Sei sulla pagina 1di 12

Published in Journal of Finance and Management Review, March 2011, Vol.

2 , issue 2 pp 257-269

Micro and Small Enterprises in Nepal : Prospects and Challenges


Rabindra Ghimire
Assistant Professor
School of Business
Pokhara University
Kask, Nepal
rabindra.pusob@gmail.com
Abstract
This paper aims to deal with the status of micro enterprises, cottage and small scale industries in Nepal and observe and
analysis their contribution in the economy. Micro and Small Enterprises (MSEs) has contributed to the economy couldn't be
underrated. Least Developed Countries like Nepalese, MSEs is contributing to the economy through employment
generation, creation of added value, GDP, export activities etc. The paper is based on empirical evidence drawn from the
publication of government policies, report of Department of Cottage and Small Industries, Economic Survey, data available
from Federation of Handicraft Association of Nepal, and various relevant articles. Government of Nepal also has conducted
various income generating program encouraging job. From governmental and non governmental sector some initiatives has
been carried out through multifold activities like community development program, micro finance program and cooperative
programs. Share in export of Handicraft product is one of the milestones of SMEs which can observed around 8% of total
export . But, as a part of the economy, lots of things required to do from the government sector in MSEs sector.
Key words: micro enterprises, cottage and small scale industries, Industrial Policy, informal sector, economic growth.
1.

Introduction

Microenterprise is a very small business that produces goods or services for cash income. In general, microenterprises have
limited access to capital, have few employees, and are often home-based. Not all microenterprises are family operated, but
when family members do work for the business, they frequently do so without pay. Small cooperatives can also be
microenterprises. Microenterprises usually operate in the informal sector of a nations economy, not paying taxes and not
being tracked in official government statistics. Entrepreneurs in the informal sector are more likely to start their businesses
because of lack of alternative employment opportunities and are less educated on average. Informal sector entrepreneurs
employ fewer workers, are less likely to have permanent premises, and use less business financing than their formal sector
counterparts.
Micro, Small and Medium Scale Enterprises (MSMEs) are the starting point of development in the economies towards
industrialization. However, MSMEs have their significant effect on the income distribution, tax revenue, and employment,
efficient utilization of resources and stability of family income. The contribution of MSMEs to employment, growth and
sustainable development is now widely acknowledged. (UNCTAD: 2001). Their contributing to job creation and output
growth is now widely accepted in both developed and developing countries. It can also help to achieve a more equitable
distribution of the benefits of economic growth and thereby help alleviate some of the problems associated with uneven
income distribution. In many developing and least developed countries (LDCs) there are number of micro and small
enterprises which have played crucial role for the economic development of the country. According to the United Nations
Industrial Development Organization UNIDO, for developing countries, integration into the global economy through
economic liberalization, deregulation and democratization is seen as the paramount way to triumph over poverty and
inequality. Important to this process, is the development of an animated private sector, in which small and medium
enterprises can play a central role (Bies, 2002; Fida, 2008). MSEs face various challenges, however, they remain important
source of growth and development. MSEs are continuously depending on more expensive alternatives to traditional loan
than big businesses. All these demonstrate that there is a need to implement a plan of action aimed at creating conducive and

__________________________________________________________________________________________
Micro and Small Enterprises in Nepal : Prospects and Challenges

