Two weeks ago, Prime Minister KP Sharma Oli announced jubilantly on social media that Nepal had achieved a historic annual growth of 81.8% in exports. He was right. Nepal’s trade did take a great leap forward compared to last year. But the dramatic rise was mainly due to processed soya bean oil.&nbsp; However, Nepal does not produce the edible oil it exports. In fact, the soya and palm oil that make up 44% of total exports are imported from Southeast Asia and South America, and simply re-exported, mostly to India.&nbsp; Under the SAFTA (South Asian Free Trade Area) Agreement, Nepal can export products to India duty-free if it has at least 30% value-added. Nepal’s traders have taken advantage of SAFTA even though the edible oils they export do not reach that value addition threshold. “The 30% value addition requirement is often only on paper,” says former commerce secretary Purushottam Ojha. “It is clear that simply packaging edible oils in Nepal does not fulfil the terms of the trade agreement.” Prime Minister Oli is aware of this, and even called Nepal’s export figures “fake” at an earlier event. The government is relying on other iffy figures to suggest that Nepal’s economy is strong and getting stronger. For example, the value of imports rose by 13.25% in 2024-25 compared to the previous fiscal year.&nbsp; Some of it was due to a jump in electric vehicle imports worth Rs 31.76 billion, but mostly it was because more wholesale soya oil was imported to be re-packaged and sold in India. The very fact that the government boasts about increased imports is an indication of how much it relies on taxing them for revenue. Touting such trade figures cannot be the basis to claim an economic rebound.&nbsp; “A jump in the value of imports can be interpreted as an increase in purchasing power, but it is not evidence of a stronger economy,” says economist Keshav Acharya. “Even though imports have increased, Nepal's domestic production and productive capacity have not improved.” Nepal Rastra Bank's semi-annual economic activity study report shows that industrial production was down in the first six months of the last fiscal year. This despite an increase in the number of new industries registered and investment commitments. Out of the Rs70.2 billion proposed foreign investment, Nepal received only Rs17.9 billion last year.&nbsp; Meanwhile, the rate of capital formation was limited to 24% last year, which is lower than the year before, suggesting that new investment, job creation and economic expansion all declined. If domestic production does not improve in relation to this year’s inflated trade figures, the outflow will put pressure on foreign exchange reserves like it did three years ago. At that time, Nepal borrowed from the IMF under its Extended Credit Facility Program to kickstart the economy.&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/2025080710084_2cdaaa5795828c4a7de93a0604ba884ef0a8b8f24cccd939f6c24e279ab6058f.jpg" data-media-id="editor_0" data-image-id="2025080710084_2cdaaa5795828c4a7de93a0604ba884ef0a8b8f24cccd939f6c24e279ab6058f" data-rendition-name="original" width="1633" height="723" loading="lazy" alt="Nepal's bubble economy NT"> <figcaption>Source: NEPAL RASTRA BANK</figcaption> </figure>  The macroeconomy is on firm footing with foreign exchange reserves at a comfortable Rs2,520 billion in May, up 23% from last year. This was largely due to remittances, and partly due to a falling NPR exchange rate. Real estate transactions and the stock market index have also been climbing as a result of government policies to revive the sector.&nbsp; However, former executive director of Nepal Rastra Bank Nar Bahadur Thapa cautions: “This is not organic growth, it is the result of deliberate policy decisions to relax rules on real estate and stock markets transactions.” In reality, the sharp rise in land prices have increased the cost of production, and excessive monetisation of the real estate has become the main source of Nepal’s economic woes. The central bank has announced a slew of new policies, shifting the terms of loan repayment for industrialists and entrepreneurs, reducing interest rates, and injecting more working capital — all designed to inject adrenaline into the real estate and stock market sectors.&nbsp; When he was governor, Mahaprasad Adhikari made several financial reforms during the latter half of his tenure to stimulate the economy, including tightening credit flow.&nbsp; By the last fiscal year, additional financial reforms had resulted in a credit expansion rate of around 8%. As the pace of credit expansion slows, real estate prices have started to fall. This is actually beneficial to the economy, because it lays the foundation for improvements in land-related entrepreneurship, production, and the construction sector. Just because real estate and the stock market transactions increase, it does not indicate an economic turnaround — especially when manufacturing and productive sector continues to languish.&nbsp; “It is foolish to believe that real estate and the stock market have magically revived our economy. Agriculture employs more than half of the population, but it is in decline. Investment in the productive sector has not increased, and job creation has not increased.” Two years ago, Nepal’s industrialists, business leaders, and political leadership predicted a recession amidst a sluggish business, declining market demand, large-scale job loss, and a shrinking real estate and share market.&nbsp; Still, the economy grew by 3.36% in fiscal year 2023/24. In fact, Nepal’s economy has grown nominally over the last two decades even when all sectors of the economy are in decline.&nbsp; Says Keshav Acharya: “The growth in trade, real estate, and the stock market are bubbles. The real economy remains stagnant.”

