2018 Digital Nepal Framework

2018 DIGITAL NEPAL FRAMEWORK
Unlocking Nepal’s Growth Potential
Government of Nepal
Ministry of Communication
and Information Technology
Table of Contents
Executive Summary ............................................................................................................................ 1
Setting the Context ............................................................................................................................ 5
State of Digital Adoption in Nepal ............................................................................................. 12
Digital Nepal Framework: 1 – 8 – 80 .......................................................................................... 18
Agriculture ...................................................................................................................................... 20
Healthcare ....................................................................................................................................... 30
Education ........................................................................................................................................ 38
Energy .............................................................................................................................................. 50
Tourism ............................................................................................................................................ 58
Finance ............................................................................................................................................. 69
Urban Infrastructure .................................................................................................................... 79
Connectivity ................................................................................................................................... 93
Business Environment Enablers ............................................................................................... 105
Draft
Executive Summary
Background
Bordering two of the world’s fastest-growing economies – India and China – Nepal has
eight of the world’s highest mountains, an abundance of natural resources, and
multidimensional cultural heritage attracting tourists globally. Despite having these
enticing features, Nepal has not been able to tap its growth potential due to prolonged
political uncertainty.
That stated, Nepal has made significant progress on reforms with the adoption of a new
Constitution in 2015, transitioning from a unitary to federal state, and election of a stable
government. The new Government’s priorities are centered on development and targeted
initiatives to realize its goal of attaining developing nation status by 2022, and middle-
income country status by 2030.
The Prime Minister of Nepal, Khadga Prasad Oli, has outlined his vision of “Prosperous
Nepal, Happy Nepali” with broad objectives to address some of the basic challenges
facing the country. Key focus areas include:
 Building capabilities to grow the country’s tourism sector
 Focusing on rapid build-out of infrastructure – water, transportation, and energy
 Ending absolute poverty, illiteracy, and unemployment
 Providing health insurance and free health care for every citizen
 Accelerating post-earthquake reconstruction efforts
 Curbing the flow of young talent leaving the country
 Increasing farming productivity
Digital Journey
Nepal has enjoyed incredible success in digital adoption as compared to its neighbors,
with mobile penetration exceeding 100% and Internet penetration reaching 60%.
According to the Nepal Telecom Authority, there was an addition of 2.25 million new
Internet users in 2017 alone, translating into approximately 250 new Internet users every
hour.
Nepal is expected to lead Internet penetration by 2025 in comparison to major economies
such as China and India, given its growth trend over the next few years. The growing
popularity of social media is a crucial driver for Internet adoption in Nepal, coming second
only to Bhutan in South Asia in social media penetration. As at January 2018, Nepal has
nearly 9.3 million Facebook users. Entertainment and video sharing are other popular use
cases with more than 6.4 million registered users on YouTube.
Draft 1
What is Digital Nepal?
The early success with Internet and mobile provide the impetus for Nepal to leverage the
potential of digital technologies to drive accelerated growth. The Digital Nepal
Framework is a blueprint that provides a roadmap to how digital initiatives can:
 Contribute to economic growth
 Find innovative ways to solve major challenges facing society in a shorter period
with fewer resources
 Identify opportunities for Nepal to participate in the global economy
The digital initiatives have been selected based on:
 Alignment with the vision of Prosperous Nepal, Happy Nepali
 Demonstrated success in other similar developing markets
 Ability to execute in the local environment
The Digital Nepal Framework encompasses:
 One Nation
 Eight Domains
 80 Digital Initiatives
The Digital Nepal program is designed to enable Nepal to harness its

growth potential by leveraging disruptive technologies and driving
socioeconomic growth. The program is expected to deliver an impact of up
to NPR 800 billion by 2022
GDP Growth Forecast, Nepal, 2013/14–2021/22F
10.0%
5.0%
0.0%
2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22
(F) (F) (F) (F) (F)
BAU Digital Nepal
Source: Frost and Sullivan
Eight Domains and Eighty Digital Initiatives

Under the Digital Nepal framework, eight sectors – agriculture, health, education, urban
infrastructure, energy, tourism, finance, and connectivity – have been identified based on
close engagement with stakeholders.
Draft 2
Frost & Sullivan has identified 80 digital initiatives which aim to propel socioeconomic
growth in Nepal by addressing crucial challenges while unlocking the growth potential in
each of the eight key sectors.
Agriculture Healthcare
1) eHaat Bazaar 10) National Digital Healthcare Program
2) Precision Agriculture 11) High Speed Internet Access
3) Agriculture Tools Sharing 12) Next Generation Digital Facilities
4) Digital Payment of Subsidies 13) EMR
5) Specialty Food Program 14) Health Procurement and Distribution
6) Digitalization of Land Records Solution
7) Smart Irrigation Project 15) Mobile Health Units
8) Education and Training Programs 16) eMaternal Care
for Farmers 17) Drones for Medical Emergencies
9) State of the Art Knowledge 18) Centralized Telemedicine Centre
Centers
Education Energy
19) Smart Classrooms 28) Smart Pricing
20) OLE Nepal 2.0 29) Smart Metering
21) Online Learning Platform 30)Smart Grid
22) Rent-a-Laptop Program 31) NEA Official Mobile App 2.0
23) GSM Mapping 32) Any Branch Payment
24) Centralized Admission System 33) Smart Building
25) Biometric Attendance and CCTV 34) NEA Field Force Automation
Cameras 35) NEA Customer Service Portal
26) Co-creation Hubs 36) NEA e-Learning Centre
27) Mobile Learning Centers in Rural
Areas
Tourism Finance
37) Welcome Nepal Website 46)GPS Tagging of Branches
38) Welcome Nepal App 47) National Biometric ID Card
39) eVisas 48) Gamification of Digital Payments
40) Multilingual Helpline 49)Allow Telecom Operators to offer
41) AR / VR Digital Financial Services
42) Electronic Tour Guides 50)Digital Payments Campaign
43) Omnichannel Marketing
44)Free Wi-Fi for Tourist Areas
45) Training Programs for Local Guides
Draft 3
Urban Infrastructure Connectivity
51) Water ATMs 66) Internet - A Fundamental Right

52) Smart Metering 67) Availability of Spectrum
53) Pipeline Monitoring 68) Take lead in 5G
54) Intelligent Waste Management 69) Fiber Broadband Network
55) Crowd Sourcing for municipal 70) High Speed Connectivity for
services Government Establishments
56) Automated Waste Sorting 71) Nepal Cyber Security Centre
57) Connected Public Transport 72) SEZ for IT sector
58) Public Transport App 73) Government of Nepal App
59) Multi-modal Smart Cards 74) eGovernance 2.0
60)Intelligent traffic management 75) Paperless Government
61) Intelligent Parking Lot Management 76) Kathmandu Digital Hub
62) Intelligent Toll Booths 77) Public Wi-Fi Hotspots
63) National Disaster Management 78) Digitally Streamlined PPP Platform
System 79) Digital Literacy Training
64) Ride Sharing 80)Government eLearning Platform
65) Disaster Management Training
Business Environment Enablers

The success of Digital Nepal Framework will require a high degree of emphasis on
implementation. Government of Nepal needs to focus on the following priority areas to
create an enabling environment for the success of Digital Nepal initiatives:
Technology and Talent and Skills

Entrepreneurship/PPP
Infrastructure Development
Digital connectivity needs Encourage private sector Improve Digital Education.
to be a key priority. participation. Possible Possible actions include:
Possible actions include: actions include:
 Compulsory IT education
 Make Internet access a  Digitally streamline PPP in schools and colleges
fundamental right for application system to  Increase the education
every citizen mobilize private system’s capacity to
 Improve availability of investment impart advanced ICT
spectrum to the  Tax holidays and education
operators to enhance incentives for investment  ICT literacy programs for
service coverage and in Digital Nepal program rural communities and
quality  Start-up accelerator underprivileged Nepali
 Take leadership in driving program to build a strong people
5G adoption in South ecosystem for nurturing  Ongoing communication
Asia innovation and and celebration of digital
 Establish a nationwide entrepreneurship stories of success
fiber network
Facilitate development of a Encourage foreign direct Making public servants
robust financial ecosystem. investment in priority areas. digitally-ready will be
Possible actions include: Possible actions include: essential. Possible actions
include
 Encourage digital  Fast-track FDI
payments applications for Digital  Digital skills training for
 Attract investments in Nepal initiatives public sector employees
Fintech by encouraging  100% FDI and easier
the growth of startups repatriation of funds for
and telecom companies Digital Nepal initiatives
to offer services to drive
financial inclusion
Draft 4
Setting the Context
Background
Bordered by two of the world’s fastest growing economies – India and China, Nepal has
eight of the world highest mountains, abundance of natural resource (especially fresh
water resources) and multi-dimensional cultural heritage attracting tourists globally.
Despite these, Nepal has not been able to tap its growth potential due to multifaceted
challenges including political uncertainty, trade disruptions, and natural disasters (like twin
earthquakes in 2015 and floods in 2017). Political instability had become a part of life
among residents, with the country changing twenty governments since the introduction of
democracy in 19901.
However, Nepal has made significant progress on reforms recently with adoption of new
Constitution in 2015, transitioning from a unitary to federal state, and election of a stable
government.
 The country’s first-ever local government elections in state assemblies and the
Federal Parliament in 2017 marked a crucial and positive move towards federalism
and political stability.
 The new Constitution aims to turn around the economic and political situation,
ensure a double digit economic growth over the next 10 years2 and create an
inclusive, pluralistic democracy, and a mixed market economy.
 One of the key targets of the government is to graduate from its status as a LDC
by 2022, become a middle-income economy by 2030, and a developed country by
20993, and towards this, has implemented several long-run policies and programs
that are centered on the UN’s Sustainable Development Goals (SDGs).
Macro-Economic Environment
Nepal has registered a steady growth in GDP during 2010-2015, with GDP growth hovering
around 5.0%. However, a massive earthquake in April 2015, significantly impacted the
country’s economic development and GDP growth in FY 2015/16 dropped to 0.6%
 In 2016-17, growth picked up significantly to 7.5%, driven by good harvest,
significant foreign aid, normalization of trade activities and improved electricity
1
UNESCO
2
Nepal Joint Election Manifesto, 2017
3
Nepal Joint Election Manifesto, 2017
Draft 5
supply management. Nepal ranked as the third fastest growing economy in the
world in 20174 in terms of GDP growth
 Going forward, GDP growth is likely to normalize around the pre-earthquake figure
of ~5.3%, sustained by increased spending on reconstruction and election activities.
However, this may be offset by a slowdown in remittance inflow due to a decline in
the number of outgoing migrants.
Nepal GDP (US$ billion) and GDP Growth (%), at constant prices, 2013/14 – 2021/22F
7.5%
35.0
32.4
30.0
5.4% 27.7
26.2
23.8
20.0 21.3 21.2 5.8%
5.3% 5.5%
4.8% 5.0%
2.7%
0.6%
2013/14 2014/15 2015/16 2016/17 2017/18F 2018/19F 2019/20F 2020/21F 2021/22F
GDP ($ bn) GDP Growth (%)
Source: Frost & Sullivan, Nepal's Macro Environment and Key Industry Prospects, 2017–2022; F indicates
forecasts
Nepal is considered to be one of the least developed countries in the world with low per
capita income. Further, low economic growth rates in Nepal compared to other countries
in the region is a cause of concern.
Per Capita of Gross National Income* of Asian

Average annual GDP growth rate of Asian
countries, 2016, US$
countries, 2012-2017, % (at current prices)
Maldives 10380
Bangladesh 13.4%
Sri Lanka 3780
China 7.4%
Bhutan 2510
India 7.3%
India 1670
Bhutan 6.6%
Pakistan 1500
Pakistan 6.3%
Bangladesh 1330
Nepal 5.4%
Nepal 730
Sri Lanka 5.0%
*Based on Atlas Method; Source: ADB, Basic

Source: World Bank, World Development Indicators
Statistics 2018
Criteria for graduation from LDC Category

Graduation threshold for any two of the following three graduation criteria must be met
for two consecutive triennial reviews for graduation from LDC status:
Graduation Criteria Nepal progress vs. criteria
GNI per capita > US$1,242

Per Capita Income 753 (avg. 2015-17)*
(three year average)
4
World Economic Forum
Draft 6
Human Assets Human Assets Index (HAI) > 66 68.7 (2015)
Economic Economic Vulnerability Index

26.2 (2015)
Vulnerability (EVI) < 32
Source: UN Committee for Development Policy; * GNI per capita, Atlas method (current
US$)
Nepal Gross National Income (GNI) per capita is significantly below threshold for
graduation out of Least Developed Country (LDC) category. However, the country has
made significant progress on human asset and economic vulnerability related KPIs, which
have made it eligible for graduation for LDC.
However, Nepal has decided not to rely on the non-income criteria framed by United
Nations to graduate from the LDC category, fearing the transition would significantly
reduce the flow of foreign aid and deprive the country of other international support
measures.
Expected economic growth rate of 5-6% are unlikely to help Nepal to achieve its
objectives of:
• Meeting income criteria for graduation from LDC category by 2022
• Becoming a mid-income country by 2030
In order to achieve its vision to become a mid-income country by 2030, Nepal will require
heavy infrastructure along with consistent growth rate of 8-10% annually.
Maintaining a GDP rate of 8-10% level will require broad-based growth

spanning infrastructure development, supporting policies, fiscal reforms,
and greater foreign participation
Agriculture continues to remain the mainstay of the Nepali economy, accounting for the
largest share of total value-add at ~32.1%
 Future growth will be led by reconstruction of damaged irrigation facilities and
sufficient supply of agri-inputs. However effects of floods and landslides in August
2017, which created significant food shortage, and unseasonal rainfall that affected
paddy, may slowdown sector growth
Trade, Transport and construction are other key sectors witnessing strong momentum in
Nepal.
 Wholesale and retail trade and Transport sector has picked up with the
normalization of trade activities and expected to grow further in the import driven
economy.
 Construction sector growth in 2017/18 will be boosted by continued momentum in
post-earthquake reconstruction and large infrastructure project.
Draft 7
Nepal GDP by Industry, 2017/18, %
0.9% Agriculture, Forestry, Fishing

1.9% 0.6% Wholesale & Retail Trade
1.9% 4.2%
Real Estate, Renting
2.7% Transport, Storage, Communications
5.1% Construction
32.1% Education
5.3% Manufacturing
Financial Intermediation
7.0% Public Administration & Defence
Hotels & Restaurants
7.0% Health & Social Work
14.4% Electricty, Gas, Water
8.0% Mining & Quarrying
8.9% Others*
Source: Frost & Sullivan, Nepal's Macro Environment and Key Industry Prospects, 2017–2022 (September 2017)
Foreign Direct Investment

Government of Nepal has undertaken several steps in the recent years to encourage
foreign direct investment (FDI) in the country. As a part of its efforts to encourage FDI,
the Government of Nepal issued the new Foreign Investment and One-Window Policy
2015, which replaced the Foreign Investment Policy of 1992. Further, the government
organized Nepal Investment Summit in 2017 with an objective of attracting FDI.
Foreign Direct Investment, Nepal (NPR Million)
13,504
9,195 9,082
6,437 5,921
4,383
2,852 3,195
1,829
294
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Source: Nepal Rastra Bank
As a result of these efforts, foreign direct investment in Nepal grew by whopping 128% in
2017 to reached NPR 13.5 billion.5 However, Nepal has not been able to tap complete
potential of FDI investments with net FDI contribution only 0.8% of GDP6. Government of
Nepal should continue its effort to attract FDI, as it does not only help in bridging funding
gap, but also enables technology transfer and sharing of best practices from other
economies.
Inflation Rate
Following significant volatility in the last five years, inflation rate in Nepal has stabilized,
reaching a 13-year low in 2017, aided by declining food prices and moderation in the costs
5
Nepal Rastra Bank
6
World Bank
Draft 8
of nonfood items. In 2018, experienced a marginal spike, due to a sharp increase in
vegetable prices; however going forward, is expected to remain at the 5% level.
In recent months, strong trade linkages with India have resulted in Nepal’s inflation trend
mimicking that of India.
Nepal Inflation rate, 2013/14 - 2021/22F, %
9.9%
9.1%
7.2%
5.0% 5.5% 5.3% 5.0% 4.9% 4.9%
2013/14 2014/15 2015/16 2016/17 2017/18F 2018/19F 2019/20F 2020/21F 2021/22F
Population
High population growth in Nepal has been long regarded as one of the key challenges
inhibiting economic growth. The country’s population had almost doubled between 1960
and 1990. However, with the expansion of mass education, gradually rising economic
opportunities, urbanization, growth in female labor force participation, and delayed
marriages leading to a decline in fertility, the trend has started to reverse, with population
growth slowing down.
2017- 2018- 2019- 2020- 2021-
2013-14 2014-15 2015-16 2016-17
18F 19F 20F 21F 22F
Population (Million) 28.11 28.43 28.85 29.15 29.51 29.87 30.22 30.55 30.91
Annual population
1.1% 1.1% 1.5% 1.0% 1.2% 1.2% 1.2% 1.1% 1.2%
growth (%)
Poverty
With almost 25% of the population living below the national poverty line, 50% of the
population earning below ~$3 per day, and a per capita income below international and
regional standards, Nepal is considered among poorest nations in South Asia, trailing only
Bangladesh. This is primarily due to socioeconomic conditions wherein almost 80% of
Nepal’s population lives in rural areas, have large families, very small landholdings and lack
primary healthcare, education, safe drinking water, sanitation and other basic necessities.
The earthquake in 2015 that caused widespread devastation, coupled with high
dependence on agriculture and climate-specific issues such as rugged terrain, lack of
rainfall and poor soil quality, has further exacerbated the situation. Huge disparities and
inequalities continue to exist between regions and underprivileged social groups.
Despite such a dismal situation, Nepal has covered significant ground in alleviating
poverty over the last five years, primarily due to high amounts of remittances from Nepali
people who have migrated overseas – Nepal has among the highest foreign remittances in
the world, at US$ 6.6 billion equivalent to 31.3% of the country’s GDP in 20167
7
Pew Research Center and World Bank, 2017
Draft 9
Nepal poverty statistics
1995/9 2003/0
Metrics 2010/11
6 4
Population Living Below International Poverty Line ($1.90
61.9% 46.1% 15.0%
a day)
Population Living Below International Poverty Line ($3.10
86.6% 75.5% 50.8%
a day)
Population Living Below National Poverty Line 41.8% 30.9% 25.2%
Source: World Bank; Nepal Central Bureau of Statistics
Literacy rates
Nepal has made notable progress in improving its Nepal Adult Literacy Rate (15 years &
education system, increasing net primary school above), Percent
enrolment rates have increased from 68.0% to
94.7%8, over 1991-2017 and significantly closing the 59.6%
gender and age gap in education – one in five 48.6%
elderly people able to read and write – led by 32.9%
strong government policies such as the School
Sector Development Program (SSDP) and
significant ICT implementation through Open
Learning Exchange (OLE) Nepal and OpenIDEO 1991 2001 2011
programs.
Source: World Bank
However, with an adult literacy rate of ~59.6%, Nepal continues to rank the lowest among
key South Asian countries, as majority of the youth still struggle to gain access to
education, particularly at the secondary and tertiary level. To overcome this, the
government will need to devise stronger incentive and monitoring mechanisms to ensure
implementation of its various programs.
Literacy rate*, Nepal vs. Asian countries, Enrolment Ratio, Nepal vs. Asian countries,
44.1
China 95.1% Malaysia 85.2
103.5
17.3
Sri Lanka 91.2% Bangladesh 69.0 Tertiary
118.6
enrolment ratio
9.7
Bangladesh 72.7% Pakistan 46.1
97.7 Secondary
enrolment ratio
26.9
India 69.3% India 75.2
114.5 Primary
enrolment ratio
11.8
Nepal 59.6% Nepal 69.5
135.4
%9 2016, %10
*Latest available data, as per latest census data in the country
8
UNESCO
9
UNESCO Institute for Statistics, Data for the Sustainable Development Goals by Country
10
Draft 10
High Rural Population
In spite of rapid urbanization in recent years, Nepal continues to remain one of the least
urbanized countries in the world. World Bank estimates that only one-fifth of the Nepali
population lives in the urban areas, while more than 80% of the population continues to
reside in rural areas.
Urban Population (%), Nepal vs. select Asain countries, 2017
94 100
76 82
58 51
33 40 40 35
19 18
Source: World Bank
However, most of the infrastructure development in Nepal is centered in a few large cities,
while people in the remote rural areas continue to struggle with poor infrastructure and
limited access to basic services like healthcare, education and financial services. As a
result, it is important for Nepal Government to focus on extending reach of its services
and development agenda to rural Nepal in order to drive inclusive growth and achieve its
vision of Prosperous Nepal, Happy Nepali.
To sum up, Nepal has made considerable progress in socio-economic parameters during
the last decade. However, it continues to lag behind its South Asian peers in both
economic growth and Sustainable Development Goals with high poverty and low adult
literacy rates. Nepal needs to adopt a holistic approach and undertake significant
investments in order to meet its socio-economic growth aspirations.
Draft 11
State of Digital Adoption in Nepal
Nepal - Mobile First Economy

Expansion of telecommunication infrastructure in Nepal was restricted due to multiple
challenges including difficult topography, adverse economic conditions and political
instability. However, the country has seen significant improvement in telecommunication
landscape in last decade driven by significant investments by leading mobile network
operators (Nepal Telecom and Ncell).
Like many other Asian countries, mobile services industry in Nepal has witnessed
significant growth over the last 4-5 years. The mobile penetration in Nepal has grown
exponentially in the last decade to reach 113% in 2017 from 21% in 2009. 11 Further, mobile
penetration in Nepal is expected to continue to grow strongly over the next five years.
Mobile Penetration in Nepal

150% 130% 134% 136%
113% 119% 125%
104%
94%
100% 77% 82%
60%
49%
50% 34%
21%
0%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018E 2019E 2020E 2021E 2022E
Source: Nepal Telecommunications Authority
11
Nepal Telecommunications Authority
Draft 12
Comparision of Mobile Penetration of key Asian cuntries, 2016
124%
111%
85% 88% 83%
71%
62%
Afghanistan Nepal India Pakistan Bhutan Sri Lanka Bangladesh
Source: World Bank
Internet Penetration in Nepal

Nepali people are realizing benefits of the Internet and Internet penetration in Nepal is
growing at a phenomenal rate. During the last five years, internet penetration in Nepal has
increased by 6-7 percentage points annually.
Internet Penetration, Nepal

57%
50%
43%
36%
27%
21%
2012 2013 2014 2015 2016 2017
Source: Nepal Telecom Authority (MIS reports), World Bank
According to the Nepal Telecom Authority, 2.25 million new users were connected to the
internet in 2017, which translated to approximately 250 new internet users in every hour.
Increasing penetration of internet in Nepal is driven by:
 Increasing popularity of social media (e.g. Facebook, Twitter and Instagram) and
online communication platforms (e.g. WhatsApp, IMO, etc.)
 Increase mobile connection and smart phone penetration
 Increasing use cases, such as entertainment (e.g. YouTube), music streaming, and
ecommerce
2.25 million new 250 new internet Teenagers and youth

internet users added in 2017 users per hour are key power user
segments
Nepal is expected to be a forerunner in internet penetration with continued growth in

internet penetration in next several years. In the next few years, Nepal will see huge
growth in mobile penetration and mobile internet usage, more than countries like India
and China.
Draft 13
Source: Frost & Sullivan Analysis
Mobile operators in Nepal are increasing investments in infrastructure in order to meet

growing demand for data services. Leading mobile operators in Nepal have focused on
expanding coverage of 4G services since its launch in early 2017. 4G services rollout will
continue to remain a priority for telecom operators with 60% of Nepal’s cities getting 4G
services in next 2-3 years.
Source: Frost & Sullivan Analysis
Compared with the mobile broadband industry, Nepal's fixed-line sector is significantly
underdeveloped. Fixed broadband services have been largely confined to larger cities
with some ISPs beginning to offer fiber-to-the-home.
Government of Nepal is undertaking steps to expand internet connectivity as part of its
vision of a Digital society that connects 90% of the population to broadband services by
202012. In line with this, in May 2018, Nepal Telecom Authority selected Subisu, a privately
owned Nepali company focusing on cable TV and cable internet, to build Fiber-To-The-
Home (FTTH) network in eight districts in Province 2 of Nepal.
12
Nepal’s ICT Development and Broadband Policy, 2015
Draft 14
Nepali people are embracing social media
Growing popularity of social media is key driver for adoption of internet in Nepal. Nepal is
second only to Bhutan in South Asia in social media penetration.
Active social media users (Jan, 2017)

37%
24% 23%
14% 16% 16%
9%
Afghanistan Nepal India Pakistan Bhutan Sri Lanka Bangladesh