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supportive environment where MSEs could be promoted and expanded. The key to a successful strategy is to get the policies
right.
There is no single definition of micro, small and medium enterprises, and employee numbers may not be the sole defining
criterion. However, SMEs are generally considered to be non subsidiary, independent firms which employ less than a given
number of employees. This number varies across countries. The most frequent upper limit is 250 employees, as in the
European Union (UNCTAD). However, some countries set the limit at 200. Small firms are considered to be firms with
fewer than 50 employees, while micro-enterprises have at most ten, or in some country cases, five. These criteria are
influenced by the scale of economies, investment environment, government policy and to some extent it is influenced by the
external environment. SMEs in Asia can be generally characterized as the engines of growth, the backbone of national
economies, the highest employment-generating sector, a potential tool of poverty alleviation by creating self-employment
avenues, and significant contributor to a countrys industrial production, exports, national income and GDP. (Narain: ).
Importance of SMEs in economic development is highlighted by the UNCTAD Report that in Bangladesh and India, SMEs
sector has provided 80% of industrial employment and 5% of GDP in Bangladesh and 40% of industrial output of India has
been contributed from SMEs sector. In China the export of SMEs to GDP ratio is 30% and share of SMEs export on total
export is 40 60%. These figures are sufficient to support the significance of the SMEs in economic development. It doesn't
mean to underestimate the role of high scale industries. In the present global context, the sustained high growth of
economies with equitable income distribution is not possible without building the capacity of the low income families.

2.

Review of Literature

Micro and Small enterprises are not new phenomenon in the world and even in Nepal. These are as old as human
civilization. Numerous studies have been carried out in the field of the micro enterprises, small and medium scale industries
in the world. SMEs have been played pivotal role to the industrialization of the countries. Its contribution in economy
couldn't be underestimated. Various researches have been conducted on Nepalese micro and small enterprises sector.
Accepting the significance role of micro enterprises, Micro Enterprises Development Project (MEDEP) had been
implemented in the joint efforts of United Nations Development Fund and Government of Nepal. International Labour
organization also conducted indepth nationwide survey study in 2003 and published a report on the micro enterprises. Least
developed countries (LDC) like Nepal are suffered from low saving, low investment and low capital formation. However,
micro and small level industries require comparatively low amount of investment, low technology and small market than
medium and large scale industries. The importance of small and medium- sized enterprises (SMEs) in contributing to job
creation and economic growth is now widely accepted in both developed and developing countries.(UNCTAD). The
available evidence suggests that MSEs have played a major role in the growth and development of all the leading economies
in Asia. The Asian experience clearly shows that it is mainly the growth-oriented medium-sized enterprises among the
MSEs that have a high propensity to apply technology and training and serve specialized niche markets. According to the
report of Role of trade unions in micro and small enterprises in Nepal the growth of MSE sector in the urban areas
comprising of the manufacturing, construction, trade and hotels, transportation and communication is apparent from the fact
that the proportion of people involved in these sector, which was 7.2 percent in 1991, has increased to 17.2 percent in 1999.
Whereas, the rural based activities like agriculture, fishery, forestry, mining and quarrying and community and social
services have decreased from 92.8 percent in 1991 to 82.8 percent in1999. From the socio-economic development
viewpoint, SMEs provide a variety of benefits (Advani: 1997). According to Mukole, SMEs play significant contribution in
the transition of agriculture-led economies to industrial ones furnishing plain opportunities for processing activities which
can generate sustainable source of revenue and enhance the development process. SMEs shore up the expansion of systemic
productive capability. They help to absorb productive resources at all levels of the economy and add to the formation of
flexible economic systems in which small and large firms are interlinked.

i.

Evolution of MSEs in Nepal

Nepal is famous on craftsmanship. Chinese travellers like Wanghunshe and Huansang in 648 AD have appreciated Nepalese
arts and crafts and the skills of Nepalese craftsmen and artisans in their travelogues. It is also described about the exported
product from Nepal in Kautilya's Economics during the time of Chandra Gupta Mouriya, in fourth century. From the
beginning up to the mid-nineteenth century, the rulers of the country promoted national industries and trade to various
measures of production, promotion and encouragement. To save the national industry commodities were not allowed to
imported except those which were not produced locally. Towards the end of the nineteenth century, Nepalese arts and crafts
industry and the entire home based industries in general suffered a great deal due to the general liberal import policy of the
government. Prior to the establishment of British regime over India and entering a peace treaty with Tibet in 1904 AD,
Nepal was interpreted as the main route to Tibet for external trade with other countries. Nepal also enter into the age of
industrialisation in the Rana regime.
Micro and Small Enterprises in Nepal: Prospects and Challenges Rabindra Ghimire