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Nepal’s bubble economy

<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221110141148/636d01229c7e80680e0a3614jpeg.jpg" alt="" width="1050" height="637"/><figcaption></figcaption></figure>Nepal Rashtra Bank’s (NRB) tightness on share collateral, signs of a lack of liquidity and the opening up of other investment avenues post-lockdown are some of the factors behind the share market’s sharp decline of late.On Sunday, <a href="http://www.nepalstock.com/" target="_blank" rel="noopener noreferrer">Nepal Stock Exchange (Nepse)</a> recorded the highest-ever fall in its history after the market dropped by 5.03% in just the first two hours of trading. A 40-minute long circuit break was imposed, as 60 companies saw their share values decline by 10%, and the Nepse index to 2782.52 points.A slight recovery was soon posted, but Nepse still fell by 3.7% from the previous day, losing 108.26 points from 2928.8 points to an end-of-day total of 2811.16 points. By day’s end, 31 companies lost up to 10% value on their shares.Despite the fall in the index, there were as many if not more people trading shares and the volume of transactions were unaffected, with 23 million 79 thousand shares of 223 companies clocking in Rs11.24 billion in turnover.The current dip in the share market is in sharp contrast to the <a href="https://www.nepalitimes.com/latest/despite-politics-nepals-stock-market-is-bullish/" target="_blank" rel="noopener noreferrer">boom during the lockdowns and prohibitory orders</a> when other investment sectors remained shut, allowing big and small investors to trade from home with the online trading system flourishing unabated.Bank interest rates also fell as the investment sector shrunk during the closures. As demand for credit in other sectors began to decline, banks also increased their investments in equity securities. As a result, the stock market traded at a record high with a turnover of Rs19.55 billion and Rs21.64 billion on 14 May and 15 July respectively.However, since then with the reopening of other sectors, the demand for bank loans has increased. There are indications that the lack of investment capital will be repeated. As such, banks are preparing to raise interest rates.The share market’s decline has been particularly concerning over the last week, falling from 3044 points to 2817 in five days. This has resulted in a loss of Rs1.5 trillion, down to Rs39.44 trillion on Sunday from last week’s Rs40.89 trillion.<figure><img src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221110141148/636d01249c7e80680e0a3615jpeg.jpg" alt="" width="623" height="351"><figcaption></figcaption></figure>Sunday’s fallout also prompted the Capital Market Reform Struggle Committee, led by investor Ram Krishna Dhakal, to demand the resignation of NRB governor Maha Prasad Adhikari for activities that have negatively influenced the share market.The committee has put forward 15-point demands including the limit of Rs120 million on margin loans brought by the central bank through monitory policy to be scrapped, the cap on dividends distributed by microfinance companies to be removed and the provisioning be modified.As per the NRB’s new stricter monetary policy, banks and financial institutions are allowed to give a maximum loan of Rs40 million to an individual or institution on the security of shares. Similarly, an investor can take a loan of only Rs120 million by pledging shares.Read also: <a href="https://www.nepalitimes.com/latest/instability-to-cost-nepal-dear-in-2021/" target="_blank" rel="noopener noreferrer">Instability to cost Nepal dear in 2021</a>, Ramesh KumarThe NRB didn’t only tighten its monetary policy, but all subordinate banks were also placed under strict restrictions, effectively banning them from share trading.To be clear, the NRB’s austere policies have caused the market correction by dislodging the confidence of large and institutionalised share traders, says share market analyst Mukti Aryal.The <a href="https://www.nepalitimes.com/here-now/insider-trading-taints-nepal-capital-market/" target="_blank" rel="noopener noreferrer">Sarbottam Cement share scandal</a>, in which Nepal Securities Board Chairperson Bhishma Raj Dhungana and Nepse CEO Chandra Singh Saud engaged in insider trading on IPOs, had recently dented confidence in the fledgling stock market.But the only way forward is for the NRB to examine its restrictive policies, adds Aryal: “The tightening of stock pledges is the chief reason for the market’s decline. Pledging one’s own assets as securities for trading should not be restricted.”However, instead of agitating against the regulatory bodies, investors themselves must adopt careful share-trading practices, says a share broker, adding that it is natural for the market to fall after being propped up by companies that very recently had bad portfolios.“If investors had invested in companies with solid portfolios, none of this would be happening,” he says. “Instead of investing smartly in profitable companies, investors hedged their bets on hydropower projects, development banks and finance, following the market rumours rather than prudent investment.”Translated by Kaustubh Dhital from the <a href="https://www.himalkhabar.com/news/125732?fbclid=IwAR1n22ltLRWRA6Yi8Lg23aGzl8ZLzgKvIlBx_UTy1R_3m9GZlgogZ9Y4F80" target="_blank" rel="noopener noreferrer">Nepali language original</a> in Himal Khabar.

Inside Nepal’s biggest stock market tumble

<img width="1508" height="900" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221110141124/636cfbb39c7e80680e0a0b49jpeg.jpg" alt=""/>The heads of the Nepal Stock Exchange (Nepse) and Securities Board of Nepal (SEBON) as well brokers and industrialists have been found to have profited from insider training and conflict of interest, eroding the <a href="https://www.nepalitimes.com/latest/despite-politics-nepals-stock-market-is-bullish/" target="_blank" rel="noopener noreferrer">public’s trust in the country’s stock market</a>.   Documents show that they were engaged in ‘front running’ in contravention of existing rules governing the role of regulators and brokers in stock valuation and transactions. An investigation by <a href="https://www.himalkhabar.com/news/125318">Himal Khabar</a> this week found Nepse CEO Chandra Singh Saud and SEBON Chair Bhishma Raj Dhungana bought shares for family members in Sarbottam Cement at far lower prices just before its Initial Public offering (IPO). The board of directors of Sarbottam Cement decided to sell 6 million shares in the company through a book building process. The shares were valued at Rs750 per unit to raise Rs4.65 billion, of which only 12.9% were included in the initial public offering.  