Nepal’s micro and small industry registrations plunge 75 percent in five years despite policy push

Nepal's micro, cottage, and small enterprises (MCSEs) are facing a severe registration crisis, with numbers plummeting by almost 75% in the last five years. This sharp decline occurred despite the government's implementation of various policies and programs designed to boost the sector.

Entrepreneurs point to several persistent challenges that deter formal registration. These include inadequate access to crucial financing, limited market opportunities, and a perception that government support disproportionately benefits those with political or bureaucratic ties. These factors discourage business owners from operating within the formal system.

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Although the government has been promoting the facilities available for micro, cottage and small enterprises, many entrepreneurs may still be unaware of them.

Official data from the Department of Industry reveals a stark downward trend. Registrations fell from 83,386 in fiscal year 2020-21 to just 21,029 in the last fiscal year. The department also noted a shift in registration jurisdiction following a new government reform plan, with certain domestic investment categories now handled at lower administrative levels.

While the government established the Micro, Cottage and Small Industry Promotion Centre and introduced policies to encourage local production, these initiatives have yet to yield significant results. The center's budget has also been substantially reduced. National statistics indicate that nearly half of Nepal's businesses remain unregistered, with a vast majority of workers in small enterprises operating informally.

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The government has also not been fully successful in making entrepreneurs aware of the benefits of formally registering their businesses.