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As Nepal faces the challenges and opportunities of a rapidly changing global economy, artificial intelligence (AI) is emerging as a transformative force. Once confined to global tech hubs, AI is now influencing industries across Nepal, reshaping employment trends and redefining how work is perceived. While its potential is vast, integrating AI into Nepal’s workforce requires a thoughtful approach to ensure its benefits reach everyone.

AI enables businesses to improve efficiency, reduce operational costs and innovate in previously unimaginable ways. AI is finding its way into Nepal’s key sectors, from agriculture to education and tourism. For instance, AI-driven tools are helping farmers predict weather patterns, monitor crop health using drones, and streamline supply chains. These innovations boost productivity and create demand for tech-savvy professionals capable of bridging traditional practices with digital solutions.

The IT sector is also experiencing a surge in opportunities. Nepali companies are developing AI-based services for global clients, such as data analysis, machine learning models and natural language processing. These advancements are generating a demand for skilled workers in data science, AI engineering and software development, signalling a shift in the type of expertise required in the job market.

AI’s influence extends to education, where adaptive learning platforms powered by AI are personalising student experiences. Educators are using AI tools to monitor student progress and refine teaching strategies. These developments equip today’s students with the skills they need for tomorrow’s AI-driven economy, preparing them for careers that may not yet exist.

Despite these opportunities, the rise of AI also presents significant challenges, particularly for workers whose roles involve repetitive, manual tasks. Automation in sectors like manufacturing and retail could lead to job losses, creating a pressing need for reskilling initiatives to help displaced workers transition to new roles.

A significant hurdle is the skills gap that exists in Nepal’s workforce. Many graduates lack the technical expertise and adaptability needed for AI-driven roles, highlighting a disconnect between the education system and industry needs. Furthermore, geographic disparities compound the issue. Urban areas like Kathmandu may benefit more from AI-driven opportunities, while rural populations risk being left behind due to limited access to infrastructure, training and resources.

To address these challenges, a collective effort is essential. Educational institutions such as The British College have integrated AI, coding and data analytics into their curricula. Lifelong learning should become a norm, with industries investing in upskilling their workforce and governments funding reskilling programs to future-proof jobs at risk of automation.

The government has a critical role to play in fostering an AI-ready ecosystem. Policies encouraging AI innovation—such as tax incentives for tech startups and funding for AI research—will accelerate adoption. Equally important is ensuring equitable access to technology in rural areas through improved infrastructure and digital literacy campaigns.

While AI may replace some roles, many others will be created. Careers in AI development, data analysis and machine learning are increasingly in demand, offering Nepal the opportunity to position itself as a regional talent hub. With advancements in remote work, Nepali professionals can now collaborate with global companies without leaving the country, expanding employment opportunities like never before.

AI will also drive the growth of entirely new sectors. Businesses built around AI applications for local contexts—such as intelligent logistics for Nepal’s unique geography or personalised travel experiences in tourism—will likely flourish. Lower barriers to entry for tech startups will fuel entrepreneurship, enabling more individuals to launch innovative ventures.

Nepal stands at a critical juncture. Its ability to adapt to the opportunities and challenges posed by AI will determine the future of its workforce. Industries that embrace innovation and invest in their workforce will thrive, while those that resist change may struggle to remain competitive.

The integration of AI into Nepal’s economy holds the promise of increased productivity, job creation and economic growth. However, achieving this requires a concerted effort to ensure that the benefits of AI are equitably distributed and that workers are equipped for the future. By prioritising education, fostering collaboration between stakeholders and addressing geographic and resource inequalities, Nepal can transform the challenges of AI integration into opportunities for all its citizens.

AI is not merely a tool but a force reshaping how we live and work. If Nepal can rise to the challenge, it has the potential to become a leader in AI-driven innovation, positioning itself at the forefront of South Asia’s technological landscape.

Nepal saw both supply and demand side effects during the Covid-19 pandemic. Following that event, the Russian-Ukrainian war, which caused several political upheavals worldwide, in addition to domestic political instability in Nepal, prevented the economy from recovering. Nevertheless, tourism, IT and hydropower sectors have exhibited some positive trends that are likely to stimulate economic recovery. 

