80 pc of startups in Koshi earn profits: NRB report

KATHMANDU: A special report by Nepal Rastra Bank (NRB) shows that 80% of startup enterprises in Koshi Province are earning profits despite facing challenges such as inadequate capital, a shortage of skilled human resources, limited market access and insufficient government facilities.

The study covers 160 startups that applied for loans at the Industrial Enterprises Development Institute and were shortlisted for credit. A total investment of Rs 2.56 billion has been made in the 160 startups covered by the study, with 38.7% financed through loans and 61.3% from entrepreneurs’ own capital, the report says.

Of the enterprises surveyed, 41.3% are engaged in agriculture and forestry, 18.1% in production-based industries, 17.5% in service-based businesses, 13.8% in tourism and 9.4% in the information technology (IT) sector. Regarding commercial potential, 43.1% of respondents identified agriculture and forest-based industries as the most promising sector, followed by tourism (21.3%), manufacturing (13.8%), services (10%), information technology (8.1%) and energy and construction (1.9% each).

Among the startups, 54% have adopted innovative ideas in products and services, 41% in production processes and 5% in distribution processes. Based on technology usage, 27.5% of enterprises use advanced technology, 65% rely on general technology, and 7.5% do not use any technology.

Market access remains a challenge: 45% of enterprises primarily serve local markets, 46.9% operate at the national level, and only 8.1% supply goods and services to international markets. For marketing and promotion, 33.9% of enterprises depend on friends and relatives, 28.3% use social media platforms, 8.5% operate through websites, 7.2% rely on online advertisements and festivals, 6.1% use traditional methods, 4.1% conduct door-to-door contact and 4.3% employ other promotional methods.

In terms of age, 39.3% of entrepreneurs fall within the 21–35 age group, 44.4% are aged 36–50 and 16.2% belong to the 50–70 age group. Overall, 74.4% of the entrepreneurs are male, and 25.6% are female. Employment within these enterprises is split 48.4% women and 51.6% men.

The report states that 40.6% of enterprises have received government grants and facilities, while 59.4% have not been able to access such support. The key motivating factors for operating startups include the desire for self-sufficiency (37.1%), contributing to society (25.8%), exploring new opportunities (25.1%), lack of employment (7.9%) and other factors (4.1%).

To promote startups, the central bank recommends mobilisation of seed capital, implementation of joint-venture models, expansion of venture capital, provision of tax incentives, legal flexibility and ensuring easy access to debt financing. The report also suggests establishing incubation centres at federal, provincial and local levels and implementing special incentive programmes and financial literacy initiatives to help entrepreneurs better explore market opportunities.