Source: Hootsuite, 2017
In Jan 2018, Nepal had nearly 9.3 million Facebook users.13 Entertainment and video-
sharing are other popular use cases with more than 6.4 million registered users on
YouTube. 14
The rapid growth of social media users and increasing of internet penetration in Nepal has
catalyzed the stereotypical concept of traditional marketing and created the emergence
of digital marketing in the country. Website development, social media marketing, content
management, web design and e-mail marketing have vastly expanded in Nepal and have
become one of the fastest forms of information dissemination.
eCommerce is still a new concept, but growing rapidly

As of May 2017, there were more than 56,286 registered websites in Nepal, including
40,000 commercial websites. 15 Many business & organizations in Nepal started leveraging
digital marketing to enhance their online presence on the Internet and promote their
business globally.
Growth of eCommerce in Nepal is inhibited due to lack of supporting eco-system, such as
limited digital payment options. However, this is changing with the emergence of FinTech
startups such as eSewa and Khlati which are expected to disrupt the payments landscape.
Digital to unlock potential for Nepal
Digital Adoption in Nepal is higher than ever with near universal mobile adoption and
nearly 60% internet penetration. Nepali people are adopting internet technologies at a
rapid pace, but case studies for adoption in public sector and enterprises are far and few.
Further, Nepal lacks a supporting eco-system (such as digital payments, online banking,
etc.) which is critical for development of a digital society. As a result, Nepali society has
not been able to reap full benefits of the ongoing digital revolution.
The recent times have seen emerging of new business models and disruptive technologies
such as Artificial Intelligence, Robotics, Internet of Things (IoT), which have completely
transformed the way work is done. These digital technologies have helped government
and enterprises globally to unlock their growth potential to achieve exponential growth.
13
Hootsuite
14
Social Blade
15
Export.gov - Nepal Country Commercial Guide
Draft 15
Digital is Catalyst for Exponential Accelerated Growth
Source: Frost & Sullivan
There are strong linkages between digital adoption and GDP growth. According to a
World Bank report, every 10% increase in internet penetration in a country, results in an
incremental economic growth of 1.3%. 16 The impact becomes even more robust once the
penetration reaches critical mass.
Source: World Bank, ITU, Nepal Telecom Authority, Frost & Sullivan Analysis
Nepal needs to grow at significantly higher rate (8-10%) than currently projections (~5%)
to have a realistic chance of meeting income criteria for elevation from LDC category by
2022, and becoming a mid-income country by 2030. Disruptive digital technologies have
potential to help Nepal in fast tracking social-economic growth in Nepal. The Digital Nepal
Framework intends to help Nepal in identifying key digital initiatives that can help it in
meetings its growth potential.
16
Exploring the Relationship Between Broadband and Economic Growth, World Bank, 2016
Draft 16
Digital Nepal program will help Nepal in unlocking its growth potential
by leveraging disruptive technologies to enable social-economic growth.
The program will help Nepal in embarking on its journey to an era of high
economic growth, enabling it to become developing country by 2022 and
mid-income country by 2030.
Nepal, GDP Growth Forecast

10.0%
9.0%
8.0%
7.0% Digital Impact
6.0%
5.0%
4.0% Impact of Digital Nepal program:
3.0%
2.0%
NPR 800 billion by 2022
1.0%
0.0%
2013/14 2014/15 2015/16 2016/17 2017/18 (F) 2018/19 (F) 2019/20 (F) 2020/21 (F) 2021/22 (F)
BAU Digital Nepal
Draft 17
Digital Nepal Framework: 1 – 8 – 80
Under the Digital Nepal framework, eight sectors – agriculture, health, education, urban
infrastructure, energy, tourism, finance, and connectivity – have been identified based on
close engagement with stakeholders. The framework aims to guide Nepal on its journey
toward becoming a Digital State.
Agriculture: Digital Nepal initiatives in the agriculture sector encompass technological

solutions aimed at maximizing yield and minimizing agricultural input. The use of Agritech
solutions is anticipated to boost farm productivity and sustainability to meet growing food
consumption, and in turn, increase farmers’ incomes.
Health: Digital Nepal initiatives in healthcare aim to assist the country in meeting its
objectives of providing quality basic healthcare to all citizens. The program intends to
leverage digital technologies (e.g., videoconferencing, e-learning, and mobile health) to
address issues relating to access, affordability, and quality of healthcare for the Nepali
people.
Education: Digital Nepal initiatives in education aim to prepare human capital to capture
new economic opportunities through the creation of an enhanced teaching and learning
environment. This entails the use of digital technologies to support teaching, enrich the
learning experience, and improve educational outcomes.
Urban Infrastructure: Digital Nepal initiatives in urban infrastructure aim to leverage

disruptive technologies to improve the quality of life in Nepal’s urban cities by improving
essential services, such as water management, solid waste management, public transport,
and traffic management.
Energy: Digital initiatives in the energy sector aim to create a sustainable energy
infrastructure to not only reduce costs, but also reinforce energy networks. Smart
solutions include customer-centric solutions, smart transmissions, and distribution
networks, with interconnectivity playing an important role.
Draft 18
Tourism: Digital initiatives in the tourism sector seek to promote Nepal globally, attract
visitors to the country, and create employment opportunities for the Nepali people. It
involves the use of omni-channel marketing solutions, e-commerce, and disruptive
technologies such as augmented reality to promote tourism, build human capital skills in
the tourism sector, and offer better tourist experiences.
Finance: Digital Nepal initiatives in promoting the financial services sector target the
sizeable unbanked population by leveraging digital technology and telecom infrastructure.
Given the strong linkages between financial inclusion and economic prosperity, Nepal is
poised to benefit considerably from the use of FinTech, broadening access to financial
services to nearly 55% of the country’s unbanked population.
Connectivity: Digital connectivity is the foundation of the Digital Nepal program. While
Internet penetration in Nepal has risen sharply in the past few years, a large section of
Nepali people remains digitally uninitiated due to concerns around affordability, access,
and digital illiteracy. The program intends to bridge this gap by providing broader access
to connectivity using public-private partnerships and Government initiatives.
Frost & Sullivan has identified 80 digital initiatives across eight critical
sectors to guide Nepal as it embarks on its digital transformation journey.
The 80 digital initiatives aim to propel socioeconomic growth in Nepal by
addressing crucial challenges while unlocking the growth potential in each
of the eight key sectors.
1 Country – 8 Domains – 80 Digital Initiatives
Draft 19
Agriculture
Primarily an agrarian economy, Nepal’s agriculture sector accounted for ~33% of the
nation’s GDP and ~76% of total employment in 2016.17
Between 2008 and 2015, agricultural output in Nepal grew at an average 3.7% rate, before
slowing down considerably in the next few years following the twin earthquakes that
struck the country in 2015.
Agriculture Growth (%), Nepal, 2008–2017
5.8% 5.3%
4.5% 4.6% 4.6%
3.0%
2.0%
1.1% 1.1%
0.0%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Source: Ministry of Finance, Government of Nepal
Almost three-fourths of Nepal’s population relies on agriculture for their livelihood, making
the sector a key component of the nation’s growth agenda. The Government of Nepal
considers farming and agriculture as a critical sector for achieving its socio-economic
growth aspirations, allocating nearly 4%–5% of its annual budget to the sector. There are
multiple Government-led initiatives to drive agriculture sector productivity with a target to
achieve self-sufficiency in food production in the near future.
Challenges in Nepal’s Agriculture Sector

Despite continued policy interventions and Government focus, progress remains slow and
restricted to a few regions owing to inherent issues, such as high dependence on climate,
difficulty obtaining credit and financing, poor distribution infrastructure, and limited
access to extension and advisory services.
Nepal’s agricultural imports are also increasing significantly showing negative trade
balance, especially with India. The import of agricultural produce, e.g., cereals, vegetables,
and fruits has also grown sharply in the past few years.
17
World Bank
Draft 20
120.0 Food and livestock imports (NPR Billions) 99.6
100.0 89.7 87.0
80.0 61.1
60.0 40.8
40.0 23.8 29.3
15.8 20.5
20.0 13.3 12.9
0.0
Source: Central Bureau of Statistics (CBS), Government of Nepal
Other challenges the agriculture sector faces include:

 Poor access to agricultural input and supply, including bottlenecks in obtaining
basic equipment, seeds, and knowledge on agricultural best practices, particularly
in remote rural areas
 Low yields and declining productivity, especially for principal crops, such as rice,
due to lack of irrigation facilities, smaller land holdings, and reliance on subsistence
farming; Nepal has considerably lower agricultural yield compared to other
developing countries in the region
 Inadequate access to agricultural markets and end customers due to
underdeveloped transport, infrastructure, and distribution facilities, increasing the
risk of exploitation of farmers by intermediaries
 Limited access to financial services, including loans and crop insurance
 Labor shortage as rural workers are increasingly migrating to urban cities in search
of better opportunities
The Government is seeking to digitalize and modernize the sector to these issues.
Wheat and Rice Yields by Country, 2016–2017
Yield (Metric tons per hectare)
Country Wheat Rice
2016/17 2017/18 2016/17 2017/18
China 5.33 5.41 6.86 6.91
India 2.88 3.2 3.74 3.85
Pakistan 2.78 2.97 3.77 4.02
Nepal 2.41 2.31 3.48 3.34
Bangladesh - - 4.42 4.35
Sri Lanka - - 4.35 4.22
Source: United States Department of Agriculture, Foreign Agricultural Service, June 2018
Promise of digital solutions in Agriculture

For decades, the Government of Nepal has used many policy instruments to improve farm
productivity. However, there are only marginal improvements to the yields of most
farmers. Most farmers continue to use traditional processes that depend heavily on
historical norms or use traditional tools that have not evolved for centuries.
As the barrier of entry for farming technology drops and digital tools such as cloud,
compute systems, connectivity, and open source software become increasingly
affordable, the Government can deliver these technologies to farmers more cost-
Draft 21
effectively. Authorities should also look at India’s “Digital India” program, as a case
example for implementation.
The agriculture sector has made some progress in the use of soil health cards, modern
irrigation methods (e.g., drip irrigation technology), mobile apps to access agricultural
information, and e-commerce platforms. However, the initiatives seem too few and far
between and focused on easily accessible regions, while hard-to-reach mountainous areas
continue to be underserved.
Future success would be contingent on a consolidated and centralized ICT policy, led by
the state or the central governments, with concerted efforts targeting specific pain points.
Use of modern agriculture technologies is likely to provide measurable returns to Nepal,
with industry analysts estimating technologies such as precision agriculture to improve
yields on existing agricultural land by ~70%.18
Case Study: India’s plan to digitalize agriculture benefiting stakeholders across the agricultural
value chain and increasing farmer incomes
In Feb 2018, Indian Prime Minister, Narendra Modi, unveiled an agricultural strategy aimed at
boosting farmers’ income, decreasing production cost, increasing minimum support price, and
reducing wastage.
Objectives
 Double farmers’ income by 2022

 Double private corporate investments in farming from the current 2% of agricultural
investments
 Indian farms to become outsourcing hubs for global supermarket chains
Initiatives
 Encouraging the entry of private companies by relaxing the investment rules in contract
farming, transport, marketing, warehousing, and food processing
 Creating a unified National Agriculture Market (NAM) to regulate the agriculture market.
Through real-time electronic auctioning of commodities; and integrated assaying,
weighing, storage and payment systems, the system will enable participation of both
farmers and consumers in the market
 Initiating completion of 99 irrigation schemes delayed over the past 25 to 30 years by
investing ~INR80,000 crores; ~50% of the schemes to be completed in 2018
 Launching “Startup Agri India” to support agritech entrepreneurs striving to improve the
efficiency of the agricultural process; organizing hackathons among leading technology
institutes in India to generate out-of-the-box ideas for agriculture
 Directing mandatory transfer of 50% of all cropped areas under new insurance schemes
Agriculture in Nepal: Pain Points, Priorities, and Digital Solutions
Government of Nepal’s
Pain Points Digital as an Enabler
Priorities
Poor access to agricultural input and supply
 Offer fertilizers, seeds,  Mobile applications to
 Bottlenecks in obtaining
agriculture machinery and provide information on the
essential equipment, seeds,
tools through the weather, market information,
electricity:
Agriculture and Livestock prices, and crops
18
Goldman-Sachs, 2016
Draft 22
Service Centers of rural  Leverage digital technologies
o <1% of farmers had tractors in
municipalities (e.g., mobile applications) for
2011 19
 Provide Soil Cards to the provision/rental of

 Significant knowledge gaps in farmers agriculture machinery and
best practices and technical  Establish knowledge centers tools
know-how to provide agriculture and  Remote education to impart
livestock technical technical knowledge and
knowledge and skills to best practices
farmers
Low yields and declining productivity
 Focus on modernization and  Precision agriculture to
 Declines in the production of
commercialization to double improve productivity
key crops, e.g., Nepal currently
agriculture production in through the use of satellites,
has a 700,000 MT – 800,000
five years drones, and soil sensors to
MT shortage in rice 20
 Plans to extend the Prime monitor and manage crop

 Poor irrigation facilities, smaller growth in real time
Minister Agriculture
land holdings, and a low share of
Modernization Project  Equipment monitoring using
high-value crops with greater
 Achieve self-sufficiency in IoT and sensor technology to
reliance on subsistence level
the production of food ensure optimization of
agriculture are key factors
grains, fish, meat, eggs, and resources
causing the shortfall
milk in two years
Poor irrigation reach
 Plans to implement modern  Smart irrigation systems to
 Of Nepal’s 14.7 billion hectare
irrigation system in potential minimize water loss and
area, only 2.6 million hectares
agricultural land by 2022 ensure higher irrigation
are arable, and 1.8 million
 Expand irrigation facility in efficiency
hectares are irrigable 21
Hills and Terai region using

advanced technology and
implementation of irrigation
projects
Limited financing and incentives
 The Government and NRB  Digital payments to farmers
 Farmers have limited access to
have put in place several and intermediaries via mobile
bank loans to buy seeds,
concessional financing money
fertilizer, and tools, despite
schemes, including  Crowdsourcing and credit
Government policies requiring
providing 20% of loans to platforms to provide loan
banks to provide easy loans to
productive sectors, facilities to underserved
the sector
including agriculture farmers
 According to the Nepal Rastra
Bank (NRB), banks’ lending to
agriculture sector was only
6.16% of their total credit
portfolio, as at Nov 2017, below
the required target of 20%
Poor access to markets, transport, and distribution facilities
 Under the Agriculture  Use of logistic solutions and
 Due to the inefficient transport
Development Strategy sensors to track trucks and
system and poor rural road
(ADS), the Government aims obtain location updates
infrastructure, farmers are
to support farmers and  Provide matching platforms to
unable to reach markets limiting
cooperatives for collective help grade the quality of
access and open to exploitation
marketing using cleaning produce
by middlemen
and grading equipment,  Deploy traceability and
 Processing, grading, and collection centers, and tracking systems and RFID for
packaging are not well storage facilities smart packaging
conceptualized, resulting in
 Big data analytics to analyze
19
Agricultural Engineering Division, 2011
20
Investment Board Nepal, February 2017
21
Investment Board Nepal, February 2017
Draft 23
significant wastage data for produce quality
 Underdeveloped storage
facilities
Labor shortage
 Automation for ploughing,
Migration of rural workers to  Establish professional and
leveling, winnowing,
urban areas for better technical schools, colleges,
harvesting, spraying, and
opportunities are causing acute and training centers to
irrigating reducing the need
labor shortages in the agriculture produce agriculturalists and
for manual labor
sector other human capital for the
sector
Digital Initiatives Roadmap for Agriculture Sector

Frost and Sullivan recommends following digital initiatives to unlock the potential of
Nepal’s agriculture sector:
1 Technology and 2 Entrepreneurship/PPP 3 Talent and Skills
 E-Haat Bazaar Promote the involvement of  Educational programs
 Precision Agriculture the private sector in the for farmers
 Agriculture Tools Sharing agriculture sector by  Introduction of degree
 Digital Disbursements for relaxing the investment programs on AgriTech
MSP and Subsidies rules in contract farming, at universities
 Specialty Food Program transport marketing,  Decentralized training
warehouses, food and advisory centers in
 Digitization of Land
processing, and agritech each village
Records
 Developing a Financial
Ecosystem
 Smart Irrigation Project
TECHNOLOGY AND INFRASTRUCTURE
1.1 eHaat Bazaar

Solution Develop an eHaat Bazaar, along the lines of India’s National Agriculture
Mandi (NAM) platform:
 E-Haat Bazaar should be a pan-Nepal electronic trading portal
which networks the existing haat bazaars to create a unified
national market for agricultural commodities. It should provide a
single window service for all haat bazaar-related information and
services. This includes commodity arrivals and prices, buying and
selling trade offers, and provision to respond to trade offers
 Introduce digital payments as part of the platform to credit
earnings/funds directly to farmers’ accounts to enable them to
increase margins and reduce handling costs
Stakeholders Ministry of Agriculture, Land Management and Cooperatives (MoAD)
Timelines Short Term
1.2 Precision Agriculture
Draft 24
Solution Current productivity levels in Nepal are low compared to developed
countries and South Asian neighbors that offer valuable lessons in
optimal utilization of resources. The use of technology in farm
management could improve efficiencies and lead to less dependency on
manpower. Better farm management and monitoring enabled by wireless
sensor networks, mobile applications, and precision farming could alert
farmers on soil readiness and quality, water requirements, optimal harvest
time, and market information.
Precision agriculture initiatives should aim to:
 Enhance efficiencies and reduce labor dependency
 Provide technology-driven applications such as wireless sensors
and mobile applications for farm management solutions
 Offer real-time information on market prices, demand and supply,
soil quality, climate, and water level
 Higher productivity (output per hectare)
Timelines Medium Term
1.3 Agriculture Tools Sharing

Solution The Government of Nepal intends to provide agricultural input and tools
such as fertilizers, seeds, chemical, and agriculture machinery to farms
through agriculture and livestock service centers in rural municipalities.
The Government should consider leveraging digital platforms (e.g.,
mobile applications) to efficiently manage the process of agriculture
input provision and rental of agricultural machinery from its agriculture
and livestock service centers in rural municipalities. These tools could
enable sharing of farmer-owned agriculture machinery and tools. For
example, framers can rent out their tractors, when not in use, to other
farmers in the locality.
1.4 Digital Disbursements for MSP and Subsidies

Solution The Government of Nepal should promote digital payments to farmers’
accounts for crops procured at minimum support prices. All Government
subsidies and payments should be made directly into the beneficiaries’
account.
Digital disbursement of Government purchases and payments could:
 Streamline and shorten the time required for payment
 Reduce leakages and corruption, as the payments directly go to
beneficiaries’ accounts
 Increase the financial inclusion of farming communities
 Improve tracking and auditing processes
Draft 25
1.5 Specialty Food Program
Solution The Government of Nepal aims to encourage production of high-value
crops with export potential. It also plans to launch an agro-farming
campaign to promote the organic produce of Nepal.
The Special Food Program should target the development of crops with
export potential and organic produce. Modern methods such as urban
farming and vertical farming concepts can be applied to allow these
farms to run with less space and yield higher output as well as drive new
R&D areas.
The initiative can also look into expanding the concept of cooperative
farming in urban spaces where start-ups can create small kits to grow
fruits and vegetables at home or in a community environment.
Timelines Long Term
1.6 Digitization of Land Records

Solution Create an electronic register of agricultural land across regions and
villages, computerization of registration documents, digitize maps and
survey, and update all settlement records to improve transparency
around productive land, enable better monitoring, and reduce land
disputes.
Stakeholders Ministry of Agriculture, Land Management and Cooperatives (MoAD),
Village Development Committees
1.7 Smart Irrigation Project

Solution Lack of irrigation facilities in remote areas and high dependency on
monsoon season are triggering the need for IoT in Nepal’s agriculture
sector. Deployment of IoT for smart irrigation considers factors like
humidity, temperature, and soil moisture to calculate the water volume
required for irrigation on respective fields to minimize water loss and
ensure higher irrigation efficiency.
The Government should consider leveraging Smart Irrigation
technologies to extend its irrigation projects to underserved, remote
areas as well as offer incentives to foster adoption of these technologies
in farms.
Timelines Long Term
ENTREPRENEURSHIP/PUBLIC-PRIVATE PARTNERSHIPS
2.1 Private Sector Participation

Solution Open the agriculture sector to private sector participation and foreign
investments to boost competitiveness by relaxing norms and simplifying
regulations for investments in various agricultural activities:
Draft 26
 A strong case for the entry of tech start-ups to promote
technology adoption in the sector in partnership with the
Government and local NGOs
Consider offering incentives, grants, subsidies, and tax breaks to
companies and start-ups engaging in agricultural research.
2.2 Agritech Start-up Initiative

Solution Initiative to support agritech start-ups seeking to improve the efficiency
of agricultural processes.
Activities can include case challenges at leading engineering colleges and
universities to generate technology-driven innovations to resolve critical
challenges facing Nepal’s agriculture sector.
Stakeholders Ministry of Agriculture, Land Management and Cooperatives (MoAD);
Ministry of Finance
Case Study: Govi Mithuru - A mobile agriculture service by Dialog, Sri Lanka
Dialog Sri Lanka’s Govi Mithuru (Farmer’s Friend, Uzavar Tholan in the Tamil language version) is a
value added service (VAS) which commercially launched in October 2015. The product rollout was
supported by a matched funding agreement between Dialog Sri Lanka and GSMA under the
mNutrition Initiative funded by UK aid from the UK government (DFID). By December 2016, the
service had acquired over 250,000 registered users.
Govi Mithuru promises to ‘secure crop and family health’. It aims to offer comprehensive advice to
farmers in Sri Lanka with a particular focus on reducing dependence on chemical inputs, an issue
frequently raised in Sri Lanka. Users register with a one-click response to an outbound dialing (OBD)
message, after which they are profiled through a series of OBD calls requiring one-click responses
for profile perimeters, or by dialing 616 and navigating through an interactive voice response (IVR)
registration menu.
The service offers agricultural advice at each stage of the farming cycle, from land preparation to
postharvest support. Content is provided across eight crops, alongside nutrition and home
gardening content, all provided by CABI Sri Lanka and quality assured by the Sri Lankan
Department for Agriculture.
Case Study: Start-ups in India targeting supply chain inefficiencies, falling yields, knowledge
sharing issues, and agricultural wastage
Crofarm: Founded in May 2016, Crofarm is an agricultural supply chain start-up that aims to address
wastage during distribution and sale of farm produce, by digitizing the supply chain for fruits and
vegetables. The system:
 Procures products with longer shelf-life from national sourcing zones and perishables from
regional sourcing zones
 Enables farmers using the platform to reportedly earn 25% higher than if they sold their
produce to mandis
Aibono: A smart farming collective that provides farm-related intelligence, technology, expertise
and gadgets, and precision agriculture. Shares resources and expertise with small-scale farmers
along with shared instruments to map data onto the cloud:
Draft 27
 Helping to increase yields by nearly 50% for 140 farmers working in the Nilgiri hills of Tamil
Nadu
CropIn: A farm management company that seeks to digitize the entire agriculture ecosystem to
deliver Smart Agriculture solutions with live reporting capabilities, analysis, interpretation and
insights on farming operations.
EM3 Agri Services: Aims to increase agricultural productivity by delivering technology and
mechanization to the farming community on a pay-per-use basis:
 Offers Samadhan Farming as a Service (FaaS), a platform that allows technology to reach
farmers and farms cost-efficiently using the network of farm centers (Samadhan Kendras)
Intello Labs: Invented a first-of-its-kind application and equipment to test, grade, and analyze the
visual quality parameters of agricultural commodities:
 Uses AI and deep learning to measure crop quality parameters including infestation
incidence, nutrient deficiencies, harvest quality, evaluation of fruits, vegetables, grains and
other crops, and farm-to-fork commodities
Tessol: Provides energy efficient and fuel-saving refrigeration technologies for cold chain storage
and logistics. Its flagship range, PLUGnCHILL, targeting transport refrigeration uses the proprietary
PCM heat exchanger technology, and provides 60% cost-savings by eliminating the use of fuels.
Other prominent start-ups in agriculture include Aarav Unmanned Systems, Ninjacart Gramco
Infratech Pvt Ltd, FarmLink, and Gold Farm.
TALENT AND SKILLS DEVELOPMENT
3.1 Education and Training Programs

Solution Modernizing the sector requires building the skills of farmers. The
Government should develop training curriculum covering areas such as
climate change, supply chain, and standard compliance to produce skilled
and knowledgeable farmers.
Qualified farmers can enroll in familiarization and attachment programs
via collaborations with international bodies such as the Food and
Agriculture Organization (FAO), and in ASEAN counterparts. Skills
training on the use and maintenance of farming machinery and
equipment to accelerate farm mechanization and automation are
essential to increasing productivity and reducing labor reliance on foreign
workers.
3.2 State-of-the-art Knowledge Centers & Government Agriculture Centers