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History of industrialization in Nepal dates back to 1936. This year Jute Mill had been established joint venture with Indian
industrialist in Biratnagar. In 1940 Thirty Five new joint companies were established till 1951 but after that for one decade
not companies were established due to the social and political unrest. In Rana regime ( 1836 to 1951) Cottage Skill
Awareness Office (Gharelu Ilam Prachar Adda) was established in 1940. After formation of the elected government in
1958, new industrial policy was announced and government also realized that Nepal being a hilly topographic country,
small and cottage industries will have a play very important role in economy. For the promotion of cottage industries in
private sector, in various district Training Centre were established. During 1970 to 1990, cottage industries development
program initiated in different forms like industrial and technical service program, handicraft design program, village
industries program, sales management program, training program.( GON, 1970). To promote and foster various kinds of
cottage and small industries enhancing their industrial productivity increment along with making congenial environment for
industrial investment in accordance with policy, Department of Cottage and Small Industries (DCSI) have been constituted.
During the Sixth Plan ( 1980-1985), emphasized has been given to cottage and small industries. The objective of this plan
was to reduce the income inequality by helping the low income people and increase the employment. The Eighth Plan had
focused on export promoting and import substituting industries specially emphasizing the role of cottage and small
industries. In Ninth Plan the contribution of industry sector in GDP was confined to 9.1% however the target was 14% set
for the Ninth Plan. Tenth Plan (2002-2007) also emphasized the development of industrial sector. Present Industrial policy
announced many more things to be improved in the industrial sector. Cottage and Small Industry sector is also kept on
priority sector. ( annex -3)
Now, garments and carpets, silk and Pashmina, Allo and Dhaka, metal craft, handmade paper, Thanka, ceramics, bamboo
and stone crafts are popular in Europe, Asia and America. (FHAN). Nepalese export markets fall into two broad categories:
mass-market exports driven by Indian markets and niche exports for markets in Europe and the United States. Now
Nepalese product is exporting to more than Seventies countries around the world.
ii

Micro & Small Enterprises in Nepal

The population of Nepal is about 23.2 million ( CBS:2001) and its economy highly depends on agriculture, which employs
more than 78.1 per cent of the total workforce and account for about 39 per cent of GDP. The manufacturing sector is still
small but growing rapidly. It contributes about 10 per cent to the GDP. On the other hand, there are vast rural areas where
85.8 per cent of the total population of the country live. The development of infrastructure like road, communication,
electricity etc. is negligible in these areas, where people are largely dependent on agriculture. The technology used is
traditional and the investment is very low. Large number of the people of these areas are poor and illiterate. The economy of
this rural sector is, therefore, less-monetized and traditional. Although only 20 per cent of the land is arable, most of the
farmers are busy in farming only for few months during the year and dreaming idle the rest of the time. Cottage industry
could play an important role in solving this problem, as well as raising the national income and creating a sound basis for
industrialization by mobilizing idle resources and manpower in the agricultural sector. It could help to fulfill the local
demand for consumers goods, to raise production by fully utilizing the leisure time, to develop cottage industry and
handicrafts by collecting the skills scattered in the village and suburban areas, and to prepare the skilled and semiskilled
workers needed for industrialization of the country. Poverty is closely linked to the levels of underemployment and
unemployment in Nepal. Therefore, the strategy of reducing the poverty in the economic plans of the country has focused on
generating and improving self-employment through micro-enterprise development. UNDP Nepal funded a programme on
micro enterprise development (MEDEP) addressing the issues of poverty and employment through sustainable development
of micro enterprises among the rural households. However, it was realized by the mid-term review of the programme in
2000 that a conducive policy and regulatory environment is critical in the growth of micro enterprises.
The Nepal Labour Force Survey (1998/99) estimated that the employment in MSEs was 1.6 million people. However,
women are more likely to be employed in micro enterprises than men, while men are more likely to be employed in small
enterprises than women. The MSE survey conducted by ILO in 2005 found that there was an average of three workers per
MSE. However, when examining small enterprises alone, this number grew to 17.9 workers per enterprise. The
manufacturing sector was found to employ the most, followed by trade and services sectors. In the micro sector, the ratio of
self-employed was high at 75.4 percent compared to 17.5 percent in small enterprises. Micro enterprises have therefore
generated employment opportunities for those trying to seek self employment. A survey in 1999/2000 found that there were
87,342 small manufacturing establishments in Nepal. Up to 1990/91 total registered cottage industries under Department of
Cottage and Small Industries were 47,426 which reached 2,16,663 in 2009/10. Survey found that 60.3 percent of small
enterprises were found to be registered. It is estimated that about 6,00,000 micro enterprises are operating in rural and urban
area both registered and unregistered. Being a agrarian country, most of the micro-enterprises established so far are either
agro-based, forest-based, or livestock-based and rest of them are metal based, weaving, and somewhere shop and restaurant.