An economic model where revenue generation is based on customs duties and remittances has been found to be unsustainable yet contributing to the Nepali economy substantially. Therefore, new economic measures have become imperative. There is a growing debate of a new economic model in Nepal known as Structural Reforms 2.0. The previous reforms—Structural Reforms 1.0—liberalized the national economy, opening space for private sector development. Sectors like banking, aviation, and services performed relatively well and generated jobs. However, with a rising labor force (around 500,000 entrants per year), the private sector developed during 1.0 is no longer sufficient to meet a growing job demand, highlighting the urgent need for Structural Reforms 2.0.

Macroeconomics

Realizing the projections made, most of the growth in real GDP growth is anticipated to come from the services sector, which is expected to grow from two percent in 2023 to 3.9 percent in 2024. Within this sector, tourists’ arrivals have risen by an astonishing 30.7 percent aiding sectors such as accommodation, culinary services and transport, signifying the return of normal economic activities. Paddy production also increased by 4.3 percent, while hydropower production advanced significantly with an addition of more than 450 MW. 

The highest-ever foreign exchange reserves of $13.64bn were a result of record breaking remittance inflows of $5.52bn in FY 2023-2024. Private consumption, which makes up over 80 percent of GDP, surged by 1.1 percent from 0.7 percent the year before due to this spike in remittances. Supported by concessional external borrowing and stable domestic debt levels, public debt slightly declined to 42.7 percent of GDP. 

Consumer price inflation, on a year-on-year basis, dropped to 3.57 percent by mid-July 2024, down from 7.44 percent the previous year. The World Bank projects inflation will decrease to 6 percent in 2025, down from 6.8 percent in 2024, while the Asian Development Bank (ADB) forecasts a rise in inflation to six percent in 2025, up from 5.5 percent in 2024. The inflationary trend is driven by rising vegetable prices, India’s export bans on essential commodities like wheat and rice, global energy price hikes impacting transportation costs, and increasing housing and utility expenses.

Way forward

As we have already identified, three key sectors in Nepal (in line with Structural Reforms 2.0) are currently contributing significantly to the economy: hydropower, tourism and IT. We need solid strategies to drive these sectors forward. To enhance the private sector’s contribution to electricity generation and the export of energy to India and Bangladesh, we must first address land acquisition issues promptly. One of the recurring challenges is securing land for hydropower development. The anticipated amount of land often turns out to be much higher when we engage with local communities, largely influenced by local political leaders and other influential figures. Delays in acquiring land damage Nepal’s reputation in the global investment community, making potential investors reluctant to engage. 

Additionally, when exporting electricity to India—especially in real-time trading—we must be fully prepared to manage potential obstacles. For example, recent Sept 2024 flash floods damaged several hydropower sites, which hindered our ability to export electricity. Consequently, Indian buyers demanded compensation under existing agreements. This situation highlighted the need for regular safety audits of hydropower sites to mitigate climate-induced risks. 

In tourism, one of the most frequent complaints is our limited connectivity to the world. The national flag carrier; Nepal Airlines, is underperforming, and we remain blacklisted by the European Union due to weak safety audits, outdated pilot training and regulatory shortcomings. The European Civil Aviation Authority has even recommended that the Civil Aviation Authority of Nepal (CAAN) be split into two separate entities—one for regulatory functions and another for operations. Having both responsibilities under a single entity creates conflicts of interest, compromising the growth and safety of our aviation industry. Therefore, we must prioritize enhancing direct connectivity to European cities and separating the CAAN’s functions for improved oversight and development. 

In the IT sector, the government needs to adopt a more flexible approach to attracting American and European IT companies. Instead of acting as a stringent regulator, the government should serve as a facilitator. A recent case where the government sued Cotiviti for allegedly evading capital gains tax has created a negative impression on potential investors. As an alternative, the government could allow companies to reinvest the amount owed in capital gains tax into job creation, which would benefit the economy through VAT and income taxes. Rather than demanding large sums upfront, this circular model of reinvestment could help generate wealth while maintaining government revenue through other channels. 

At the same time, Nepal Rastra Bank should consider opening avenues for Bitcoin mining, a growing business model in the global market. Bitcoin mining requires significant energy, and placing Bitcoin mining stations near hydropower plants could create economic opportunities for the hydropower sector, utilizing energy right at their doorstep. Allowing PayPal to function in Nepal would also be a positive step toward advancing the IT sector in the country. 

We are harnessing energy through hydropower, a renewable resource that contributes to a net-zero world. In the light of this, applying for grants from the Green Climate Fund to implement tech-related projects focused on net-zero, green, or gig economies should be considered. Additionally, the development of equipment for carbon trading measurement by our IT professionals could economically benefit the country while positioning us as a forward thinking nation in the fight against climate change. 

