Nepal Investment Board should bring in investments in social enterprises

Kudos to Mr. Radesh Pant for accepting the career denting challenge of heading the Nepal Investment Board (NIB). I hope under his leadership,NIB will lure in lots of much needed FDI in the country. Mr Pant knows it well that he is going to face significant domestic challenges like militant labour, extortion, local opposition, arbitrary government policies, red tape, corruption, power cuts, bandas etc . I am confident that he and his team is competent enough to acclimatize/ face these never ending domestic challenges .In my opinion, in the coming year,the bigger concern for NIB will be the uncertainly in the global macro economic situation..........................

"According to a 2010 Central Bureau of Statistics survey, there were 1,897 firms operating with foreign investment from 139 countries. India had the largest investment in Nepal with 393 companies, followed by China with 179, Japan 132, South Korea 94, UK 94, Germany 61 and Switzerland 27." click here to read more

NIB is banking heavily on India to investment in sectors like infrastructure and energy, however I believe in 2012, it is unlikely that Indian private sector will expand its balance sheets to own assets in Nepal......According to a study - "Credit Suisse looked at loans to 3,550 non-financial services companies in India with aggregate borrowing of $385 billion at the end of March and found that nearly 30% had net debt more than six times current earnings before interest, taxes, depreciation and amortization. That's increased by about 50% in the past five years." click here to read mo

re

Uncertainly in the foreign exchange rate (18% fall in the rupee against the dollar since April ,2010) and growing concern of sovereign debt crisis in Europe will likely retard FDI outflow from European Countries.........................................Chances are also high that major European Countries will experience recession in 2012...

Considering the global macro economic situation, In 2012, Nepal Investment Broad needs to attract low capital intensive FDI and Impact Investing in social business and enterprises ...... NIB should work to bring in FDI/Impact investing in sector like health Care, micro finance agriculture, small scale clean tech,water and Sanitation ... ............. Bringing in FDI in social enterprises will not only help flight poverty and other environmental concern but will also help build a bigger and stronger "traditional" FDI suitable eco-system in Nepal ...........

NIB should help potential foreign private equity/social venture fund investors to conduct investment due diligence, support deal flow and provide investment safely .....Typically , impact investors are much more risk takers then "traditional" foreign investors, I think it will be less laborious to attract foreign impact investors despite investment risk from domestic variables.....