Agriculture in Nepal, Investment Analysis

Between India and China is the little country of Nepal. Although it has a special physical location and a wide range of altitudes, it is also incredibly biodiverse. In terms of religion, language, culture, and customs, this diversity is evident. It would be difficult to conceive given its size the vast natural riches it boasts of as a tourist destination (Nepal and Karst, 2016). In addition to eight of the highest mountains in the world, it is home to over 800 bird species, which make up 8% of the world’s bird population. It has a total size of 147,181 square kilometers and a population of 29,249,225, or 0.39% of the world’s population. Kathmandu serves as the nation’s capital. The nation has 125 ethnic groups who comfortably speak 123 languages and subscribe to 10 different religions. According to Discovery World Trekking (2017), the nation has a unique united diversity of its kind. No tribe is superior to the other making it a laboratory for ethnic study. In May 2017, Minister for finance Krishna Bahadur Mahara projected that Nepal’s per capita income reached $ 862 (Onlinekhabar, 2017). Nepali people hugely rely on agriculture, businesses and foreign employment. In terms of UN human development rankings, Nepal was ranked 144th in the year 2015 just below Cambodia and above Myanmar and scored an index of 0.558 (UNDP, 2016). This means that it has not performed well in creating avenues through which people can develop.

On political rights and civil liberties freedom: Nepal had a decade long civil war which ended in 2006. They held competitive general elections in 2008 and 2013 and adopted a permanent constitution in 2015. They also have had successive coalition governments which have become hard to run. The political rivalry has seen parties pursue their own interests to the detriment of the well-being of Nepalese people (Gopal, 2017). Corruption has been rife in government, politics and the judicial system. Police service has been severally put in the limelight because of excessive use of force while prison conditions also have remained deplorable. There has been widespread open discrimination against low-caste Hindus, ethnic minorities, gender based violence, child labor, sex trafficking of women and under-aged girls and Christians (Freedom House, 2017). In light of the afore-mentioned, political rights scored 3.5/7 while civil rights liberties scored 4/7 which averages 52% by aggregate. It is also important to note that freedom of the press is partly fundamental.

The Economic position of Nepal over other countries: There is lack of entrepreneurial dynamism that defines economic prowess of this great nation. There are weak reforms that have greatly failed in alleviating people from poverty (Bastola & Sapkota, 2016). The state is using its power to muzzle private sector development which in turn affects economic growth. Business activities have also dragged due to static approach. There is total lack of transparency, run away corruption, and burdensome approval processes which are more bureaucratic and only meant to impede the much-needed expansion of private sector investments.

Weaker and compromised judicial systems work against property rights. In view of this, regional countries have performed much better compared to Nepal. It is a country of very rich few people while a majority wallow in abject poverty. Developed countries like the United States of America (USA) have allowed and supported budding entrepreneurs. There are better and stronger reforms that are helping such countries in alleviating people from poverty (Sharma, 2006). The USA as a country has stronger constitution and institutions that fight for the people. The judicial system cannot be swayed to rule in a manner that can affect the entire general population of the state (Asian Foundation, 2012). The State has no power to muzzle private sector development. They understand that it is in the private sector development that most people get employed. Issues of unemployment are solved when many people find employment opportunities.

Classification and government structure: Nepalese people have a unique government structure that is classified into three which includes the executive, legislative and the judiciary. Under the executive are head of state, prime minister and the council of ministers, administrative structures, field level organizations, independent bodies, constitutional bodies, management of public agencies, other public services, governance, implementation, management processes, accountability arrangement and oversight institutions. The legislative arm is the parliament (Asian foundation, 2012). Under it are constituent assembly, law making processes, other parliamentary functions and parliament secretariat. The judiciary is responsible for the general courts.

Nepal Regime: Many countries are today trying to bring democratic gains through the Constitution. This nation is not left out as it is a democratic state. It is a country of few millionaires versus million poor people. Rights of people that are enshrined in the Constitution are a preserve of the few. There are no checks and balances as developed worlds making political systems to have fissures (Human Rights Watch, 2017). Elections are usually corrupt as elected people cannot fix most of the challenges bedeviling the nation. Nepali politics coalesce around race and caste. Those who were born in lower caste struggle to be heard. As much as people want democratically elected leaders, Nepal has ended up with a more authoritative regime.

Elections and an electoral system: Nepal has 75 districts which are subdivided into 744 local units while each unit is further divided into 5 wards. Each voter has the mandate to select 7 representatives. Nepalese people elect executive heads, deputy heads, and ward committee members during elections (Asian Foundation, 2012). The Electoral Commission of Nepal (ECN) is the only constitutionally mandated independent body responsible for conducting elections. It is currently headed by chief election commission officer and other four additional commissioners. It is supported by a secretariat with 159 full time-based officers in the capital city of Kathmandu.

The ECN has several functions which include, advice to the government on election date, ask for security during elections from the national government, monitor election campaigns and impose sanctions on those found to be violating electoral laws, authorize election observation, delegate duties to government employees by requesting for necessary assistance from the government, register or disqualify candidates they deem should not hold any electoral office and may so decide to cancel elections due to threats of violence (Asian Foundation, 2012). It is important to note that the people have the sole responsibility of electing their leaders for a five-year term under the promulgated Constitution of 2015.

The constitution is barely two years old having got an overwhelming support from the people since it is considered very much effective than the older one that was in use before. Head of the government is the prime minister in a parliamentary system (Human Rights Watch, 2017). This nation is a federal state where policies are administered through structures of government already discussed. The judicial power in Nepal is exercised by courts and other judicial institutions which are headed by the chief justice appointed by the president. There are, however, three courts which include the Supreme Court, appellate and district courts. Supreme Court is the highest court in Nepalese land.