However, many of the shares were sold pre-IPO for less than Rs250 per unit even before the public offering, and others are believed to have been given for free as ‘presents’ to important people. Benefiting were close family members of SEBON’s Chair Dhungana, Nepse CEO Saud, as well as Global IME Capital which was handling Sarbottam’s IPO. <img width="2284" height="1512" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221110141124/636cfbb69c7e80680e0a0b4ajpeg.jpg" alt="">Says share market expert Rabindra Bhattarai: “This is a clear case of an attempt by insiders to unethically influence the market price of a company offering premium shares.”Global IME Capital’s parent company Global IME Bank is headed by Chandra Dhakal, who is vice-chair of FNCCI and is also a member of SEBON. Dhakal’s brother has 30% share in an investment company that bought some of the shares. Chandra Dhakal therefore had a conflict of interest in being in a position to be the regulator in the sale of investment vehicles in a company that his family had invested in. Documents show that Saud and Dhungana also used their positions to leverage cheap purchases of the shares in the cement company, while Sarbottam benefited by getting permission to enter the share market, illegally influencing the regulators’ decision-making. In the eyes of the law, this is equivalent to corruption and considered a crime.  <img width="1028" height="718" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221110141124/636cfbba9c7e80680e0a0b4bjpeg.jpg" alt="">“For a CEO of the Stock Exchange or its employees to use information about an IPO to personally buy shares is a direct and serious conflict of interest,” explains capital market expert Mukti Aryal. “Buying shares in a company that is going to be traded on its own platform opens up the possibility of share price manipulation. In a case like this the SEBON official has to declare a conflict of interest and step down.”Front running is a form of insider trading where those with knowledge of a company’s share value use it to make a personal profit at the expense of the public. For example, it is ‘front running’ when a stockbroker receives customer orders to purchase a large stock in a company, but instead speculates the value of the shares and buys or sells off shares for themselves accordingly. Such actions are not just unethical, but can even be considered a financial crime. Nepal’s Securities Act 2007 Clause 91 codifies into law measures against front running, prohibiting SEBON staff from divulging and profiting off any inside information received by their position. Regulatory authorities are also not allowed to be in contact with company executives, founders and managers or exchange any benefits with them.  <img width="2288" height="482" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221110141124/636cfbbd9c7e80680e0a0b4cjpeg.jpg" alt=""><a href="https://www.himalkhabar.com/news/125244">Nepse CEO Saud told Himal Khabar</a> he did nothing wrong, and admitted that he bought shares in Sarbottam at Rs250 per unit in the name of his wife, Sushila Kumari Bohara, but only after the cement company’s book building process had started. “It is only prohibited to buy and sell in the secondary market, there are no restrictions on buying shares in a company’s initial public offering,” Aryal told the magazine.However, Saud has been accused of purchasing the shares at a price lower than the company’s book-building, or share price evaluation.  <figure><img width="2000" height="1026" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221110141124/636cfbbf9c7e80680e0a0b4djpeg.jpg" alt=""><figcaption>Nepse CEO Chandra Singh Saud.</figcaption></figure>Companies that are going public must disclose all operations to regulators to ensure market transparency, but in no way are regulator officials, investment executives, brokers, company employees and others with an inside track allowed to enrich themselves using the company’s open books. Similarly, the investigation showed that SEBON chair Bhisma Raj Dhungana had also bought 11,992 shares in the name of his US-based daughter, Rebika Dhungana, in Sarbottam Cement before its book building process had started. SEBON’s Code of Ethics bars the board’s members and chair and their families from engaging in any transaction from which they can financially benefit.“Yes, my daughter sent me money from the United States to buy the shares, and yes, they are her shares,” Dhungana admitted. “Just because I am the chair of SEBON does not mean the law bars my married daughter from buying shares from any company she wants.”Dhungana was formerly with Nepal Rastra Bank, and is believed to have been nominated for the four-year term in SEBON at the recommendation of President Bidya Devi Bhandari. <figure><img width="1604" height="860" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221110141124/636cfbc39c7e80680e0a0b4ejpeg.jpg" alt=""><figcaption>SEBON Chair Bhishma Raj Dhungana.</figcaption></figure><a href="https://www.himalkhabar.com/news/125258">An expert in share market regulations told Himal Khabar</a>: “This is a straightforward case of insider trading. There is no question about it.”Sarbottam Cement had signed an agreement with Global IME Capital to handle the IPO in March in the presence of SEBON officials, but the process has been delayed till later this month. Nepal’s manufacturing companies, especially in the construction and hydropower sector are currently riding a wave of market confidence. Another compnay, Shivam Cement, recently went public clocking a similarly strong stock market performance. The revelation of insider trading has been greeted by outrage on Nepal’s social media, and is likely to erode people’s growing trust in the stock exchange, with many commentators and financial analysts equating the secondary market with skulduggery, insider trading and outright theft.‘Are board members allowing suspicious companies to release shares under the temptation of illicit rewards?’ asked one social media post. Another went: ‘Is the share distribution process transparent?’ Yet another said: ‘Have finance bosses, chiefs and sales executives rigged the process to earn favourable shares for themselves?’ The share market had been anticipating a surge, riding a wave of investment interest of the Nepali public in the manufacturing and construction sectors. But the reports of insider trading confirm the public’s suspicions of hanky-panky, and are expected to dampen the stock market.  Moreover, moving forward, companies wishing to list their IPOs via book building will be cautious of possible behind-the-scenes dealings.The irregularity in Sarbottam Cement share offering is not the first of its kind, with the Securities Act 2007 violated previously.  In 2014, investors at Citizens Investment and Employees Provident Funds were caught exchanging investment with the Upper Tama Kosi Hydropower with shares for themselves in return. The regulations were subsequently overhauled and loopholes plugged.The Upper Tama Kosi and Sarbottam Cement cases are similar in the sense that they were both examples of graft, wherein two parties are believed to have exchanged confidential information for personal profit. Given the impunity that is rife in Nepal’s political and business spheres, the Sarbottam issue will further damage the reputation, trust and transparency of the share market, hurting an already moribund economy.Stock exchange legal expert Amrit Kharel is clear about the rules: “Three generations of the family members of a person with inside information about an initial public offering are barred from benefiting from any transaction, It is not just unethical, it is considered insider trading. And if any member of staff of SEBON is found to be violating this, they are liable to prosecution.”Links to Himal Khabar series on this subject:<a href="https://www.himalkhabar.com/news/125318">https://www.himalkhabar.com/news/125318</a><a href="https://www.himalkhabar.com/news/125244">https://www.himalkhabar.com/news/125244</a><a href="https://www.himalkhabar.com/news/125258">https://www.himalkhabar.com/news/125258</a>Translated by Kaustubh Dhital

