Executive Overview: USAID Workshop on Private Sector Recovery and Growth

KATHMANDU, Dec 07:USAID Trade and Competitiveness conducted a transformative program: 'Consultation

Workshop: Private Sector Recovery and Resilience, Gaps and Opportunities.' Ms. Agnes Luz, Chief of Party, gave the opening remarks about how the project aligned with USAID's fourth core objective; this initiative targets Nepal's private sector recovery, specifically addressing the lingering impact of the COVID-19 pandemic.

The event's opening presenter, Bhojraj Poudel, conducted a comprehensive analysis of the private sector's landscape. His dual-phase survey illuminated the dynamic responses of firms to the challenges posed by COVID-19, showcasing a transient closure pattern that shifted positively with USAID support.

Poudel's revelations went beyond statistics, delving into the intricacies of the tourism sector's struggle, which achieved only 38% of pre-pandemic sales. Key challenges, including human resources, market access, and financial barriers, were emphasized. The event's focus on handicrafts, tea, dog chews, and apparel provided a nuanced perspective on sector-specific challenges.

Sanjay Jha, the Access to Financial Services Manager, offered a macroeconomic snapshot, projecting a 4.3% GDP expansion in 2024. Despite positive economic indicators, firms, especially in the tourism sector, grapple with recovery after the failed Visit Nepal 2020 initiative.

Jha underscored the financial needs of firms in key sectors like tea and dog chews, revealing a collective ambition to expand, secure loans, and invest in higher-quality products. The tourism sector, however, faces crucial constraints on accessing finance, as highlighted by Jha.

Sheri Pitigala, the consultant leading the market system analysis, added a strategic dimension to the event. Emphasizing resilience, Pitigala proposed solutions to market losses and supply chain disruptions, stressing the need for diversification and adaptability.

Pitigala's systematic approach to sector identification and prioritization explored private sector growth. Her analysis identified three promising product types: textiles and apparel, other fiber-based products, and agriculture and forestry items. The concise SWOT analyses for each sector provided strategic insights, guiding the path for resilience and growth.

In textiles and apparel, the emphasis on high-value specialized handwork products was a strength, while dependency on imported materials posed a notable weakness. Opportunities lay in untapped markets, but vulnerabilities arose from low market and supply chain diversification.

For tea and essential oils, diverse products coordinated well (strength), but bulk exports led to lower value addition (weakness). Opportunities included growing demand in high-income markets, but threats loomed from intense competition, particularly from Indian bulk exports.

In the dog chews sector, uniqueness and high value were strengths, while issues with certification, traceability, and technology were identified as weaknesses. Growing market demand provided opportunities, but threats surfaced from intense competition.

The open forum discussions delved into these major portions: Long-term infrastructure challenges,Tea sector intricacies of certification and packaging concerns , Financial hurdles, such as the substantial yet constrained cash flow, Advocacy for external support for SMEs in market research and product customization , Roles for the government in international trade promotion, the private sector's readiness for marketing investments, Exploration of data sale opportunities and the importance of analyzing sector-specific models.

Finally, breakout sessions were held where six specific groups were formed to discuss substantial issues and potential solutions, where each group did their research and analysis based on commodities, access to markets, access to finance, and policy. The group leaders then did their presentations, which helped brainstorm tools to address constraints that are preventing growth within 2-3 years.