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ENTREPRENURES IN NEPAL : An Empirical Study

– Dr. Fatta Bahadur K.C.
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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.

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Reader, Nepal Commerce Campus, Tribhuvan University, Kathmandu.

the financier (investor) and the manager in the process of industrial development. In the literature of economic development. At the same time he has to act as the financial manager. So it can be stated that an entrepreneur has to act both as a mother and as a mid-wife. The industrial sector contributes around 8 percent to GDP and provides employment to about 2 percent of economically active population. brings together the requisites like men. . works out the tentative scheme of organization. More than 32 percent of population lie below the poverty line and the annual per capita income is not more than U. III.$ 370. money and managerial ability and floats the new enterprise. the marketing manager and the personnel manager in an existing concern.4 percent and 33. An entrepreneur conceives the idea of a business (industrial) enterprise. The Objectives and Methodology of the Study The basic objective of this study is to carry out a small research on entrepreneurs in Nepal. The responses there from were collected and tabulated for analysis.e. The pace of industrialization in Nepal has remained very slow. Many economists including Joseph Schumpeter glorified the role of the entrepreneur and regarded him as the key figure in the process of economic development. machines. is the central figure in this modern era of business.6 percent in rural and urban Nepal respectively (Nepal Rastra Bank: 1988:64. He has taken all important decisions and implement these decisions for obtaining the predetermined objectives of his organization.II. 75). an entrepreneur has been heralded as the innovating man. 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. They could assist to generate employment opportunities. Nepal is a least developed country. Nepal has been experiencing unemployment and acute under-unemployment problem. Economic development of any country cannot be initiated without the pioneering efforts of entrepreneurs.S. the path-breaker and the pace-setter of economic and industrial growth (Joshi. to raise income and to break the vicious circle of poverty. In order to present and analyze the tabulated data. entrepreneurs and 15 academics including university teachers. For it only three questions were developed and distributed to 10 businessmen. Role of Entrepreneurs An entrepreneur. materials. because it is he who faces various problems to bring the new enterprise to existence and brings it up into a successful venture. 1977:39). the production manager. The table below presents the role of entrepreneurs that they can play in the process of industrial and economic development of Nepal. However. the statistical tools like the mean value and the ranking were used. In a developing country like Nepal.1 percent. the percentage of unemployed in the total labor force was estimated at 3. He identified that the ultimate determining factor of the rate of economic growth is the availability of dynamic entrepreneurship in the country concerned. analysis its prospects. In a case study conducted by Nepal Rastra Bank. entrepreneurs have important role to play in the process of industrial as well as economic development. Similarly the under-employment rate worked out to 46. an entrepreneur has to play multi-dimensional roles. questionnaire. He could be worked as the promoter. Therefore. who is also known as a risk-bearer.

67 4.67 4. luxurious imports and other speculative motives.24 4.32 3.11 4. 3.08 3. lack of adequate protection to investors. 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. amassing of gold and silver. human resource development.83 2.31 2. 3.83 3.26 and 4.80 2. 3.20 3.00.64 Rank 2 4 3 1 5 Overall Mean 1. industrial growth. They have been actually channelising their resources on nationally unproductive sectors like acquisition of land.12 3.26 3.61 3. Entrepreneurs Barriers Limited access to capital Low level of confidence Low return from industrial investment Lack of education and training Political instability Lack of favorable policy Mean 2. 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.49 1. In the following section.92 Rank 1 4 3 6 2 5 Academics Mean 3.46 4.80 Rank 4 2 3 5 1 6 Overall Mean 3. construction of building.20 2. conservative lending policy of banks and financial institutions.76 3. lack of proper entrepreneurial education and training facilities.12.06 Rank 1 4 3 2 5 As shown in the table. unstable and unsuitable economic and industrial policies of the government.75 4. 1989 & 2003). etc.35 3. 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. 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.. Academics Entrepreneurs Role Capital formulation and mobilization Employment generation Industrial growth Human resource development Balanced regional development Mean 1.02 3.76 1.83 2.60 4.21 3.06 respectively.C.32 3.00 4. low rate of return from industrial investment.47 Rank 1 2 4 5 3 Mean 2.Table 1: Role of Entrepreneurs Businessmen. IV.36 Rank 3 2 4 6 1 5 . 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. employment generation and balanced regional development showing the mean values 1.76.

It can thus. It is especially important to encourage more people to be long term entrepreneurs interested in permanent business. low level of confidence and limited access to capital are the main problems of Nepalese entrepreneurs. So. Nepalese businessmen and entrepreneurs have viewed that their main barriers include limited access to capital. The stronger are the motives and abilities. Table 3 attempts to present the remedial measures to solve the problems and support the entrepreneurs. low return from industrial investment. expansion of institutional services and provision of training and education. commercial banks and other financial . 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. some suggestive measures are presented to motivate entrepreneurs as well as to induce industrial investment in Nepal.03 Rank 3 4 1 2 5 The table reveals that easy access to finance and favorable government policy are the two most important measures to motivate entrepreneurs in Nepal. rather than short term speculators. low level of confidence and lack of favorable policy of the government. thus. be concluded that political instability. Here.59 4. the lending policy of development banks. Again. congenial environment will be less necessary.72 2. abilities and congenial environment all combine to promote entrepreneurship. Table 3: Measures to Support Entrepreneurs in Nepal Measures Creation of investment-friendly climate Extension of institutional services Easy access to finance Favorable government policy Provision of education and training Mean 2. Motives. it is required to motivate entrepreneurs especially in the private sector. Nepalese entrepreneurs have been facing so many barriers in the way of creation of new ventures and smooth operation of the existing ones.As mentioned earlier. low level of confidence and low return from industrial investment are the major causes responsible for poor entrepreneurial motivation in Nepal. The entrepreneurial ability and talent could be improved by organizing entrepreneurship development program for present and potential investors. It is. It is also found that other supportive measures include creation of investment-friendly environment.98 1. political instability. Academics viewed the political instability. 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. First of all. adequate institutional services and effective policy changes will help to create an environment which is conductive to induce industrial investment. attitudes and motives of the people in the private sectors to become rich overnight must be diverted to mobilize their resources in productive sector. Overall ranking also indicates the similar results.62 3. 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. 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. V.

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

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