Insider trading taints Nepal capital market

<figure><img width="620" height="366" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221110111148/636cd7bc9c7e80680e092dfdjpeg.jpg" alt=""/><figcaption></figcaption></figure>Aside from second-guessing what will happen in the restored Parliament on Sunday, the major past-time of urban Nepalis these days is to speculate about the country’s violatile stock market.Dring the past six months, the <a href="http://www.nepalstock.com/" target="_blank" rel="noopener noreferrer">Nepali Stock Market (NEPSE)</a> has soared, which immediately begs the question: is a fall imminent?The NEPSE Index is at a record high market capitalisation, which is the total value of shares listed in the stock market. Daily turnovers have started crossing the Rs10 billion mark, invetors seem to be raking it in.All this has happened at a time when the <a href="https://www.nepalitimes.com/latest/instability-to-cost-nepal-dear-in-2021/" target="_blank" rel="noopener noreferrer">economy is being battered by the impact of the pandemic</a>, which has led to heated debates over whether the market is in a bubble and likely to crash, bringing ordinate ionvestors down with it.  Current highs are the combination of several factors:<ul><li>Low interest rate (see figure 1)</li><li>High liquidity in the banking system</li><li>Dematerialisation (conversion of physical certificates to electronic units) of shares</li><li>Restrictionof ‘kitta-kaat’ in real estate</li><li>Fear of missing out (FOMO)</li></ul>Low share prices between 2017-2019 have been attributed to the appointment of <a href="https://www.nepalitimes.com/banner/calendar-of-economic-change/" target="_blank" rel="noopener noreferrer">Yubraj Khatiwada as finance minister</a>. He famously (or infamously for investors) once remarked that investing in stocks was “not productive”. <figure><img width="953" height="560" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221110111148/636cd7bd9c7e80680e092dfejpeg.jpg" alt=""><figcaption> </figcaption></figure>One factor that has gone relatively unnoticed but has been a game-changer is the advent of ‘online trading’. The possibility to make transactions through the online banking system has ushered in a new breed of investors. Online trading has made the Nepali stock market easily accessible to the public, who can now trade from their living room instead of going to a broker office or bank to make a payment.This trend was starting to be reflected in the data before Covid-19 gripped the country (figure 2). From October 2019 to February 2020, the number of monthly share transactions doubled from an average of 200,000 to 400,000, which pushed the NEPSE Index to the 1,600s, despite relatively higher interest rate hovering above 11%. <figure><img width="961" height="541" src="https://superdesk-pro-c.s3.amazonaws.com/sd-nepalitimes/20221110111148/636cd7bf9c7e80680e092dffjpeg.jpg" alt=""><figcaption> </figcaption></figure>Following Covid-19 restrictions, the number of transactions further increased and reached a whopping 1.1 million per month in recent months. This reflects the unprecedented entry of retail investors who, with a click of a mouse, can invest money that otherwise would be sitting idle, earning savings account interest rates. This increased participation and diversification of the investor base is also reflected by the data on stock market penetration. DEMAT accounts have increased from 800,000 in mid-July 2017 to 1.4 million in mid-July 2019, and is currently estimated at 2.5 million -- about 8% of Nepal’s total population. More than 1.5 million Nepalis applied for the recent IPO of an infrastructure finance company. Compare this number with India, where around 2% of the country’s population invest in the stock market, while in China this number is estimated to be around 7%. But, online trading also brings a host of new challenges. Asymmetric information, poor advisory services and buying shares based on rumours are big concerns. Investors can lose money in the share market if they overpaid for stock or if their investment horizon is not long enough. However, by not investing they can also ‘lose’ potential gains. So, investors need to understand and be aware of cognitive biases that limit investing success. It is as much about human psychology as it is about finance and economics. The importance of diversifying across different companies and sectors, having a long-term investment horizon and personal finance management are even more important these days, but these are severely lacking in Nepal. An investor’s main motto always has to be: buy a diversified set of companies, invest regularly, keep track of the company’s financials and hold for a long period of time. Crucial reforms now await Nepal’s stock market, these can include: <ul><li>Increased participation of companies in manufacturing, agribusiness, etc</li> <li>Strong regulation on insider trading</li> <li>Better trade settlement systems</li> <li>Increasing the limitation of 50 brokers</li> <li>Creation of index funds and exchange traded funds (ETFs)</li> </ul>The NEPSE Index jumped more than 100% in the past year. You could argue that its current level is a bit high, but just because it has gone up by 100% it does not mean that it is overvalued, and vice versa. The cumulative annual growth rate of the NEPSE between 2001 and 2021 is around 12%, which is in line with the 10% return of the S&amp;P 500 (which tracks 500 of the largest US companies) in the same period. During these 20 years, there have also been periods where the NEPSE fell as much as 75% (between August 2008 and June 2011) and soared over 500% (between June 2011 to July 2016). Stock markets are cyclical by nature. Corrections, and subsequent rises, are bound to happen. In this apparently chaotic environment of ups and downs, one thing is here to stay: a fundamental shift and dynamism thanks to a new breed of investors trading online. This will have short-term disruptions, but it is likely to stabilise the Nepali capital market for years to come. Santosh Pokharel, CFA works in development sector. Sudyumna Dahal is Doctoral candidate at CAMA, <a href="https://cama.crawford.anu.edu.au/">Australian National University.</a>

Despite politics, Nepal’s stock market is bullish