Additionally, the government-led initiative for startup funding should be implemented effectively. The distribution of funds should be based on meritocracy, with concrete business plans that demonstrate good returns, sustainability and long-term viability. Funds should not be allocated based on political alignment or favoritism toward certain individuals or party cadres. In Nepal, there is a growing complaint about the politicization of business, where those who favor political parties receive benefits. This practice must be stopped. 

The plans mentioned above are just starting points and suggestions. The primary focus of Nepal’s economic policy should be job creation, and these three sectors—hydropower, tourism, and IT—are performing relatively well. Therefore, flexibility should be extended to individuals and companies investing in Nepal, rather than portraying them as ‘foreign agents’ who have come to Nepal with an intention to undermine the country’s territorial integrity. 

Furthermore, the legacy of a socialism-oriented economy, even reflected in our constitution’s preamble, needs to be reconsidered. Socialism can only be sustainable when there is a broad private sector base capable of supporting those in need. Hostility toward the private sector or specific business communities is not the solution. It’s time to think critically.

The contemporary, globalized world is witnessing a great shift of power from males to females, and people have realized how aggressive, risk-seeking behaviour, which enables men to entrench power, has proven ‘destructive and unsustainable'. With this shift, various countries are moving slowly or gradually toward alternative conceptions of sustainable peace by adopting gender-inclusive, gender-balanced approaches in their activities and policies. Nepal is one of the countries in South-Asia that has recognized social and gender inequalities and is progressive, adopting inclusive laws for gender equality and promotion. According to Sapana Pradhan Malla, the Supreme Court judge of Nepal, ‘the  2015 Constitution of Nepal is one of the most progressive in South Asia in terms of gender equality and women’s rights. Furthermore, Nepal leads South Asia in women’s political participation.  

Additionally, Nepal is a signatory to the significant foundational human and women's rights treaties and conventions, namely the Universal Declaration of Human Rights (1948), the International Covenant on Civil and Political Rights in 1991, the Convention against Torture and other Cruel, Inhuman or Degrading Treatment or Punishment in 1991. The country ratified the Convention on the Elimination of All forms of Discrimination against Women (CEDAW) in 1992. Also, Nepal is the first country in South Asia to adopt a National Action Plan to implement UN Security Council 1325 and a prominent contributor of women peacekeepers in UN missions. In this regard, Nepal can be considered well-placed and holds the potential for gender-inclusive foreign policies due to conducive domestic and international factors.

However, Nepal also depicts a bleak picture and shows a considerable gender gap in its foreign policy. The policy abides by the 2015 Constitution of Nepal, and the constitution upholds the GESI framework. However, foreign policy documents and guiding principles do not adequately reflect the same commitments. Updated four years ago, the foreign policy of Nepal considers gender, gender equality and social inclusion as cross-cutting issues for effective aid implementation rather than a priority in foreign policy formulation. It tries to address gender issues through mainstreaming without opening up to intersecting identities that are more vulnerable, marginalized  and in dire need of opportunities. Though the nation has passed through various political struggles, including the democratic struggles,  the Maoist insurgency and the Madhes movement, it is oblivious to multiple intersecting identities and contains homogeneous language about gender categories.

Examining key foreign policy documents, such as the Foreign Aid Policy 2002 and International Development Cooperation Policy 2019 showcases this gender gap. In these policies, individual donors can execute those projects that align with sectoral priorities of Nepal, which include poverty reduction, fostering economic growth and supporting critical social infrastructure needs. In these projects, social needs are not explicitly defined, nor are languages of intersectionality considered. If we try to locate gender in International Development Cooperation Policy 2019,  it comes up only twice, except for aid utilization and project design and implementation, where the policy has considered gender as one of the cross-cutting issues to improve aid effectiveness. The policy has not prioritized gender explicitly as one of the key principles/aspects. It showcases policies that deal with international affairs and external aid lack robust consideration of intersectionality, leading to the homogenization of diverse experiences and marginalization of specific individuals.

