Digital Artifact- Investing in a Fintech Company- Nepal

1. Like other developing countries it is country driven by youth population.
Almost 60% of the people are in the age group of 16-40 years (National
Youth Policy Study). Major portion of the income come from personal
remittance as almost 30% is of its GDP is contributed by personal
remittance which was at staggering 8.064 Billion in 2018
(https://databank.worldbank.org/views/reports/).
Similarly, with improving secondary schooling completion datas/records which is around 70% it is one of
fast-growing country with English speaking people as a secondary language or easy way of
communicating. With mobile subscription of almost 120 among 100 people and internet using individual
of around 21% it has huge opportunity of Digital finance.
As per the study the unbanked youth consist of around 40%, the figures can be more due to multiple
accounts opened by individual having accounts in other Banks and financial institution.
Therefore, the investment strategy I will be interested in setting up a Fintech Company providing payment
service and other Digital Finance activities. Primarily the objective for choosing a fintech company in Nepal
will be as follows:
• Huge potential given the youth markets as well growing economy.
• English speaking youth/individual can add value when scaled up given proximities to Country like
Nepal and China.
• Huge potential of scaling/investment in Tourism sector given its natural beauty and rich culture
(8 out of 10 highest mountain is in Nepal with amazing lakes and rivers)
• Lack of innovation in banking sector where conventional banking (Deposit, Loan) is paramount.
• Potential of using blockchain technology for remittance industry.
Nepal is predominately a landlock
country sandwiched between India
and china. With population of just
under 3 crore it is small but highly
densely popula’s given its size. It is
among low income country with GDP
of around USD 28.81 Billion (2018)
https://databank.worldbank.org/vie
ws/reports/.
NEPAL

2. Given the scenario and potential of a fintech company to flourish in a country like Nepal, all the indicators
are positive. There are few companies who has been providing payment/wallet services such mobile
recharge, online ticketing, bank transfer, however Interpolability is an issue, hence there are surviving on
a smaller pie with more room for innovation and investment.
In this given scenario investment in Fintech company add value given the potential market Nepal has to
offer. Few long-term strategy and output related with setting up a Fintech company in Nepal are as
follows:
• Initial strategy will be finding a Mobile partner and bending a benefit of Fintech with Mobile
services based on profit sharing platform. The mobile reach has been more than 100%, Similarly,
the 4G connection is available in almost 25% of the country size and GPRS services are available
in almost 70%. Therefore, it will be a great value addition if a strategic partner in Mobile field can
be achievable.
• Initially partnering with BFI’s to bring in remittance through active channels, as per the study the
top destination countries for Nepalis migrants such as Malaysia, Qatar, Saudi Arabia, UAE
accounting for around 70% of total population. The major objective would be track down the
remittance income from this source countries and make/aware individual to remit in a more cost
effective way. In future Blockchain technology can be use to make remittance less costly currently
the cost involved on sending receiving remitted money is around 1-2%.
• Similarly, based on the data other innovative products such deposit and credit can be channelized
to the client for wealth creation. Based on the remittance income access to credit can be aligned
based on the data of the clients and help in creation of wealth by providing credit facilities for
micro-enterprises most to women, As more than 90% of migrants are men. Other products related
to life insurance, micro insurance, animal insurance can also be triggered through fintech in
future. Hence benefiting the access to finance and financial inclusion. This will lead to important
achievement of SDG goal as a way of impact investment.

3. However, getting there will not be easy, Nepal has seen low growth due to years of Maoist insurgency in
90’s , similarly the pollical instability had led to rampant corruption and underdevelopment which has
pushed the nation into decade of backwardness. The main challenge will be overcoming corruption which
are rampant in government offices as well as to get along with the central bank policies regarding setting
up a fintech companies. The central bank has recently opened its doors to payment service provider
limiting the transaction amount, Similarly, the permission or license a foreign company can get can be
cumbersome. Therefore, A strategic alliance with a mobile company can be fruitful who knows the
knowhow in dealing the bureaucracy hurdles, In addition programs related to UNCDF, World Bank group
in areas of Fintech and proposal to work in such area can add value where polices level doors can be
opened through co-ordination with central banks.