Nepal has shut down dozens of social media platforms in a move that is widely seen as an effort to tax the revenue they generate in the country, and to control content critical of government. The sites were blocked as of midnight on Thursday, 4 September and affects all Meta products including WhatsApp and Messenger, Threads, and others. Although YouTube, Google and X are also on the government’s list, they were still working as of Friday midday.&nbsp; The government says it took the action after repeated warnings to the platforms to open offices in Nepal, a Cabinet decision last month setting a deadline, as well as a 17 August Supreme Court ruling also requiring them to register and pay requisite taxes. However, the Bill cited in the ban, ‘The Operation, Use, and Regulation of Social Media in Nepal’ has not yet been passed by Parliament. Some social media platforms which were already paying taxes in Nepal even though they are not officially registered, have also been blocked. The move is the latest in <a href="https://nepalitimes.com/news/big-beautiful-bills" target="_blank">a slew of draft legislations</a> designed to undermine Nepal’s open society. A Bill amending the Print and Publications Act would allow district bureaucrats to shut down media. Another draft Bill would allow political appointees to head a new Media Council with the power to revoke the licenses of journalists.&nbsp; A counter-intelligence Bill would let just about anyone in government to arbitrarily tap phones, read emails and trail citizens. On Wednesday the government announced new immigration requirements that would allow it to track the movement of all foreigners in the country. Yet another draft Bill has been set to Parliament to dissolve the <a href="https://archive.nepalitimes.com/news.php?id=10675" target="_blank">Social Welfare Council (SWC)</a> and move registration and monitoring of non-governmental organisations, nonprofits and charities to the Ministry of Social Welfare. Seen in this light, the blockage of social media platforms this week is seen as the latest government attempt to constrict freedom of press. Nepal is one of the few remaining open societies in Asia, and now appears to be drifting towards authoritarianism. The government’s sudden shutdown of social media has been greeted with howls of protest on platforms that still remain open, like Viber and TikTok, as well as in Nepal’s mainstream press. Even senior members of the ruling UML-NC coalition have sharply criticised the move, asking if the government is trying to “turn Nepal into North Korea”.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/2025090508098_a2ab330e403e8418a7006cd5e915607382628dd6984524332bf7b99c74743656.jpg" data-media-id="editor_2" data-image-id="2025090508098_a2ab330e403e8418a7006cd5e915607382628dd6984524332bf7b99c74743656" data-rendition-name="original" width="4280" height="5187" loading="lazy" alt="social media ban in Nepal"> </figure>  The Regional Director of the New York-based Committee to Protect Journalists (CPJ) Beh Lih Yi said in a statement: ‘Nepal’s sweeping ban on social media sets a dangerous precedent for press freedom. Blocking online news platforms vital to journalists will undermine reporting and the public’s right to information. The government must immediately rescind this order and restore access to social media platforms, which are essential tools for exercising press freedom.’ Besides undermining press freedom, blocking social media platforms will also hurt commerce and the economy since so many small and medium business trade through Instagram, Facebook and other platforms. Nepal’s vibrant social media has also been a boost or citizens to assert identity, build solidarity against injustice and play an adversarial role when the mainstream media does not do it. Social media platforms have also become the tenuous link for Nepali families scattered across the world to keep in touch with each other — its importance growing with the increasing size of the diaspora. The government wants social media platforms to register, pay taxes and remove posts on their sites that ‘undermine the national interest and Nepal’s territorial integrity, disturb social and religious harmony’.&nbsp; In response, rights activists have said while there is need for the government to regulate extreme content and hate speech, officials appear to be more intent on clamping down on free speech and trying to force platforms to share the revenue. On Friday, the government had allowed WhatsApp back online, but there were reports that it had instructed the Nepal Telecommunication Authority (NTA) to instruct mobile and internet service providers to block by Friday night all platforms, including Facebook, Instagram, Messenger, WhatsApp, X (Twitter), YouTube, LinkedIn, Reddit, Threads, Snapchat, Pinterest, Signal, Clubhouse, Rumble.&nbsp; Platforms that have registered and are allowed include TikTok, Viber, Nimbuzz, Popo Live, WeTalk, Global Diary and the Nepali portal Hamro Patro. TikTok was banned last year for ‘disturbing social harmony’ and it was lifted after the platform registered its office in Nepal. But even while it was banned, many users simply switched to VPN. Telegram was also banned for ‘financial crimes’ and it has since also been allowed back. NTA officials confirmed that some Asia-Pacific regional offices of platforms, including Meta had been in touch overnight inquiring about the registration process.&nbsp; Nepal is not alone in regulating social media. China bans most Western platforms, Russia and Turkey regulate their and require platforms to locate their data servers in the country. Gulf countries allow social media but keep a tight control on dissent.&nbsp; Experts have said even the government will not dare close down YouTube since so many Nepali individuals and companies make money with posts on that platform, and closing it would also impact on Google and Gmail. Facebook had also just launched a monetisation scheme for videos and reels, and Nepalis uploading content would lose revenue.&nbsp; Blocking the platforms has already hit content creators, influencers and cut small businesses from reaching customers. A survey of social media use in Nepal by Sharecast Initiative showed that 94% of those with smart phones used YouTube, followed by Facebook (92%) while TikTok was in the 50-60% range. X and Instagram were in the single digits. A YouTube ban will also hurt the mainstream media since up to 20% of the revenue of Nepal’s main tv channels came through YouTube. Some 11.1 million Nepalis watch YouTube content every day, the survey showed. ‘For global giants like Meta or Google, Nepal is a small market, and they may not even flinch — but for millions of Nepalis, these platforms are central to daily life, livelihoods, and connections across the world,’ wrote AI consultant Naresh Newar in a LinkedIn post. Some experts said the government’s sweeping ban on social media networks was untenable and the government would be forced to rollback sooner or later. Said editor Shiva Gaunle: “The platforms had given citizens a voice and broken the monopoly of the government, legislators, the courts and journalists over public opinion. This is an effort to reassert that monopoly, but Nepal can never be turned into a North Korea.”