Why? There are two primary reasons, among many. First, insecurities shape Nepal's foreign policies. Usually tangled in balancing two neighbors and having survival mode policies as evident in the external policies adopted by Nepal, which include a policy of independence, a policy of isolation, non–alignment, Indo-centric unique relations, and currently, a neutral and balanced approach vis-a-vis neighbours. Nepal's foreign policy debates often revolve around its neighbors, limiting the scope and knowledge of the overall policy framework. Second, Nepal’s aspiration is for economic development rather than social development, and it aims to elevate itself to a middle-income country by 2030. Thus, the understanding of foreign policy has been limited, narrow and state-centric. It has been understood to protect national sovereignty and security against external threats and promote economic interest through its foreign policy. Therefore, considering an intersectional gender-sensitive approach looks challenging within the state-centric foreign policy.

However, Nepal’s foreign policy is critical to its development goals. For realization of the vision of ‘Prosperous Nepal and Happy Nepali’ and Sustainable Development Goals (SDGs), and the elevation to the club of middle-income countries by 2030, development aid should be channelized through citizen-centric aid policies that include the gender dimension. Non-inclusion of gender issues in the nation’s foreign policy can have serious consequences, perpetuating gender-based inequalities and hindering progress toward sustainable development. So, there is a need for Nepal to advance gender perspectives through its foreign policy and prioritize the development of marginalized communities by recognizing the existence of diverse categories of people and ensure that these groups, including women and girls, people with disabilities and senior citizens, get to enjoy their rights. For this, it is important to amend relevant policy documents and make intersectionality integral to its foreign policy.

Overall, it is critical for Nepal to prioritize social development that can contribute to sustainable development and economic prosperity. It is of utmost importance for Nepal to focus on gender aspects not only in gender mainstreaming but also to make gender a top priority area of its foreign policy and partnerships.

Every year, the academic results of SEE/SLC, graduate and postgraduate studies bring a momentous problem for the state as a significant percentage of students fail the exams.

While around 50 percent of students fail SEE exams every year, university exams also do not yield satisfactory results, indicating that there are holes in our education system that need fixing.

Stakeholders are well aware of some of the reasons behind poor results at school and university levels—political interference, poor management, infrastructure, pedagogy, etc—and they can give hours-long lectures on these reasons.

Apart from visible issues, there are other issues also behind poor results. One of the most important factors behind a poor result at the individual level is the “lack of interest” on the part of the student in studies. 

On the contrary, if the student devotes time in studies, chances of him/her getting good results are quite high.

Our education system and society give high priority to education and for them, getting an academic degree is very important regardless of the individual’s interest (or lack thereof) in the endeavor. 

This mindset of the society and the state, which undermines the lack of individuals’ interest in studies, is mainly to blame for poor results year after year after year. 

This mindset ignores the fact that the individual interested in his/her chosen field, whether it’s education or some other sector, will surely put in extra efforts to get the best result. 

It’s a given that someone who wants to be an ace sportsperson will give it all to his/her chosen sport instead of burning the midnight oil for an academic degree. 

For example. football is life’s true calling for Ronaldo. Imagine what will happen if he is not allowed to play football. 

But this does not mean that getting an education is not important. Even those individuals who have no interest in studies would do well to get an education, a state-prescribed education at least, given the importance of education in this day and age. After completing basic education (my opinion is that it should be made mandatory), the individuals can follow their passion and make their dreams come true. 

The main premise of this writeup is based on my observation of students’ behavior in the Kathmandu Valley. Early in the morning, I see myriad students donning uniforms heading to their respective educational institutions. On the surface, it seems they all are marching with the same purpose but their body language reveals otherwise. 

It is not difficult to observe that each student has their own sets of dreams, desires and aspirations; even those with basic knowledge of psychology can read this much.

Some of these students look fresh and energetic, indicating that they want to study and do something significant in academia. 

Some others, through gestures and facial expressions, give the impression that they have no desire to study, that their hearts lie in other fields like music and sports.

They are physically present in the classroom, not mentally. They are taking classes because their parents want them to study at all costs, even at the expense of their chosen fields.

This is a sheer waste of time and resources, and this lack of interest in studies is one of the major reasons behind poor academic results.

As part of this study, I even asked some students “How do you feel while going to school?”

Their responses matched with my reading of their body language.

Parents, teachers and the government are focusing only on imparting education by taking it as the only means to get success in life, ignoring the dreams, aspirations and aptitude of the individuals concerned. On their part, these students are trying to make their parents happy by obeying them physically, though their hearts lie elsewhere.

Given this context, parents, teachers and state authorities should encourage students to pursue their dreams instead of forcing their will onto them. This way, our society will, in all likelihood, get Ronaldo, Mahabir Pun and many other wonders.