Solution Establish knowledge centers to provide technical knowledge and skills on
agriculture and livestock to the farmers. Additionally, provide applied and
practical know-how on technology and skills through Government
agriculture centers.
Draft 28
The Government should ensure that the proposed knowledge and
agriculture centers have state-of-the-art infrastructure (e.g., high-speed
Internet access, videoconferencing) to enable distance learning.
Stakeholders Ministry of Agriculture, Land Management and Cooperatives (MoAD)=

Timelines Long Term
3.3 Introduce Agritech Degree Programs at Universities

Solution Foster collaboration between Ministry of Agriculture and the Ministry of
Education to introduce degree courses in public universities to train
agriculturalists and create relevance of agricultural education programs

Ministry of Education
Timelines Long Term
Draft 29
Healthcare
Over the past decade, healthcare has been a key priority for successive Nepal
governments, with public and private healthcare spending increasing considerably year on
year. Total healthcare expenditure in Nepal as a percentage of GDP grew from 4% in 2006
to exceed 6% in 2015, comparatively higher than its neighbors such as India, Pakistan,
Bhutan, and Sri Lanka with healthcare spending at 2.6% and 4.7% of GDP.22
The rise in healthcare expenditure and continued focus by the government in enhancing
healthcare policies and infrastructure have enabled Nepal to achieve vast improvements in
its healthcare KPIs in the past 20 years. For example, neonatal and child mortality rates
have declined significantly since 1995. Moreover, Nepal’s consistent track record in
improving other health outcomes such as maternal mortality, death rates, and life
expectancy is acknowledged internationally.
Mortality and Life Expectancy Rates, Nepal, 1995-2015
Subject Unit of Measurement 1995 2000 2005 2010 2015
Neonatal mortality Per 1,000 Live Births 47.7 39.3 32.5 26.7 22.2
Infant mortality Per 1,000 Live Births 76.8 59.6 46.3 36.3 29.4
Under-5 mortality Per 1,000 Live Births 107.7 80.6 60 45.4 35.8
Crude birth rate People per 1,000 36 32.1 27.5 22.9 20.2
Death rate People per 1,000 10.4 8.5 7.3 6.7 6.3
Life expectancy at birth Years 58.5 62.3 65.5 68 70
Maternal mortality ratio Per 100,000 660 548 444 349 258
Source: World Health Organization; Frost & Sullivan analysis (2017)
Despite improvements in Nepal’s key healthcare outcomes, the country continues to trail
its Asian peers and international benchmarks. For example, while efforts to enhance
maternal and neonatal care in rural Nepal have resulted in substantial improvements in
maternal mortality rates; yet the maternal mortality ratio in Nepal (at 258 per 100,000 live
births) is notably higher than its Asian counterparts (at 148-178 per 100,000 live births for
India, Pakistan, Bhutan and Bangladesh.
22
World Health Organization
Draft 30
Challenges in Nepal’s Healthcare Sector
In 2007, Nepal’s Interim Constitution recognized access to primary healthcare as a right
for every citizen. However, more than a decade later, Primary Healthcare for All remains
an elusive dream for the Nepali people. In fact, Nepal lags behind its Asian peers and
international standards on health service coverage, according to the World Health
Organization (WHO).
Nepal, like many low- and middle- income countries, faces common issues such as:
 Limited access to healthcare, especially in remote rural areas, where patients need
to travel long distances to receive quality healthcare
 Chronic shortage of healthcare professionals and reluctance of public servants to
serve in remote areas
 Underdeveloped infrastructure limiting access to safe drinking water, sanitation,
and hygiene practices
 Poverty and illiteracy coupled with high cost of private healthcare services
 Poor quality of care services at public sector hospitals and institutions
Nonetheless, Nepal’s new government aims to change this during its tenure.
Acknowledging health as the primary right of every citizen, the government intends to roll
out various initiatives (e.g., establishing a 15-bed hospital in every local area, extending
health insurance for all citizens) to address these issues.
Promise of Digital Initiatives in Healthcare
Given the high mobile penetration in urban and rural areas, digital and mobile
technologies have the potential to solve the challenges associated with Nepal’s healthcare
sector. Countries successfully leveraging digital and mobile healthcare technologies offer
Nepal critical insights on resolving the healthcare hurdles it faces.
Nepal is initiating efforts to digitalize Healthcare sector, which includes the eHealth Nepal
Project with UNICEF. eHealth provides teleconsultation services and vaccination
reminders to users through SMS. However, the need of the hour is to adopt broad-based
initiatives optimizing government resources and attracting greater private sector
involvement.
Embarking on a Digital Health journey can help Nepal in address key challenges by
improving coverage of quality health services, reducing the cost of healthcare services to
deprived sections of society, plugging funding leakages, and optimizing utilization of
healthcare skills and resources.
Case Study – How Novartis’ telemedicine model in Ghana is helping to expand access to quality
care in remote rural areas
Objective: Expand access to quality care in remote rural areas to reduce transport times and costs to
patients while minimizing unnecessary referrals.
Model: The telemedicine model was developed around frontline health workers using digital
technology to enable centralization of healthcare expertise. Under the model, healthcare
professionals at the teleconsultation centers coach and guide less-skilled community health workers
in patient care. The initiative is not only empowering community health workers, but also improving
the quality of care with a direct impact on patient health outcomes. In 2016, for example, more than
half of all teleconsultations were resolved directly by phone, including 31% that avoided referrals.
Timelines: 2012 onwards
Results: The model pioneered in the Amansi West region by the joint efforts of the Ghana Ministry of
Health, the Ghana Health Service, the National Health Insurance Authority, the Ambulance Services of
Ghana, Millennium Promise, and the Novartis Foundation. The initiative is now successfully scaling
throughout Ghana with strong local ownership by Ghanian health authorities.
Draft 31
Healthcare in Nepal: Pain Points, Priorities, and Digital Solutions
Pain Points Government of Nepal’s Priorities Digital as an Enabler
Wide rural/urban gap in healthcare facilities

 83% of Nepal’s population  Aims to improve quality of  Digital Health (e.g., mobile
live in villages, while the basic and specialized health, telemedicine) can
country’s healthcare healthcare services extend the reach of
infrastructure and  Plans to offer free basic healthcare services to rural
caregivers are health services at the local areas:
predominantly in urban level; specialized and referral o Equipping all healthcare
areas health services from centers in rural areas
 Most private hospitals and provinces, and modern and with high-speed
institutions in Nepal are specialist health services Internet should be the
concentrated in cities such from central health top priority for the
as Kathmandu, Pokhara, institutions Government
and Biratnagar
Chronic shortage of health professionals

 Nepal has only 5.4 skilled  Set up at least one 15-bed  eHealth/mHealth can
health professionals per hospital in each local level effectively utilize and
10,000 population; between 2018 and 2022 expand the reach of
compared to 24.1 and 14.0  Hire at least one medical healthcare professionals
skilled health professionals doctor in each local level  Tap into healthcare talent
per 10,000 population in from other countries (e.g.,
India and Pakistan, India, Philippines) to plug
respectively the demand-supply gap
 High brain drain among
medical professionals and
preference for medical
workers to join the private
sector
Access to safe drinking water, poor hygiene habits, and sanitation facilities is a key challenge
 Nepal has the highest  Provision of clean and safe  Innovative use of digital
mortality rate due to drinking water and sanitation technologies can boost
unsafe hygiene, water, and facilities to all Nepali people awareness about the need
sanitation compared to is a priority for the new to follow proper hygiene
neighboring countries Government and sanitation practices
 Open defecation is a norm  Become an open defecation-  Technology can enhance
in Nepal (especially in rural free country by 2022 access and simplify usage
areas) of public facilities
‒ 32% of the Nepali
population practice
open defecation
Expensive healthcare services

 Underdeveloped public  Improve healthcare services  Economies of scale and
healthcare infrastructure by building quality lower investment
and poor perception of infrastructure, medical requirements for Digital
service quality at public equipment, and human Healthcare can help lower
hospitals has led to a surge resources the cost of healthcare
in private/household  Extend health insurance services
healthcare expenses program to cover all Nepali
 27% of Nepal’s population people
spend over 10% of their
household income on
healthcare
Draft 32
Mismanagement of funds and supplies in rural Nepal
 Mismanagement of funds  Zero tolerance for  Leveraging latest Health
and government subsidies, corruption Information Management
inadequate supply of (HIM) and procurement
essential drugs, and solutions can enhance
budget limitations restrict auditing and compliance
the Government’s ability to processes, minimizing the
provide proper healthcare risk of mismanagement of
facilities for its citizens funds and government
subsidies
Digital Initiatives Roadmap for Healthcare sector

The Government of Nepal should consider setting aside at least 10% of its central health
budget for Digital Health programs. The Ministry of Health (MoH) should establish a
separate department/task force to drive implementation of Digital Health initiatives, with
a focus on the following areas to reap the benefits of digital technologies in the healthcare
sector.
1 Technology & 2 Entrepreneurship/PPP 3 Talent & Skills

 National Digital  Ease of doing business  Increase intake at
Healthcare Platform in Digital Healthcare existing medical
 High-speed Internet  Private sector colleges and open new
access participation in rural medical colleges
 Next-generation digital healthcare  Centralized
facilities telemedicine center for
 Electronic Medical skills development of
Records medical professionals
 Health Procurement and
Distribution Solution
 Mobile Health Units
 Drones for delivery of
emergency medical
supplies

The following initiatives targeting Digital Healthcare are identified as “quick wins” to be
implemented as part of the Digital Nepal program. The selected projects are as follows:
1.1 National Digital Healthcare Platform

Solution A National Digital Health Platform/Mobile App connecting all public
sector health facilities in Nepal. The platform/app could offer features
such as facilitating healthcare initiatives, providing public health
information, listing locations of health centers, booking appointments
with healthcare professionals, tracking patients’ healthcare records.
 Nepal should emulate the Telangana Ministry of Health (India) app
that allows its citizens to access services at more than 800 public
health facilities. The app was developed by the Government of
Telangana in partnership with Mahindra Comviva.
Draft 33
Stakeholders Ministry of Health (MoH)
1.2 High-Speed Internet Access

Solution All healthcare facilities in Nepal should be equipped with high-speed
internet, video conferencing, e-Learning and collaboration tools. These
digital technologies would enable delivery of remote healthcare services
from the central/regional hospitals, along with facilitating rollout of other
digital healthcare initiatives.
 The Government should aim to provide 100% high-speed connectivity
to healthcare facilities in Nepal by 2020 (starting with rural healthcare
facilities)
Stakeholders Ministry of Health (MoH), Ministry for Communications and Information
Technology (MoCIT)
1.3 Next-Generation Digital Facilities

Solution New public sector health facilities (including the proposed 15-bed
hospitals at each local level) should be equipped with next-generation
digital infrastructure with the goal to provide specialist healthcare
services in remote areas.
Timelines Long Term
1.4 Electronic Medical Records

Solution The rollout of Electronic Medical Records (EMR) System at public
healthcare institutions in Nepal. EMRs can significantly radically reduce
the storage space necessary to store paper-based records and improve
efficiency.
Stakeholders Ministry of Health (MoH), Public healthcare facilities in Nepal
1.5 Health Procurement and Distribution Solution

Solution Health Procurement and Distribution Management Solution (HPDMS) will
manage procurement, storage and distribution of medicines, drugs,
injectable, surgical goods and medical equipment. It will the operational
efficiency of the healthcare services provided across the national. The
basic objective will be to maintain database of medical supplies and
equipment.
Stakeholders Ministry of Health (MoH), Public healthcare facilities in Nepal
1.6 Mobile Health Units
Draft 34
Solution Roll out mobile health units/vans in other to improve reach of Healthcare
services in rural, underserved areas. Mobile health units/vans allow
regional healthcare facilities to extend their reach by going directly to the
people in their communities, potentially saving lives and money.
The mobile health units should be equipped with digital connectivity and
GPS services to effective tracking, route management and digital record
management.
1.7 e-Maternal Care

Solution E-Maternal Care will be a technological platform for tracking of each
pregnant woman and children. The objective would be to maintain
effective medical records for pregnant women and children, provide
healthcare related information, and enable access to healthcare services
on regular basis.
The target beneficiary of this initiative is Pregnant Women, Mothers &
New Born Child.
Stakeholders Ministry of Health (MoH), Department for Women and Children
1.8 Drones for delivery of emergency medical supplies

Solution Consider use of drones for delivery of medical supplies and equipment in
case of a medical emergency or natural disaster. Drones can be leveraged
for delivery of essential medical supplies to remote areas where people
are isolated by rugged terrain, bad roads, and seasonal flooding
Timelines Long Term
The Government of Nepal should consider undertaking the following policy interventions
to create an enabling environment:
2.1 Ease of doing business in Digital Healthcare

Solution Private sector start-ups and telecom participants play a pivotal role in
developing Digital Health solutions in many markets globally. The
Government of Nepal should focus on creating an enabling business
environment to encourage private sector players and start-ups to
contribute to these priority areas:
 Focus on improving ease of doing business, developing an eco-
system (e.g., digital payment platforms), tax holidays for NGOs
and enterprises focusing on digital health in poor/remote areas
Draft 35
2.2 Private sector participation in rural healthcare

Solution Private healthcare providers, which primarily focus on urban areas
currently, should be encouraged to invest in Digital Healthcare programs
to capture a broader market and contribute to the society as part of their
Corporate Social Responsibility (CSR) efforts:
 Consider necessary policy interventions (e.g., tax benefits) to
attract greater private sector involvement

Chronic shortage of healthcare professionals, continued brain drain to foreign countries,
and reluctance of caregivers to join medical facilities in remote areas are restricting the
Government’s ability to improve the quality and coverage of healthcare services.
To address these challenges, Nepal needs to systematically scale-up the capacity of its
healthcare system by increasing the intake of students in existing medical colleges and
opening new medical colleges to meet demand. Additionally, Nepal can leverage ICT
solutions (e.g., Centralized Telemedicine Center) for skills development of its healthcare
professionals in remote areas.
3.1 Centralized Telemedicine Center

Solution A telemedicine model developed around frontline health workers, with
digital technology allowing for the centralization of healthcare expertise.
Under the model, healthcare professionals at the teleconsultation center
of a major public hospital in Kathmandu can coach and guide less-skilled
community health workers from various healthcare facilities in Nepal.
Stakeholders Ministry of Health (MoH), Teaching Hospital, Kathmandu
Case Study: Telecom operator partners with Sri Lankan hospitals to build a Digital Health Platform
In 2016, Dialog, a leading telecom operator in Sri Lanka, entered a joint venture with Asiri Hospital
Holdings to set up a digital health platform. Following the success of this initiative, two more
hospitals in Sri Lanka joined the effort in March 2018. The joint venture connects more than 1,500
doctors in over 80 hospitals via its digital health platform, accessible through doc.lk, by dialing 990,
or the Doc990 app.
Doc990 currently offers a range of medical services including channeling doctor sessions at
hospitals island-wide for physical consultations, the Tele Doctor Service where consultants can be
contacted over the phone, medicine delivery to the doorstep, and access to lab reports from
selected laboratories via the Doc990 web portal.
The Doc990 app is integrated with all mobile operators and banks for multiple payment options
such as add-to-bill, eZ Cash, Genie, Amex, Visa, and MasterCard.
Draft 36
Nepal vs. Selected Asian Countries: Comparison of Major Healthcare KPIs
Unit of Sri Korea
Nepal India Pakistan Bhutan China Japan Malaysia Singapore Thailand Bangladesh
Measurement Lanka Rep
Skilled health
Per 10,000
professional density, 5.4 24.1 14 12.4 23.2 31.5 137.9 44.7 77.1 71.5 24.7 5.7
population
2005–2013
Maternal mortality Per 100,000
258 174 178 148 30 27 5 40 10 11 20 176
ratio, 2015 births
Skilled birth
attendance, 2007– % 58 86 55 89 99 100 100 99 100 100 99 50
2017
Under five mortality
and neonatal Per 1000 births 34.5 43 78.8 32.4 9.4 9.9 2.7 8.3 2.8 3.4 12.2 34.2
mortality rate, 2016
Health Service
Index* 46 56 40 59 62 76 80 70 80 80 75 46
Coverage Index, 2015
% of population
Financial protection, spending large
27.4 17.3 1 N/A 2.9 17.7 6.2 N/A N/A 13.5 3.4 13.6
2007–2015 health
expenditure
Mortality rate due to
unsafe hygiene, per 100,000
19.8 18.6 19.6 4 1.2 0.6 0.2 0.4 <0.1 1.8 3.5 11.9
water, and sanitation, population
2016
All vaccine coverage,
% of population 25 76 53 90 99 99 93 99 88 97 95 93
2016
Domestic general % of general
government health government 5.5 3.4 3.7 9.1 7.9 10.1 N/A 8.3 12 12.9 16.6 2.8
expenditure 2015 expenditure
Access to safe
% of population 27 N/A 36 34 N/A N/A 97 92 100 98 N/A 56
drinking water, 2015
Total health
expenditure, 2014– % of GDP 6.2 4.7 2.6 3.6 3.5 5.5 10.2 4.2 4.9 7.4 4.1 2.8
2015
Total expenditure on
health per capita, USD 135 267 129 281 369 731 3727 1040 4047 2531 600 88
2014–2015
Life expectancy at
Years 70.2 68.8 66.5 70.6 75.3 76.4 84.2 75.3 82.9 82.7 75.5 72.7
birth, 2016
Source: WHO; UNICEF; Frost & Sullivan analysis
Legend: Green-Amber-Red Scale, where dark green signifies best in class performance, while dark red signifies worst in class performance
Draft 37
Education
Overview
Nepal’s education sector has made notable

strides in the past 20 years. Between 1991 and Education Budget (NPR Billions), Nepal,
2014/15–2018/19
2017, the country’s net primary school
134.51
enrolment rates grew from 68.0% to 94.7%23,
106.83
making it one of the few developing countries 86.03 90.68
to reach near gender parity. Education is a key 65.13
priority sector for Nepal, accounting for the
largest share of the total national budget at
~10.1%24 in FY2018/19, registering 11.8% CAGR
over the past five years (2014/15–2018/19) to
2014/15 2015/16 2016/17 2017/18 2018/19
reach NPR134.5 billion (US$1.23 billion)25.
Source: Central Budgets (Government of Nepal)
Development of the sector appears to be a key imperative to drive Nepal’s progress from
least developed country status to developing nation by 2022. Access to education is even
more critical given the country’s large youth base, with ~32% of its total population aged 14
and below.26
To support its vision, the Government of Nepal is pursuing revisions to its education policy
aiming for inclusiveness by making education up to secondary level compulsory and free.
Key Education Targets 27
 Investment of at least 20% of national budget each year in education

 All school-age children to be enrolled in school in the next two years
 All citizens to be literate in the next five years

 ICT usage to be made compulsory in schools
23
UNESCO
24
Calculated using figures in the Budget Speech for FY 2018/19, Ministry of Finance
25
Calculated using figures in the Budget Speech for FY 2018/19, Ministry of Finance
26
27
Joint Election Manifesto
Draft 38
 E-library to be established and students to be provided modern education materials (e.g.,
laptops and textbooks)
 Higher education to be specialized by involving students in research and innovation

 Gurukul, Monastery, Gumba, Madarasa, and open and alternative education programs to be
affiliated with the national education system
Source: Joint Election Manifesto (Please note this list is not exhaustive)
The Government has also formulated a range of supporting policies, grants and aids, and
investment incentives, as well as turned to foreign aid to improve its key education metrics.
Key Government Policies:
School Sector Development Plan (SSDP), 2016–
Five-year Roadmap
2023
Aims for inclusive and equitable access, participation, In April 2018, the Minister for Education,
and learning outcomes of the education system Science and Technology unveiled a 10-point,
through: five-year roadmap which includes plans to:
 Investment of ~US$10.66 billion from 2016–2023  Improve quality of education sector;

in multiple areas including teacher management structural and organizational reforms;
and professional development; school governance primary child education; common
and management; institutional capacity commitments; quality of public education;
development; disaster risk reduction; school regulation of private education system;
safety, monitoring, evaluation, and assessment; higher education; open education; science
examination and accreditation, ICT, and health and technology; and good government
and nutrition and management
 The EU continues to support the program with a
recent funding injection of €6 million (~NPR700
million) directly to the Government of Nepal
However, the quality of education in Nepal continues to fall short of international standards
due to inadequate funding, socio-economic issues leading to child labor, uneven development
between rural and urban areas, lack of basic infrastructure, shortage of trained teachers, un-
employability of graduates due to outdated coursework, and insufficient basic learning
materials. This has resulted in an increase in student mobility among the urban and wealthy
population, with a large number of youth moving to other countries to study.
While the country has achieved near universal enrolments at the primary level (135.4% in
2016), it drops significantly at the secondary (69.5% in 2016) and tertiary levels (11.8% in
2016), indicating substantial dropout rates at higher levels of education.
Key Education Metrics/KPIs for Nepal
Metrics 2014 2015 2016 2017
Primary total gross enrolment ratio
(%) 134.75 134.94 135.38 134.12
Secondary total gross enrolment ratio
(%) 66.88 67.14 69.5 71.21
Tertiary total gross enrolment ratio
(%) 15.82 14.95 11.8 -
Out-of-school children (’000s) 185.34 103.66 101.86 159.21
Out-of-school adolescents (’000s) - - 237.55 222.24
Draft 39
Literacy rate, 15–24 years (%) 84.76* - - -
Literacy rate, 15 years and above (%) 59.63* - - -
Source: UNESCO Institute for Statistics, Data for the Sustainable Development Goals by Country
Note: *Latest available data based on 2011 census
Challenges in Nepal’s Education Sector
The Government of Nepal recognizes the importance of education and its implications in
driving future growth. However, supporting initiatives do not appear to be reaching target
areas, as institutions face delays in receiving funding and coordination challenges among
stakeholders in the sector. This has placed Nepal at a disadvantageous position vis-à-vis other
Asian developing countries.
44.1
Sri Lanka 91.2% Malaysia 85.2
103.5
17.3
Bangladesh 72.7% Bangladesh 69.0 Tertiary
118.6
enrolment ratio
9.7
China 95.1% Pakistan 46.1
97.7 Secondary
enrolment ratio
26.9
India 69.3% India 75.2
114.5 Primary
enrolment ratio
11.8
Nepal 59.6% Nepal 69.5
135.4
Literacy Rate* (%), Nepal vs. Selected Asian Enrolment Ratio (%), Nepal vs. Selected Asian
Countries, 201628 Countries, 201629
Source: UNESCO Institute for Statistics, Data for the Sustainable Development Goals by Country
Note: *Latest available data, as per latest census data in the country
Several inherent limitations also hinder the progress of the education sector in Nepal:
 Shortage of teachers per student and insufficient training of teachers, leading to high
absenteeism and low student engagement and motivation
 Underdeveloped basic infrastructure and facilities at both rural and urban institutions,
including lack of learning materials and equipment
 Significant disparities in infrastructure development and availability of quality
education and teachers between private and public schools. Prohibitively expensive
fees and limited presence of private schools are resulting in inequitable access to
education and widening the gap between the haves and have-nots
 Poor availability of funding and government support due to an inefficient industry
structure, red tape, and corruption
28
29
Draft 40
 High dropout rates due to socio-economic conditions and widespread poverty in rural
areas, resulting in children working in menial jobs instead of attending school and
creating issues such as child labor and child marriages
The Government appears to be focused on addressing these challenges during its tenure by
establishing actionable targets for the sector in the current and subsequent budgets.
Promise of Digital Initiatives in Education Sector
Near-universal penetration of mobile and Internet, and availability of low-cost smartphones

and tablets provide a favorable enabling environment for integrating ICT into education.
Nepal’s large youth demographic who are comfortable using technology stand to benefit
greatly from technology-based delivery and access to education.
The positive benefits of the use of digital technologies in education are well documented with
several success stories and proven results. Nepal should seek to learn from the multiple
projects underway across developing countries in Asia and Africa.
Nepal has launched several technology initiatives, including strengthening ICT infrastructure
at schools and universities; ICT-enabled teaching and learning; and integrating education
management information system (EMIS) as part of the SSDP 2016–2023 Program.
However, stronger technology push coupled with skills development and awareness
programs may be required to address persistent challenges, strengthen institutional capacity,
bridge the digital divide in the country, and maximize the impact of ICT in the sector.
Nepal is actively pursuing ICT programs for education with progress in several areas:
ICT – A Key Component of the SSDP 2016–2023 Agenda
Key targets include: Key achievements include:
 Provide ICT teaching-learning materials to  Established computer labs and
strengthen interactive teaching approaches Internet connectivity in District
Education Offices (DEO) and selected
 Establish ICT learning centers at model schools schools
 Prepare ICT teaching and learning materials initially  Central agencies, regional education
for Science, Math, and English directorates, and 75 DEOs have
 Provide ICT infrastructure and teaching-learning launched websites
materials  Developed interactive digital learning
 Implement unified computerized accounting materials for students in Grades 2 to
software (CGAS) in the Ministry of Education 6 in Nepali, Math, English, and Science
system
 Introduce school-based integrated EMIS, including

