This document summarizes an empirical study on entrepreneurs in Nepal. It defines entrepreneurs and their roles in economic development. Entrepreneurs in Nepal face many barriers including limited access to capital, low confidence, and unstable policies. To motivate more entrepreneurship, the study recommends increasing access to finance, creating a supportive environment, and expanding training opportunities. Overall, the document analyzes the importance of entrepreneurs for Nepal's economy and identifies ways to encourage their activities.

1. ENTREPRENURES IN NEPAL :
An Empirical Study
*
– Dr. Fatta Bahadur K.C.
I. Introduction
Entrepreneurs are individuals or group of individuals who invest capital, organize and direct
business and industrial units. An entrepreneur assembles, coordinates and directs various factors
of production namely land, labor, capital and other materials. "An entrepreneur initiates ventures,
employs workers, organizes production, develops markets and influences the development of
managerial thoughts" (Shrestha, 1982:11). As stated by Higgins "Entrepreneurship is meant the
function of seeing investment and production opportunities, organizing an enterprise to undertake
a new production process, raising capital, hiring labor, arranging for the supply of raw materials,
finding a site and combining these factors of production into a going concern, introducing new
techniques and selecting top managers for day to day operation" (Higgins, 1966:88).
Entrepreneurship is thus, characterized by the dominant element of innovation, a streak of
creativity and ready for risk-bearing.
An entrepreneur could be a trader, a technician, an educated unemployed or the like. The
elements common to all of them are the desire for breaking away from traditional ways of doing
things, face the organizational and technical problems in decision-making process and measure
up to the risks which are implicit in the process (Joshi, 1977:40).
Entrepreneurs can be divided into three broad categories i.e., Private Entrepreneur,
Government Entrepreneur and Institutional Entrepreneur (K.C., 1989:18–19). In capitalist system
of economy, private entrepreneurs have been actually playing dominant role in all sectors of the
economy mainly industry, trade and the like. But government controls all economic activities and
performs entrepreneurial role in socialist countries.
Since Nepal has adopted a system of mixed economy both private and Government
sectors have been performing entrepreneurship function in the process of industrialization.
Private entrepreneurs have promoted many industrial units such as biscuit and confectioneries,
bakeries, flour mills, modern rice mills, sugar, soap, tanneries, cotton and textile, solvent
extraction plants, iron rod, corrugated sheets, plastic pipes and utensils, light engineering units,
breweries, television and radio assembly, hotels, etc. In the absence of entrepreneurial ability and
lack of adequate capital in the private sector, Government also acts as an entrepreneur in
developing industrial projects. In Nepal, Government has set up jute, sugar, cigarette, leather,
timber process, agro-lime and agricultural tools, brick and tile, cement, dairy, textile, herbs and
drugs, paper spinning industries etc.
The development banks, investment trusts, and other financial institutions also act as
entrepreneurs. In Nepal, Nepal Industrial Development Corporation (NIDC), Employee Provident
Fund (EPF), Rastriya Beema Sansthan (RBS) and other financial institutions are the examples of
institutional entrepreneurs. NIDC, as an industrial development bank, has been playing important
role for the promotion of industries in the private sector. It assists private enterprises by providing
medium and long-term loans, equity participation, guarantees as well as technical and managerial
advice. It also promotes industries on a priority basis as guided by the National plan.
*
Reader, Nepal Commerce Campus, Tribhuvan University, Kathmandu.

2. II. The Objectives and Methodology of the Study
The basic objective of this study is to carry out a small research on entrepreneurs in Nepal.
However, the specific objectives are:
To present the role of entrepreneurs
To identify the barriers and problems faced by Nepalese entrepreneurs
To analyze the prospects of entrepreneurial motivation in Nepal
The required data for the research were collected through primary source i.e,
questionnaire. For it only three questions were developed and distributed to 10 businessmen,
entrepreneurs and 15 academics including university teachers. The responses there from were
collected and tabulated for analysis. In order to present and analyze the tabulated data, the
statistical tools like the mean value and the ranking were used.
III. Role of Entrepreneurs
An entrepreneur, who is also known as a risk-bearer, is the central figure in this modern
era of business. Economic development of any country cannot be initiated without the pioneering
efforts of entrepreneurs. Many economists including Joseph Schumpeter glorified the role of the
entrepreneur and regarded him as the key figure in the process of economic development. He
identified that the ultimate determining factor of the rate of economic growth is the availability of
dynamic entrepreneurship in the country concerned.
Nepal is a least developed country. More than 32 percent of population lie below the
poverty line and the annual per capita income is not more than U.S.$ 370. The pace of
industrialization in Nepal has remained very slow. The industrial sector contributes around 8
percent to GDP and provides employment to about 2 percent of economically active population.
Nepal has been experiencing unemployment and acute under-unemployment problem. In a case
study conducted by Nepal Rastra Bank, the percentage of unemployed in the total labor force
was estimated at 3.1 percent. Similarly the under-employment rate worked out to 46.4 percent
and 33.6 percent in rural and urban Nepal respectively (Nepal Rastra Bank: 1988:64, 75).
Therefore, entrepreneurs have important role to play in the process of industrial as well as
economic development. They could assist to generate employment opportunities, to raise income
and to break the vicious circle of poverty.
In the literature of economic development, an entrepreneur has been heralded as the
innovating man, the path-breaker and the pace-setter of economic and industrial growth (Joshi,
1977:39). In a developing country like Nepal, an entrepreneur has to play multi-dimensional roles.
He could be worked as the promoter, the financier (investor) and the manager in the process of
industrial development. An entrepreneur conceives the idea of a business (industrial) enterprise,
analysis its prospects, works out the tentative scheme of organization, brings together the
requisites like men, materials, machines, money and managerial ability and floats the new
enterprise. At the same time he has to act as the financial manager, the production manager, the
marketing manager and the personnel manager in an existing concern. He has taken all
important decisions and implement these decisions for obtaining the predetermined objectives of
his organization. So it can be stated that an entrepreneur has to act both as a mother and as a
mid-wife, because it is he who faces various problems to bring the new enterprise to existence
and brings it up into a successful venture.
The table below presents the role of entrepreneurs that they can play in the process of
industrial and economic development of Nepal.

