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Nepal is still largely a cash-based country. But this is gradually changing with the advent of technology and several digital payment platforms. More than 14mn Nepalis use mobile banking platforms, according to a report published by the Nepal Rastra Bank in June of 2021. It was a 26 percent increase within one year. 

Digipay is one of the emerging digital wallet and an e-commerce application that aims to gain a large and wide client base in the coming years. The app allows you to do everything a mobile banking app does, from online transactions to utility bill payment, while also allowing you to shop online. But it has one unique and innovative feature that other digital payment apps do not. It also allows cash payments while giving amazing cashback offers, and it is the first in the world to do so. Priyanjali Karn of ApEx talked to Diwakar Pandey, chairman of Digipay, to learn about the Digipay ecosystem and the Digipay franchise. 

How is Digipay transaction process different from other digital wallets? 

Digipay includes three mediums of pricing. The first one is the Nepal Rastra Bank cash, which we already use. Then there is ‘gold cash’, also known as loyalty points. Once you download the app, it automatically rewards you with a 100 gold cash, or loyalty points. The value of loyalty points vary with every merchant. 

As a Digipay client, you can purchase items from stores that accept digipay in normal cash, gold cash, and even a combination of the two cash, that is also the third medium of pricing. The application shows all the stores that accept Digipay in the Digipay map.

In the market, a seller is looking for profit in every sale, and a buyer is looking for a benefit in every purchase. This app gives them just that.

For example, let's say Arjun wants to make a purchase using digipay. Once he downloads the application, he gets a 100 gold cash reward. Once he loads normal cash in the digital wallet, now he can purchase an item using either or both types of cash. Digipay merchants put out their products and their price in both types of cash, for instance, a purse being sold by a particular merchant may cost Rs 250 or 25 gold cash or it may cost Rs 150 and 10 gold cash. For this merchant’s product, the value of one gold cash is equivalent to Rs 10.

Now Arjun has a nice offer that helps him save a certain amount and benefit from the gold cash. With the products, merchants also offer a certain number of gold cash as cash back when you make a purchase. For instance, with the purse, Arjun receives two gold cash as cashback.

Where does the gold cash come from, for a digipay merchant and also for a client?

In case of a Digipay merchant, once you sign up to sell your products through the app, you have to give a certain percentage of service charge to the Digipay system, from where the gold cash is acquired. Therefore, the system is mining gold cash everytime there's a transaction between a client and a merchant.

Being a digital payment platform, how does it accept cash? 

Stores that accept Digipay also accept cash. Arjun can make a payment either by paying online through the amount he has in his digital wallet. Or, he can simply pay cash and ask the cashier to put it into his account records. Now even if he paid physical cash, he still gets the gold cash as a reward, that he can utilize in future payments in the Digipay network. Thus, creating a Digipay ecosystem.

How does this help digital payment?

It is designed in such a way that even clients who aren’t familiar with digital transactions can make Digipay payments and benefit from the loyalty points. It is a gradual process of educating the remaining population with the growing technology in a way that they understand. 

Anyone can use Digipay, even someone who doesn't own a phone can make a Digipay cash purchase from a family member's account, and they gain loyalty points. 

What are the aims of Digipay?

Nepal is a third-world country, but technology-wise, we aren’t less than the first-world countries. True, we are still dependent on cash and cards, even when almost every Nepalis have a smart phone in their hands. 

With the Digipay franchise, also called local business partnership, we are trying to reach every phone and access more clients and merchants who can benefit from the application. It is one of the most offer-oriented digital payment platforms that cater for that benefit. 

At present, one franchise is making a minimum of Rs 400,000 to Rs 500,000 a month with Digipay. We aim to make our service reachable to people from all around the country by acquiring merchants and spreading the business. 

The suspension of Nepal Rastra Bank Governor Maha Prasad Adhikari threatens to further roil an economy already battered by covid-19. Adhikari had apparently refused to heed Finance Minister Janardan Sharma’s instruction to release Rs 400m of suspicious money from abroad deposited into Nepali bank accounts of one Prithvi Bahadur Shah. (The Supreme Court on April 19 overturned the governor's suspension.) 

The country’s foreign reserves have shrunk to alarming levels. Remittance and tourism—the two backbones of Nepal’s economy—aren’t doing well either. Moreover, Nepal is already in the international spotlight as a conduit of illicit money. 

Kamal Dev Bhattarai spoke to senior economist Dilli Raj Khanal on the possible implications of the government’s intervention in the central bank and its lax attitude on black money.

What are Nepal’s international commitments on combating money laundering?

Global Financial Integrity, a Washington-based think tank, maintains a record of illicit financial flows, corruption, illegal trade, and money laundering. It also tracks money laundering in Nepal.

Likewise, the Asia Pacific Group on Money Laundering, a regional anti-money laundering body, conducts a mutual evaluation of the country. Nepal actively participates in such international organizations to control money laundering. But there seems to have been little improvement. 