Protest grows against Nepal’s social media ban

As arson and violence swept Nepal’s capital, Prime Minister K P Oli resigned on Tuesday. However, this did not stop angry protesters from setting fire to the Parliament building, homes of ministers, hotels and other property. Singha Darbar is also in flames. Meanwhile, former Prime Minister Sher Bahadur Deuba and his wife, Foreign Minister Arzu Rana Deuba were also attacked in their house. As protests spread, Police withdrew from guarding official buildings, and thousands of protesters entered the federal government secretariat at Singha Darbar, ransacking and setting fire to buildings.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250909120916_a86227e5556356134565053699ed9599f8b268d0c22815fa94410ffac52a49fa.jpg" data-media-id="editor_0" data-image-id="20250909120916_a86227e5556356134565053699ed9599f8b268d0c22815fa94410ffac52a49fa" data-rendition-name="original" width="1440" height="1042" loading="lazy" alt="de-escalation"> </figure>   <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250909120916_995f368b8c372bf2f99b6a9c25c2816e941413b3c19d0f94458c07604391b039.jpg" data-media-id="editor_1" data-image-id="20250909120916_995f368b8c372bf2f99b6a9c25c2816e941413b3c19d0f94458c07604391b039" data-rendition-name="original" width="1440" height="1042" loading="lazy" alt="Kathmandu protests"> </figure>  Kathmandu Valley was shrouded in smoke under heavy monsoon clouds on Tuesday afternoon with an acrid smell covering the capital. The minister’s quarters in Bhaisepati were set on fire, the convention centre in Godavari, the Hilton Hotel and Chhaya Centre in Thamel, and the headquarters of all three main parties were also burning.&nbsp; The widespread arson was sparked by the <a href="https://nepalitimes.com/news/nepal-s-8-september-massacre">killing of at least 19 young protesters</a> as they tried to storm Parliament on Monday. A peaceful rally by youth against corruption and nepotism by Nepal’s GenZ movement in Kathmandu escalated after the killings. With the prime minister out of the picture, the government not visible and the security forces in retreat, protesters have had the run of the three cities of Kathmandu Valley.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250909120916_207c3c25f8aa9bd0934b8c98ccee1221e3a062815cfcb1e211deddb4dccd6511.jpg" data-media-id="editor_3" data-image-id="20250909120916_207c3c25f8aa9bd0934b8c98ccee1221e3a062815cfcb1e211deddb4dccd6511" data-rendition-name="original" width="1440" height="1042" loading="lazy" alt="Kathmandu protests"> </figure>   <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250909120920_bb2c0f273dc95ef62c58b5f55045c58cbddc4b3b8f619e938be76ef2cda69468.jpg" data-media-id="editor_4" data-image-id="20250909120920_bb2c0f273dc95ef62c58b5f55045c58cbddc4b3b8f619e938be76ef2cda69468" data-rendition-name="original" width="1440" height="1042" loading="lazy" alt="Kathmandu protests"> </figure>  Nepal’s celebrity cricket captain Paras Khadka has appealed to to call off the agitation, saying: “The prime minister you wanted to kneel has already knelt.” Former prime minister and Maoist ideologue Baburam Bhattarai called for the formation of an interim government that included some young student leaders. He called for the agitating groups to find a solution from within the Constitution and a directly elected presidential system. All members of the opposition RPP and the RSP have resigned from Parliament, while party supporters entered the Nakkhu Jail and freed the RSP leader Rabi Lamichhane who had been detained for the past 8 months by the Oli government on charges of embezzlement. Some of the protesters also want an end to federalism, which was also the demand of opposition parties like the RSP and the pro-monarchist RPP. Chief Minister Satish Kumar Singh has stepped down. Many of the protesters have voiced support for Kathmandu Mayor Balen Shah, who &nbsp;posted on Facebook calling on the GenZ protesters to “be ready to talk to the Army … but only after Parliament has been dissolved”. Army Chief Ashok Raj Sigdel and the heads of security agencies have called on the protesting groups to excercise restraint and to find a solution through talks.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250909120912_cd93a827631d987ee52723aa270faf45aa42e4322eb8f06304b28215e3cea28a.jpg" data-media-id="editor_5" data-image-id="20250909120912_cd93a827631d987ee52723aa270faf45aa42e4322eb8f06304b28215e3cea28a" data-rendition-name="original" width="1440" height="1042" loading="lazy" alt="Kathmandu protests"> </figure>  Although the <a href="https://nepalitimes.com/news/nepal-s-gen-z-protest-turns-deadly">protests were sparked by the GenZ campaigners</a>, disparate groups, including monarchists, anti-federalists, disgruntled Maoists, dissidents from the mainstream parties, and others have joined the protests. But one thing that united them is extreme frustration with the mainstream parties and their leaders past and present who have taken turns running and ruining the country.