3. Table 1: Role of Entrepreneurs
Businessmen, Academics Overall
Entrepreneurs
Role Mean Rank Mean Rank Mean Rank
Capital formulation and
mobilization 1.20 1 2.35 2 1.76 1
Employment generation 2.21 2 3.31 4 3.26 4
Industrial growth 3.75 4 2.49 3 3.12 3
Human resource development 4.32 5 1.67 1 3.00 2
Balanced regional
development 3.47 3 4.64 5 4.06 5
As shown in the table, Nepalese businessmen viewed that entrepreneurs can contribute to
the formation and mobilization of capital required for economic development of the country
followed by employment generation and balanced regional development. Academics perceived
that assist in human resource development and capital formation were the key roles played by
entrepreneurs. Overall ranking of the roles stood as capital formation, human resource
development, industrial growth, employment generation and balanced regional development
showing the mean values 1.76, 3.00, 3.12, 3.26 and 4.06 respectively.
IV. Why Nepalese Entrepreneurs are Shy?
Private entrepreneurs in Nepal have traditionally remained very shy to come forward for
investment in industrial ventures due to various reasons such as limited financial resources, lack
of proper entrepreneurial education and training facilities, low rate of return from industrial
investment, conservative lending policy of banks and financial institutions, lack of adequate
protection to investors, unstable and unsuitable economic and industrial policies of the
government, wide-spread corruption in the public sector and the aspiration of many people in the
private sector to be rich overnight instead of putting efforts to the industrial development (K.C.,
1989 & 2003). They have been actually channelising their resources on nationally unproductive
sectors like acquisition of land, amassing of gold and silver, construction of building, luxurious
imports and other speculative motives, etc.
In the following section, an attempt has been made to identify the barriers and problems
that are being experienced by Nepalese Entrepreneurs
Table 2: Barriers to Nepalese Entrepreneurs
Businessmen, Academics Overall
Entrepreneurs
Barriers Mean Rank Mean Rank Mean Rank
Limited access to capital 2.32 1 3.83 4 3.08 3
Low level of confidence 3.83 4 2.20 2 3.02 2
Low return from industrial 3.24 3 3.67 3 3.46 4
investment
Lack of education and training 4.83 6 4.76 5 4.80 6
Political instability 2.61 2 1.60 1 2.11 1
Lack of favorable policy 3.92 5 4.80 6 4.36 5

4. As mentioned earlier, Nepalese entrepreneurs have been facing so many barriers in the
way of creation of new ventures and smooth operation of the existing ones. Nepalese
businessmen and entrepreneurs have viewed that their main barriers include limited access to
capital, political instability, low return from industrial investment, low level of confidence and lack
of favorable policy of the government. Academics viewed the political instability, low level of
confidence and low return from industrial investment are the major causes responsible for poor
entrepreneurial motivation in Nepal. Overall ranking also indicates the similar results. It can thus,
be concluded that political instability, low level of confidence and limited access to capital are the
main problems of Nepalese entrepreneurs.
It is realized that the slow pace of industrialization in Nepal is deeply rooted with the lack of
sufficient capital in one hand and the problem of proper mobilization of available (limited)
resources in this sector on the other. It is, thus, very appropriate time at present to review such
activities and discourage such unproductive investments through the effective policy changes for
reduction of high premium and return which these pursuits are commanding.
V. The Need of Entrepreneurial Motivation in Nepal
It is well known that entrepreneurs have key role to play in the process of industrial
development in the country. So, it is required to motivate entrepreneurs especially in the private
sector. Motives, abilities and congenial environment all combine to promote entrepreneurship.
The stronger are the motives and abilities, congenial environment will be less necessary. It is
especially important to encourage more people to be long term entrepreneurs interested in
permanent business, rather than short term speculators.
First of all, attitudes and motives of the people in the private sectors to become rich
overnight must be diverted to mobilize their resources in productive sector. The entrepreneurial
ability and talent could be improved by organizing entrepreneurship development program for
present and potential investors. Again, adequate institutional services and effective policy
changes will help to create an environment which is conductive to induce industrial investment.
Table 3 attempts to present the remedial measures to solve the problems and support the
entrepreneurs.
Table 3: Measures to Support Entrepreneurs in Nepal
Measures Mean Rank
Creation of investment-friendly climate 2.62 3
Extension of institutional services 3.98 4
Easy access to finance 1.72 1
Favorable government policy 2.59 2
Provision of education and training 4.03 5
The table reveals that easy access to finance and favorable government policy are the two
most important measures to motivate entrepreneurs in Nepal. It is also found that other
supportive measures include creation of investment-friendly environment, expansion of
institutional services and provision of training and education. Here, some suggestive measures
are presented to motivate entrepreneurs as well as to induce industrial investment in Nepal.
i) Provision of Adequate Capital: It is essential to provide adequate financial facilities
especially to meet the fixed and working capital requirements of the concerned industries.
So, the lending policy of development banks, commercial banks and other financial