Money laundering is a serious business. That is why we have laws and agencies to deal with it. Nepal introduced the Money Laundering Prevention Act in 2008 and the Department of Money Laundering Investigation was established in 2011. But again there has not been expected progress. As money laundering is linked to a country’s image, Nepal should take sufficient preventive measures. We are being closely watched by international organizations. 

In 2021, the Finance Ministry amended laws such that income sources of investors in infrastructure will no longer be investigated. Won’t that promote money laundering and flow of black money? 

Obviously, it will. The provision says the government will not seek the sources of investments made in nationally important hydropower projects, international airports, and other projects that use more than 50 percent domestic raw materials. This is a wrong approach as it contributes to money laundering. Some argue it will boost investments. But I personally do not see this as a valid reason. 

What will be the implications of reports of Finance Minister Janardan Sharma trying to release money brought into Nepal from suspicious sources abroad?

This is a very serious case, which could have a big implication on the country’s economy and image. The finance ministry is mainly responsible for checking the flow of black money. It has also formulated anti-money laundering laws. 

With this incident, the ministry has sullied its image. Governor Adhikari has been suspended on charges of defying Finance Minister Sharma’s directive to give clearance to suspicious black money. This could spoil Nepal’s image abroad. Bilateral and multilateral donor agencies want a country’s central bank to be autonomous and its economy transparent. The autonomy of our central bank is vital to building trust with them. 

What is Nepal’s international reputation when it comes to combating money laundering?

Many international reports suggest Nepal has a parallel economy and facilitates illicit flow of money. Our image was already bad abroad before the governor’s dismissal. 

We are not fully implementing laws related to prevention of money laundering in order to improve our image and to earn trust of donor agencies and investors. On the institutional front, it is a complete mess. The finance ministry is mending in the business of other bodies.

If the Financial Action Task Force blacklists Nepal, what will be the consequences?

There will be multifaceted impacts. The country’s image in the international stage will further slide. Many developed countries, donor agencies and multilateral financial institutions take money laundering seriously. It will be tough for us to get loans and assistance from World Bank, International Monetary Fund, and other institutions. 

It could also affect our international trade. If we fail to curb money laundering and flow of illicit money, it could in the long run create a serious economic crisis. Our politicians are taking this issue lightly, which is a grave mistake. Financial integrity is a vital pillar of any economy. If that is lost, it will affect every aspect of the economy, including resource mobilization, banking, and other sectors.

Political parties are gearing up for the May 13 local elections and busy selecting candidates for 753 local units across the country. Meanwhile, the Election Commission is also preparing. As the election date gets close, the past functioning of the local bodies is being evaluated and campaign spending is again under discussion. Kamal Dev Bhattarai talked to Ayodhi Prasad Yadav, the former chief election commissioner who successfully conducted the all three ties of elections in 2017. 

What is your impression of the upcoming local elections?

This is a periodic election being held in line with the constitutional provisions. Even though there are contradictory provisions in the constitution and electoral laws, the Election Commission in the end decided to hold the polls before the expiry of the local governments’ term.

Holding elections in a timely manner would help institutionalize the new federal structure. People’s trust in federalism and republicanism will increase. The upcoming elections will further strengthen this political system. 

How do you evaluate the first five years of local governments?

I recently visited some areas of Madhes and talked to common people. Frankly, they were not pleased with the performance of local representatives. Instead of focusing on public services, local representatives seem more interested in securing facilities and luxury for themselves.

In terms of resources, the local units are better equipped now than in the past. But this isn’t reflected in service delivery. There are many anomalies and problems in our society. The local governments haven’t been able to address them in a timely manner.

Most of them haven’t been able to meet the expectations of their local electorates. Some local bodies, however, were unable to work for a full five-year term, as the elections were held in multiple phases. 

How can we improve the performance of local bodies? 

Local governments have been heavily politicized, which has affected their work. To address this problem, we have to elect non-political representatives. Doing so will encourage independent candidates to enter politics. We can adopt a full proportional representation (PR) system in local governments. In many countries, local bodies have non-political representatives.

Political representation in local governments has led to poor public services and added economic burden. If a full PR system is adopted, we can address such problems. The first-past-the-post (FPTP) electoral system at the local level is creating a lot of problems. 

What is the possibility of vote-rigging in local elections?

During the 2017 elections held under my leadership there were no reports of vote-rigging or fraud. There were some obstructions created by the Netra Bikram Chand-led group, and some political parties were also in protest. But we nonetheless managed to hold the elections in a fair manner.

But now, there is cut-throat competition. Candidate-selection process has become tough. This is because elected representatives get good facilities. More youths are active in politics as they want to get some positions in local bodies. So there is a high possibility of violence at some polling centers. Candidates have already started to influence voters and polling stations. 

Elections have become expensive. How do we minimize electoral costs?

