New incentives to attract agriculture investment in Nepal

What would it take to create a better enabling agriculture investment environment in Nepal?  This question was put forward by business journalist Shivanee Thapa at the Nepal Agriculture Investment Meeting.

At the meeting, co-hosted by CASA Nepal and Federation of Nepalese Chambers of Commerce & Industry (FNCCI) in December 2022 in Kathmandu, over 100 delegates identified five main priorities for action.  The top priority emerged as improving awareness of current government policies.

Alvaro Valverde, Engagement, Learning and Communication Lead for CASA, said: ‘There was a strong feeling amongst government representatives at the meeting that the policy framework and incentives were in place, but were not understood. The investors felt that there was a mismatch in the current government priorities, and that the mechanisms to get help to where it is needed, often fell short.

There is a need to communicate the current policies. Then a discussion can take place to improve these policies, where necessary, to support sustainable investment in the agri-food sector in Nepal.’

In the meeting, policy review and resource allocation were identified by participants. Delegates voted on the ones they thought would make the most impact.

Incentives for food production

The delegates proposed greater segmentation the agricultural loan portfolio. A central bank mandate requires financial institutions to invest 15% in the agri-food sector. Currently, most funds in Nepal are invested in agriculture processing rather than directly in agriculture production.

During the meeting, attendees highlighted the importance of greater incentives for investment. This includes in primary food production trading, such as reduced interest rates. The food production sector faces productivity challenges, which requires better information, mechanization, and more routes to market.

More attention to value addition

Better investment in processing technologies, however, was seen as a critical point.  This was outlined in two priorities that were identified at the meeting. These looked at the ability of Nepali businesses to add value to produce in the agri-food sector.

In addition, the investors sought greater alignment between priority value chains identified by the government, and the areas within the private sector where high value-addition was possible.

It is critical to the invest in processing technologies. CASA Nepal has worked with around 20 businesses in the vegetable and dairy value chains, which are producing preserved food. This extends the markets for small-scale farmers, creating jobs and improved livelihoods. Moreover, countries rely less on imported food. In some cases, the quality requirement for international export has been met.

Attendees choose their top investment priorities (Credit: CASA)

Building a case for technical assistance

Since 2019, CASA Nepal has supported around 60 businesses with technical assistance. Critically, these businesses are required to co-invest in technical assistance. The delegates recognized the importance of Nepali food enterprises having access to high levels of consultancy, training and development.

Furthermore, they wanted to see a clear business case developed. Specifically, these would show how context-specific technical assistance can impact on the bottom line and support enterprises to access investment.

Alvaro Valverde, said: ‘This event was very successful in identifying the challenges that need to be addressed for the agro-food sector to better attract investment. We have been invited by the Ministry of Agriculture and Livestock Development to share these findings to explore the overall enabling environment.

CASA has seen that, overall, there are investable agri-food businesses in Nepal. There is a clear impact that investment can make in raising the productivity of the sector. In turn, this can improve livelihoods in the country.

The partnership with FNCCI is critical to addressing the priorities raised at this meeting. The CASA team is supporting them in the evolution of the agricultural sector in Nepal.’

CASA is planning an investment meeting to take place in Malawi, in June 2022.

More information on the Nepal Agriculture Investment Meeting:

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