5. institutions should follow more liberal and practical policies. Similarly, procedural
simplification is required while investing in productive sector.
ii) Protection to the Investors: It is especially important to provide adequate protection to
the industrial investors. Most industries have failed to protect their industry from the
competition of foreign products. Now Government should adopt an appropriate and realistic
policy to protect and develop industries within the country.
iii) Suitable Government Policy: Only clear and consistent economic and industrial
policy can help to induce entrepreneurs. Government should formulate clear, liberal and
attractive economic and industrial policies.
iv) Expansion of Institutional Services: The adequate institutional services are required
to encourage entrepreneurs. The concerned agencies, both the financial an d development
institutions should be directly involved to encourage potential investors for investing their
funds in productive sectors. NIDC and NPEDC (National Productivity and Economic
Development Centre) should launch appropriate entrepreneurship development program.
As an industrial development bank, NIDC has to identify and motivate the potential
investors by providing financial assistance and technical, administrative as well as
managerial guidance and advice. The activities of the Department of Cottage and Village
Industries (DCVI), the Cottage Industries Development Board (CIDB) and Industrial
Enterprise Development Institute (IEDI) be further improved to encourage small
entrepreneurs. Similarly, Women Development Section, Women Training Centre and Nari
Shilpakala Kendra should conduct appropriate programs to induce women entrepreneurs
and to bring them into meaningful and remunerative job.
Due to the lack of sufficient capital, technical and managerial expertise in the country, the
recently formed first republican government should adopt to have a liberal policy to attract foreign
investors. Because foreign capital in the form of collaboration may impart training to Nepalese
entrepreneurs and promoters as well.
Conclusion
Economic development cannot be initiated without the pioneering efforts of entrepreneurs.
Entrepreneurs have key role to play in the process of industrial development in particular and
economic development in general. But entrepreneurs in Nepal are very shy to invest capital in
industrial sector. Therefore, it is essential to induce entrepreneurs to mobilize their resources in
industrial sector. Government should implement an appropriate policy to motivate the
entrepreneurs and to develop industries in the country. Finally the attitude of the people to
become rich overnight must be changed through effective policy reforms.

6. Selected References
Higgins, Benjamin (1966), Economist Development – Problems, Principles and Policies.
Joshi, Navin C. (1977), "Developing Entrepreneurship in Nepal", Nepal Industrial Digest 1977,
NIDC, Kathmandu.
K. C., Fatta B. (1989), "Entrepreneurship in Nepal" (in Nepali) Nepalese Journal of Government
Auditing–Issue 7m, Vol. 3, June 27, Department of Auditor-General.
K.C. Fatta B. (1989), "Unemployment in the Development Perspective of Nepal", Nepalese
Journal of Government Auditing– Issue 7, Vol. 4, Oct., Department of Auditor-General.
K. C., Fatta B. (1989), Role of Entrepreneurs in Industrialization of Nepal, Nepalese Economic
Review, Vol. 1–2, No. 2, Kathmandu.
K. C., Fatta B. (2003), Entrepreneurship and Economic Development, Mirmire, Vol. 32, No. 212,
Nepal Rastra Bank, Bankers' Club, Kathmandu.
Nepal Rastra Bank (1988), Multipurpose Household Budget Survey, Nepal Rastra Bank,
Kathmandu.
Pyakural, Ramesh C. (1984), "Role of Development Bank in Entrepreneurship Development",
Nepal Industrial Digests 1984, NIDC, Kathmandu.
Shrestha, Juddha B. (1982), "Role of Entrepreneurs and Managers in Nepal", Emerging
Concepts in Nepalese Management, CEDA, Kathmandu.
Singh, B. P. and Chhabra, T. N. (1981), An Introduction to Business Organization and
Management, Allahabad: Kitab Mahal, India.