Micro and Small Enterprises in Nepal: Prospects and Challenges Rabindra Ghimire

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Nepal suffers from a lack of both internal and external investment. This stems from low domestic savings, a small domestic
market, a severe shortage of skilled labor, chronically corrupt and inefficient public administrations, high transport and
operating costs, the inadequacy of power resources and, increasingly, political instability. There have been recent attempts
to encourage investment and privatization through the Industrial Policy 2010 and Foreign Investment and One Window
Policy 1992, and the creation of industrial centers with governmental land and buildings on lease for private ventures.
However, the poor quality of local products has reduced their competitiveness and hampered the ability of rural people to
sell their goods beyond local markets. A large number of these enterprises are informal and unregulated, and therefore are
unable to take the opportunities available through linkages to proper marketing channels. They are also constrained by a
lack of value addition, technology and product supply capacity, as well as by the absence of a supportive policy and legal
framework. At present there are two types of micro-enterprises: formal and informal. Informal enterprises are generally
initiated by an individual family to earn money by means of their traditional craft skills, whereas formal enterprises are
either initiated by NGOs and government agencies as income generating programs for poor families and the marginalized,
or self-initiated by the rural people themselves. Formal enterprises are often supported by training and the allocation of
funds. Often, however, business counseling and market linkages are not considered and environment-impact considerations
are neglected.
Micro-enterprises are very small and family-based, they are generally operated from home. This can have an adverse impact
on the home environment, depending on the enterprise (e.g. poultry raising, wool carding, chemical dyeing, welding,
furniture repairing). Since this impact is originated at home, it is rarely documented. Despite these limitations, micro enterprises tend to be more profitable entities because of the non-valuation of family labour and reduced overhead. In
underdeveloped countries like Nepal, micro-enterprises are one of the most viable options to create employment
opportunities and consequently to reduce poverty. Moreover, since Nepalese society is characterized by social exclusion,
the development of such enterprises can provide employment to a relatively wider section of Nepal's population, thereby
narrowing down income disparities. A large number of small enterprises are situated in the informal sector. These
enterprises are not regulated under the various industrial acts of Nepal, although they are generating significant income and
local employment and are often ignored by the government. A study on the small-scale, informal, forestry sector enterprises
in the Banke, Bajhang, Humla and Dolakha districts undertaken showed that a significant proportion of the non-wood and
wood-based enterprises were in the informal sector and it was unlikely that their contribution was reflected in the official
statistics.
There is no common definition and common policy of defining micro enterprises over the world. It differs country to
country because of the size of economy. The European Union makes a general distinction between self-employment, micro,
small and medium sized businesses based on number of employees. Self employed has no additional employee, where as in
micro enterprises number of employees range from 2 to 9, in Small business 10 to 49, and in Medium size business 50 to
249. ( UNIDO and OECD).
As per Industrial Policy, 2010 Nepalese industries are divided in four categories as per following criteria.
Table 1 : Criteria of Types of Industries
Types of Industries

