Despite the opportunities available in the construction sector – it accounts for 20% of Nepal’s GDP – many businesses were struggling to capitalise on this boom. Purnima is boosting economic recovery and development of the private sector, and helping micro, small and medium enterprises (MSMEs) to grow and expand on the back of the current construction boom.
Purnima identified a number of barriers that businesses faced such as access to finance, a difficult business environment, limited innovation and quality, and a shortage of skilled labour. It also found clear opportunities to overcome these barriers and unleash economic opportunities, particularly for women.
Purnima found that the biggest barrier is access to finance. There is currently a disconnect between MSMEs and the banks who insist on detailed transaction records and bring strict conditions for collateral. Many entrepreneurs have scant financial literacy or business training and find banks’ procedures and channels unworkable and complex.
Purnima is making it easier for MSMEs to become ‘bank ready’, helping them to write plans that meet banks’ requirements and also provide a business strategy. MSMEs have begun accessing finance at lower cost, registering increased incomes and expanding. As a result, they are creating new jobs and adopting better business practices, which allow them to overcome business losses that would have previously had a significant impact.
Purnima found that although policies were well drawn up, they were not able to be implemented effectively. Due to problems around information dissemination, MSMEs found processes difficult to navigate and therefore restrictive to growth. Purnima’s public private dialogue process helped shine a light on these constraints and devised mechanisms to address them to reduce the burden of compliance for businesses, such as simplifying business registration and taxes.
Purnima research underlined the need to incubate innovation in Nepal. In the face of mounting competition from China and India, MSMEs were struggling to match the standards and prices of foreign imports. Businesses with high-growth potential have been connected with local incubation providers who are helping them adopt new technologies, learn better business practices, become investment ready, and connect to impact investors and other sources of private investment, as well as ensuring growth is environmentally friendly and disaster-resilient.
Construction remains a male-dominated sector in Nepal. Wives and sisters are often registered as owners to bring in subsidies, but it is the husbands and brothers making the decisions. Purnima has helped alert women to the potential career opportunities in the construction sector, providing business training and access to additional finance. These activities are addressing social taboos and enabling women in business to move up the ladder of economic empowerment, decision making and resilience.