Kathmandu burns despite PM resignation

Many had never heard of <a href="https://www.haminepal.org/">Hami Nepal</a>, the organisation that is part of the GenZ movement that did not just topple the government this week, but <a href="https://nepalitimes.com/news/what-next-nepal">pushed Nepal’s political system into new, uncharted territory</a>. It was part of an organic coming together of various youth groups fed up with Nepal’s corruption, mismanagement and lack of accountability. Hami Nepal and its GenZ comrades are now part of the negotiations with the Army to form an interim government. Hami Nepal is a non-profit dedicated to supporting communities and individuals in need, guided by its motto ‘For the People, By the People’. Its core mission is to assist individuals and communities in need, particularly during emergencies and crises, with a focus on directly connecting donors with recipients, and delivering aid efficiently and transparently. It was set up after the 2015 earthquake, but was formally registered and gained recognition in 2020 during the Covid-19 pandemic. Hami Nepal is led by 36-year-old civic activist Sudan Gurung, and mentored by renowned ophthalmologist Sanduk Ruit. Gurung started the organisation after he lost his own son in the 2015 earthquake, and now has over hundreds of thousands of members, growing by the hour.&nbsp;  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250911090920_34e57abe26d5b243a6c2d0c01215d2e7b55c7b36a3c13b9f82d421b9588482b9.jpg" data-media-id="editor_2" data-image-id="20250911090920_34e57abe26d5b243a6c2d0c01215d2e7b55c7b36a3c13b9f82d421b9588482b9" data-rendition-name="original" width="707" height="647" loading="lazy" alt="Who, or what, is Hami Nepal?"> </figure>  Leading up to the events this week, it played a central role in guiding the demonstrations, using its Instagram and Discord platforms to circulate protest information and share guidelines. Other GenZ groups used their own WhatsApp groups and other fora.&nbsp; Among the 20 or so volunteers is Ronesh Pradhan, who spoke to <a href="https://nepalitimes.com/news/nepal-s-gen-z-protest-turns-deadly">Nepali Times on 8 September </a>morning during the GenZ rally, before the violence escalated.&nbsp; “The voices of young people matter. We can’t keep being ruled by the same old men,” Pradhan said. “Our generation is the future and if there are older leaders in government, they need to be competent and accountable. We are ready to lead this country forward.” Hami Nepal’s earliest visible campaigns include donating more than 400 blankets to Bir Hospital’s Covid unit in 2022, creating a plasma and oxygen bank during the pandemic, and distributing school jackets to children in rural districts. More recently, it mounted a relief effort in response to the 2023 Jajarkot earthquake, reaching over 13,000 families with shelter, food, and medical support. The organisation was also associated with the two-month ‘Save Ghopa’ campaign, demanding effective and smooth administration of the BPKIHS (B P Koirala Institute of Health Sciences) in Dharan. The organisation was also actively engaged in providing rescue and relief during the Kagbeni and Sindhupalchok floods this year. It even sent aid to Turkey after its 2023 earthquake. After the Kavre floods last year, Hami Nepal donated solar lights. Funding for Hami Nepal comes directly from public donations, with a policy of channeling 100% of received funds for aid distribution. Volunteers self-finance administrative costs, and the group publishes detailed expenditure figures, regularly sharing updates and transparency reports through their social media and website which it launched at its Annual General Meeting in Bhaktapur last year.  <figure> <img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250911090920_cd40c472bd7e06cc038a2d77a431cba777b6f53e4374a0216c9af2c4feb56c88.jpg" data-media-id="editor_4" data-image-id="20250911090920_cd40c472bd7e06cc038a2d77a431cba777b6f53e4374a0216c9af2c4feb56c88" data-rendition-name="original" width="1080" height="719" loading="lazy" alt="Who, or what, is Hami Nepal?"> </figure>  Following the death of Nepali student Prakriti Lamsal at KIIT University in India earlier this year, Hami Nepal advocated for justice using its Instagram account, raising concern about the safety of Nepali students. Its advocacy platform started with rescue and relief, and Hami Nepal managed to develop a track record for efficient campaigns and transparency in Nepal’s humanitarian landscape. But its work pushed the group to realise that there was a deeper malaise in Nepali society. Its #youthsagainstcorruption campaign on social media platforms gained rapid momentum, and that led to the rally on 8 September. Read also: <a href="https://nepalitimes.com/news/nepal-s-8-september-massacre">Nepal’s 8 September massacre</a>, Shristi Karki The international #Nepobaby trend on TikTok propelled the rally even more, and young Nepalis used it to expose the scions of powerful politicians and politically-connected influencers who were exhibiting their flashy lifestyles on social media while citizens struggled with joblessness, corruption and poor service delivery. Public anger reached a tipping point when the UML-NC coalition led by Prime Minister K P Oli announced a sweeping ban on major social media platforms citing tax revenue, cyber security, and lack of content moderation. Netizens, civil society and media, however, saw it as the latest authoritarian attempt by the government to clamp down on free speech, increase surveillance of citizens and constrict Nepal’s open society. Susmita Khadka, 22, told us at the rally: “Politics is everywhere. Gen Z has the most platforms, and we want a revolution.” Leading up to 8 September, the GenZ movement disseminated information and reassured participants with volunteers readily available for help, medical support, and assistance. It put up a protest support helpline so that students needing assistance could get help. As the protests intensified, leaving at least 20 dead outside Parliament, and forcing Prime Minister K P Oli to resign, Hami Nepal shifted into a mediator role, engaging in talks with officials and seeking GenZ’s views on future leadership.&nbsp; Influencers like TikToker Nimesh Shrestha publicly backed the group, amplifying their voice in ongoing negotiations with the Nepal Army alongside other GenZ representatives. However, as the protests escalated on 9 September, <a href="https://nepalitimes.com/news/kathmandu-burns-despite-pm-resignation">resulting in massive arson and vandalism of public and private property</a>, many GenZ activists disavowed association with the attackers, saying their movement had been infiltrated. The group backtracked, with Gurung saying he was not the leader of the protests.&nbsp; Meanwhile, others accused Hami Nepal for singlehandedly speaking with the Army chief, and said that they did not represent GenZ’s collective voice. Most GenZ supporters backed <a href="https://archive.nepalitimes.com/regular-columns/Legalese/justice-in-chief,804">Former Chief Justice Sushila Karki</a> as their candidate for interim prime minister in an online group. Not everyone in the GenZ movement agrees with that choice, with support for Kathmandu Mayor Balen Shah, even though he has endorsed Karki’s appointment. Dharan Mayor Harka Sampang rushed to Kathmandu on Wednesday to push his own candidacy. Hami Nepal has supported Balen Shah to lead the country for the next five years, not just during the interim period, and have called on the public to share their posts supporting Shah to amplify the message. With the old guard gone, there is a power vacuum with multiple actors with competing interests to fill it. GenZ’s youth-led activism has brought new energy for political reform, but its real test begins now — whether it can unite Hami Nepal and other sections to negotiate with the Nepal Army.&nbsp;

Who, or what, is Hami Nepal?