Fixed Assets

Turn over

Power used

Micro Enterprises

Up to Rs. 2 lakh, excluding Land


and Building

Rs. 20 Lakh

10 KW

Small Industries

Less than Rs. 50 million,


including Land and Building
More than Rs.50 million but less
than Rs. 150 million , including Land and Building
More than Rs. 150 million ,
including Land and Building

Medium Industries

Large Industries

Micro and Small Enterprises in Nepal: Prospects and Challenges Rabindra Ghimire

No.
of
Employees
Less than 10,
self
employed
and
self
managed.

Page 4 of 12

Generally, micro enterprises are managed by the investors him/herself and numbers of employees should not be more than
9. Besides micro enterprises, other industries are not clearly define their turnover, no. of employees working in the
industries and power they used.
Government has realized the importance of the MSEs, various supportive programs have been carried out through
government agency and non-governmental and private sector. Bank and financial institutions, cooperatives and FINGOs
also conducted micro finance program which ultimate goal is to encourage deprived and target community to start micro
enterprise activities and empower them financially. Synopsis of these program are mentioned in table 2.
Table 2 : MSEs Support Program
Program & Organisation

Coverage

Duration

Department of Cottage and Small Industries

75 Districts, each

Micro Enterprise Development Programme


(MEDEP) / UNDP
Poverty Alleviation Fund, GoN
Gramin Bikash Bank ( Micro Credit Bank)
Private Sector Microfinance Bank, FINGOs
and Cooperatives

36 Districts, with total


number exceeding 40,000.
40 Districts
5 Development Regions
Almost all districts

From 1957 to date


continued
1997 to 2006

beneficiary

2006 to date
1992 to date
to date

Department of Cottage and Small Industries regularly organizes various training program to initiate small scale business in
75 Districts through District office. Every year such types of training program being conducted and numbers of potential
entrepreneurs participated different sort of training.
3.

Research Focus

This is an exploratory research. Attempt will be made to explore the present situation of the micro enterprise and small
industries. Economic development can not be possible without proper development of industrial sector. MSEs is a part of
the industrial development. Given the study objective, the following research questions were explored:
There are basically two objectives to be focused on the following area:
i. To trace out the present policy and existing status of the MSEs and government initiatives, and
ii. To explore the contribution of micro and small enterprises for the economic development of the country?

4.

Data and Methodology


This was an exploratory study for which information was obtained through various secondary sources like document,
report and articles. It is very interesting to know the share of the cottage and small industries to the total export of the
country. Period is taken for the analysis from 1982 to 2010. Data are taken from Federation of Handicraft Association
of Nepal, Department of Cottage and Small Industries and publication of Ministry of Finance. Government has
recognized the cottage industries as a engine of the economic growth. The industries focuses on exporting the
handicraft, cultural goods to Europe and US markets.

5.

Analysis
Government has not sufficient and reliable statistics of various enterprises and industries. Micro enterprises are so
common that they are found each and every road side and street. They are easily established and under the roof. At least
one member of the house operates the micro business but due to the lack of the proper management of database of
MSEs activities it is quite difficult to assess the present status and also hard to measure their contribution the economy.
Two criteria are taken to analyse the MSE contribution: foreign currency earnings and employment creation.
i Foreign Currency Earnings:
Cottage industries are good vehicle of foreign currency earnings. Except few years, the amount of export is increasing
constantly. So that we can say that it provides foreign currency in a reliable way.
Table -3: Export of Handicrafts Goods for FY 1982/83 to 2009/10
Rs. Ten Million

Micro and Small Enterprises in Nepal: Prospects and Challenges Rabindra Ghimire

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F.Y.

1982/83

1983/84

1984/85

1985/86

1986/87

1987/88

1988/89

1989/90

1990/91

15.99

19.07

1991/92

Export

2.50

3.99

6.18

9.12

3.73

5.68

9.73

F.Y.