an Equity Index, school profiles, and unique student
IDs to enhance effectiveness of governance and
management
Open Learning Exchange (OLE) Nepal: Established in September 2007, OLE Nepal integrates
technology in classrooms and the teaching-learning process. Key programs include:
 E-Paath: Interactive educational software that includes multimedia learning modules based on
the national curriculum of Nepal. Developed 600+ learning modules for teachers
 E-Pustakalaya: An open, digital library comprising 6,000+ books
 Teacher training: Focuses on IT literacy, child-centric interactive teaching, and integrating ICT-
based instruction. Has trained 600+ teachers in the program
Draft 41
 Technology infrastructure: Helps install school network consisting of servers and Wi-Fi, and
provide low-power, low-cost, durable equipment. Has deployed 5,000+ laptops in 100+ schools
OpenIDEO: An open innovation platform that works with local organizations in Nepal to provide
funding and support, targeting the education sector in rural areas. Key programs include:
 Picosoft: A rural Internet service provider in Nepal which offers high-speed Internet service
using Super Wi-Fi (TV White Space) technology to schools in rural areas where cable and ADSL
Internet are not available. Also provides state-of-the-art computer labs and develops localized
content for ICT in education in partnership with Kull Labs
 REED Nepal: An NGO that has introduced digital educational platforms and Teacher Training
Quality Education Program for schools in earthquake-prone areas
Education in Nepal: Pain Points, Priorities, and Digital Solutions
Government of Nepal’s
Pain Points Digital as an Enabler
Priorities
Shortage of trained teachers As part of its latest budget,  Technology-based teacher
the Government plans to: training to build awareness
 Lack of qualified, well-trained
and prepare them for using
teachers as well as decline in  Expand training programs
technology in a classroom
teacher-pupil ratio from 22.7 to for technical teachers
setting
20.3 from 2014–201730
 Redistribute existing posts
 Deploy videoconferencing,
 Teachers, particularly at public for teachers
mobile, and collaboration
schools and universities, have proportionately on the
technologies to enable
inadequate technical, content, and basis of number of
training from any location
pedagogical support and poor IT students, subject
remotely
awareness requirements, and
geographical conditions  Install CCTV cameras and
 Limited ICT use in classrooms and
biometric systems in schools
administration and staff resistance  Provide additional grants
to track teacher attendance
to change, resulting in low teacher to schools to hire more
attendance teachers at secondary level
on Science, Math, English,
 Cases of teachers holding down and Technical subjects
multiple jobs and engaging in part-
time businesses or research, further
impacting their performance
 Use of wireless and satellite
Lack of basic infrastructure The Government plans to
technologies to connect
reduce the urban-rural digital
 Setting up educational facilities in divide and improve institutions’ IT infrastructure
rural Nepal is a considerable in hard-to-reach remote areas
infrastructure through:
technical and financial challenge  Deploy high-density networks
due to the difficult geographical  Use of new technology on school and university
terrain and improvements to campuses at urban
 Strain on distribution of basic education standard institutions to support
learning materials, e.g., textbooks,  Set up of Rural uninterrupted running of
and poor access to basic Telecommunication Fund devices, IT tools, and
necessities like water, sanitation, to provide free high-speed applications
and hygiene Internet services to
 Public schools and universities in community schools
30
Draft 42
urban areas lack proper facilities
and funding to maintain
laboratory materials and
curriculum to keep pace with new
technologies
Disparities in education  Leverage Massive Open
development and access Online Courses (MOOCs), i.e.,
online courses delivered via
 Huge differences in quality and distance learning as a cost-
provision of infrastructure between effective option to reduce
rural and urban areas, with disparities in course quality
development mainly concentrated and training
in cities like Kathmandu
 Use of cloud-based unified
 Even within cities, gaps exist communication tools to
between private and public interact with students,
institutions, with the former having teachers, and administrators
superior quality of education, remotely
teachers, and infrastructure
 Low number of private institutions
in urban areas and high fees makes
private education inaccessible to
rural and middle-class students
 Social inequalities prevent students
belonging to lower castes and
underprivileged groups from
attending schools, e.g., in the Terai
region, only 23.1% of Dalits were
literate compared to 80% of
Brahmans and Chhetris (higher
castes), in 2016 31
 Adopt digital technologies

High dropout rates In FY 2018/19, the
and blended learning
Government launched
Dropout rates are particularly high at techniques that combine
Literate Nepal, and Let’s
higher education institutes with gross online and face-to-face
Bring to School, Retain and
enrolment rates decreasing from teaching modes in classrooms
Teach programs that aim to:
135.4% at primary level to 69.5% at  Integrate gamification,
secondary and 11.8% at tertiary level  Ensure compulsory AR/VR technology, badges,
in 2016 due to factors such as:
32
education for all children and rewards in the classroom
of school age to increase engagement
 Low student engagement and
Education up to  Introduce interactive learning
motivation as a result of poor
secondary level is made modules in rural areas on
quality of teaching and learning
free gradually specific subjects, hobbies,
processes and over-reliance on
and women empowerment
teacher-centered classrooms that
initiatives
do not prepare students to think
critically
 Socio-economic issues in rural areas
leading girls to leave school earlier
than boys because of early
marriages and to support their
families financially
Inadequate funding In April 2018, the Minister for  eGovernment solutions that
Education, Science and automate tasks undertaken
Public institutions often face delays in
Technology unveiled a 10- by public officials, reducing
obtaining sufficient government
31
UNESCO
32
Draft 43
support and funding, possibly due to point, five-year roadmap spending leaks and
an inefficient education structure: which includes structural and improving transparency
organizational reforms to  Introduce an automated,
 Currently, the sector is supported improve the efficiency of the mobile-based customer
by the Central Government, with sector management system for
regional/provincial governments
institutions to file complaints
having limited control and
and track resolutions in case
resources
of delays in receiving support
 Red tape, corruption, and
 Use common CRM and ERP
bureaucratic processes exacerbate
systems across departments
the issue
and industry hierarchies to
enable information sharing
 The Government is  Use cloud-based back-up and
Physical safety issues
drafting policies relating disaster recovery solutions as
Since the devastating earthquake of to disaster risk reduction well as sensor technology to
April 2015, education authorities in and safety under the SSDP predict and mitigate effects
Nepal have yet to open the new program of natural disasters
academic session in several districts  The National Strategy for  Use of laptops and handheld
owing to the quake's adverse impact: Disaster Risk Management devices by students could
in Nepal also highlights help maintain learning
 Over 16,000 classrooms at ~6,000
the role the education continuity in case schools or
public schools were destroyed, over
sector can play in universities are inaccessible
7,000 classrooms have major
reducing the vulnerability
cracks while 12,000 have repairable
and exposure posed by
cracks 33
natural hazards
 Use of online testing tools to
Poor quality of vocational training In September 2017, the
assess student capabilities
and lack of employability World Bank approved a
and interests, and
US$60 million credit to
Nepali students face significant recommend courses
support the second phase of
challenges in finding employment accordingly
the Enhanced Vocational
after graduation due to gaps Education and Training  Introduce technology-
between skills gained and industry Project in Nepal, called assisted learning modules,
needs: EVENT II that is: e.g., an institute in the UK
introduced a renovation
 Studies focusing on rote learning  Designed to improve project in its vocational class
are not interactive and do not equitable access to that used film and Padlet to
prepare students to tackle real- market-relevant training develop students’ functional
world situations programs and strengthen Math and English skills in
 Teachers lack skills in scientific the delivery of Technical construction
teaching methods Education and Vocational
 Vocational education curriculum is Training (TEVT)
irrelevant and out-of-date
Digital Initiatives Roadmap for Healthcare sector
While the Government of Nepal allocates a substantial share of its budget to the education
sector, cohesiveness between initiatives remains a challenge. Development of an integrated
digital education ecosystem that combines various ICT policies and aspects of technology
adoption under a single umbrella organization by authorities could improve coordination
among all stakeholders in the education value chain.
Frost and Sullivan recommends following digital initiatives to unlock the potential of Nepal’s
education sector
33
Independent news articles
Draft 44
1 Technology and 2 Entrepreneurship/PPP 3 Talent and Skills
 Promote entry of
 Smart classrooms  Mobile learning centers
edutech startups
 OLE Nepal 2.0 in rural areas
 Co-creation hubs
 Online learning platform
 Redesign vocational
 Rent-a-Laptop program curriculum
 GPS mapping
 Centralized admission
application

Technology infrastructure and services are pivotal to deriving the maximum benefits of next-
generation education solutions. Key projects that can be undertaken to improve these areas
include:
1.1 Smart classrooms

Solution Integrate technology in classrooms at public schools and colleges
including:
 Laptops, mobile phones, and tablets for students, along with
sufficient charging points and Wi-Fi connectivity
 Projectors, audio-visual equipment, video recorders, and screens
for showing teaching content
 Digital whiteboards that provide an interactive learning
experience for students
Stakeholders Ministry of Education, Schools and Universities
Timelines Long Term
1.2 OLE Nepal 2.0

Solution Extend the ongoing Open Learning Exchange (OLE) program by
increasing the provision of E-Paath software, E-Pustakalaya, teacher
training, and ICT infrastructure to 100% of schools in Nepal over the next
five years from the current ~100 schools:
 To increase coverage, the Ministry of Education should devise
incentive schemes and monetary compensation, and frequently
monitor ICT usage
 The program should include development of a mobile app for the
E-Pustakalaya digital library
 Extend E-Pustakalaya to include digital versions of the pre-
primary and higher education (e.g., university and vocational
courses) curricula
Draft 45
Stakeholders Ministry of Education, Schools and Universities
Timelines Long Term
1.3 Online Learning Platform

Solution Collaborate with educational institutions to develop a platform that
delivers educational content as per the national curriculum, for school-
going and out-of-school youth as well as teachers. The platform should
be delivered on websites and mobile-based devices enabling:
 Students to attend pre-loaded video classes on specific subjects,
check homework, submit assignments, and self-design learning
programs according to their pace or preference
 Teachers to upload assignments, check homework, provide
additional help to weak students through video chat, and publish
exam schedules
 Integration of a cloud-based library where content can be
downloaded onto laptops/mobiles to access in areas with no
Internet connectivity
Stakeholders Ministry of Education, Schools and universities
1.4 Rent-a-Laptop Program

Solution Nepal should consider launching a Rent-a-Laptop program to digitally
empower students nationwide. As part of the program, Government of
Nepal can provide basic laptops to students from underprivileged
backgrounds at a marginal cost (e.g., nominal sum of NPR1, 000 for one
year).
The program can target underprivileged students studying at senior
secondary and tertiary levels (e.g., colleges and vocational training
schools).
Stakeholders Ministry of Education
1.5 GPS Mapping

Solution Map all schools and universities in Nepal on GPS and upload the data on a
common portal to track the geographical location of each institute and
check its proximity to the closest village/city/habitation. Target to
complete GPS mapping of all institutions by 2025.
Stakeholders Ministry of Education, Ministry of Science and Technology (MoST)

Draft 46
1. 6 Centralized Admission Application
Solution Develop a centralized admission application to be used by all public and
private schools and universities, which integrates with existing SIS
systems and tracks student admissions.
The tool will include an automated provision for admission quota of
underprivileged (SC/ST) communities in the public school and university
systems, ensuring transparency.
1. 7 Biometric Attendance and CCTV Cameras

Solution Consider rolling out biometric attendance systems and CCTV cameras at
all public educational institutions. Biometric attendance system and CCTV
cameras would enable better tracking and monitoring of teacher
attendance and quality of services delivered from public schools
Case Study: Leading telecom operator in Indonesia connects 1,000 schools with high-speed Internet
XL Axiata, a leading telecom operator in Indonesia, launched “1,000 School Broadband Program” in
October 2016. As a part of the program, XL Axiata facilitated 1,000 schools in various provinces to
connect to high-speed internet networks as part of its on-going social activities in support of
government programs for school digitization. The program helped more than 400,000 students and
thousands of teachers in the learning process.
While the education sector in Nepal shows immense potential to grow, challenges related to
the country’s scale and diversity could impact its progress. Partnerships with technology
innovators could go a long way in addressing various issues challenges and improving
implementation of initiatives. The Government should consider the following approaches to
create a conducive environment for entrepreneurship in the sector:
2.1 Edutech Start-ups

Solution Encourage private sector participation in the education sector,
particularly in higher education to boost competitiveness and innovation:
 Consider offering incentives, grants, subsidies, and tax breaks to
companies and start-ups engaging in the education sector
Solutions from start-ups and niche online/digital education providers
should address specific challenges facing the sector
Draft 47
2.2 Co-creation Hubs

Solution Open innovation hubs, research labs, incubators, and accelerators to
foster cooperation between educational institutes and the corporate
world on student internships and business-based projects:
 Organize lectures, workshops, and seminars for university
students to highlight latest workplace trends and skills
enhancement
Interact with industry players to redesign education curriculum

Sustainable impact of ICT in education requires targeted awareness and skills development
programs for all stakeholders in the education value chain.
3.1 Mobile Learning Centers in Rural Areas
Solution Establish learning centers in rural areas that target underserved
population with limited access to formal education:
 Provide self-learning and interactive learning in specific skills such
as plumbing, electrician, technical training, culinary, sewing, and
entrepreneurship
Deploy mobile phones, tablets, and laptops to increase impact of
initiative
3.2 Redesign of Vocational Curriculum

Solution Redesign education curriculum at technical and vocational colleges in
collaboration with prominent companies across industries to make
courses less theoretical, reduce the skills gap, and introduce practical
training.
Case Study: Vodafone improving education access in rural Africa through its
newly-launched Instant Schools For Africa initiative
Objective: Provide young people in Sub-Saharan African markets with free access to
online learning materials, addressing the problem of access to quality education
Draft 48
Program Description: Launched in 2017, the initiative provides school going children in
South Africa, the Democratic Republic of Congo (DRC), Ghana, Kenya, Lesotho,
Mozambique, and Tanzania with free access to online learning materials. These include
video/interactive exercises, optimized for basic mobile devices and low bandwidth. The
initiative targets primary to secondary students (5–18 years old) and is part of Vodafone
Foundation’s ongoing mission to use digital and mobile technologies to bring critical
educational resources to Africa. Other ongoing initiatives by Vodafone in the region
include Vodacom e-schools and the KA Lite open-source platform
Expected Outcome: Vodafone is targeting to help three million children and youth
through the program by 2020
Draft 49
Energy
Reliable energy supply is essential for driving the economic growth and social well-being of a
country. Severe energy shortfall in Nepal in the past few decades have led to a chronic
imbalance between power supply and consumption. Electricity supply quality in Nepal is
among the lowest in the world, ranking 137th out of 147 countries.34 Aggressive expansion in
the country’s population, agricultural, and industrial activities have resulted in higher demand
for power, worsening the severity of power shortage.
Similar to other countries in the region, the rate of electrification in Nepal is approximately
76%. However, significant disparities in electricity access between rural and urban areas exist
with only 61% of the rural population having access to electricity, compared to 96% of the
urban population.35
Nepal is a net energy importer, with 34.76% of its energy needs imported from India.36 As
energy generation via the Nepal Electricity Authority (NEA) is insufficient to meet domestic
demand, Nepal supplements its energy sources by importing from India, and through
Independent Power Producers (IPPs). Nepal’s rich hydro resources are estimated to be able
to support power generation up to 42,000 MW.37 However, by the end of 2016, its total
installed hydropower station capacity was only 802.4 MW, equivalent to less than 2% of its
total generation potential.
Promise of Digital Initiatives in Energy Sector

The Government of Nepal continues to actively pursue measures to overcome load shedding
and energy shortage issues in the country. Following the appointment of a new director at
the NEA and strong government support, Nepal became load shedding free in May 2018 from
improvements in the efficiency of management of supply and demand. Having resolved load
shedding issues for both household and industrial users, the NEA is currently focusing on
maintaining consistent power supply with quality and safety as priorities. The NEA is also
34
Asian Development Bank (ADB), Asian Development Outlook 2015: Financing Asia’s Future Growth, Manila.
35
Energizing Development (EnDev), a multi-donor partnership financed and governed by the governments of the
Netherlands, Germany, Norway, the United Kingdom, Switzerland, and Sweden
36
NEA 2017
37
ADB, Technical Assistance for the South Asia Economic Integration Partnership – Power Trading in Bangladesh
and Nepal (Subproject 1), Manila, 2014.
Draft 50
taking bold steps to strengthen its financial position through organizational restructuring
exercises as well as introduce transparent transfer modality and other measures to improve
services, reduce power wastage, and collect outstanding revenues.
Recognizing the need to develop its energy sector to reduce poverty and reinvigorate the
economy, the Government is prioritizing energy development projects with multiple targets
set over the next few years. It is also actively driving efforts to develop hydropower
capabilities through initiatives such as the Nepal Power Investment Summit 2018.
Case Study – Bhutan’s ambitious hydropower developments to become a net exporter of energy
Over a 10-year period (2005–2015), Bhutan, a developing nation with similar topography to Nepal,
increased its electricity production from 460 MW to 1606 MW , mainly generated through hydropower.
38
Bhutan’s electricity exports grew from US$78 million in 2005 to US$176 million in 2017, contributing to
40% of its total exports and generating 25% of the government’s revenue.
Four out of five of its major hydropower projects are financed by the Indian government, with the fifth
financed by the Asian Development Bank (ADB) and loans from Indian banks. The investment
arrangement helps to cover the financial and construction risks of hydropower projects, with India
committing to purchase surplus electricity reflecting production costs plus 15%.
39
Rapid development in the energy sector is reinvigorating Bhutan’s economy, with gross GDP projected
to record 9.9% in the fiscal year ending 2018. Although current and future revenues generated from
energy exports are forecast to cover the cost of hydropower investments, the Bhutan government is
taking measures to monitor its hydropower-related costs closely. Under a 5-year plan, the government
has stipulated that hydropower debt should not exceed 40% of hydropower earnings, while non-
hydropower debt is limited to 35% of GDP.
Challenges in Nepal’s Energy Sector

The Himalayas cover approximately 75% of land in Nepal providing the country with ample
free water resources and a favorable terrain for the production of electricity. Despite its
power generation potential, Nepal is a net importer of electricity. In meeting the growing
demand for energy, Nepal’s electricity imports increased at an average annual growth rate
(AAGR) of 20.4% between 2011 and 2016, while NEA’s electricity generation grew at 0.3%
annually over the same period.
Key hurdles facing Nepal’s energy sector include:
 Acute power shortfall, particularly during the dry season when water flow drops,
adversely affecting hydropower generation
 Inefficiency in energy transmission through high technical and non-technical losses
resulting in one of the highest energy losses in the world
 Underexploited hydropower capacity with Nepal only using a fraction of its
commercially exploitable potential
 Despite its abundant hydropower resources, Nepal has one of the highest electricity
tariffs in the world
 Regulatory barriers associated with foreign investments (including those in energy
development projects), and land acquisition (private landowners for construction of
transmission lines)
38
Hydro World
39
Nikkei Asian Review, Aug 2017
Draft 51
Energy in Nepal: Pain Points, Priorities, and Digital Solutions
Pain Points Government of Nepal’s Digital as an Enabler

Priorities
Inadequate power generation

 Increase electricity  Digitally streamlined PPP
 Nepal has a high
consumption per capita application processes to
dependence on energy
over the next 10 years from mobilize foreign investment
imports from India as the
110kw/h to 1500kw/h in the development large-
NEA only meets 40% of
 Establish a center to scale hydropower projects
Nepal’s energy needs (2017)
implement large-scale PPP and high-voltage
 Energy generation in Nepal transmission lines
hydropower projects and
fluctuates depending on
provide relevant  Smart Grid solutions to
water flow due to heavy
transaction advice. develop necessary power
reliance on hydropower,
Additionally, the distribution infrastructure
resulting in lower supply
Government intends to  Smart Building/Smart
during the winter when
diversify power generation Energy Management
demand is typically the
to include other sources solutions for the public
highest
such as biomass, solar, sector and large enterprises
wind, and solid waste to reduce power
consumption
Limited rural electrification

 Complete electrification  Smart Power (e.g., cloud-
 Large disparity in electricity
throughout the country by based operating systems,
access with only 72% of the
2021 applications integration) can
rural population having
extend electricity and
access to electricity,
energy reach to rural areas
compared to 96% in urban
through better management
areas
High transmission energy losses

 NEA is leading several  Smart Grids and Smart
 Nepal has one of the highest
projects to improve grid Meters to conduct system
electricity output losses
infrastructure and loss analysis to reduce
globally, recording 22.9% in
increase efficiencies power losses by leveling,
2017 during the transmission
including the Smart reducing or improving the
and distribution process
Metering Smart Grid quality and efficiency of
 Technical losses such as Project and the GIS Smart power flows
energy dissipation in the Grid Project  Advanced analytics
transmission lines and non-
solutions to track energy
technical losses such as
consumption and check
faulty meters and
power thefts
unmetered energy are key
contributors for the output
loss
Inefficiency of the Nepal Electricity Authority (NEA)

 Measures to restructure  Use of Digital technologies
 In FY2016/2017, the NEA
the NEA and improve the in meter reading collection
incurred a net loss of
efficiency of related (Smart Meters), payment
approximately US$8.98
organizations collection, customers
million
 Plans to evaluate and services to improve
 Increasing cost of power operational efficiency
adjust electricity tariff
purchased from IPPs could
rates, power purchase  Field Force Automation
destabilize the agency’s
rates, and wheeling solutions for optimal use of
financial position further
Draft 52
 Concerns over the NEA’s charges according to field forces such as
ability to meet contractual climate and time, to reduce technicians and meter
obligations in power costs and boost energy readers
development projects due distribution efficiency
to its financial standing
Case Study: Digital tech addressing Brazil’s power theft crisis

Rising incidence of electricity theft in Brazil was costing its government billions in lost revenue. On
average, 8% of energy in Brazil was being stolen from the grid each year, reaching a staggering 40% in
some areas.
Solution: Siemens used innovative Smart Meter software to access, collect, and process data from smart
meters, integrating the platform with the billing and management system to ensure efficient energy
billing to users. From the analysis of consistent data, Siemens was also able to identify the culprits as
being a group of small and mid-sized enterprises that were using stolen energy to reduce their
overheads. By building complicated user profiles, smart algorithms continuously compare an estimated
consumption pattern to the amount of energy coming from the grid. The system can also detect any
anomalies in electricity use, which is then inspected. 40
Digital Initiatives Roadmap for Energy Sector

The Government of Nepal should consider increasing its focus on digital investments in the
energy sector to maximize its ability to meet power demands and generation potential.
1 Technology & 2 Entrepreneurship/PPP 3 Talent and Skills
 Digitally streamlined  NEA e-Learning Center
 Smart Pricing
PPP application to to enhance digital skills
 Smart Metering
resolve regulatory and knowledge of NEA
 GIS Smart Grid Project barriers staff
 Minimizing
Inefficiencies in Power
Transmission
 NEA Official Mobile
App 2.0
 Pan-Nepal Rollout of
Any Branch Payment
System (ABPS)
 Smart Building/Energy
Management Project
 NEA Field Force
Automation Solutions
 NEA Customer Service
Portal
40
Siemens
Draft 53
Technology and infrastructure
The recommended initiatives to expand technology-based electricity generation and
distribution capacity in Nepal are as follows:
1.1 Smart Pricing

Solution Implementation of Smart Pricing is highly recommended to facilitate
revenue collection and improve the financial position of the NEA through:
 Automatic tariff adjustments based on fluctuations in currency
exchange and price of power purchased from India
 Nationwide implementation of Time-of-Day (TOD) meter to charge
different rates for electricity usage during peak and off-peak periods
Stakeholders Ministry of Energy, Electricity Tariff Fixation Commission (ETFC)
1.2 Smart Metering

Solution Introduction of smart meters could help reduce energy losses and
improve operational efficiencies from data analysis. The Government has
allocations for smart meters in Nepal in the 2016/2017 budget with the
project to be implemented in three phases. This is expected to improve
efficiencies in the energy sector through:
 Nationwide shift from analogue to smart meters
 Automatic Meter Reading (AMR) system with Automatic Metering
Infrastructure (AMI) application in existing meters
 Forecast load demand by actual electricity usage
Stakeholders Nepal Electricity Authority (NEA), Electricity Tariff Fixation Commission
(ETFC)
1.3 GIS Smart Grid Project

