My Experience of the Ease of Starting a Business in Nepal

        I often wondered, what motivates people to be an entrepreneur. If we take my dad for example, he refrained entrepreneurship since as long as I remember. But he tells that out of experience. It was the late 1980s and my father had inherited a venture that was rapidly spiraling towards its demise not long after its beginning. My grandfather, who back then, like everyone else in Nepal, was a farmer, barely had enough lands to feed his family of eight children, had invested a significant fortune in the domestic business of making hand-woven clothes. But soon after its commencement, his health deteriorated, and the business doomed before it could amount to anything. My father and uncles, who were clueless about management of a venture couldn’t perform any miracle, and my father was left with a lesson for life – we – referring to our family – neither have the cunning nor the capital to carry on a venture. This is a lesson that he expected me to abide as well.

Unlike my father, I was hardwired the other way. Probably it was because I grew up watching way too many movies wherein actors playing businessmen dressed sharp and always in some sort of hurry. The idea of life where your work keeps you so busy was always so tempting. Then came my journey to obtaining an MBA which made me assured that running a venture is not a very difficult task. All I needed to do was "make a little more money than is spent". Simple, right? The idea had occupied my mind and I was beginning to look for opportunities to start my own business. However, I hadn’t found the push yet. But, not so many weeks ago, the nature of my professional involvement with a certain organization required me to obtain a Permanent Account Number as a business or a Business PAN. In order to qualify for the same, I needed to register a consulting firm. It was then, when I got the opportunity to gain an experience of what a small business owner has to face in Nepal.

I went to my Ward Office under Kathmandu Metropolitan City in order to register a firm with all the necessary papers. However, the clerks at the Ward Office were adamant that they will not register the firm in the Ward Office until my business was registered elsewhere like the Department of Cottage and Small Industries or the Department of Commerce. Then, I hopped onto my bike and went to a tour of both the departments. The Department of Commerce was very clear that until my firm was involved in any kind of trade of goods, I couldn’t register my firm there. The next stop was Department of Cottage and Small Industries which agreed to establish my firm if my capital exceeded 5 lakh. But my capital didn’t exceed 5 lakh. I wanted to open up a small consulting firm where I worked on my laptop and submitted reports to other parties. I told them that I would barely have a capital of 2 lakh. Then I was suggested to go back to my own Ward Office from where my journey had begun.

The laws couldn’t have been any clearer. Industrial Enterprise Act, 2076 issued by the federal parliament, Industrial Enterprise Act, 2076 of the Bagmati Province as well as Trade and Business Act, 2076 issued by the Bagmati Province collectively indicated that my firm would have to be registered at the Ward Office of the Municipality I lived in. But as I talked to the clerks who were responsible for furthering the process, they were adamant that they wouldn’t register the business there until my firm was already registered elsewhere. I tried talking some sense to them by showing the clause of the aforementioned act which provided that any firms with capital below 5 Lakh would have to be registered in the Ward Office. But they didn’t budge. Instead, they proudly showed how even a tea-shop in the ward office was made to register at Department of Cottage and Small Industries before being registered in the ward. I tried to explain to them how my friends have registered firms of similar nature in other municipalities or in other wards of Kathmandu Metropolitan City, however, I was rudely told that that’s where I should go and do it. I talked with the secretary of the Ward but even the Secretary wasn’t willing to debate them or reprimand or instruct them in anyway. Instead the secretary told me to come back a few weeks later. It was clear that the clerks lacked procedural understanding of the legal framework that existed to facilitate registration of firms in Nepal but it was their arrogance and unwillingness to consider anything beyond their presumption, which was actually infuriating. I eventually opened up a firm, but in another ward of another municipality. But, I couldn’t do it where I lived, which would have been much more comfortable for me.

One would think that it is just the government offices that have a problematic way of dealing with small businesses. However, that's not where the problem is limited to. I visited one of the most reputed commercial bank to open a bank account for the new firm but I was denied the opportunity as they were circulated with the information that only firms registered under private firm registration act would qualify opening up a firm in their bank. It was almost heartbreaking to see that even the commercial banks do not remain up to date in terms of who is qualified to be their client.

I consider myself privileged because of the ease with which I can access information. But, even with all my education and information, I couldn’t convince few people of what was legally my right. For an average person, opening up businesses may be even harder chore. If such incidents are common inside Kathmandu Metropolitan City, one cannot imagine things going smoothly outside of the valley. Sure, any person intending to incorporate a private limited company in Nepal will surely not have to go through the same troubles, but a sole proprietorship or partnership firm is more likely option for an average aspiring business owner.

Global experiences provides that entrepreneurships, startups and small businesses, play a vital role in strengthening the economy. In Nepal too, small businesses can revitalize the economy and can play a key role in retaining the precious human resource that is being lost to the Middle East and other parts of the world. However, Nepal hasn’t yet developed a culture of nurturing small businesses and entrepreneurships. And by my experience, the government is practically making things harder for small businesses. Nepal has had a bad reputation in terms of the ease of doing business and until some groundbreaking changes in not made in that regard, the economy may not take the dramatic leaps which has been expected of it. Until the government isn’t committed, in action and not just in words, to making doing business easy for large and small business alike, Nepal’s aspirations of bringing in foreign investment will not succeed and nor will any hopes of having a vibrant economy.