1992/93

1993/94

1994/95

1995/96

1996/97

1997/98

1998/99

1999/2000

2000/01

2001/02

Export

56.75

52.65

57.23

62.86

70.94

90.02

129.58

716.27

682.32

271.96

F.Y.

2002/03

2003/04

2004/05

2005/06

2006/07

2007/08

2008/09

Export

255.30

257.18

284.95

288.06

271.64

537.49

569.31

34.23

2009/10
555.07

Export has multi faceted influence to the economic growth. It earns foreign currencies and reduces the trade deficit.
Export based form creates the employment opportunities. Most of the raw materials used by the handicraft exporting
cottage industries are domestics. MSEs export to total export ratio ranges from 1% to 14%. In 1999/01, handicrafts
goods export increased to 14% of total trade. Export was increased by 453% form 1999/2000 to 2000/01. The share of
export also increased from 4% to 14%. At the same time total export was increased by 40%. Figure 1 exhibit the share
of handicrafts goods on total export.
Figure 1: Share of handicraft goods export to total export ( in percentage)
16%

14%
12%
10%
8%
6%

4%
2%
2009/10

2008/09

2007/08

2006/07

2005/06

2004/05

2003/04

2002/03

2001/02

2000/01

1999/2000

1998/99

1997/98

1996/97

1995/96

1994/95

1993/94

1992/93

1991/92

1990/91

1989/90

1988/89

1987/88

1986/87

1985/86

1984/85

1983/84

1982/83

0%

Source : Economic Survey 2009/10, FHAN Report, 2010


ii Employment creation:
Another contribution of MSEs to the economy is creation of employment opportunity. According to the record formally
registered and renewed cottage industries up to 2009/10 are 2,16,663 where Rs. 1,45,250 million of amount has been
invested. About 18 lakh 44 thousand people are getting an employment opportunities. There is no doubt that SMEs play
vital role to create job opportunities. Beyond this figure, it is estimated that about 600,000 micro enterprises are existing
in societies which also create additional job opportunities. (ILO:2005). Following data shows that in an average, each
firm provides job opportunities for 8 to 9 people. According to the Industrial policy 2010, to be a micro enterprises the
number of employees should not exceeds 9 including the owner.
Table 4: Employment and Investment in Small and Cottage Industries
Particulars

Unit

Total Rs.

Investment

Rs.

1,45,25,00,00,000

Per Firm
6,70,405

Micro and Small Enterprises in Nepal: Prospects and Challenges Rabindra Ghimire

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No. of Registered Firm

No

2,16,663

No. of Employment

No.

18,43,908

8.5

Source : Department of Cottage and Small Industries, 2010


Data shows that in cottage and small industries there is average investment around Rs. 6 lakh 70 thousand per firm. It
includes land and building, other fixed assets and working capital. DCSI has further divided the industries in cottage
and small industries where 10% are cottage industries and rest of 90% are small industries.

Figure 2: No. of CSI and Employment for 1990 to 2010


500
450
No. of
Firm ( In
Thousand)

400
350
300

No. of
Employme
nt ( in
Thousand)

250

200
150

100
50

Source : Economic Survey 2009/10, DCSI Report


ii Handicraft export in different continent
Handicraft product of Nepal is very popular around the world which is proved by the export data of different year. In
2006/07, Nepal had exported its handicraft product more than 87 countries almost all continent of the world. Details of
export amounts is shown in annex 2. As per the data available from the FHAN in 2006/07 Rs. 2.71 Billion of goods was
exported in different 87 countries out of this amount 45% was exported to Europe, 31% to America, Canada, Mexico
and Argentina, in Asia 22% and 2% to Australia and New Zealand, whereas in Africa less than 1% was exported.
Entrepreneurs should focus European market since there is high possibility of selling handicrafts goods.
Table 5: Export of Handicraft products to different continent ( 2006/07)

Continent
Europe

Amount Rs. 000


12,18,094

Percentage of total export


44.77%

Micro and Small Enterprises in Nepal: Prospects and Challenges Rabindra Ghimire

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2
3
4
5

North and South America


8,39,466
Asia
5,94,811
Australia & NZ
57,694
Africa
6,319
Total
27,16,384
Source : FHAN Report, regrouping of data by author
6.