A rally organised by young Nepalis across the country against corruption, impunity and restrictions on freedom of expression on Monday turned into one of the deadliest days in the country's recent history. As of Monday evening, the death toll from the protest had reached 19, with 17 killed in Kathmandu and two in Itahari. More than 350 people were injured. Police have arrested more than 40 protesters. Home Minister Ramesh Lekhak of the Nepali Congress resigned, and there have been calls from opposition parties for the entire NC-UML coalition to step down and announce early elections. The protest followed a growing online movement led by young Nepalis exposing the ostentatious display of privilege by the offspring and relatives of politicians and other public figures, which had sparked discourse about nepotism, corruption and the wealth gap in Nepal. Confronted with joblessness and corruption, Nepali youth looked to the recent street movement in Bangladesh, where a student uprising against quota-based recruitment for government jobs expanded last year and toppled the autocratic Sheikh Hasina government. In Indonesia, public frustration with government apathy boiled over into a national movement last month after it emerged that elected officials and the political elite enjoyed perks while citizens faced a cost of living crisis. In the Philippines, as disaster mitigation-infrastructure projects failed to work, citizens began to question where the funds for such projects were actually going. This prompted social media users to look deeper into the lives of the politically-connected figures who flaunted their lavish lifestyles online. In Nepal public outrage has been building up against nepotism, corruption and impunity in government. Facing unemployment at home, nearly 10% of Nepalis, mostly youth, toil overseas or leave Nepal in search for better lives abroad. Meanwhile, the well-connected posted images online of themselves enjoying holidays abroad paid with the ill-gotten wealth of relatives in high places. Young GenZ Nepalis, frustrated with establishment politicians, had called for an anti-corruption, anti-government movement across the country. This coincided with the Nepal government’s decision on 5 September to ban 26 social media sites for failing to register and pay taxes in Nepal.  <figure><img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/20250908120956_53f97cf0de3ddc8d5c823686f56e71981df922d0ecd2989ad842245acdf71aa6.jpg" data-media-id="editor_0" data-image-id="20250908120956_53f97cf0de3ddc8d5c823686f56e71981df922d0ecd2989ad842245acdf71aa6" data-rendition-name="original" width="1600" height="1200" loading="lazy" alt="Gen Z protest"></figure>  Faced with the government's social media blockade, the protests took to the street. The movement was supposed to be apolitical, and focused against corruption. It garnered support from public figures and opposition leaders, some of whom conveniently forgot that they had been in government when the TikTok ban was imposed in Nepal in 2023. On Monday morning, protesters showed up at Maitighar with slogans and placards, many of them college students, even school children. The organisers had called for young Nepalis to join in their uniforms, believing that it would protect them from violence that might occur during the course of the day. By mid-morning, thousands of Nepalis had gathered at the Mandala intersection, playing music and chanting slogans. The mood was almost festive. Shortly after noon, however, a rally that had begun peacefully descended into violence after protesters broke the police barricade in Baneswor to storm Parliament. Police first began firing tear gas and water cannons, and then live ammunition at demonstrators. The Kathmandu district administration is said to have authorised full use of force against protestors who vandalised public property after protestors infiltrated the Parliament grounds.  <figure><img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/2025090818090_84e4a5bdcf19aa3cbf03831140120c88d9f3fe5a12d47041588fea7409988e67.jpg" data-media-id="editor_1" data-image-id="2025090818090_84e4a5bdcf19aa3cbf03831140120c88d9f3fe5a12d47041588fea7409988e67" data-rendition-name="original" width="1200" height="1600" loading="lazy" alt="Gen Z protests"><figcaption>Photo: SUDIKSHA TULADHAR</figcaption></figure>  Organisers Hami Nepali had requested demonstrators to go home as the protests turned deadly, saying that those who stormed Parliament were not associated with them, hinting that the rally had been infiltrated by radical groups. But by that time, the demonstration had got too large to contain. In the ensuing violence, hundreds were left injured, including journalists, and 17 dead so far in Kathmandu. Nepal’s leadership and security forces do not seem to have learnt their lessons about managing mass protests after the pro-monarchy demonstrations in March in which two people were killed. The indiscriminate use of force against unarmed Nepalis turned into a massacre. The emergency wards in Kathmandu are filled with those with bullet wounds on their legs, arms and heads. Hospitals have called for blood donations. At the time of publishing, there has been no statement from the Prime Minister, who before the protest on Monday had belittled GenZ youth as being naive, wet behind the ears, and their movement being ‘led by provocateurs’. Oli has presided over a slew of Bills to constrain the press, social media, and civil society, he has silenced and mowed down competitors and critics within his own party. This week, the UML got rid of age and term limits for party chairmanship, effectively clearing the way for 74-year-old Oli to head the party for the foreseeable future. Also feeding into the anger in the GenZ protest was a CCTV clip of a young woman being hit on Saturday at a zebra crossing by the car of a provincial minister in Godavari. The video of the car speeding away without stopping went viral on TikTok, one of few social media platforms still functioning.  <figure><img src="https://publisher-publish.s3.eu-central-1.amazonaws.com/pb-nepalitimes/swp/asv65r/media/2025090818090_35799a98e5a7f5f865bb6f94633059d2baa66ec57ea0d396ab020f2f8f912387.jpg" data-media-id="editor_2" data-image-id="2025090818090_35799a98e5a7f5f865bb6f94633059d2baa66ec57ea0d396ab020f2f8f912387" data-rendition-name="original" width="854" height="641" loading="lazy" alt="Gen Z protest"><figcaption>Photo: SANGYA LAMSAL</figcaption></figure>  Oli fuelled the outrage by dismissing the victim’s injury as “minor”, and accusing political rivals of magnifying the issue. Opposition leaders and members of civil society have called for the government to resign en masse, and the fourth-largest party in Parliament, the RSP, has called for a snap election. As per his agreement with the NC, Oli is supposed to hand over power early next year to its leader ’s Sher Bahadur Deuba. Some analysts have suggested that if Oli did the handover now, he could help defuse the situation and earn brownie points ahead of the 2027 elections. But such political calculation would belittle the tragedy that has befallen the families of the 19 who were killed on Monday. Nepal’s political leadership cannot think that just reshuffling its three-card prime ministerial deck will quell public anger now. Nepal’s next generation wants to uproot the rot of corruption from politics, governance, and the bureaucracy. It wants elected leaders to deliver services, provide jobs and raise living standards. Monday’s massacre has only made them angrier, and bolstered their resolve to lead from the front.