The governments control over the economy: Nepalese people have had for a long time a non-responsive government to the people’s needs. A lot of budding companies have collapsed in the past because of lack of government support (Bastola & Sapkota, 2015). Poor policies that existed could not help either. Authorization that was meant to protect people became more bureaucratic as most of the required legal licenses could not be obtained in time. The government’s control over economy contributed much to its sinking due to corruption and a number of the mentioned malpractices.

The question whether the government has had control over economy should not arise because a lot more people have since remained poorer than before. There have been civil unrests to change the constitution so that the government could be fully held to account. With the promulgation of the Constitution, people are now beginning to believe in their own power (UNDP, 2016). The belief that the constitution will open avenues for the competition is now a reality. There is also a belief that Nepal will be economically stable with people being given equal opportunity to compete for the available resources. The gap between the few millionaires shall also be closed with the good and responsive government. There are thirty political parties in Nepal with seven being stronger than others (Nepal & Karst, 2016). They include Nepali Congress, the Communist Party of Nepal (Unified Marxist-Leninist), the communist party of Nepal (Maoist), Rashtriya Prajatantraparty, Rashtriya Janata Party Nepal, Nepal democratic forum, and federal socialist forum with a representation of 207, 181, 82, 37,24 18 and 15 respectively.

Continued conflict between political parties in the post-civil war period has affected the country’s development. The failure of former Prime Minister Pushpa Kumar Dahal to guarantee accountability for human rights violation during the civil war has renewed intense political bickering among the country’s major political parties (Human Rights Watch, 2017). Dahal’s government undertook to address the gross abuses of human rights in the wake of the 2006 peace agreement. Nepal experiences lack of political goodwill among the political leaders which are the reason perpetrators of violence do not find justice.

There are two electoral systems in Nepal which include parallel voting and first past the post. The former is used during the election of members of the legislature and provincial assemblies while the latter is used for local elections (Human Rights Watch, 2017). The people of Nepal are required to participate in the electoral process through the election of the President, Vice-president, and federal parliament. The major political change occurred in 2015 when major political parties contested the adoption of the Constitution. The major social movement in Nepal has been geared towards the abolition of monarchy and establishment of a democratic government. According to Gopal (2017), Nepal was a monarchy for 239 years. The general election will be held on November 26 and it is expected to end a turbulent path to the country’s democratization.

Nepal’s department of industries (DOI) administers and implements Foreign Investment and technology transfer Act which has regulated foreign investment in the country. Nepal allows foreign investment to take many forms such as investment in equity, loans, machinery and equipment, and reinvesting earnings from shares (Ministry of Industries, 2017). The government policy on foreign investment set the minimum of FDI NPR 5 million from every investor. The policy also bars foreigners from investing 100% equity share in industries such as personal service businesses, tobacco, security printing, fisheries, bee keeping, poultry, and atomic energy (Ministry of Industry, 2017). This policy is disadvantageous for foreign investors who may want to set up agricultural enterprises in the country and have full ownership of the agricultural industries. Nepal allows investment through private limited and public limited companies but not sole proprietorship and partnerships.

Political processes in Nepal have strangled the country’s economic progress. The communist party which took power after the abolition of monarchy failed to undertake rapid socioeconomic transformation. There is hope that the political climate will stabilize and allow economic growth after the national elections in November (Gopal, 2017). However, the economic development process has been premised on five-year plans. The introduction of economic liberalization in the country has improved Nepal’s standards of living unlike the past when the country was an isolated agrarian society. The agricultural sector in Nepal has provided employment for about 65% of her population making it the major economic mainstay in the country. Human rights abuses occurred in the backdrop of the conflict that pitted the government of Nepal and the communist party leading to 2006 (Amnesty International, 2016). The abuses included torture, arrests, unlawful killings, and abductions. The failure of the successive Nepalese governments to investigate the excessive use of force has exposed the government’s lack of commitment to human rights. Nepal is not in conflict with her neighbor. However, it becomes a target of major world powers including the United States, China, and the European Union. The great powers have provided aid to Nepal with the aim of influencing her socioeconomic agenda. Nayak (2008) reveals that the great powers have divergent interests in Nepal. For example, the European Union has helped Nepal with humanitarian assistance while China and the United States have latent strategic interests. In so doing, the great powers have complicated the country peace process.

Conclusion

The study reveals that political crisis in Nepal has delayed its economic transformation. 239-year old monarchy which was succeeded by a decade-old civil war frustrated Nepal’s socioeconomic development. The fighting between the government forces and the communist party not only violated human rights but also destabilized the country’s political environment. The study reveals a significant potential for agriculture in Nepal because the industry employs about 65% of the national population. Investment in Nepal is allowed although under strict conditions which require public limited and private limited companies. It is imperative for foreign investors to recognize that Nepal’s government policies discourage 100% equity ownership in crucial agricultural activities such as poultry, fisheries, bee keeping, and tobacco. There is hope that the post-2016 political environment will encourage foreign investment in the country and improve its economic growth.

References

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Bastola, U., & Sapkota, P. (2015). Causality between trade and economic growth in the least developed economy: Evidence from Nepal. The Journal of Developing Areas, 49(4), 197-213.

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Ministry of Industry. (2017). Foreign Investment in Nepal: Procedures. Retrieved from http://www.investnepal.gov.np/portal/index.php?p1=content&p2=9#.WbS6wtFLfIU

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Onlinekhabar. (2017). Nepal’s per capita income projected at USD 862. Retrieved from: http://english.onlinekhabar.com/2017/05/28/401021.html

Sharma, K. (2006). The political economy of civil war in Nepal. World Development, 34(7), 1237-1253.

UNDP. (2016). Human Development Report. Retrieved from: http://hdr.undp.org/en/composite/trends