31%
22%
2%
0.23%
100%

Conclusion
Cottage industries are not new for Nepalese society. Due to the fast liberalization process most of the existing industries
are severely affected because of their inability to compete with consumer goods being freely imported after the
withdrawal of quantitative restrictions and the drastic reduction of import tariffs. There are challenging facing by the
SMEs. In the age of globalization, every local product should compete with the global product. Cost is first challenge of
the SMEs and quality also comes together. Lack of technical know how, lack of marketing strategies, lack of financing
are some examples facing by our MSEs. It is found that most of the micro enterprises are still operating their activities
in informal sector. Government is small efforts doesn't success to transmit them in the mainstream of the economy.
Lack of sufficient fund to MSEs also another challenges. Micro finance program has limited resources and do not cover
the whole country. Technology used by the MSEs is very simple, indigenous and low productive so that it hardly
compete with the medium and large scale industries. Most of the enterprises are run by the uneducated people so that
they have lack of proper management skill and knowledge. Marketing of the goods and services is another challenges.
Quality of product also a major issue. Most of the micro enterprises are established as a last alternative, until owner
receive the other alternative. Data shows some of the old firms are being discontinued due to various reasons.
There are tremendous opportunities with the challenges. Agriculture provides only seasonal employment for the rural
population, which constitutes 88 per cent of the total population. Hence, off- season and off- farm activities such as
weaving, knitting, basketry, teashops and roadside shops complement rural incomes. In addition, informal rural
microenterprises have the opportunities to supply goods and services to local manufacturers using traditional
technologies.
There is no doubt that SMEs play a fundamental role in utilising and adding value to local resources. In addition,
development of SMEs facilitates distribution of economic activities within the economy and thus fosters equitable
income distribution. Furthermore, SME technologies are easier to acquire, transfer and adopt.

Micro and Small Enterprises in Nepal: Prospects and Challenges Rabindra Ghimire

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Micro and Small Enterprises in Nepal: Prospects and Challenges Rabindra Ghimire

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Annex 1 : Export of Handicraft Goods and total export 1982/83 to 2009/2010


Export (Rs. Ten Million)
F.Y.