Smart grids are electricity networks that enable monitoring, analysis,
Solution
control, and communication capabilities in the electricity supply chain,
from the power plant to the end user. Smart grids incorporating GIS
technology in Nepal are funded through the Government budget
2016/2017 and will achieve the following:
 Manage proper information about poles, transformers & meters
along with the consumer’s information geographically
 Forecast load demand by actual electricity usage
 Identify and manage electricity leakages
Stakeholders Nepal Electricity Authority (NEA), National Transmission Grid Company
Timelines Long Term
1.4 NEA Official Mobile App 2.0
Draft 54
Solution In H2 2017, NEA launched the NEA Official mobile application where
users can access all activities of the authority including electricity tariffs,
register complaints, and locate areas experiencing a power cut and
restoration times.
As the current version offers limited functionalities, the Government and
NEA should consider the development of the NEA Official 2.0 application
to meet the current needs of customers, in line with similar applications
offered by leading utility companies worldwide.
Stakeholders Ministry of Energy, NEA’s Distribution and Consumer Services Directorate
(DCSD)
1.5 Pan-Nepal Rollout of Any Branch Payment System (ABPS)

Solution NEA has introduced the Any Branch Payment System (ABPS) in
Kathmandu Valley, which allows customers to pay their bill at any NEA
locations with ease.
ABPS services should be rolled out across Nepal to provide better
customer experience to NEE customers.
(DCSD)
1.6 Smart Building/Energy Management Project

Solution Energy Management involves optimizing energy consumption in a
building by employing energy-efficient measures.
Deployment of Smart Building/Energy Management Solutions in

government offices and departments could be effective in reducing
energy consumption and carbon footprint over the next five years.
Stakeholders Ministry of Energy, All Government Offices and Departments
Timelines Long Term
1.7 NEA Field Force Automation Solutions

Solution Field Force Automation Solutions for improving the efficiency of NEA’s
Field Force can help in the following ways:
 Automatically schedule and allocate work to Field Engineers
 Use of mobile applications (e.g., GPS tagging, automatic meter
reading) to enable collection of meter readings and a reduction in
complaints/fraud related to meter readings
(DCSD)
Draft 55
Timelines Long Term
1.8 NEA Customer Service Portal

Solution As a part of its efforts to offer better customer experience, NEA is
focusing on leveraging digital technologies such as online payments via
partner banks and wallets and customer care helplines. However, it offers
limited self-service capabilities to its customers.
NEA should consider offering better self-service options to its customer
base by developing a customer service portal. It should leverage
technologies such as artificial intelligence and chatbots to handle tasks
such as complaints, queries, and digital payment solutions.
(DCSD)
Case Study: Smart Grid Technology Reducing Power Outages in Bosnia and Herzegovina
To the people of Brcko, Bosnia and Herzegovina, frequent power outages were a way of life affecting
businesses, schools, and homes. During storms or technical failures, residents could lose power for
extended periods.
USAID and its partners, the US Energy Association, Schweitzer Engineering Laboratories, and Brcko
Komunalna, the electric utility serving the Brcko district of Bosnia and Herzegovina, joined forces to
support a smart grid technology pilot project between September 2015 and September 2016 that
dramatically improved the reliability of electricity supply in Brcko.
Schweitzer Engineering’s technology could instantly identify the location of power outages caused by
storms and technical failures on Brcko’s distribution lines. Previously, during a power outage, employees
would have to drive or walk along the power lines until they found the problem. The new technology not
only reduces the number of trucks and employees needed to restore services, but also improves
customer services while reducing emissions and costs associated with the use of diesel-powered backup
generators. The project has reduced the frequency and duration of electricity outages. Over the project
period, customers on an affected line reported a 51% drop in the number of outages, and 58% reduction
– or about 8 hours – in the duration of outages compared with the same period the previous year. 41
Entrepreneurship/Public-Private Partnerships
The Government of Nepal acknowledges the importance of private sector involvement and
investment to develop Nepal’s hydropower capacity fully. In considering public-private
partnerships (PPPs) hydropower generation models, the Government should also work to
address constraints to private investments in infrastructure, including regulatory barriers (e.g.,
simplifying licensing procedures, forest clearance, land acquisition procedures).
2.1 Digitally Streamlined PPP Application

Solution Digitally streamlined PPP application processes to create a conducive
environment for the mobilization of foreign investment in the
41
USAID
Draft 56
development of large-scale hydropower projects and high-voltage
transmission lines.
Stakeholders Ministry of Energy, NEA
Case Study: A telecom tower company brings electricity to rural Bangladesh

edotco Bangladesh, a tower infrastructure company, leverages renewal energy sources to reduce its
carbon footprint. The company operates 9,000 telecom towers in Bangladesh, of which 500 towers are
powered by solar and wind energy.
The company has launched “Tower to Power” project as a part of its corporate social responsibly
initiatives. Through this program, the company distributes a part of electricity generated from its
renewal energy powered towers with communities around the site. As of August 2017, more than 160
homes, 13 mosques and 2 schools in Bangladesh’s remote areas benefited from edotco’s “Tower to
Power” program. 42
Talent and Skills Development

Training public sector employees working in the electricity sector would be critical for
success of the Digital Nepal initiatives.
3.1 NEA e-Learning Center
Solution A virtual learning platform to support the efforts of NEA Training Centers
is essential to impart technical and digital skills and knowledge to its staff
for a smooth transition to Digital Energy.
Stakeholders NEA Training Center
42
edotco Group
Draft 57
Tourism
Blessed with world-class tourist attractions, Nepal has a naturally rich topography and culture
that caters to diverse travel interests ranging from pilgrimage/religious sites to wildlife parks,
mountaineering, adventure trekking, and luxury holidays.
The travel and tourism sector is a primary source of revenue, foreign exchange, and
employment for the country, contributing 7.8% to total GDP and 6.6% to total employment
(translating into ~1,027,000 jobs) as at 2017.43 Given the sector’s direct positive impact on
Nepal’s economic growth, the Government is stepping up efforts to promote travel and
tourism through an array of market-friendly policies, targeted marketing campaigns, and
investment programs.
Key initiatives fall under its new policy, the National Tourism Strategy 2016–2025, which
envisages a fivefold increase in annual arrivals by 202544. An immediate focus area of the
Government is the Visit Nepal 2020 program that aims to attract two million tourists and
generate one million job opportunities in the sector by 202045.
Key Government Initiatives in Tourism:
National Tourism Strategy 2016-2025 Visit Nepal 2020
Envisages a fivefold increase in annual An immediate focus area of the
arrivals and 9.29% growth in the sector’s Government, Visit Nepal 2020 aims to
contribution to GDP by 2025. Also aims to attract two million tourists and create one
add 4,000 hotel rooms in Kathmandu by million jobs in the sector by 2020.
2018–2019.
Partnerships with International

Attracting Tourists from Regional Countries
Organizations
The Government is encouraging tourism, Nepal Government has partnered with the
mainly from China, its largest tourist World Bank’s International Finance Corp
demographic, with the launch of its (IFC) and FMO, a Netherlands-based
customized website in Chinese language. development bank, to build critical
43
World Travel & Tourism Council (WTTC), Data Gateway, Nepal, https://tool.wttc.org
44
Debanjana Bhattacharya, “Nepal Tourism launches new National Tourism Strategy”, Travel News Digest, August 30, 2016,
http://www.travelnewsdigest.in/2016/08/nepal-tourism-launches-new-national-tourism-strategy
45
Ministry of Tourism and Civil Aviation, Tourism Vision 2020 policy document, May 2009
Draft 58
infrastructure including a US$6 million,
green-field, three-star hotel in Kathmandu,
under the Fairfield brand46.
Encouraging Private Investments in Tourism Sector

Driven by policies to boost the tourism sector, the hospitality industry in Nepal is in an
expansionary mode to accommodate the influx of tourists, with domestic and foreign
investors announcing plans to invest NPR60 billion (US$0.55 billion) in hotel projects
across the country in 2016.
Prominent initiatives include the re-entry of Indian hotel chain, Taj Hotels Resorts and
Palaces, into Nepal to operate a new lodge in Chitwan; ongoing construction by
InterContinental Hotels and the Sheraton Group in various regions in Nepal; and expansion
of several local hotel companies including Nepal Hospitality Group, Muktishree Group, and
Glacier Hotel.
Tourist Arrivals, 2013-2017 & 2020 ('000s)

CAGR (2017-20):
CAGR (2013-2017): 28.6%
4.2% 2000.0
940.2
797.6 790.1 753.0
539.0
2013 2014 2015 2016 2017 2020
All figures are rounded. The base year is 2013; Source: World Travel & Tourism Council; Frost & Sullivan analysis
Despite the Government-led efforts, growth has been relatively slow, with tourist arrivals to
Nepal at a five-year CAGR of only ~4.2% (2013–2017), reaching 940,218 tourists in 201747,
primarily owing to underdeveloped infrastructure. To achieve its 2020 target of two million
tourists, arrivals will need to increase multifold, at a CAGR of 28.6%, requiring the
Government to intensify initiatives to boost the sector.
Challenges in Nepal’s Tourism Sector
While the Government of Nepal aspires to strengthen the tourism sector’s productivity,
income, and image internationally, it continues to trail other countries in the region due to
46
The Himalayan Times, “IFC, FMO invest $5.5m in Fairfield Marriot Hotel”, June 21, 2017
47
Nepal Tourism Statistics 2017 publication, Ministry of Culture, Tourism & Civil Aviation
Draft 59
several inherent challenges. In 2017, the sector accounted for ~7.8% of Nepal’s GDP, as
compared to 21.2% in Thailand, 11.6% in Sri Lanka, and 8.9% for countries in South Asia.48,49
Critical challenges in Nepal’s tourism and hospitality sector include:
 Poor infrastructure to support tourism activity, including congested airports, poor
quality of roads, facilities, and weak IT infrastructure to support digital initiatives. The
massive April 2015 earthquake that severely damaged many of the country’s historic
sites further exacerbate this problem
 Lack of effective marketing and promotional activities to promote Nepal as a tourist
destination, possibly due to lack of funds
 Tourists’ negative perceptions about safety and security risks due to past instances of
political turmoil, terrorism from neighboring countries, and natural disasters
 Shortage of skilled and professional workforce, with most tour guides speaking very
little English, weakening the image of Nepal as a tourism destination internationally
 Tourists to Nepal often complain about the lack of information on tourist spots,
weather conditions, and activities available. There are also concerns about the
reliability of information
 Low focus on promoting domestic tourism, leading to lost revenue opportunities for
the sector
The new Government intends to revitalize the tourism sector during its tenure by rolling out a
100-day action plan to address various challenges. Key areas under the action plan include:
Technology & Innovation
 Digitalize and consolidate archives of national importance; plans to catalogue, tag, and upload
11,550 of 31,000 handwritten manuscripts, along with 655,000 images preserved at the National
Archives
 Form a think tank to gather suggestions and feedback regularly, and draft a concept paper on
mobilizing tourism attachés in five major markets
Administrative
 Establish a secretariat to oversee Visit Nepal 2020

 Form a committee to determine the actual contribution of the tourism sector to Nepal’s economy
 Resolve the dispute over the use of modern materials to rebuild the Rani Pokhari heritage
monument and begin reconstruction
 Draft a formal Casino Act to streamline the gambling business and address the evasion of
royalties and taxes by casino operators
Infrastructure
 Finalize the modality of the proposed Nijgadh International Airport in Bara within 100 days
 Build a Guerrilla Trail and Yarsa Trail at least 10km long to offer a unique trekking experience
 Develop model tourist destinations in all seven provinces of Nepal such as Ilam, Janakpur,
Makwanpur, Pokhara, Rupandehi, Mugu, and Kailali
48
World Travel & Tourism Council (WTTC), Data Gateway, Nepal
49
South Asia includes India, Myanmar, China, Bangladesh, Vietnam, Cambodia, Thailand, Sri Lanka, Laos, and Nepal
Draft 60
Promise of Digital Initiatives in Tourism
Increasing connectivity driven by the proliferation of the Internet and mobile devices and
growing affordability of digital technologies are transforming the nature of tourism and
consumer demand. Globally, ICT penetration is typically high in the travel, tourism, and
hospitality sector, with the automation of almost every process from research, price
comparison, ticketing to booking and reservations. Nepal can learn from other countries
successfully implementing Digital Tourism technologies to address the inherent challenges of
its tourism sector.
Use of digital technologies in tourism sector presents new revenue streams for Nepal through
increased profitability of its various stakeholders and generates significant benefits for
society through a reduction in environmental footprint, better safety and security, and cost
and time savings. Nepal appears to be in the early stages of ICT implementation. Currently,
digitalization efforts are limited to website development for the Ministry of Culture, Tourism
and Civil Aviation (MoCTCA) and Department of Tourism while the hospitality industry
operates basic CRM and revenue management systems. Nepal has a long way ahead to gain
measurable benefits from ICT through the large-scale implementation of digital initiatives in
tourism.
Tourism in Nepal: Pain Points, Priorities, and Digital Solutions
Inadequate infrastructure
Airports Under the 100-day action plan,  Use of digital signages

the Government has announced and touchscreen kiosks
Nepal has only one international
several measures to revitalize its to provide tourism
airport – Tribhuvan International
airport, including: information
Airport (TIA), considered among the
worst in the world according to  Increasing the operation hours  Advertise tourism-related
tourist reviews due to:
50
of TIA from the current 17 offers and alerts via free
hours/day to over 20 Wi-Fi services at the
 Small with just one runway and
hours/day airport
limited capacity, resulting in
overcrowding and baggage  Completing 40% of the physical  Digitize immigration,
collection issues infrastructure of Gautam Customs and visa
Buddha International Airport in processes through the
 Runway is developing cracks and
Bhairahawa and 50% physical use of automated
potholes, worsening congestion
progress by June 2018 gateways to scan
and causing flight delays
passports, visas, and
 Purchasing six Twin Otter
 Lack of basic amenities like boarding passes
aircraft to serve remote areas
toilets, cleanliness, and e-
 Use of e-visas and digital
ticketing services There are also plans to complete
immigration records to
construction of the Pokhara
 Untrained and unskilled move toward paperless
Airport by 2020. 51
employees immigration processes

which are faster and
50
Dr Perry Haan, “Tourism issues involving Nepal’s economy”, Watertown Public Opinion, August 17, 2017,
51
Address by the Right Honorable President of Nepal, Mrs. Bidya Devi Bhandari, to the Joint Session of both Houses of the Federal
Parliament, May 21, 2018
Draft 61
could alleviate
The airport is the first point of
congestion at airports
contact for tourists. As such, any
negative impression could hamper
tourist growth in the country.
Road infrastructure  In Jan 2017, ~US$1.35 million  Use of smart traffic

grant was allocated to procure management and
 Congestion in popular tourist
a 150-kilowatt solar power intelligent lighting
areas due to the poor quality of
plant to power e-vehicles control systems for real-
roads and traffic
plying the World Heritage Site time and predictive
mismanagement
of Lumbini, to reduce traffic information
 Lack of last-mile connectivity in congestion and pollution
remote, hard-to-reach areas  Vehicle tracking and
 The Government has monitoring using RFID
 Weak regulation of driving commenced construction of the tags
licenses is a major contributor to Kathmandu Nijgadh Fast Track
the presence of unsafe, road  Use of GPS technology
inexperienced drivers on the by cabs transporting
road, presenting significant tourists to check road
reputational and safety risks conditions
Facilities  Under the Visit Nepal 2020  Equip self-service kiosks

campaign, the Government is in tourist centers
 Shortage of tourist facilities like
investing in the development of
ATMs, information centers,  Enable booking through
additional tourist facilities and
currency exchanges outside mobile and web channels
infrastructure
mainstream tourist spots
 Install Wi-Fi hotspots
 Inadequate information on
health, hygiene, and ecology  Develop websites and
portals with
comprehensive tourism
information
4. IT infrastructure to support  In May 2017, Nepal Rastra Bank  Implement centralized IT

digitalization (NRB) reviewed its retail systems such as Global
payment systems to identify Distributed Software
 Inability to perform digital regulatory gaps and barriers, as (GDS) and reservation
payments due to poor well as to develop a national management systems to
integration between payment retail payment strategy, to connect all licensed
systems of banks, mobile wallets, support digital payments agencies with the
and merchants; and lack of Government to enable
facilitation for foreign currency information sharing
payments
 Highly fragmented databases
and poor integration between
airports, tourism authorities,
travel agencies, and hotels
Limited tourism information availability
 Lack of information on tourism  Nepal Tourism Board (NTB) has  Develop an official
destinations, health and hygiene, launched website and mobile
natural hazards, changes in www.welcomenepal.com, its application for the NTB
biodiversity, and ecology official tourism website, with with regular updates on
 Tourism websites, books, and detailed information on tourist attractions, weather,
brochures are limited; ones that attractions, activities, events, travel, accommodation,
are available are scattered, not climate, and local transport and e-ticketing
updated regularly or reliable  Equip tourist centers with
As tourism is an information- self-service information
intensive business, poor data access kiosks, digital signages,
Draft 62
could weaken Nepal’s position in the and maps
global tourism industry.
Lack of effective marketing strategies

 The Government has  Use augmented reality
Despite its rich cultural heritage and
introduced several tourism apps to provide tourism
terrain, Nepal is not at the top of the
campaigns including Visit information, navigation,
travel list for most tourists due to
Nepal 2018, Campaign HAN, guides, and translations
lack of promotional activities
and Himalayan Travel Mart  Virtual reality technology
advertising Nepal as a tourist
2018 to recreate tours,
destination. Other factors include:
 Launch of a customized showcase
 The Government’s inability to website in Chinese language accommodation, and
diversify tourism products, to attract visitors from China advertise hotels
possibly due to lack of funding who form a majority of  Deploy online marketing,
Nepal’s tourists SEM/SEO tools including
 Lack of opportunity to fully
 In 2017, the NTB signed up targeted ads for travelers
capitalize on the country’s
with BBC World, Reuters, and  Social media marketing,
mountaineering, pilgrimage,
TripAdvisor to display peer reviews, and user-
medical tourism, and ecotourism
promotional videos of Nepal generated content build
features, indicating lost revenue
through the media channels brand value and attract
channels
visitors
Shortage of skilled workforce in the tourism sector
As the majority of the country’s  Nepal Academy of Tourism and  Use of automated tour
skilled talent have migrated Hotel Management offers guides that connect to
overseas for work, Nepal’s tourism Bachelor’s and Master’s visitors’ mobile phones
sector is forced to hire unskilled degrees in Hospitality and provide historical
people from rural areas with little Management, as well as information, reducing the
experience; gender equality issues Bachelor’s degree in Travel and need for physical tour
and socio-cultural factors also Tourism guides
prevent women from working in the  The Government plans to set
sector  Monuments and heritage
up training centers to coach
sites can be connected
tourist guides, and a Tourism
with sensor/IoT
University to offer higher
technology, QR codes,
education in tourism to meet
and RFID tags to provide
human capital demand
information
Low focus on domestic tourism

 Government-led initiatives to
Majority of tourism policies in Nepal  Create
improve infrastructure and
target foreign tourists with little websites/helplines in
marketing/promotional
being done to promote domestic local Nepali languages to
activities could benefit both
tourism, leading to: cater to the diverse
international and domestic
ethnic local population
 Growth in outbound tourism as tourism
Nepali people travel overseas  Ongoing programs by NTB to  Train local entrepreneurs,
during the holiday season boost domestic tourism such as particularly in rural
(October–November) Travel Nepal and Photo Nepal tourists hotspots like
 Loss of opportunity to tap into to promote Nepali tourism Manang, Mustang, Rara
the rising disposable incomes using photography; Safa Nepal Lake, and Ghandruk, to
and spending power of Nepali to foster cleanliness around boost domestic tourism
people heritage sites, and Chulo Nepal
to publicize Nepali food and
hygiene conditions
Draft 63
Digital Initiatives Roadmap for Tourism Sector
The Government of Nepal should consider formulating a comprehensive model for the
tourism industry, encompassing infrastructure, attractions, accessibility, amenities, and
ancillary services, along with key technology tools.
Frost and Sullivan recommends following technology initiatives to unlock potential of Nepal’s
tourism sector:

 Entry of travel start-ups  Training programs for
 Welcome Nepal website
and foreign companies local guides
2.0
 Public-private  Tie-ups with
 Welcome Nepal mobile
investments and educational institutions
app
partnerships with
 Electronic visas
sharing economy
 Multilingual helpline players
 AR/VR tours
 Electronic tour guides
 Omnichannel marketing
 Free Wi-Fi services in
tourist points of interest

The following initiatives seek to address the gaps in insufficient tourism infrastructure.
Selected projects for the consideration of the Government of Nepal include:
1.1 Enhancement of Welcome Nepal Website 2.0

Solution Enhance official web portal www.welcomenepal.com to make it a one-
stop shop offering services such as direct booking of accommodation,
transport, e-tickets to sites, flights, visa and immigration information,
support for special needs/disabled tourists, and helpline/emergency
contact details:
 Integrate AI/chatbot technology to answer tourist queries
Stakeholders Ministry of Culture, Tourism and Civil Aviation (MoCTCA) – Department of
Tourism
1.2 Welcome Nepal Mobile App

Solution Expand the Welcome Nepal web portal to the mobile platform to include
tourist services such as online ticket booking to all tourist spots in the
country, barcodes at heritage sites to provide information on the area in
tourists’ local language, online booking feature for cabs and tourist
guides, accommodation details, and other tourist-related services.
Draft 64
The website is currently available on Android and should be extended to
include other operating systems such as Apple iOS and Linux to increase
reach.
Stakeholders Ministry of Culture, Tourism and Civil Aviation (MoCTCA), IT service
providers
1.3 Electronic Visas

Solution Introduce electronic visas (e-visas) for entry into Nepal to replace the
current paper visa application system. Start with a few pilot countries
including India and China and extend to other nations over the next five
years.
Stakeholders Ministry of Culture, Tourism and Civil Aviation (MoCTCA), Department of
Immigration
Timelines Long Term
1.4 Multilingual Helpline

Solution Develop multilingual support – phone, website, and mobile application –
to cater to multiple nationalities seeking to visit Nepal. Focus on English,
Hindi, Bengali, and Chinese – the group of language speakers that
constitute the highest share of tourists.
Tourism
1.5 Augmented and Virtual Reality Tours

Solution Deploy AR/VR technology on Nepal’s official tourism website and mobile
application to showcase popular attractions (e.g., temples, Mount
Everest) and immersive content, giving travelers a real-world feel.
Tourism
Timelines Long Term
1.6 Electronic Tour Guides

Solution Provide devices with pre-loaded historical information on key tourist
sites, temples, and museums; and offer travelers the option to purchase
the device:
 Phase II would cover development of a mobile version of the
guide that can be downloaded on travelers’ phones upon paying a
small fee
Draft 65
Tourism
1.7 Omnichannel Marketing

Solution Launch a comprehensive omnichannel marketing campaign across all
channels – online, mobile, social media, TV, and print (e.g., newspapers,
flyers) with a common theme and positioning to promote Nepal’s
attractions:
 Consider partnerships with popular lifestyle magazines such as
Time Out and sites like Trip Advisor to provide information about
the best options for a night out, music, restaurants, films, and
hotels in the area
 Look at India’s “Incredible India” tourism campaign and other
efforts by its various state governments as examples for
implementation
Stakeholders Ministry of Culture, Tourism and Civil Aviation (MoCTCA), Government of
Nepal
1.8 Free Wi-Fi Services in Tourist Areas

Solution Availability of Internet connectivity and Wi-Fi hotspots at airports, hotels,
and major tourist spots as a pre-requisite to support digital tourism
initiatives:
 Nepal should target to roll out 100% Wi-Fi connectivity at its
international and domestic airports as well as main heritage sites
by 2020, in time for Visit Nepal 2020
Stakeholders Ministry of Culture, Tourism and Civil Aviation (MoCTCA), Ministry for
Communications and Information Technology (MoCIT)
Suggest of digital initiatives in tourism sector would require active government-industry-
consumer collaboration. To promote a vibrant tourism ecosystem, the Government should
consider the following:
2.1 Encourage entry of travel start-ups and foreign companies
Solution  Promote entry of start-ups that cater to niche segments of the tourism
sector, e.g., online travel communities, travel planning, activities and
experiences, travel guide services, food delivery, customized travel
packages, community/crowdsourcing platforms, and hotel booking:
‒ Provide a market-friendly environment for tech start-ups by
offering benefits including incentives, tax holidays, and knowledge
Draft 66
parks/hubs
Attract participation from international hotel chains to increase tourism
promotion and marketing activities
Stakeholders Ministry of Culture, Tourism and Civil Aviation (MoCTCA)
2.2 Public-private investments and participation in sharing economy

Solution Foster public-private partnerships to improve travel infrastructure and
transport in Nepal. Launch hop-on hop-off tourist bus services operated
by a private company under a PPP model to offer services such as free
onboard Wi-Fi, digital commentary on sites along the route, real-time bus
tracking, online ticketing platform.
Promote the sharing economy for ridesharing by allowing entry of
companies like Uber and Ola as travelers are familiar with such services

