‘Cyber Gurkhas’ to attract foreign investors with the management of data centres with climate friendly renewable energy. Access to technology such as precision agriculture, a data-driven approach to farming to improve food production, reduce environmental impact and enhance profitability could be Nepal’s strategy into 2043 and beyond.

‘Earlier, we needed ploughs and strong hands in agriculture. Now, you need a computer and strong fingers,” Shakya writes, citing a neighbour’s son who inspects his crops from drone cameras. A farmer in an Ilam teashop tells the author he asks AI questions in Nepali, and it answers promptly.

The biggest enabler of all is Nepal’s young demography with 62% of the population in the active 15-60 age bracket, while 28% are younger than 14. Nepal’s dependency ratio has dropped to the lowest in history with 100 Nepalis having to support 62 dependents.

But this demographic dividend window is closing. Nepal’s total fertility rate declined from 2.62% in 1981 to 0.92% in 2021 — below replacement level. We have less than 30 years left to make the best use of the youth, many of whom are currently studying and working abroad.

Nepal’s biggest resource, therefore, is its diaspora spread across the world who send home $20 billion a year. Migration is not just a necessity but an aspiration for many Nepalis, and they are an important source of contacts, investment and soft power.

This young and educated group has taken advantage of connectivity and digitisation in all arenas of national life. TikTok and Instagram have become e-commerce platforms, or mobile app-riven digital services. Nepal’s software companies exported over $1 billion worth of IT products last year.

Next we need a change in the bureaucratic mindset to eliminate paper and manual processes, which would also contribute to reducing corruption.

Shakya comes up with many revelations: 81% of Nepalis live in houses they own, much higher than most other South Asian countries which means higher disposable income. Nepal has the highest tax-to-GDP ratio in South Asia. The banking sector is twice the size of Bangladesh despite Nepal having just one-fifth of its population. In 2021, 12.62% of the population had demat accounts in Nepal, while India had only 5.32%. For every five male investors, there are four women in Nepal while it is 10:1 in India.

With such figures and prospects, how come Nepal just went through a violent uprising that took the shortest time to topple a democratically-elected government in modern history?

One early chapter of 2043 is actually dedicated to how Nepalis have always thrived on chaos. When people faced up to 20 hours of power cuts a day, people worked around the load-shedding schedule, woke up at ungodly hours to cook and stock up on inverters. They did not put up a fight, or even protest.

''Generally, Nepalis are used to taking things lying down, and perhaps this also needs to change,' says Shakya, writing that line before last month’s uprising. ‘On the one hand, some of these issues speak volumes about the average Nepali’s patience and perhaps optimism that things will change in the long run. On the other hand, one is also forced to wonder how much longer they will be able to put up with unfavourable conditions if things don’t change.’

It does seem Nepali had enough with corruption, governance failure and political apathy to the concerns of ordinary people.

The final chapter lists the non-negotiables to realise the 2043 Nepal Roadmap: democratic values and freedom of speech, a capitalist welfare state and socio-political transformation to tackle corruption and impunity.

The book notes, ‘Countries transitioning to democratic rule experienced a 20% increase in GDP over a 25 year period compared to what they would have achieved under authoritarian regimes. After the end of the Shah rule in 2006, Nepal’s GDP rose from US$10 billion to US$44 billion by 2024.’

The government’s Vision 2030 document projects Nepal’s GDP at US$100 billion, and the Vision 2043 estimates that it will be a US$423 billion economy with a per capita of US$12,100.

However, it will need more than optimism and practical action to make these projections real. China and India loom large throughout the book with examples of small city states like Singapore which have taken advantage of their strategic location.

Despite the tension between India and China, the two will have to collaborate given the inherent advantages. China has replaced the United States as India’s biggest trading partner.

Sujeev Shakya is a great admirer of former Singaporean diplomat and author Kishore Mahbubani, and he has written a blurb for the book. He quotes Mahbubani saying that for the past 2,000 years, apart from the last two hundred, Asian countries have dominated the world, and it is quite natural that the world’s economic centre is returning to Asia.

And Nepal is strategically placed to make the most of it because of its location between two of the world’s fastest growing economies. We just have to get our politics right, and have a strategy for equitable growth in the new Nepali century.