Candidates are spending a lot of money on campaigns. To address this issue, we have to remove the current FPTP system. If we adopt a PR system, it will help curtail election costs. The Election Commission has a ceiling for campaign expenditure. This means the state itself is encouraging parties and their candidates to spend money on election campaigns. Better remove the spending ceiling, which is unnecessary for a campaign that doesn’t last more than two weeks.

To bring change, we should create public awareness. I just returned from my village. There, the political parties and prospective candidates have already started organizing parties to woo voters. They are also distributing “fuel money” to the youths.

Another way of reducing election expenditure is by removing the provision of salary for local representatives.

How do you evaluate your five-year tenure? 

After the elections, we were determined to work as per the spirit of the constitution. We score ourselves 70 out of 100. As Budhanilkantha is a new municipality, formed after the merger of a few former village development committees, we had some extra challenges than other local units. The first thing we had to focus on was setting up the basic infrastructure, as we had no proper office. Among the 18 municipalities in Kathmandu valley, we were the first to have our own administrative building. Also, since we had to transition from a collection of villages into one single town, we had to develop things while keeping the prestige and essence of the Capital city in mind. So I am quite happy with what we’ve accomplished in the past five years.

We focused on five things: good governance, infrastructure development, social development, economic prosperity, and environment and disaster management. 

How did your municipality cope during Covid-19 pandemic? 

We had Rs40 million as a covid crisis management fund. Our main target group was to support daily-wage workers, as they barely had any savings to get by during the pandemic. We assisted them in many ways, sometimes with cash handouts and sometimes with free meals. Even after the pandemic situation became normal, we continued to facilitate the citizens in need by reducing taxes in many services. 

How is your municipality different from others? 

All the 753 local governments are different from each other based on their needs, resources and capacity. Budhanilkantha Municipality was in need of community schools and hospitals and we built them. We also connected drinking water pipelines to every household. It was a project that cost Rs2 bn. 

What have you done to improve service delivery to the people? 

Every day, I meet with around 200 people from my municipality. I sit with them and listen to their problems. I also try to address their concerns as soon as possible. We have tried to make the people feel that their local government is there for them. We look after the concerns of every group and community. We have established welfare clubs for women, children, youths, students, senior citizens and others.

We also help pregnant women by looking after their health and diet and bearing all the expenses. We have also opened government Montessori schools for children. For the youths, we organize various counseling sessions to support their emotional and psychological wellbeing. We have also created employment opportunities for adults and provided health care services to the senior citizens. Altogether, Budhanilkantha Municipality provides 38 kinds of services to the people. I believe we have largely fulfilled the needs of the citizens. 

How is your coordination with neighboring municipalities? 

Being in the Kathmandu valley, there are many things we cannot do alone, like the problem of drinking water, drainage, dumping site, etc. We have to collaborate with the other municipalities and state agencies in most development projects. This has certainly slowed down the pace of our development. In some cases, poor coordination has also led the Nepal Electricity Authority and Nepal Water Supply Corporation to dig up the recently surfaced roads. This is an issue we plan to address in the coming days. As for the coordination with neighboring municipalities, we communicated and collaborated on a need basis for projects like river cleaning, river corridor management, urbanization, waste management, water supply, and security. 

What are your agendas for the upcoming local election? 

In the past five years, we worked focusing on good governance, infrastructure development, social development, economic prosperity, and environment and disaster management. Citizens have witnessed the improvement in these five areas, and they are happy and satisfied with my work. But still there are a lot of things we need to improve. We need a sustainable development plan. That will be my agenda in the upcoming elections. 

Introduction of Budhanilkantha Municipality 

Budhanilkantha Municipality, located in Kathmandu district of Bagmati Province, was formed after a merger of the six former village development committees: Chapali, Bhadrakali, Khadka Bhadrakali, Chunikhel, Mahankal, Vishnu Budhanilkantha, and Kapan on 2 Dec 2014. The municipality has 13 wards. Budhanilkantha is home to important religious sites like Budhanilkantha, Chandeshwar, Rudreshwar, Bhadrakali, Panchakanya, Kapan Bangalamukhi. The famous Kapan Gumba and several other monasteries are also located in Budhanilkantha. 

Besides, rivers like Bishnumati, Rudramati, Dhobikhola, Yagyamati and Chyanekhola also flow from this area. The municipality shares borders with Shivapuri Nagarjun National Park, Kathmandu Metropolitan City, Tokha Municipality, and Nuwakot district. 

Message from the mayor 

I thank all the residents and voters of Budhanilkantha Municipality for believing in me for this post. Five years ago, my office had neither the idea nor the basic infrastructure to start the work, as we were a new municipality. But despite all the hurdles, we performed very well. The progress has been witnessed by the local residents.

Still, the local government could not fulfill a lot of things that it had promised before the elections. This was largely due to the Covid-19 pandemic. Besides, we also had limitations on resources.

Lastly, I would like to request all to vote wisely in the upcoming local elections.