Handicrafts

Total

Ratio Handicraft Export to Total


Export

1982/83

113

2%

1983/84

170

2%

1984/85

274

2%

1985/86

1707

1%

1986/87

301

1%

1987/88

411

1%

1988/89

10

419

2%

1989/90

16

516

3%

1990/91

19

739

3%

1991/92

34

1371

2%

1992/93

57

1723

3%

1993/94

53

1929

3%

1994/95

57

1764

3%

1995/96

63

1988

3%

1996/97

71

2264

3%

1997/98

90

2751

3%

1998/99

130

3568

4%

1999/2000

716

4982

14%

2000/01

682

5565

12%

2001/02

272

4694

6%

2002/03

255

4993

5%

2003/04

257

5391

5%

2004/05

285

5871

5%

2005/06

288

6023

5%

2006/07

272

5938

5%

2007/08

537

5927

9%

2008/09

569

6770

8%

2009/10

555

7468

7%

Source: Economic Survey 2009/10, FHAN Report 2010

Micro and Small Enterprises in Nepal: Prospects and Challenges Rabindra Ghimire

Page 10 of 12

Annex 2: Country wise Export of Handicraft Goods in 2006/ 2007


SN

Country to Export

SN

Country to Export

USA

6,39,902

23

China

14,289

Japan

2,49,846

24

Czech Republic

13,357

Germany

2,40,354

25

Turkey

10,258

UK

2,23,894

26

New Zealand

10,143

Italy

2,05,909

27

Malaysia

8,290

Canada

1,93,111

28

Portugal

8,267

France

1,67,288

29

Pakistan

7,496

Tibet

1,33,340

30

UAE

7,157

Switzerland

63,921

31

Hungary

5,669

10

Netherlands

61,768

32

Thailand

5,533

11

Spain

51,401

33

South Africa

5,487

12

India

51,361

34

Bhutan

4,289

13

Denmark

49,031

35

Brazil

4,106

14

Australia

47,552

36

Greece

3,593

15

Taiwan

35,934

37

Finland

3,317

16

Sweden

29,153

38

Ireland

3,274

17

Hong Kong

24,015

39

Ukraine

2,965

18

Belgium

23,535

40

South Korea

2,787

19

Russia

18,092

41

Slovenia

2,673

20

Norway

16,888

42

Mexico

1,964

21

Austria

15,697

43

Israel

1,893

22

Singapore

14,600

44

Latvia

1,576

SN

Country to Export

Amount Rs. 000

Amount Rs. 000

Amount Rs. 000

SN

Country to Export

45

Lithuania

1,418

67

Bosnia & Herzegovina

266

46

Croatia

1,344

68

Qatar

261

47

Luxembourg

1,188

69

Indonesia

246

48

Poland

970

70

Slovak

212

49

Lebanon

918

71

Mauritius

193

50

Sri Lanka

878

72

Bulgaria

190

51

Vietnam

786

73

Romania

178

52

Egypt

725

74

Kuwait

174

53

Chile

724

75

Puerto Rico

158

54

Armenia

718

76

New Caledonia

109

55

Cyprus

662

77

Iceland

105

56

Bahrain

591

78

Macau

82

57

Belarus

574

79

Saudi Arabia

80

58

Mongolia

540

80

Jorden

28

59

Oman

517

81

Afghanistan

26

60

Estonia

514

82

Serbia & Montenegro

20

61

Philippines

454

83

Maldives

12

62

Argentina

378

84

Iran

11

63

Fiji

335

85

Georgia

64

Morroco

333

86

Colombia

65

Uruguay

304

87

Others
Total

Micro and Small Enterprises in Nepal: Prospects and Challenges Rabindra Ghimire

Amount Rs. 000

4
13,872
27,16,384

Page 11 of 12

Annex 3: Special Policy of Government of Nepal to promote the micro, cottage and small scale industries:
a)
b)
c)

d)
e)
f)

g)
h)
i)
j)
k)

Build infrastructure and organizational structure, form legal provision to promote, develop and extension of the
micro, cottage and small scale industries.
To extend and make effective to the existing Micro, Cottage and Small Scale Industries Development Fund to
improve the competitiveness, market access and market extension.
On the basis of the availability of the natural resources, human resources and investment opportunities in
coordination with local authorities District Industrious and industrial development plan will be prepared and
implemented phase wise basis.
Focus will be given to the target community and motivate them and build capacity to operate the Micro, Cottage
and Small Scale Industries.
To deliver Business Development Service to production base industries in rural area, Community and Cooperative
Micro, Cottage and Small Scale Industries industrial cluster will be developed.
Identify the One Village One Product in each village and promote the appropriate product "Product Development
Centres" will be established and priority will be given to industrial promotion through Product Specific Industrial
Clusters.
To recognize the product of Micro, Cottage and Small Scale Industries assist to use Collective Mark and help to
promote the product.
Provide integrated and capable institutional provisions for the protection of the intellectual property and encourage
to proper protection and use of this property to Micro, Cottage and Small Scale Industries.
Suitable Information Technology will be provided to Micro, Cottage and Small Scale Industries to produce and
market promotion.
Priority will be given to social mobilization tools to promote, development and extension of Micro, Cottage and
Small Scale Industries.
Provide financial access through equity fund, credit guarantee fund, rural self reliance fund.

(Source: Industrial Policy, 2010)

Micro and Small Enterprises in Nepal: Prospects and Challenges Rabindra Ghimire

Page 12 of 12

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