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By Shanker Man Singh

Recently, the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) discussed the 2.0 version of the Development Agenda. This new version appears to bring policymakers, the private sector, and development partners together to address the economic challenges that have emerged after the Gen Z movement.

At a glance, its major objectives include addressing the economic demands of the younger generation, creating a new framework for public–private dialogue, preparing a long-term framework for economic stability, and promoting social inclusion and entrepreneurship.

The Gen Z movement forced the private sector to become more sensitive to the voices of young people. It is widely accepted that youth dissatisfaction is not only social but also reflects criticism of the country’s economic structure and governance. As a result, the private sector has begun prioritizing youth entrepreneurship.

Nepal’s economy is divided into three main sectors: the government sector, the private sector, and the cooperative sector. However, misconceptions about these sectors have created ambiguity in policymaking.

There is a misconception that the government should lead all economic development. In reality, the government’s primary role should be policymaking, regulation, and public service delivery. It should function as a facilitator by creating an environment conducive to private investment.

There is another misconception that the private sector is only profit-driven and indifferent to social responsibility. In reality, it is the main engine of job creation, innovation, and capital mobilization.

Despite this, the private sector still faces both possibilities and challenges. Questions persist about how its role can be strengthened to help achieve Nepal’s broader socio-economic goals.

Recently, Prime Minister Sushila Karki acknowledged that the morale of industrialists and businesspersons is crucial for economic reform. Speaking at the “National Economic Debate 2.0,” she stressed that good governance is essential for social justice and economic growth, and assured that the government would take this seriously.

The private sector is frequently criticized during social movements, where profit-making is portrayed as immoral. However, the reality remains that businesses must make profits while providing services.

Nepal’s banks currently hold around Rs 1.1 trillion in investable funds. Yet investment attraction remains low due to working capital loan guidelines, close monitoring, and strict blacklisting policies. Experts argue that decisions on working capital loans should be made through mutual discussion between banks and borrowers.

The private sector—involving privately owned enterprises—employs more workers than the public sector. It comprises both newly formed companies and privatized former public enterprises. Understanding its strengths, weaknesses, opportunities, and threats is essential.

High resilience and adaptability among Nepali entrepreneurs; significant tourism potential, including eco-tourism and abundant natural resources are the strength of the private sector.

Meanwhile,poor infrastructure (transport, energy, connectivity); bureaucratic hurdles and regulatory barriers; landlocked geography limiting market access; and rising interest rates and high operational costs are the hurdles for the private sectors.

There are opportunities for the private sector for attracting foreign direct investment (FDI); hydropower exports; trade agreements with neighboring countries; and niche tourism markets.

Political instability; geopolitical pressures; shortage of skilled labor; natural disaster are the risk factors.

Globally, 1.2 billion people live in extreme poverty. In Nepal, one in five people is poor according to national standards. Achieving development goals requires improvements in income, health, and education access.

Nepal still lacks a dedicated Private Sector Act. Many believe improving economic conditions requires boosting private-sector morale. But confidence among the public and business community has declined due to stagnant investment.

Despite increased remittances and tourist arrivals, market demand remains weak because both the government and private sector have failed to restore public confidence.

The private sector itself must change. It often blames the government while neglecting its own responsibilities. It has contributed to Nepal’s import-driven economic model. Private-sector advocacy has often lacked long-term or sustainable perspectives, weakening its credibility.

Although Nepal’s private sector contributes around 80 percent to the economy, no formal study has confirmed this figure.

Major structural problems—such as hydropower underdevelopment, dependence on petroleum products, weak commercialization of agriculture, and inadequate investment in productive sectors—persist due to policy neglect.

The government is now engaged in tasks better handled by the market, while failing to focus on essential responsibilities such as policymaking, security, foreign relations, fiscal and monetary policy, and justice administration.