The tourism sector in Nepal is unorganized and highly fragmented with several small-scale
players. Due to its non-technical nature, most workers in the sector, while skillful, come from
rural areas and do not have proper education.
As part of its goal to formalize the sector and improve infrastructure, the Government needs
to introduce language training and ICT education programs to improve the quality of human
capital.
3.1 Training Programs for Local Guides

Solution Create a structured training program for local tour guides in the areas of
communication (English and other languages), technical know-how (e.g.,
operate trekking equipment), driving, and professional etiquette, among
others.
3.2 Tie-ups with Educational Institutes

Solution Set up specialized educational institutes that offer courses in Hotel and
Travel Management to cope with demand for travel professionals. These
institutes can consider alliances with existing hotels to provide practical,
on-the-job training to existing employees in the tourism sector.
Stakeholders Ministry of Culture, Tourism and Civil Aviation (MoCTCA), Ministry of
Draft 67
Education
Timelines Long Term
Case Study: Government-led initiatives and digital programs improving India’s tourism
infrastructure
Government Schemes
“Ude Desh ka Aam Nagrik” A regional airport development and connectivity scheme aimed
(UDAN) at improving transport connectivity to several major tourist
spots, including investments in last-mile road and air connectivity
in underserved areas.
National Heritage City Launched in January 2015, the plan focuses on the development
Development & and rejuvenation of cultural/religious spots such as monuments,
Augmentation Yojana Ghats, and temples as well as revival of intangible assets in cities
(HRIDAY); Pilgrimage such as Ajmer, Amaravati, Amritsar, Badami, Dwarka, Gaya,
Rejuvenation and Spirituality Kanchipuram, Mathura, Puri, Varanasi, Velankanni, and Warangal.
Augmentation Drive
(PRASAD)
Digital Initiatives
A digital tourism calendar application for 2018 for Android and
iOS platforms that features notifications and updated information
Incredible India digital
on events and festivals in India during the year; personal travel
calendar
planner; customized reminders for events; option to share event
information with friends.
e-tickets for access to 116 monuments across India using the web
and mobile phones. While at the site, tourists can use their
eTicketing of monument
phones to access the available audio-visual guides and combine
entrance tickets
them with venue-specific barcodes encapsulating the
information.
Introduction of the 1363 helpline in 12 languages, one-of-its-kind
in the world. The helpline also offers human assistance by dialing
Multilingual helpline
a “tourist’s friend” or tourist facilitator. It also includes other
travel-related services, prices, comparators, and certified experts.
The Incredible India website includes e-versions of travel
Digital magazines
magazines such as India & You, INDES, and Colors of India.
Source: Press Information Bureau, Government of India, January 12, 2018, Frost & Sullivan analysis
Draft 68
Finance
Despite the size of its economy, Nepal has a relatively diversified financial services sector. As
at July 2017, there are 28 commercial banks in Nepal with a paid up capital of NPR 8 billion,
40 development banks, and 32 finance companies. As one of the largest contributors to
Nepal’s economy, the financial services sector contributed 23% of GDP in FY2016. It is also
one of the largest employers in the country with commercial banks alone employing nearly
30,000 people in July 2017.
A key driver for the financial services sector is the high volume of remittances sent to Nepal
by the thousands of Nepali people working abroad since the 1990s. Remittances in 1995
accounted for 1.3% of GDP, growing to an estimated US$6.6 billion, equivalent to 31.3% of the
country’s GDP in 2016.52
While the sector consists of a diverse range of financial institutions, Nepal has yet to reap the
benefits of a mature financial services sector as large section of Nepali society remains
unbanked and unable to access these services. Only 45% of adults in Nepal are formally
banked through an account with a financial institution.53 As a result, Nepal continues to be a
cash economy with most transactions occurring outside its financial system.
Nepal’s sizeable unbanked population is its biggest hurdle to achieving financial inclusion in
the country. In addressing this issue, the Government of Nepal and the Nepal Rastra Bank –
Central Bank of Nepal (NRB) should consider promoting financial inclusion initiatives as a
critical growth enabler and undertaking policy interventions to encourage banks and other
financial institutions to expand their presence in remote areas. An increase in the number of
financial institution branches could improve financial access in Nepal.
Challenges in Nepal’s Financial Services Sector

A large unbanked population and predominantly cash economy are the biggest barriers to
the development of the financial services sector in Nepal. More than half of Nepali people do
not have a bank account, with consumption of financial solutions remaining low even for
people with access to financial services.
52
World Bank
53
World Bank
Draft 69
Fast Facts
Only half of bank account
15% of salaried employees
45% of Nepali people are holders withdrew money
receive wages through a
formally banked from their accounts in the
bank account
past year
16% Nepali people have

9% of Nepali people own 1% of Nepali people own
made or received a digital
debit cards credit cards
payment
Source: World Bank, 2017
Banking fees, low literacy levels, and inaccessibility of bank services in rural areas due to poor
infrastructure are vital factors mainly hampering the uptake of formal financial services in
Nepal. Lack of legal identity documentation has also been reported to be a barrier to creating
bank accounts.
Reasons for Remaining Unbanked (% of unbaked population), Nepal, 2017
40%
20% 17% 18%

10% 8%
3% 1%
Financial Financial Lack of Lack of trust in Religious Insufficient No account No need for
institutions are services are too necessary financial reasons (age funds (age 15+) because financial services
too far away expensive (age documentation institutions (age 15+) someone in the (age 15+)
(age 15+) 15+) (age 15+) 15+) family has an
account (age
15+)
Source: Global Findex Database – World Bank; Frost & Sullivan analysis
Overall, the financial ecosystem in Nepal is still in its infancy due to several challenges
hindering its adoption:
 Sizeable unbanked population due to a multitude of issues including:
‒ Difficulty in accessing physical bank branches (especially in remote, rural areas).
As of March 2018, only 394 of the 753 local levels designed under the new
federal structure have bank branches. Additionally, ATM and commercial branch
penetration in Nepal is significantly lower than that of most other countries in
the region
‒ High cost of financial services and lack of proof-of-identity (or know your
customer, KYC) documents limiting access to financial services for the poor and
deprived sections of society
 Underdeveloped digital financial services ecosystem with low credit and debit card
penetration, low use of digital payments, online and mobile banking, and restrictive
government policies (e.g., low maximum limit of digital payments)
 Widespread preference for informal financial channels (e.g., informal remittance
transfer systems) that results in reduced resources for the Government to make
productive investments, encourages tax evasion, and negatively impacts governance
and exchange reserves
Draft 70
 Lack of financial and digital literacy
ATM Penetration Rate per 100,000 Adults, Selected Countries, Asia, 2016
127.8
113.1
81.5
57.7
48.1
17.2 21.1
7.8 9.6 9.8
Source: World Bank, 2016; * Sri Lanka data is for 2015
Promise of Digital Initiatives in Financial Services Sector

With Internet penetration rate at 63%, Nepal is well positioned to benefit from digital financial
services solutions. These solutions (e.g., mobile/Internet banking, mobile wallets, online digital
payments) have the potential to address challenges such as difficulties accessing banks and
high cost of services.
Globally, financial services institutions, IT companies, and telecom operators are joining forces
to increase digital inclusion to drive socioeconomic growth. Given the nearly ubiquitous
mobile penetration in Nepal, Intelligent Finance solutions combining digital technologies and
telecom operators’ nationwide presence can be a feasible way to boost financial inclusion in
the country. Nepal should learn from the success of mobile wallets in many African nations to
expand digital inclusion and socioeconomic growth.
Development of the digital financial services ecosystem at existing banks and financial
services institutions is integral to driving all aspects of the economy. In 2002, Kumari Bank
pioneered digital payment services in Nepal with the introduction of Internet banking services
for its customers. In recognizing the proven opportunities digital payment services offer,
more digital solutions are beginning to become available in Nepal from traditional financial
institutions and FinTech start-ups such as eSewa, IMEPay, Khalti, and iPay.
The Government of Nepal considers financial inclusion as a critical lever to driving
socioeconomic growth, and as a result, has undertaken these recent measures:
 FY2018-19 budget allocation to digitize government payments and revenue collection
(e.g., tax payments via mobile application)
 Launch of opening bank accounts campaign targeting every Nepali citizen
 Formulating and implementing necessary laws and regulations for electronic
transactions to facilitate and govern digital payments
Case study – Kenya M-Pesa transforming the economy through mobile money services 54
Objective: Using mobile money technology to offer financial services in rural and marginalized areas.
54
Vodafone; Safaricom; MIT
Draft 71
Model: The M-Pesa mobile payment platform launched in March 2007 as a product developed by
Vodafone, in partnership with Sagentia, by integrating a mobile wallet with Safaricom’s rating, billing,
and provisioning systems. The onboarding of customers on the platform was achieved by replacing the
SIM of registered Safaricom users with the M-Pesa enabled SIM. Users load money into the mobile wallet
by depositing cash with an agent to obtain e-Float currency. The digital currency is then used for
payments or transferred to other users through encrypted SMS.
The platform currently acts as a mobile wallet offering money deposits, payments, balance checking,
cash withdrawal, and international money transfer services at a minimal cost. Besides Kenya, the digital
wallet services are also available in Tanzania, Afghanistan, India, Romania, Egypt, Albania, and South
Africa.
M-Pesa’s success in Africa can be attributed to its focus on micropayments, targeting consumers at the
base of the banking sector pyramid. By offering convenient digital money transfer regardless of the
value of the transaction, M-Pesa has achieved widespread adoption throughout the financial ecosystems
in its markets.
Before M-Pesa was introduced in Kenya, the nearest bank was on average 9.4 km away from users. As at
2017, 96% of Kenya’s population can access financial services using their mobile phones, with an M-Pesa
agent an average of 1.4km away.
In the first half of 2017, transactions through M-Pesa amounted to 48.76% of Kenya’s GDP. By the end of
2017, Vodacom processed US$7.3 billion worth of M-Pesa transactions globally per month.
Today, its widespread usage in Kenya has been credited with raising 2% of Kenyan households out of
extreme poverty through access to mobile money services between 2008 and 2016. It also plays a
crucial role in offering opportunities to small businesses as well as a range of financial services such as
international transfers, loans, and health provisions using mobile.
Financial Services in Nepal: Pain Points, Priorities, and Digital Solutions
Pain Points Government of Nepal’s Digital as an Enabler

Priorities
Difficulties in accessing banks

 Ensure BFIs establish rural  Increased adoption of digital
 As at 2017, about 81% of
55
branches first to be eligible transactions and payments

Nepal’s population lives in
to set up outlets in urban to minimize the need to visit
rural areas, with 20% of
areas bank branches
Nepali adults citing the
 Offer interest-free loans to
distance they need to travel
assist BFIs to expand into
to banks as the main reason
remote districts
for not opening a bank
account
Large unbanked population

 Introduction of microfinance  Launch digital payment
 Only 40% of Nepali people
institutions in Nepal to systems in Nepal to help
are formally banked
target the financially Nepali people leapfrog
 26% of the adult population in excluded, particularly in conventional banking
Nepal are illiterate, impairing rural areas systems to the digital
their ability to engage with payment system
 NRB is currently
financial services
implementing a five-year  Promote convenience of
 A quarter of the adult strategic action plan (2012– digital payment systems to
population lack a citizenship 2016) with financial inclusion build adoption momentum
55
World Bank
Draft 72
certificate, making them as a strategic priority in Nepal
ineligible to apply for formal  Introduction of an e- ‒ With the adoption of digital
banking channels mapping system to payment methods, the
 Mostly homogenous products prioritize approval of new distance between end users
offered by financial services bank branches or channel and the nearest bank will no
providers (FSPs) do not meet points in unbanked areas longer be an inhibiting
the needs of consumers factor with the integration of
across various segments formal financial services
 Low-income consumer
market with highly seasonal
and irregular incomes have
unique needs for FSPs
High fees incurred from banking services

 Consider reducing  Adoption of digital
 Banking services in Nepal
transaction service charges processes throughout the
charge relatively high fees
to encourage digital financial system to
for financial services:
payment adoption streamline processes, and in
‒ Nepal Investment Bank
 Offer subsidies to banks to turn, reduce the cost of
(NIB) charges NPR500
offset the costs incurred banking services at financial
annually for SMS alerts
through payments institutions
for transactions and
NPR200 annually for e-
banking services
‒ NIB and NMB Bank both
charge NPR500 each
per online transfer
Preference for informal remittance methods

‒ Foreign Exchange  Digitalization of payment
 Informal channels to remit
Management Department modes through partnerships
funds to Nepal, such as the
(FEMD), under the NRB, with financial institutions to
hundi or hawala system regulates the entire reduce the cost of
which is still popular among remittance industry in Nepal remittance and encourage
Nepali people overseas more Nepali people to remit
mainly due to the hefty fees money digitally
incurred through formal
channels
Slow user adoption of digital platforms

 Actively encouraging the  Reduction in the number of
 Complex user interface
adoption of digital payment steps to make payments
 Language barriers systems via development of and reload mobile wallet
 Complexity of products a Common Platform for  Simplification of user
offered Strengthening Digital interface
Payment System in the  Platforms available in
South Asian Association multiple languages
for Regional Cooperation
(SAARC) region
Maximum limit for digital transactions

 NRB has expressed that the  NRB should increase the
 NRB has introduced various
limits may be adjusted to limit on digital transactions
limits for digital payments
accommodate industry to encourage more
such as credit/debit card,
requirements transactions
mobile banking, Internet
banking and mobile wallet
restricting the payments that
can be made digitally as well
Draft 73
as the remittance amounts
from abroad
 The transaction limit for
mobile payments has been
set NPR 10,000 ($146) a day,
in stark contrast to M-Pesa’s
maximum transaction of
US$675
Digital Initiatives Roadmap for Financial Services sector

Digital offers a plethora of opportunities in driving financial inclusion, from improving access
to financial services to improving tax collection. The Government is taking measures toward
achieving this, such as digitalizing all government transactions to boost the adoption of
digital payments. It has also started distributing social security allowances and all other
government-to-citizen payments through banks to encourage financial inclusion.

 Policy Interventions to  Financial Literacy
 Increase Maximum Limit
Allow Telecom Operators Education
for Digital Transactions
to Offer Mobile Wallets  Digital Payments
 GPS Tagging for
 Encourage Digital Campaign
ATM/Branch Network
Payments in Nepal  Training for Retailers and
Expansion
Digital Payment Service
 Reducing the Cost of
Operators
Financial Transactions
 National Biometric Card
 Gamification of Digital
Payments

The following initiatives targeting Financial Services sector can be implemented in Nepal to
boost financial inclusion:
1.1 Increase Maximum Limit for Digital Transactions

Solution NRB should look at reviewing the maximum transaction values for digital
payments with the aim of increasing the limit for “low-risk consumers”.
Low-risk consumers can be identified through the NRB’s KYC
requirements for deposit-taking, remittances, cross-border transactions,
and credit extension activities.
The move could encourage more consumers to adopt digital payment
modes as the current limit is considered too low and restrictive for digital
payment activities.
Stakeholders Ministry of Finance, Nepal Rastra Bank (NRB)
Draft 74
1.2 GPS Tagging for ATM/Branch Network Expansion
Solution ATM/branch network in Nepal is among the weakest in the world, with
limited presence in remote parts of the country. A robust nationwide
ATM and branch footprint is critical to achieving 100% financial inclusion
in the country.
NRB can initiate a GPS tagging project requiring all commercial banks to
tag their branches and ATMs on a central platform. The information can
then be mapped against the census and other government data. The
project could allow the NRB to track progress on network rollout in
remote areas effectively.
1.3 Reducing the Cost of Financial Transactions

Solution High transaction fees for banking services (e.g., ATM withdrawals from
other banks’ ATMs, minimum balance requirements, high charges for
online banking, debit/credit cards) are key deterrents for financial
inclusion in Nepal.
The Government of Nepal and NRB need to consider a reduction in the
cost of financial services in Nepal. For example, public banks in Nepal
should consider launching low-frill accounts for economically deprived
sections (similar to India’s Jan Dhan accounts) to drive financial services
adoption in India. Similarly, banks should be encouraged to absorb ATM
withdrawal fees from other banks’ ATMs (at least on five to 10
transactions per month).
1.4 National Biometric ID Card

Solution Many underprivileged and uneducated Nepali people are unable to open
accounts at financial institutions due to lack of proper KYC documents.
Nepal, which does not have a national ID card system currently, should
consider rolling out a National Biometric ID card project to issue a
National ID card to each Nepali citizen. The National ID card will not only
enable underprivileged Nepali people to open bank accounts, but would
also allow them to benefit from many other government schemes.
Stakeholders Ministry of Home Affairs
1.5 Gamification of Digital Payments

Solution  Gamification of digital payments can be achieved by rewarding
Draft 75
consumers for continuous usage of digital payment methods:
‒ Usage frequency and volume of digital payment platforms for
transactions will be rewarded with discount schemes and other
incentives for selected users
‒ Users can progress to different levels based on their usage
frequency and volume
‒ Introduction of gamification in improving customer engagement is
likely to continually capture and maintain customers’ attention,
particularly in behavioral-related products such as the use of digital
payment platforms
Stakeholders Ministry of Finance, Nepal Rastra Bank (NRB), Ministry of Trade

The Government of Nepal should undertake the following policy interventions to create an
enabling environment for digital financial services:
2.1 Policy Interventions to Allow Telecom Operators to Offer Mobile Wallets

Solution Globally, telecom operators play an essential role in the financial services
sector with the rollout of digital financial services such as M-Pesa and
mobile wallets.
NRB and National Telecom Authority (NTA) should work together to
draft a policy framework that allows the involvement of telecom
operators and IT companies in promoting financial inclusion in Nepal.
Telecom operators can be given the licenses to operate e-wallet/digital
financial services using existing Telco KYC for authentication purpose.
Stakeholders Ministry of Finance, Nepal Rastra Bank (NRB), National Telecom
Authority (NTA)
2.2 Encourage Digital Payments in Nepal

Solution Only 15% of Nepali wage earners receive wages in their accounts. The
Government of Nepal should consider introducing policies that
encourage employers (public and private sectors) to transfer wages,
salaries, and other payments directly to employees and suppliers using
financial services.
The Government should mandate the compulsory transfer of
wages/salaries beyond a minimum threshold level to bank accounts. Until
the rollout of a National Biometric ID card, the onus of helping employees
in opening bank accounts should lie with the employers. Similar policies
can be considered for other private and public sector payments.
Draft 76
In addition to infrastructure support, talent and skills development is essential to ensuring the
successful adoption of digital payments in Nepal. To support the digital payments ecosystem,
the country requires skilled programmers, financial technology experts, and operational
support teams. Retailers also need to be sufficiently trained in managing digital payment
systems to ensure the smooth flow of payments. These challenges can be addressed by
training the local talent pool through partnerships with digital payment services providers to
familiarize them with the system.
The Government could also launch educational campaigns to build awareness among
consumers on the benefits of digital payments and financial inclusion to ensure the
effectiveness of the other initiatives implemented.
3.1 Financial Literacy Education

Solution Educating the public about the importance of banking systems and their
advantages could be critical to stimulating financial inclusion in Nepal.
Adults and school children should be introduced to offerings from
financial institutions and assisted in opening an account.
Stakeholders Ministry of Finance, Ministry of Communication and IT, Ministry of
Education
3.2 Digital Payments Campaign

Solution Advertisements on social media and radio/television that highlight the
advantages of using digital payments.
Stakeholders Ministry of Finance, Ministry of Communication and IT
Timelines Long Term
3.3 Training for Retailers and Digital Payment Service Operators

Solution Training for digital payment services operators and retailers aiming to
adopt digital payment services.
Stakeholders Ministry of Finance, Ministry of Trade, Key digital payment services
providers
Draft 77
Comparison of Key Financial KPIs, Nepal vs. Selected Asian Countries, 2017
Sri Korea,
UoM Nepal India Pakistan Bangladesh China Japan Malaysia Singapore Thailand
Lanka Rep.
Account holders Percentage 45% 80% 21% 74% 50% 80% 98% 85% 98% 95% 82%
% of account
Withdrawal in the past year 51% 43% 66% 48% 52% 78% 90% 70% 91% 95% 70%
holders
Used the internet to pay
Percentage 1% 3% 7% 5% 2% 40% 24% 25% 50% 64% 10%
bills in the past year
Used the internet to buy
something online in the Percentage 2% 3% 1% 3% 1% 45% 46% 34% 48% 72% 17%
past year
Paid online for internet % internet
14% 33% - 24% 7% 85% - 49% 89% - 52%
purchase purchases
Debit card ownership Percentage 9% 33% 8% 32% 6% 67% 87% 74% 92% 75% 60%
Borrowed from a financial
institution or used a credit Percentage 14% 8% 3% 17% 9% 23% 54% 23% 47% 63% 20%
card
Borrowed from family or
Percentage 53% 33% 29% 16% 21% 28% 4% 15% 4% 12% 29%
friends
Received wages: into a
% wage recipients 15% 31% 23% 44% 22% 65% 87% 72% 96% 94% 48%
financial institution account
Received wages: in cash
% wage recipients 77% 59% 67% 48% 69% 25% 12% 20% 3% 3% 45%
only
Credit card ownership Percentage 1% 3% 1% 5% 0% 21% 68% 21% 49% 64% 10%
Received government
% payment
payments: into a bank 36% 57% 0% 59% 0% 74% 86% 72% 87% 79% 67%
recipients
account
Made or received digital
Percentage 16% 29% 18% 47% 34% 68% 95% 70% 90% 92% 62%
payments in the past year
Source: World Bank; Frost & Sullivan analysis
Draft 78
Urban Infrastructure
Nepal is among the least urbanized countries in the South Asian region. However, it is
urbanizing rapidly with urban population growing 6% annual since 1970s56
Urbanization in Nepal is dominated by a few large and medium cities with an excessive
population concentration in the Kathmandu Valley. The urban population distribution is
uneven across the country with high urban growth in the Kathmandu Valley, the Pokhara
Valley, the Inner Tarai valleys, and in a few market and border towns located on highways.
Trend towards urbanizations is likely to continue in the foreseeable future, as internal
migration continues with Nepali people moving from rural areas to urban areas in search of
better opportunities and facilities. This trend towards urban migration presents both
opportunities and challenges for Urban Development and Municipal Authorities:
 Urbanization as an engine for growth: Like most other countries, growth of urban
areas is likely to emerge as a key engine for growth for Nepal. Further, it is important
for Nepal to develop other urban towns to decongest a few large cities (like
Kathmandu, Pokhara, etc.) and contribute to a more sustainable growth across regions
and geographies
 Need for investments in urban infrastructure: Rapid urbanization is putting pressure

on already week urban infrastructure (viz., water supply, sewage & drainage, waste
management, public transport, roads and public safety). Urban development
authorities and municipal corporations in Nepal need to systematically upgrade urban
infrastructure in order cope with surge in the demand
56
Asian Development Bank
Draft 79
Urban Development and Municipal Authorities in Nepal need to focus on the following five
pillars in order to prepare urban infrastructure that can deal with increasing demand due
rapid urbanization and increasing citizen expectations:
Pillars for Urban development in Nepal
Water & Waste Public Roads and Disaster

Sanitation management Transport Traffic Management
Challenges in Nepal’s urban infrastructure

There are wide deficits in basic urban infrastructure and quality benchmarking in the leading
urban areas in Nepal. Deficiency of urban infrastructures is highlighted by the situation of
water supply, sanitation, solid waste management, transport and safety.
Nepal ranks poorly on urban infrastructure when compared with other countries in the region.
Nepal was ranked 131st among 140 countries on infrastructure in Global Competitive Index
2015-16.57
The gaps in the urban infrastructure have been a result of poor urban planning, inorganic
growth of urban cities, and below-par existing infrastructure. Quality of urban infrastructure
was further impacted by twin earthquakes in 2015.
State of Basic Urban Infrastructure in Nepal
In spite of abundance of fresh water resources, most cities in
Nepal are battling with choric challenges in the water
management sector
 It has 2.7 % of the fresh water reserves globally which
makes the country 2nd country after Brazil with water
reserves58
 However, quality and quantity of drinking water is
Water and insufficient in urban Nepal with only 32.9% of
households in urban Tarai regions having access to
Sanitation
piped water supply 59
Sanitation infrastructure in Nepal also compares poorly with its
peers
 Only 56.1% of urban households have access to sanitation
system with only 88.2% households having access to
toilet60
57
Global Competitive Index 2015-16, World Economic Forum
58
International Institute of Water Management
59
National Urban Development Strategy (NUDS), 2017
60
Draft 80
Unplanned waste management system with poor collection and
open dumping practice:
 The Kathmandu valley emits about 1,000 tons per day of
solid waste of which only 900 tons is collected
Waste Lack of landfill sites for waste management:
Management  Out of 58 municipalities in Nepal, only 6 have sanitary
landfill sites and only 5 practice controlled waste
dumping61
Public transport sector in Nepal is in nascent stages with limited

investments made from Government of Nepal in developing the
sector. Road Transport (buses) system is unorganized and
managed by small private operators resulting in low reliability
and quality of services.
Public
Transport Kathmandu Valley and a few developed metros are in dire need
of a public transportation system that is reliable, safe and
comfortable. The need of the hour is to create a multi-model
transport system consisting of bus, rail and/or metro networks.
Lack of resources and investment as well as topological structure

