Nepal’s Digitalisation Journey: Experiences and Challenges in Digital Transformation and the Future Ahead

ACI collaborated with NIPoRe to host a webinar titled Nepal’s Digitalisation Journey: Experiences and Challenges in Digital Transformation and the Future Ahead on February 23th, 2023. Prof Paul Cheung, Director of Asia Competitiveness Institute (ACI) delivered his welcome remarks and highlighted the importance of digitalisation and the speed of Nepal’s digitalisation. He also shared how ACI is collaborating with the Nepal Institute for Policy Research (NIPoRe) to support key policy stakeholders in Nepal to support their ongoing evidence-based policy research work in the country. Dr Swarnim Waglé, Chair of the Institute for Integrated Development Studies (IIDS) and Advisor, Nepal Competitiveness Index delivered his keynote speech and discussed how landlockedness had created a structural handicap for Nepal. To counter this, the salience of digital technology is very important. Digital technology has great opportunities but still needs old analogue complements such as regulations, removal of barriers to adopting new technology, ensuring competition, investment in foundational ICT skills, focus on careers not just jobs, the idea of life-long learning, financial inclusion, gig-economy, create institutions that are open to accountability, adoption of e-government, and fostering citizen participation. We need to be however aware of the divides that need to be taken care of in the digitalisation journey such as inequality, the issue of concentration of internet platforms, and information control. There is also a need to work on issues of digital identity and effective service delivery. In the new federal setup, the municipal government can show what the federal government needs to do. There is much happening but the irony is that it is happening because the state does not know about it. If it knew, it would slow the pace of development. Therefore there is a need to see this as a real opportunity to catch up with development and explore the ideas of the younger generation of Nepal.

Ankur Shrestha, Research and Program Officer at the Nepal Institute for Policy Research (NIPoRe), highlighted that there’s been an increase in the government’s focus on digitisation. The Government of Nepal has taken various policies such as the Broadband Policy and ICT Policy of 2015, and the Digital Nepal Framework 2019 among others. This is required as Nepal’s mobile broadband internet penetration rate has reached 98.46 percent in FY 2021/22, an increase from 39.8 percent in FY 2017/18. In FY 2021/22 the number of digital payment transactions reached around 430 million while the total amount of digital transactions has reached NPR 4,600 billion increasing 61 percent and 133 percent from the previous fiscal year. He also highlighted some key challenges with digital adaptation such as unsecured digital infrastructure, less awareness in safely using digital systems, delays in policy updates, and slow pace of infrastructure development.

Jaya Jung Mahat, Co-founder and the Inaugural Director of NIPoRe highlighted the rapid digitization in Nepal- with 96 percent mobile broadband penetration, 36 percent fixed broadband connection, and the 4 times increase in internet users from January 2013 to January 2023 as the reason why digital competitiveness matters more than ever for Nepal. Out of 12.7 million social media users in Nepal in Jan 2023, 700,000 new users were added between 2021 and 2022. In the financial inclusion aspect, 6.1 percent of the population had a mobile money account, 18.8 percent of the total population made digital payment, 8.5 percent used a mobile phone or internet to send money, and 6.3 percent used mobile phone/internet to pay bills in 2022.

The key sectors impacted by digital trends include education, health, tourism, and finance. Jaya further talked about how the lockdown contributed to the digitization process. Due to the COVID-19 lockdown, schools and colleges moved online which resulted in increased use of digital platforms. A lot of people during lockdown used health tech platforms to order medicines and seek health counselling. Hotels use digital platforms to let guests book rooms and get travel guidance. As well as a growing population has been using mobile phones and the internet to make financial transactions. 

Besides, he highlighted a few plans and policies formed by the Nepal government to tackle the digitization trend which includes Digital Nepal Framework 2019, Telecommunication Policy 2004, ICT Policy 2015, Broadband Policy 2015, and Satellite Policy 2020 are the policies that have been introduced by the Nepal government. The Digital Nepal Framework 2019 focuses on three key pillars of the digital economy including digital connectivity, digital skills, and digital governance.

In addition, he talked about delays in adoption of technology from the government’s side which initially caused trouble for ride sharing companies. The pull factors that attract new consumers to the digital economy include digital transactions being done easily, quickly, and in a time saving way. The digitization of certain services has also been cost saving- especially in terms of providing health services in rural areas, tele-health services have been able to minimize huge costs. Some negative factors that discourage people from participating in the digital economy include frequent incidents of data breach, and lax privacy and online safety services.

Siddhartha Raja, Senior Digital Development Specialist at the World Bank Country Office in Nepal, highlighted broad trends in South Asia regarding the digital economy. While South Asian infrastructure has improved from 10 years ago and 3G and 4G connection has improved, major urban vs. rural divides still exist. There are also a lot of inclusion gaps in terms of demand side- affordability of the devices, digital literacy- gap between men and women, urban and rural areas, and people with disabilities who have accessibility gaps. There is still work to be done in terms of information and literacy gaps, and connecting with the right kind of information.

Another important point he talked about was in regard to building trust and confidence in the digital economy. Cyber security attacks have taken place in government and financial institutions throughout the region. Issues of fake news and misinformation have also come up. It is important to create legal frameworks that will stop the misuse of personal data, regulatory framework to make sure government information is secure. He emphasized the need to have a balance between control and innovation/ openness so that people are able to use data for businesses.

He further talked about institutional development- in Nepal more than a billion dollars is needed to make sure every Nepali is connected to the digital economy. The public and private sectors need to work together to deliver critical services in the digital economy. Robust regulatory frameworks need to be created, and many policies that are older need to be updated.

Nepal and the World Bank have been working together for more than five decades. The first project that the World Bank financed in Nepal was related to improvements in the country’s telecommunication sector. The three areas related to Nepal’s digitalisation that the Bank is working in the country at the moment include improving access to the internet, making it affordable and building digital literacy; making public service transparent and accountable; developing the IT industry and developing digital skill sets and jobs.

Honorable Sumana Shrestha, a member of Nepal’s Parliament, conveyed her message that public infrastructure is her top priority in terms of creating jobs and it is a way through which she sees Nepal developing through session moderator Dr Zhang Xuyao, Assistant Director (Programmes) and Senior Research Fellow of ACI.

Key Highlights

  • There has been a significant increase in internet usage and internet penetration rates so the government needs to take out timely policies as well as consider various issues that can crop up while digitising the economy.
  • Investigating digital trends at provincial level. 
  • The government has an important role in building trust and confidence in the digital economy.

By Ankur Shrestha and Anusha Basnet, Nepal Institute for Policy Research (NIPoRe)

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