Nepal need Investments not loans

International Monterey Fund claims that the world is in a process of “double speed recover”. Developing nations are growing at a high single digit rates, whereas, developed countries are growing at a much slower rate. At the annual World Economic Forum Summit in Davos, policy wonks and economists concluded that developing countries are aiding the developed countries to gain economic growth momentum. Low economic growth in the west coupled with the escalating dangers of climate change has compelled western investors to look for investment avenues in uncharted areas of developing countries.Along with foreign institution investments, western investors are also investing in sector like renewable energy, agricultural, health, microfinance and education in the developing world. India, China and few African countries are the biggest recipients of investments in the sectors mentioned above. foreign equity injection in sectors like renewable energy, microfinance or education is not only providing decent financial returns to the investors but it also empowering the individual and the communities receiving these investments. Experts have coined financial investments that also have a positive social impact as impact investment.

Unfortunately, despite being a developing country Nepal has not had much success in attracting impact investments. Impact investment can help to drive up the entrepreneurial spirit among the youth of Nepal, create employment, improve the living standard and most importantly wean the country from foreign loans . Instead of patting its own back for securing loans like Extended Credit Facility loan from IMF and Strategic Programme on Climate Resilience from World Bank, It would be more effective and impactful if government of Nepal starts doing homework to chalk out frame work to bring in foreign investments in sectors that have traditionally funded by foreign loan. While the foreign loan increase the government debt, foreign capital flowing in reduces the burden on current account deficit of the country. Impact investments usually flow into a country through financial entities like venture capital firm, private equity or private endowments.Rules and regulation to oversee the non-banking financial entities in Nepal in still in immature stage. Nepal Rastra bank and Finance Ministry should immediately consolidate rules that will govern and incentive foreign investment in sector that have direct correlation to human development.