(hilly terrain) are major challenges for road infrastructure
improvement.
Road and The construction and maintenance of roads remain a major
Traffic challenge. Narrow and unplanned roads, unreliable public
transport and increasing private ownership of vehicles are
resulting in increasing traffic congestion and rising air pollution.
Nepal has high vulnerability to disasters due to its tropology and

fragile geology. Natural disasters such as floods and landslides
have long been a regular phenomenon in Nepal. Globally, it ranks
4th, 11th and 30th in vulnerability to climate change, earthquake
Disaster and flood risks, respectively.62
Management Disaster planning and management are critical functions
for Nepal’s urban development and municipal authorities
due to looming dangers associated with national disasters.
61
62
UNDP Nepal
Draft 81
Case Study – AI and Drone for Tainan’s Smart City, Taiwan
Description: The city of Taiwan launched the AI X Drone smart city project in July 2017,
where the drones collect aerial images on a periodic basis for the integration and
development of Taiwan's artificial intelligence image recognition and analysis technology
Objective: AI computing technology is planned to be used in the maintenance of historic

sites, sightseeing assistance, environmental monitoring, traffic monitoring, among others
Partners: Ministry of Science and Technology. GeoSat, NAR Labs
Urban Infrastructure in Nepal: Pain Points, Priorities, and Digital Solutions
Challenges / Pain Points Government Priorities Digital as an Enabler
Water and sanitation

 Formulated an umbrella act
Shortage of drinking water  Crowdsourcing solutions
and policy for the water,
for citizens to report
 Acute shortage of safe, drinking sanitation and hygiene (WASH)
leakages, supply problems,
water in large cities, in spite of sector that aims to raise the
etc.
abundance of fresh water quality and performance of
resources water supply and sanitation  Mobile Apps to help
 Legacy infrastructure due not services citizens report service
lack of expansion of piped  Government has established issues, data collection data
network, and leakages due to the Sanitation & Hygiene on water, sanitation and
old water pipes Master Plan to support hygiene by municipalities
effective planning, budgeting, and NGOs for planning and
Pollution & contamination of human resource mobilization, allocation of resources
water monitoring, implementation,
evaluation, and follow up of  Water and Sanitation
 High water pollution due to: 1) Information System (SIBS)
hygiene and sanitation
release of untreated domestic monitoring system that
programs and projects
and industrial waste into rivers, monitors water pipes, tanks
and 2) seepages from poor Key priorities and initiatives at residents’ homes to
domestic sewage systems include: assess water supply, flow,
 A survey conducted in 2014 pressure, etc.
found that more than 80% of  Supply safe and pure drinking
household stored waster was water to 95% of population by
contaminated with E.coli 64
2030 63
 Started Melamchi Water Supply

Sanitation project to ease water shortage
in Kathmandu by diverting ~170
 Lack of adequate sanitary
MLD of fresh water
facilities, proper hygiene
practices, and taboos on
menstruation, due to prevailing
attitudinal and cultural barriers
 Further, has disparities in
sanitation coverage across areas
and socio-cultural groups
Waste Management
63
Government of Nepal, National Planning Commission National (Preliminary) Report, Sustainable Development Goals, 2016-2030
64
The 2014 Nepal Multiple Indicator Cluster Survey (MICS)
Draft 82
 IoT/sensor enabled waste
Poor Collection & Disposal Solid waste management
bins to inform authorities,
(including collection, treatment
 Underdeveloped waste which bins reach their full
and disposal of waste) is a
management infrastructure and capacity
responsibility of municipalities.
limited use of digital Municipal authorities are  GSP tracking for waste
technologies resulting in poor collection vehicles for
undertaking various initiatives to
quality of waste management improve solid waste effective route planning and
services for citizens management. Few examples waste management
 Many municipalities practice include:  Predictive Waste
road-side waste pickup from Management Analytics for
open piles and open dumping,  Kathmandu City is planning to effective planning and
which is creating environment build robust waste management reviewing of waste
and health risks system consisting on e-toilets, management services
 Further, dumping of untreated underground waste disposal  Crowd Sourcing to enable
waste in rivers and water is system, etc. citizens to report unattended
leading to severe contamination  Hetauda Sub-Metropolitan City waste collection
in many part of Nepal has partnered with a private  Automation for waste
under for door-to-door waste treatment plants
collection, established a
Resource Recovery Facility with
compost plan, and is
encouraging segregation of
recyclable and non-recyclable
waste
 Similar initiatives (especially
around door-to-door collection
of waste) are been undertaken
by other municipalities as well.
Public Transport
 Most urban areas in Nepal lack  Kathmandu Sustainable Urban  Use of sensors and RFID tags
efficient public transport Transport project: The ADB is for monitoring and real time
system. working with the government information on public
 Key challenges include of Nepal to develop an efficient transport
shortage of public transport public transport system and  Mobile apps for providing
vehicles, unreliable schedules, roads with pedestrian space information on routes,
poor maintenance, cleanliness that preserve heritage values. schedules, fares and real-
and overcrowding Provided a $10 million grant for time updates for all public
the program transport models
 Integrated Smart Card based
fare collection system for all
private and public transport
operators
Road & Traffic

 The Kathmandu Valley Road  Micro-simulation modeling
 The construction, improvement
Improvement Project is for predicting vehicle and
& maintenance of roads
focusing on widening the pedestrian traffic at specific
remains a major challenge due
current lanes times
to lack of resources and a
 Kathmandu Sustainable Urban  CCTV cameras, wireless
complicated topological
Transport Project aims to: sensors and trackers on
structure
‒ Improve 25 junctions in roads and at major crossings
 This, coupled with increasing
Kathmandu city center to manage traffic, accidents,
demand for mobility has led to
‒ Improve Bishnumati Link crimes, etc.
road congestions and rising
Road from Shova Bhagawati  Intelligent Parking and
pollution
to Teku on left bank of Intelligent Toll Management
 Inefficient intersections, lack of
Bishnumati River & construct solutions to address parking
Draft 83
guidelines and rampant two bridges and traffic issues
violation of traffic rules is
enhancing congestion and
traffic accidents
Disaster Management
 National Disaster
 Nepal is highly prone to natural  Nepal is in the process to
Management Plan for
disasters such as earthquakes, develop new disaster
effective disaster
floods, famines, epidemics, and management act, and national
preparedness, response,
landslides, some of which are strategic plan of action which is
recovery, and mitigation
repetitive. in line with the framework
 IoT based early warning and
 However, the country has adopted in Sendai, Japan
monitoring systems for
limited capabilities to deal with
 The government formulated a disaster management and
large scale disasters. The 2015
Post Disaster Recovery planning
earthquake highlighted several
Framework (2016-2020) and  Emergency
shortcomings including out-
the Post Disaster Needs telecommunications
dated systems, poor data
Assessment to provide a equipment for better disaster
management, weak search and
systematic, structured and response and recovery
rescue capacity, etc.
prioritized framework for  Use of drones for delivery of
implementing recovery and relief supplies, damage
reconstruction, following the assessment and
2015 earthquake communications
Promise of Digital Initiatives in Urban Infrastructure

Use of digital technology to improve the functioning and efficiency of cities and
municipalities has become a well-known strategy for urban planning worldwide. With proven
results from the on-going projects in the developing countries of Asia, Nepal can pick up
valuable lessons and best practices from existing programs.
Further, widespread proliferation of enabling technologies such as analytics, mobile, cloud,
and broadband, as well as declining costs of sensors, hardware, and IoT devices, will create
significant opportunities for Nepal to integrate digital technology for infrastructure
development.
As part of its National Urban Development Strategy (NUDS) 2017, the country has laid down
plans to modernize urban planning including land use, housing, transportation, and energy, as
well as construct smart cities in Kathmandu, Lalitpur, Bhaktapur and Kirtipur.
This is expected to create significant opportunities for Nepal by improving efficiencies,
enhancing visibility, boosting governance mechanisms, and building robust connectivity, as
well as opening up new investment opportunities for infrastructure and real estate
development in the country.
Intelligent urban planning is expected to translate into measurable benefits
The global smart waste management market is estimated to be worth US$ 2.37 billion by 2021,
growing at a robust CAGR of 16.9% over 2016-2021 65
In order to provide universal access to water and sanitation by 2030 globally, every $1 invested in
water and sanitation, will generate $4.30 in economic returns through increased productivity 66
The global Intelligent Transportation Systems market is estimated to be a $72.32 billion industry by
2022 , contributed by improved road safety, greater sustainability of vehicles, and environment
67
65
Smart Waste Management Market by Solution, Markets and Markets, August 2016
66
The Toilet Board Coalition Report, The Circular Sanitation Economy, November 2017
Draft 84
protection
The emergency preparedness initiatives by UNICEF and the World Food Program (WFP) in select
developing countries saved a total of $12 million towards future humanitarian response and created
net savings of $6.4 million, on an investment of $5.6 million 68
Digital Initiatives Roadmap for Urban Infrastructure sector

The Government of Nepal should focus on infrastructure development and up-gradation
using ICT solutions, which is expected to promote economic growth and provide quality
services.
 Ride sharing  Disaster Management
 Water ATMs
 Public-Private- Training
 Smart metering for
Partnership for urban
water
infrastructure
 Pipeline monitoring
 Smart, Connected Bins
 Fleet Management
 Municipality mobile app
 Automated waste
sorting
 Connected public
transport
 Public Transport mobile
app
 Multi-modal Smart Cards
 Intelligent traffic
management
 Intelligent parking
 Intelligent toll booths
 National disaster
management strategy

Recommended initiatives for upgrade of infrastructure with a vision of Smart city to address
key social and environmental challenges in cities and municipalities:
1.1 Water ATMs

Solution Install “Water ATMs” in select public places in Nepal such as market
areas, bus stands, railway stations, airports, etc. where people can
purchase fresh, hygienic, bottled water by paying a token amount (say,
NPR 2 for 300 ml water)
 Consider a pilot implementation in the Kathmandu district and
subsequently expand into other municipalities.
67
Global Intelligent Transportation Systems Market, Analysis and Forecast: 2017 – 2022, Research and Markets, April 2017
68
BCG, The ROI of Emergency Preparedness
Draft 85
 Can look at a similar initiative undertaken by the Delhi Jal Board in
India, as an example for implementation
Stakeholders Water Supply and Sewerage departments in Municipalities, The Municipal
Association of Nepal (MuAN), Water and Energy Commission
1.2 Smart metering for water

Solution Replace analogue meters with smart digital meters for automatic reading
collection. Rollout of smart meters will result in better operational
efficiency, reduced complaints and leakage management
Stakeholders Water Supply and Sewerage departments in Municipalities, The Municipal
Association of Nepal (MuAN), Water and Energy Commission
Timelines Long Term
1.3 Pipeline monitoring system

Solution Deploy of IoT sensors, flow meters and acoustic sensors in water pipes
across the supply network – from river banks to people’s homes, which
will provide visibility on water network operations, help municipalities and
government departments to monitor wear & tear of equipment, as well as
undertake maintenance and timely repair to prevent water loss.
Stakeholders Water and Energy Commission, Department of Water Supply and
Sewerage
Timelines Long Term
1.4 Intelligent Waste Management

Solution Deploy IoT technology and wireless connectivity to automate waste
collection and management, which will improve efficiency of operations
and reduce delays in trash collection. Include:
 Smart Waste Bins, installed with sensors in densely populated
cities like Kathmandu, which will provide information on the type
of waste in the garbage containers and measure the level of
waste-fill. Provide alerts in case of overflows or any physical
damage
 Intelligent fleet management: Install GPS powered devices in
trucks used for waste collection, which collects data from bins and
makes real-time decisions for optimal waste collection based on
that. Also provides data on vehicle status and waste collection
schedule
 Waste management analytics system: Install a centralized, web-
based waste management analytics system in all the municipal
offices that collects data from the collection trucks and connected
bins, as well as monitors nearby areas or districts
Draft 86
‒ Includes a visual dashboard and analytical tools providing
comprehensive insight into waste management operations in
the local area
‒ Also deploy predictive analytics to visualize waste generation
patterns up to 24 hours into the future, thereby allowing
districts and municipalities to optimize waste collection and
use more efficient routes
Stakeholders Waste management departments in municipalities, The Municipal
Association of Nepal (MuAN)
1.5 Crowd sourcing for municipal services

Solution Mobile app to enable residents of the municipality to share feedback and
complaints for various basis infrastructure related services offered by the
municipality.
For example, the app can enable the residents to share photos of
unattended waste and water leakages with the officials. These photos
along with GPS location can be shared by with app with the concerned
authorities for quick action and monitoring.
Stakeholders Local Municipal Authorities, The Municipal Association of Nepal (MuAN)
1.6 Automated waste sorting

Solution Deploy automated waste sorting systems in recycling plants and in
centers where garbage is collected. Uses optical sorters, sensors, RFID to
sort waste materials based on composition and chemicals structure
Stakeholders Waste management departments in municipalities, The Municipal
Association of Nepal (MuAN)
Timelines Long Term
1.7 Connected public transport

Solution Install RFID and GPS systems in public transport vehicles such as buses
and taxis, and connected to a central system at the Department of
Transport, enabling them to monitor the schedules, frequency, and
condition of public vehicles.
 Real-time information from the connected vehicles can also be
integrated into the public transport public apps to provide real-time
transport running data to citizens
 This also allows the department to communicate with drivers and
ensure safety and security of passengers in case of any unwanted
Draft 87
incidents.
 Buses should install digital displays that mention the next stop along
with automated, IVR-based announcements.
Stakeholders Ministry of Physical Infrastructure and Transport, Operators (Samittees)
of public transport vehicles
Timelines January 2019
1.8 Public Transport mobile app

Solution Create an official mobile application from the Department of Transport in
Nepal that lays down details of various public modes of transport
including taxi, metro, and buses in a city. Provides information on the
various routes connecting key locations, availability/ frequency/ schedule
of the transport, time estimates, and fare details, among others.
Stakeholders Department of Transport
1.9 Multi-modal Smart Cards

Solution Develop a new unified and coordinated fare system that integrates both
bus and rail services, and uses a prepaid, smart card, in order to reduce
congestion in stations. The government can introduce a fee structure that
progressively increases based on the distance travelled.
The system can be expanded to metro / subway use, as and when it is
developed in the country.
Stakeholders Ministry of Physical Infrastructure and Transport
1.10 Intelligent traffic management

Solution Install CCTV cameras, road sensors, traffic detectors and speed cameras
at major/ busy traffic crossings and roads such as New Road & Durbar
Square in Kathmandu, and Kamal Binayak- Nagarkot road
 Help to monitor traffic conditions and collect real-time data on
vehicle flow, to reduce congestion and ensure a smoother traffic
flow.
 Also enable the authorities to get information on accidents and
crimes, vehicle speeds and adherence to traffic rules (such as
skipping of traffic signals, incorrect lane driving, etc.), thereby
improving safety on roads
 The detectors connect to the local police station and
automatically issue penalties or “challans” in case of violation of
traffic rules and guidelines
Stakeholders Ministry of Physical Infrastructure and Transport, Traffic Police
Draft 88
1.11 Intelligent Parking Lot Management

Solution Intelligent Parking Lot management solutions to provide parking
availability status to motorists through an app. The solution will require
users to update their requirements at any given time on the app following
which the system will reflect the current occupancy status of the slots.
The system can also update the user about the prevalent parking rates at
the designated spot, and allow user to reserve the parking using mobile
payment.
Additionally, large cities in Nepal should also consider construction of
automated parking in busy markets and business areas for effective
management of limited space.
Stakeholders Local Municipal Authorities, Ministry of Physical Infrastructure and
Transport
1.12 Intelligent Toll-booths

Solution Deploy RFID tag readers (for frequent travellers) in toll-booths on
national highways that enables automatic deduction of toll charges and
lets cars pass through without stopping for cash transaction. This will
enable regulation of traffic flow and reduced congestion.
Stakeholders Ministry of Physical Infrastructure and Transport
1.13 National Disaster Management System

Solution Implement a comprehensive disaster management system that will help
in predicting disasters before they happen as well as response &
management after the disaster.
The system will consist of centralized systems installed in all government
offices:
 Information systems – by installing early warning/ remote sensing
systems, broadcast emergency warning systems, mobile
broadcast warning & notification systems (through SMS), digital
signage, message boards, and voice delivery systems
 Search and rescue systems
 Connectivity – by establishing portable emergency
communication system, buried optical fiber links, emergency
mobile networks, local wireless mesh networking, delay tolerant
networking, satellite communications (VSAT systems, mobile
satellite PTT, etc.)
 Use of drones: Formalize policies regarding the use of drones for
Draft 89
providing aid during disasters
 Will enable the government to map terrain more effectively,
assess damage in real time, increase situational awareness
through high-resolution mapping , as well as provide live-stream
footage of critical rescue efforts
 Deliver aid and supplies more efficiently in remote and
unreachable areas
Establish Emergency Operations Centre (EOC) at the village and district

level which will include emergency tools and personnel trained in
emergency response
in disaster-struck areas
Stakeholders Disaster Management Section, Ministry of Home Affairs, Nepal Centre for
Disaster Management (NCDM)
Timelines Long Term
Case Study – How Shanzen transformed the traffic situation through the use of smart technologies
Challenge: As Shenzhen city in China transformed from a small town into a metropolis, it faced
major growing pains, particularly relating to traffic congestion. Shenzhen’s land size is less than
2,000 km2, and there are only slightly more than 600 km of roads. It has the highest vehicle density
in China with an average of about 530 vehicles per kilometer.
Solution: Shenzhen’s Traffic Police Bureau collaborated with Huawei to implement ICT to manage
road congestion and launched a series of innovations, clubbed under an initiative called “traffic
brain”. It includes:
 Ultra-broadband traffic network: Leverage Huawei’s high-speed Optical Transport Network

(OTN) that enables transmission at 400 Gbit/s, data storage of over 20 PB, and data
processing capacity for 10’s of billions of elements to support the data needs of Shenzhen’s
police network
 Data analysis of city-wide traffic: Installed a road monitoring system that can detect traffic
conditions through license plate identification, video surveillance, and other methods with a
detection accuracy rate of up to 95%. Collects 700 million pieces of vehicle data every
month, and integrates nearly 40 TB of data from 78 system databases, both internal and
external
 AI-assisted law enforcement: Uses AI technology and big data analytics platform could
respond to check for traffic violations, processing up to 10 million images per day. The
technology enables the department to identify vehicle features and traffic violation images
at an accuracy rate of more than 95%
 Crime fighting efficiency using big data: The police bureau uses a big data platform and
traffic-analysis modeling engine to create multiple reports for disqualified driving, drunk
driving, and cars with multiple violations. Intelligence can be generated within 30 minutes,
from seven days previously
 Increase in road capacity: Set up a real-time surveillance system for all signal-equipped
intersections in Shenzhen, and developed a precise traffic signal control mode based on the
traffic time-space software engine. Also collects data via converged checkpoints and
roaming police cars to establish lanes through intersections and organize traffic flow
through big data management, enabling them to increase road capacity by about 8%
Results: Investigated and closed 37,055 cases of serious violations and detained 874 vehicles with
Draft 90
fake or cloned license plates. Vehicles with cloned or fake license plates, scrapped vehicles, and
vehicles with multiple violations have now almost disappeared from the streets of Shenzhen
Going forward: The Shenzhen Traffic Police Bureau plans to develop smart police terminals based
on 5G technologies; analyses historical data by means of traffic simulation to predict traffic volume
in each corner of the city; invest nearly CNY 3 billion (USD 453 million) to upgrade all checkpoint
systems, including an improved high-definition video system, so that its coverage rate will reach
over 70%
The Government of Nepal will benefit greatly from turning to the private sector for
technological development in infrastructure. It may consider the following policy
interventions to create a favorable environment:
2.1 Ride sharing
Solution Ride sharing platforms have potential to emerge as a strong alternative
for weak public transport in Nepal. Government should encourage entry
of ride sharing service providers like Uber and Ola. Alternatively,
municipal corporations can also consider developing their own ride
sharing platform to ensure efficient utilization of existing taxis.
Stakeholders Department for Transport
2.2 PPP for urban planning

Solution  Undertake public private partnerships for urban planning and
infrastructure, specially to gain access to capital and new
technologies; improve efficiency of service delivery; and risk sharing –
by providing incentives, preferential procurement terms, tax free
investments, etc. to the private sector
 For disaster management, partner with local NGOs and international
organizations for aid, disaster planning, relief efforts, etc.
Stakeholders Ministry of Urban Development, Local Municipal Corporations, Nepal
Centre for Disaster Management (NCDM)
Selected examples of smart urban infrastructure projects in Nepal:
Ncell initiatives in disaster management
In July 2016, NCell signed a Memorandum of Understanding (MoU) with the Department of
Hydrology and Meteorology (DHM) to send early warning alerts through SMS to its customers living
in areas with a high risk of flood and landslides, including West Rapti, Narayani, Kankai, Koshi,
Bagmati, Karnali, Babai and Kamala River.
 DHM will provide the SMS content to Ncell, which will be triggered based on water level in
rivers, following which Ncell will immediately send early warning SMS from short code
Draft 91
number based on the real time situation. After receiving message about the water level
crossing danger level, people can move to government-designated safe locations, and once
the water levels return to normal, SMS alerts will be sent again to inform the people that
there is no immediate risk
The company also undertakes various steps in order to help disaster victims as part of its Corporate
Social Responsibility (CSR) efforts. Some initiatives include:
 Contributed a total of NRs. 201 million and basic utilities, following the torrential rain
triggered landslides and flooding in 2017
 Offered a bonus talk time to Sindhupalchowk’s flood and landslide affected customers
Multi-level automated car parking system in Dharmapath and Teku
An automated parking system will be constructed in Kathmandu Metropolitan City within two years
at the cost of NRs. 90 million under a public private partnership model

Illiteracy is a major challenge in the country, and may become a barrier for the effective
implementation and operation of smart solutions in transport, water & sanitation practices,
waste management and disaster preparedness. The government can consider the following
projects:
3.1 Disaster Management Training

Solution Undertake training of government employees at all levels – central, state, district,
and village in protocols, use of technology and emergency communications
during disasters. Also provide training, drills and exercises to the military and
police in rescue and search operations
 Allow participation of private sector and NGOs in training programs

 Promote greater awareness and sharing of best practices through
conferences and workshops
 Leverage regional Emergency Operation Centers (proposed above) for
imparting training
Stakeholders Vocational and Skill Development Training Centre
Timelines Long Term
Draft 92
Connectivity
Digital Connectivity for Consumers

Digital Connectivity situation in Nepal has improved considerably over the last 5 years, with
exponential increase in access to mobile services. Mobile Connection and Mobile Internet
Penetration in Nepal have almost doubled in between 2012-2017 with mobile penetration
crossing 100%.
2012 2017
Mobile Penetration 60% 113%
Mobile Internet Penetration 21% 57%
Growth in mobile penetration in Nepal has been driven by significant investment made by
leading mobile network operators in expanding their network footprint, and increasing
affordability of mobile devices and services. Mobile operators have made significant
investments in their data networks, with 3G network coverage in Nepal increasing from 25%
in 2013 to reach 65% in 2017. Further, 2017 also witnessed rollout of 4G services from top
three telecommunication operators in Nepal.
2G, 3G Population Coverage (Nepal)
85% 90% 91% 92% 93%

60% 65%
55%
40%
25%
2013 2014 2015 2016 2017
2G 3G
Source: Frost & Sullivan
Draft 93
However, fixed line and fixed broadband network in Nepal continues to remain
underdeveloped with limited coverage outside large cities.
ICT Sector
ICT Sector, comprising on the Internet, telephone, mobile, IT-enabled services (ITeS) and
business process outsourcing (BPO) is among the fastest growing industry in Nepal. ICT
sector has a large role to play in driving socio-economic growth, as it has applicability in all
sectors and potential to create large number of jobs. Due to its potential to transport the
society, Nepal government has taken steps to liberalize the sector by allowing 100% FDI
investment in ITeS & BPO sector, and 80% FDI in telecommunication sector.
Nepali outsourcing companies offer services at reasonable prices compared to other South
Asian BPO companies like India, China and Philippines. There are more than 6,000 BPO
companies in the country of which only 256 are legally registered as of 2017. Nepal offers
distinct advantages as a BPO destination due to lower salaries / cost base and lower
employee turnover. However, Nepal has not been able completely exploit potential of ICT
sector.
eGovernance
Governments are typically one of the largest technology users in a country, and are therefore
able to promote adoption and industry growth by delivering public services over digital.
eGovernance and digitalization of public services has emerged as a key priority of
Government of Nepal. Government of Nepal has undertaken several steps in this direction, as
a result of which Nepal’s ranks on E-Government Development Index has improved from 165th
in 2014 to 117th in 2018.
Source: UN
Challenges in Nepal’s Connectivity Sector
Draft 94
While Nepal has made great strides in rapidly expanding mobile and Internet connections,
significant section of Nepali society continues to remain digitally un-initiated. Key challenges
include:
 Availability & Converge: Almost 1/3rd of Nepal’s population is not covered by 3G networks
while 4G networks covers less than 20% of population. Fixed broadband networks are
only limited to the large cities
 Lack of Digital Literary: High digital literacy, especially among the rural poor, creating
digital divide
 Lack of locally relevant, vernacular content for Nepali speaking population
 Limited Spectrum availability: Nepal ranks 148th out of 167 countries (with a score of 12.06
out of 100) on Spectrum in GSMA’s Mobile Connectivity Index, 2017
 High cost of broadband services
ICT Development Index – Apac ICT Development Index – Nepal (Country

Region Snapshot)
Source: International Telecommunication Union (ITU)
In spite of rapid growth in mobile connections, Nepal continues to remain a follower in overall
ICT development:
 ITU ranked Nepal 140th out of 176 countries in its ICT Development Index (IDI) for 2017
 GSMA ranked Nepal 137th out of 167 countries its Mobile Connectivity Index for 2017.
GSMA Connectivity Index measures the strength of the enabling environment for
connecting offline populations to the mobile internet
Low rankings in the ICT Development Index and Mobile Connectivity Index indicate
considerable investment and focus is required in the Connectivity sector with regards to
connecting digitally un-initiated population, increasing access and affordability of ICT
services, providing digital education and increasing fixed broadband/fiber network.
Mobile Connectivity Index, Cluster Index Score Ranking

2017
Singapore Leader 86.55 4
Korea, South Leader 83.37 13
Japan Leader 80.04 21
Draft 95
China Advanced 73.98 38
Thailand Advanced 70.66 48
Malaysia Advanced 67.97 58
Sri Lanka Transitioner 55.63 104
India Transitioner 53.67 109
Bhutan Transitioner 53.57 110
Bangladesh Emerging 48.35 118
Nepal Emerging 39.11 137
Pakistan Emerging 37.08 143
Source: GSMA
Government of Nepal considers digital connectivity as an important driver for growth and is
undertaking steps to expand internet connectivity as part of its vision of a Digital society that
connects 90% of the population to broadband services by 202069. In line with this, in May
2018, Nepal Telecom Authority selected Subisu, a privately owned Nepali company focusing
on cable TV and cable internet, to build Fiber-To-The-Home (FTTH) network in eight districts
in Province 2 of Nepal.
Nepal Government’s ICT Policy 2015 intends to systematically enhance national ICT readiness.
Key priorities of the ICT Policy include:
Digital literacy skills to at Entire population of Nepal to Offer online government

least 75% of the population get access to the Internet by services to 80% of citizens
by the end of 2020 2020 by 2020
Universal broadband access Develop human resources in Promote e-Procurement as a

to all people on an equitable the ICT and related domain means of driving
basis. By 2020, 90% of the targeting critical skill areas transparency through
population to get access the government procurement
broadband services processes
Connectivity in Nepal: Pain Points, Priorities, and Digital Solutions
Disparate availability and coverage of connectivity
Infrastructure development in urban and The government set up the Rural  Incentivize mobile
rural Nepal Telecommunication Development operators to improve
Fund (RTDF) which includes four footprint in remote areas
 Just four out of the 75 districts - major projects: with low ROI
Kathmandu, Bhaktapur, Lalitpur, and
Kaski have the highest ICT penetration  Building the District Optical  National
while districts in mid-western and far- Fiber Network program
69
Nepal’s ICT Development and Broadband Policy, 2015
Draft 96
western regions and mountains in the  Development of broadband Fiber/Broadband
north have the lowest penetration 70
infrastructure in 14 Network connecting
earthquake-affected districts important government
 Mobile phone ownership is significantly establishments,
 Establishment of model e-
higher in urban areas and some rural municipalities,
village development
areas are excluded from mobile or agriculture knowledge
committee
Internet coverage centers, etc.
 Extending Internet services to
Public Internet access 500 rural community schools  5G for connecting
& colleges disconnected, remote
 Availability of public Internet access
centers or cyber cafes is extremely and rural communities in
limited and concentrated in urban Nepal
cities. Even among the existing centers,
quality of services is substandard with
poor Internet speeds and lack of power
backup
Coverage of 3G and 4G services
 Significant section of Nepali people are

not covered by 3G/4g Services.
Further, only 30% of the mobile
connections in Nepal have high-speed
internet (i.e. 3G & 4G) 71
Low level of Digital Literacy
 Lack of digital literary and high  ICT policy aims to provide  Compulsory ICT
illiteracy rates in Nepal limits ability of digital literacy skills to 75% of education as part of
a large section of the society to reap the population National Curriculum
benefits of the digital technologies
 Local and International NGOs  Digital Labs and Training
 Digital illiteracy appears to start at a
(e.g. Code for Nepal, Microsoft Centers in Village
young age for underprivileged Nepali
Innovation Centre Nepal) are Development
people as majority of schools and
providing digital literary Committees and
educational institutions located in rural
trainings for rural / unprivileged Municipal offices to
villages lack basic computer
Nepali people impart digital trainings
 The government has launched  Rent-a-Laptop program

initiatives like one Laptop per
Child, Lab Model (computer
sharing mechanism) to develop
ICT infrastructure in rural
schools
Lack of vernacular content
 Limited mobile applications and phone  Websites and apps with

content in local languages serves as a vernacular content are
roadblock for digital adoption since a likely to find more
large proportion of the population acceptance
living in rural areas cannot speak or
understand English
Data Security
 Implement data security
 Growing digital penetration and ICT Policy 2015 intends to:
and protection standards
70
Shailesh Pandey and Nischal Regmi, “Changing connectivities and renewed priorities: Status and challenges facing Nepali
internet, January 2018
71
GSMA Intelligence, Q4 2017, “Digital in 2018 in Southern Asia” report, January 2018; We are Social & Hootsuite
Draft 97
digitalization trend across industries  Need for a
has increased risk of cyber-attacks.  Build an effective legal
comprehensive data
Nepali people and businesses are framework and enforcement
security framework
facing growing threat from ransom- capabilities for cybercrime
ware, data breaches, etc.  Raise awareness, educate and
 Data security concerns in minds of empower people and firms to
consumers is also restricting growth of protect themselves online
e-commerce and start-ups, as many  Establish a national cyber
people (especially older generations) security cell to prevent, detect,
are reluctant to share their financial defend against and recover
details due concerns on online frauds from cyber-attacks
Underdeveloped BPO and ITeS sectors

 IT Services and BPO sector has
 Growth of BPO and ITeS sector in  Strengthening IT
been identified as one of
Nepal is restricted by poor infrastructure is critical
nineteen sectors with the
infrastructure, lack of technical talent, for growth of BPO and
greatest export potential as part
and limited foreign investment and ITeS sector
of Nepal Trade Integration
government support.
Strategy (NTIS) 2016  Focus on IT education
and training
Promise of Digital Connectivity in Nepal
Internet and mobile connectivity forms the backbone of economic growth and employment
generation, and creates an enabling environment for socio-economic transformation by
improving income levels, empowering underprivileged communities and bridging the digital
divide.
Strong inter-linkages have been seen in improvement in digital connectivity and economic
growth. As per studies, every 10% increase in broadband penetration results in 1.3% increase
in GDP. As result, it is critical for Nepal for undertake necessary steps to improve digital
connectivity. Improving digital connectivity brings incremental value across the entire value
chain by enabling new business models, job creation through BPO and ITeS industry, and
improving quality of life through better access to information and services.
Digital Initiatives Roadmap to Digital Connectivity in Nepal

Frost & Sullivan recommends following digital initiatives to address challenges of the
Connectivity sector in Nepal:
1 Technology and 2 Entrepreneurship / PPP 3 Talent and skills

Infrastructure development
 Public Wi-Fi Hotspots  Digital Literacy Trainings
 Internet - A Fundamental
 Digitally Streamlined PPP  Government Learning
Right
system for Digital Nepal Platform
 Improve Availability of
initiatives  ICT in Education
Spectrum
Draft 98
 Take lead in 5G networks
 National Fiber Network
 High speed Internet
connectivity for
government
establishments
 Nepal Cyber Security
Center
 Special Economic Zones
for ITeS/BPOs
 Government of Nepal
App
 eGovernance 2.0
 Paperless Government
and Collaboration
 Public Wi-Fi Hotspots

Effective implementation of smart connectivity in Nepal with the aim of having a digitally
connected nation will require an upgrade of infrastructure and technology, and universal
connectivity on a countrywide level to reach even the remotest areas. Some key projects that
the government may consider include:
1.1 Internet – A Fundamental Right

Solution Internet – A Fundamental Right means that all people must be able to
access the Internet in order to exercise their rights to freedom of
expression and other fundamental human rights. It requires government
to work to ensure that Internet access is broadly available and prevents it
from unreasonably restricting an individual's access to information and
the Internet.
Several countries (including Costa Rica, Estonia, Finland, France, Greece
and Spain) have adopted the Internet as a Fundamental Right. In most of
these countries telecom operators must be able to provide every
permanent residence and business office with access to a reasonably
priced and high-quality connection with a downstream rate of at least 1
Mbit/s.
Stakeholders Ministry of Communication and IT (MoCIT), Nepal Telecommunications
Authority
Timelines Long Term
1.2 Improve Availability of Spectrum

Solution Strong correlation exists between availability of spectrum and quality of
services. Nepal should focus on improving availability of spectrum as an
enabler for better quality of services. Improving availability of spectrum
in line with National Frequency Policy 2073 should be a key priority.
Draft 99
Stakeholders Ministry of Communication and IT (MoCIT), National Telecommunications
Authority (NTA)
1.3 Take lead in 5G networks

Solution Prepare Nepal for 5G telecom networks through a range of initiatives:
 Setting up a central committee for designing a roadmap for
implementation, and deciding the stakeholders, timelines, pricing,
etc.
 Objective should be to take a lead in 5G, rather than a follower
Authority (NTA)
1.4 Expansion of Fiber broadband network

Solution Construct high-speed fiber broadband that connects with international
networks to improve latency and speeds
 Enable last-mile connectivity to bring FTTH networks to
households and rural areas
 Replace and modernize current copper line with fiber broadband
providing stable and high speed connectivity
Authority (NTA)
Timelines Long Term
1.5 High Speed Internet Connectivity to government establishments

Solution Ensure high-speed internet connectivity to all government
establishments, municipal corporations, village development authorities,
agriculture knowledge centers, hospitals, and education institution across
the country.
This can also be leveraged provide digital access to underprivileged
sections of the society. For example, government can mandate opening
of citizen cyber cafes in municipal corporations, village development
authorities and agriculture knowledge centers to enable citizens to
access Internet services free of cost.
Stakeholders Ministry of Communication and IT (MoCIT)
1.6 Nepal Cyber Security Centre

Solution Establish Nepal Cyber Security Centre for providing advice and support
Draft 100
for the public and private sector in how to avoid computer security
threats.
It should be responsible for Nepal's cyber security, with primary focus on
securing government networks, protecting critical national infrastructure,
and assisting businesses and citizens in protecting their own systems.
1.7 Special Economic Zone for IT sector

Solution Government of Nepal should consider creating Special Economic Zones
in order to promote BPO and ITeS services. Government can consider
giving special tax incentives (e.g. 3 year tax holidays) to organizations
opening new ITeS and BPO businesses in these areas.
Stakeholders Ministry of Communication and IT (MoCIT), Ministry of Finance, Ministry
of Urban Development
1.8 Government of Nepal app

Solution Government of Nepal should launch one single umbrella app, which
integrates app developed by all government departments and bodies.
This app should act as an aggregator of all services provided by
Government of Nepal, local governments and municipal bodies.
Stakeholders Ministry of Communication and IT (MoCIT), Prime Minister’s Office, All
other ministries and departments
1.9 eGovernance 2.0

Solution Government of Nepal has made considerable progress in eGovernance
over the last few years, as reflected by improvement in E-Governance
Development Index rankings. However, most government websites and
app are interactional in nature providing services like online form
submission, queries and correspondence, download forms, send emails to
the concerned authority, ask query etc.
In the next phase of e-Governance, government needs to focus on
moving from interactional services to transactional services, which enable
citizens to make online secure payment, automate most tasks, and
eliminate need for citizens to physically visit government departments,
where possible.
Draft 101
1.10 Paperless Government and collaboration
Solution Government of Nepal should digitalize all internal and external processes
in order to emerge as a Paperless Government. The program, led by
MoCIT, should be supported by all other government departments.
Government departments can establish multi-functional task force for
identification and digitalization of processes in a time bound manner.
As a part of these program, the government should consider leveraging
various collaboration tools and solutions (such as HD video conferencing,
instant messengers, cloud based productivity apps) to ensure better inter
and intra department collaboration.
1.11 Public Wi-Fi Hotspots

Solution Set up Wi-Fi hotspots via PPP route in public places in cities, which offer
free basic internet services (say 1 hour of internet browsing per day, and
chargeable at a nominal rate beyond the limit)
 Connect these hotspots in key public areas, including tourist
spots, airports, railway stations, markets, and educational
institutions
Stakeholders Nepal Telecommunications Authority, Ministry of Communication and
Information Technology (MoCIT)
Timelines Long Term
2.1 Kathmandu Digital Hub

Solution Ministry of Communications and IT (MoCIT) and Department of Education
can collaborate to develop Kathmandu Digital Hub. The objective of the
Digital Hub should be to foster development of digital start-up eco-
system.
The Digital Hub can emerge as a platform for enable start-ups to have
access to high-speed broadband and fiber optic connectivity, funding
(both private and government), research and development facilities,
collaboration with Kathmandu University and other education institutes,
etc.
Stakeholders Ministry of Communication and Information Technology (MoCIT),
Department of Education
2.2 Digitally Streamlined PPP System
Draft 102
Solution Digitally streamlined PPP application processes to create a conducive
environment for the mobilization of private sector and foreign investment
for Digital Nepal framework.
The Portal should contain details of shortlist Digital Nepal initiatives and
invite participation from private sector players and foreign companies. It
should be positioned as single window that enables all interactions with
external parties including proposed solutions, invitation of bids,
shortlisting of projects, etc.
Case Study – Global GiGA Island Initiative: Digital Bangladesh

Korea Telecom (KT)’s ‘GiGA Island’ is a corporate CSR initiative that aims to enhance the quality of life
and provide better access in terms of education, culture, and healthcare for people who live in remote
areas, such as highlands and islands, by providing high-speed internet and ICT solutions.
Moheshkhali is a small island located in the southeast part of the Bay of Bengal with a total population of
250,000. Due to geographical limitations and a poor telecommunications environment, the residents of
the island had limited access to public services including education, medical services, and information.
KT connected the Moheshkhali Island to the inland areas by installing the wireless network technology
‘GiGA Microwave’ and used copper-based KT’s providing giga-level internet solution ‘GiGA Wires’ to
circulate network traffic within the island. With the ‘GiGA Microwave’, the island could successfully
receive 500Mbps internet service, and the ‘GiGA Wire’ enables the island’s internet speed at the most
100Mbps. This enabled more than 30% of the residents in Moheshkhali to communicate with the world
through high-speed internet.
3.1 Digital Literacy Trainings

Solution Consider PPP route and partnerships with local & international NGOs for
providing digital literacy trainings to digitally un-initiated sections of the
society. Government can encourage these NGOs to leverage training
centers, computer labs and citizen cyber cafes in government
departments and educational institutions to provide digital literary
trainings for a nominal fee / free of cost.
Stakeholders Ministry of Communication and Information Technology (MoCIT), Ministry

of Education
Timelines Long Term
3.2 Government eLearning Platform

Solution Making public servants digitally-ready will be essential for success of
Digital Nepal program. MoCIT should take lead in developing a
Draft 103
Government eLearning Platform, which can also be leveraged by other
government departments for providing digital / online trainings to their
employees.
MoCIT should develop the centralized platform, which can be then used
by the IT and training teams of the respective departments for creating
training modules relevant for their needs.
Stakeholders Ministry of Communication and Information Technology (MoCIT)
3.3 ICT in Education

Solution Investments in digital education are important for Nepali people to reap
benefits of Digital Nepal. Possible actions include:
 Compulsory IT education for schools and colleges
 Systematically strengthen Nepal’s education system’s capacity for
imparting advanced ICT education
Stakeholders Ministry of Communication and Information Technology (MoCIT), Ministry
of Education
Timelines Long Term
Draft 104
Business Environment Enablers
Government of Nepal needs to focus on the following priority areas to create an enabling
environment for the success of Digital Nepal initiatives:
Technology and Infrastructure

A robust ICT infrastructure and supporting eco-system will be the backbone of Digital Nepal
program. Government of Nepal needs to undertake initiatives for driving digital adoption and
facilitating the establishment of a reliable ICT infrastructure through public-private
partnerships.
Digital Connectivity needs to be a key priority
Nepal has witnessed considerable improvement in digital connectivity during the last few
years driven by rapid adoption of mobile Internet. However, it continues to lag behind its
neighbors and developed economics on overall development of ICT sector.
Draft 105
As a result, strengthening digital connectivity needs to be a key priority for Government of
Nepal. Frost & Sullivan recommends following actions in order to improve digital connectivity:
 Make Internet access a fundamental right for every citizen

 Improve availability of spectrum to the operators to enhance service coverage and quality
 Take leadership in driving 5G adoption in South Asia
 Establish a nationwide fiber network
Facilitate development of a robust financial ecosystem
Digital payments and financial transactions, conducted through smartphones and other
mobile devices are now a vital cog in modern financial infrastructure. A strong digital finance
eco-system can facilitate evolution of new business models and digital start-ups thereby
generating new job opportunities and enabling faster economic growth. Further, digital
financial services have the potential to give a big boost to financial inclusion by providing
financial services to people hitherto cut off from the same.
Nepal has an underdeveloped financial eco-system with low penetration of digital finance
services. As a result, facilitating developing of a robust financial ecosystem needs to be a
priority of Government of Nepal. Possible actions in this direction include:
 Encourage digital payments

 Encourage investments in Fintech by encouraging the growth of startups and telecom
companies to offer services to drive financial inclusion
Entrepreneurship/PPP
Digital Nepal program would require significant investments, which the government alone
cannot provide. Public private partnership and foreign investments would need to play a
major role in Digital Nepal by bringing technological expertise and capital infusion for
sustainability and scalability of the program.
Government of Nepal should initiate necessary policy interventions to encourage private

sector participation in the Digital Nepal program. Nepal could consider taking the following
steps to improve the ease of doing business in priority areas:
Private Sector Participation
Private sector participation would be crucial for success of Digital Nepal program. Possible
actions include:
 Rollout a digitally streamlined PPP application system for the mobilizing private
investment in Digital Nepal program
 Consider offering Tax-holidays for investment in critical areas (e.g. companies focusing on
Smart Health in remote rural areas can be given 3 year tax holiday)
 Start-up accelerator program to build a strong ecosystem for nurturing innovation and
entrepreneurship in tackling key challenges and generating large-scale job opportunities
Foreign Investments
Government of Nepal can take steps to encourage foreign investments in the Digital Nepal
initiatives. Foreign investment can also help Nepal in cross leveraging skills and insight from
similar initiatives undertaken by foreign investors in other parts of the world. Possible actions
to attracting foreign investments in Digital Nepal program include:
Draft 106
 Fast-track FDI applications for Digital Nepal initiatives through a single window
system
 Consider increasing FDI limits and easier repatriation of funds (e.g. 100% FDI for
Digital Nepal initiative)
Talent and Skills Development

Digital Nepal program intends to open several opportunities for socio-economic growth by
addressing challenges in various sectors and enabling Nepal to enter into an era of high
economic growth. However, investment in enhancing digital skills of Nepali people is critical
for Nepal to reap real benefits of Digital Nepal program.
Government of Nepal needs to focus on the following areas:
 Invest in digital education

 Digital skills training of public servants
Improve Digital Education
Government of Nepal can consider following steps in order to enhance digital skills of Nepali
people:
 Compulsory IT education for schools and colleges

 Systematically strengthen Nepal’s education system’s capacity for imparting advanced
ICT education
 ICT Literacy programs aimed at combating digital exclusion in rural communities and
underprivileged Nepali people
Digital skills training of public servants
Making public servants digitally-ready will be essential for success Digital Nepal program.
Government should ensure establishment of IT training teams in all government departments
for imparting digital training to its employees. Further, the Government can consider
leveraging proposed National eLearning Platform to train its employees on new systems and
technologies been introduced in their respective departments.
Draft 107
About Ministry of Communication About Frost & Sullivan
Frost & Sullivan, the Growth Partnership Company,
The Ministry of Communication and Information works in collaboration with clients to leverage
Technology (MoCIT) was established in the year visionary innovation that addresses the global
(2049BS). The Ministry widely covers postal services, challenges and related growth opportunities that will
telecommunications, broadcasting, press and make or break today’s market participants. For more
information, and film development. With the than 50 years, we have been developing growth
objective to develop and expand the information & strategies for the global 1000, emerging businesses,
communications sector up to rural level in the form of the public sector and the investment community.
infrastructure for social and economic development
through wide spread participation of the private “We Accelerate Growth”
sector as well with emphasis on the dissemination of
© 2018 FROST & SULLIVAN
information and communication technology.
www.mocit.gov.np www.frost.com
Government of Nepal
Ministry of Communication

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2018 DIGITAL NEPAL FRAMEWORK

Unlocking Nepal’s Growth Potential

Executive Summary ............................................................................................................................ 1

Setting the Context ............................................................................................................................ 5

State of Digital Adoption in Nepal ............................................................................................. 12

Digital Nepal Framework: 1 – 8 – 80 .......................................................................................... 18

The Digital Nepal program is designed to enable Nepal to harness its

BAU Digital Nepal

Source: Frost and Sullivan

Eight Domains and Eighty Digital Initiatives

51) Water ATMs 66) Internet - A Fundamental Right

Business Environment Enablers

Technology and Talent and Skills

2013/14 2014/15 2015/16 2016/17 2017/18F 2018/19F 2019/20F 2020/21F 2021/22F

GDP ($ bn) GDP Growth (%)

Per Capita of Gross National Income* of Asian

*Based on Atlas Method; Source: ADB, Basic

Criteria for graduation from LDC Category

Graduation Criteria Nepal progress vs. criteria

GNI per capita > US$1,242

Economic Economic Vulnerability Index

Maintaining a GDP rate of 8-10% level will require broad-based growth

0.9% Agriculture, Forestry, Fishing

Foreign Direct Investment

Foreign Direct Investment, Nepal (NPR Million)

Source: Nepal Rastra Bank

Nepal Inflation rate, 2013/14 - 2021/22F, %

5.0% 5.5% 5.3% 5.0% 4.9% 4.9%

2013/14 2014/15 2015/16 2016/17 2017/18F 2018/19F 2019/20F 2020/21F 2021/22F

*Latest available data, as per latest census data in the country

Urban Population (%), Nepal vs. select Asain countries, 2017

Source: World Bank

Nepal - Mobile First Economy

Mobile Penetration in Nepal

Source: Nepal Telecommunications Authority

Afghanistan Nepal India Pakistan Bhutan Sri Lanka Bangladesh

Source: World Bank

Internet Penetration in Nepal

Internet Penetration, Nepal

2012 2013 2014 2015 2016 2017

Source: Nepal Telecom Authority (MIS reports), World Bank

2.25 million new 250 new internet Teenagers and youth

Nepal is expected to be a forerunner in internet penetration with continued growth in

Mobile operators in Nepal are increasing investments in infrastructure in order to meet

Source: Frost & Sullivan Analysis

Active social media users (Jan, 2017)

Afghanistan Nepal India Pakistan Bhutan Sri Lanka Bangladesh

eCommerce is still a new concept, but growing rapidly

Digital to unlock potential for Nepal

Source: Frost & Sullivan

Nepal, GDP Growth Forecast

BAU Digital Nepal

Agriculture: Digital Nepal initiatives in the agriculture sector encompass technological

Urban Infrastructure: Digital Nepal initiatives in urban infrastructure aim to leverage

1 Country – 8 Domains – 80 Digital Initiatives

Agriculture Growth (%), Nepal, 2008–2017

Source: Ministry of Finance, Government of Nepal

Challenges in Nepal’s Agriculture Sector

Source: Central Bureau of Statistics (CBS), Government of Nepal

Other challenges the agriculture sector faces include: