Government reforms and initiatives in response to an UNCTAD assessment of the Himalayan nation’s eTrade readiness have allowed businesses to capitalize on COVID-19-induced online opportunities.
Patan, an ancient city in the Kathmandu Valley, Nepal. © Aliaksei
Although COVID-19 restrictions have disrupted Nepal’s economy – tourist arrivals, for example, fell by 81% in 2020 – the pandemic has created new online opportunities. And emerging businesses like Sabji Land are seizing the moment.
The store, which sells fresh organic fruits and vegetables from more than 50 farms, has seen its online sales grow by 60% since the coronavirus outbreak.
“We tried to sell online before COVID-19, but it was difficult,” the store’s manager, Deepa Karki says, citing hurdles such as the widespread practice of bargaining prices and paying in cash.
But lockdowns and other measures that made in-person shopping difficult convinced more Nepalese consumers to buy food and other goods online.
“It has provided an ideal situation to prove to potential customers the quality and value of our services,” Ms. Karki says, adding that the business has picked up an average of 10 to 15 new customers each day since the pandemic started.
More established online businesses have also enjoyed strong growth since the pandemic struck.
Nepal’s largest online supermarket Thulo.com, for example, has seen sales surge by more than 200% from 2019 to 2020. Co-founder Surakchya Adhikari forecasts another three-digit increase this year.
Becoming eTrade ready
Sabji Land and other businesses in the Himalayan nation have capitalized on new e-commerce opportunities thanks to reforms the government made following an eTrade readiness assessment of Nepal done by UNCTAD and the Enhanced Integrated Framework in 2017.
“Government reforms and initiatives have addressed some of the key bottlenecks the assessment identified in the country’s e-commerce ecosystem,” says Shamika N. Sirimanne, UNCTAD’s director of technology and logistics.
A recent UNCTAD review confirmed the government’s commitment to making e-commerce an engine for development.
The country now has a national e-commerce strategy and an inter-agency coordination, facilitation and supervision committee to ensure the strategy is implemented in a coherent and inclusive manner.
Promoting online payments
One of the main roadblocks identified by the assessment had to do with online payments. In 2017, only 4% of online purchases were paid with a credit or bank card in Nepal.
Since then, the government has helped build citizens’ confidence in making digital payments by making it possible to pay utilities’ bills and other public services online.
And more stringent central bank regulations had allowed digital payment methods such as QR code and digital wallets to pick up speed in the south Asian nation even before the pandemic.
Digital payments now account for about 80% of Sabji Land’s sales, Ms. Karki says, up from just 5% in 2019.
Updating regulatory frameworks
“Digital payment solutions are essential for a thriving e-commerce ecosystem,” Ms. Sirimanne says.
“So is an up-to-date and robust legal and regulatory framework,” she adds, “which ensures e-commerce transactions are safe and builds trust among businesses and consumers.”
The 2017 assessment highlighted that an outdated legal and regulatory framework, especially regarding consumer protection and privacy, was hampering e-commerce uptake.
The trade and industry ministry has since drafted Nepal’s first e-commerce bill, which it plans to submit to parliament.
And thanks to the government’s expansion of broadband connectivity to more than 57% of community schools, community hospitals, and ward offices countrywide, more people in rural areas are connected to the internet and thus able to take advantage of online opportunities.
The share of people in Nepal using the internet jumped from 20% in 2017 to 34% in 2019, according to UNCTAD’s latest Business-to-Consumer E-commerce Index.
“Although Nepal has implemented almost half of the assessment’s recommendations, more impetus is needed to fast-track implementation as suggested by our review done in 2020,” Ms. Sirimanne says.
It may be easier and more popular for Nepali shoppers to make digital payments, but the delivery of goods bought online is still bogged down by the lack of a proper addressing system for houses.
Also, skills development services, access to finance for e-commerce and tech startups lag, especially for women-led small businesses.
“Biased social perceptions make people think that women cannot run a business, especially online,” Ms. Karki says. “Even within my own family I met resistance when I wanted to run Sabji Land as an online business”.
Ms. Adhikari agrees: “There are many women in e-commerce. Most women traders or producers sell offline.”
“The challenge is to successfully shift from offline to online,” says Thulo.com’s co-founder, who is also the only woman in the ICT committee of the Federation of Nepalese Chamber of Commerce and Industry, the largest private sector body in the country.
She is trying to start a women sub-committee to help give the issue of gender equality more importance within the committee.
Thulo.com joined hands with the Federation of Woman Entrepreneurs Associations of Nepal and Emerge Pvt. Ltd to implement a joint project on revitalizing women’s businesses amid the COVID-19 pandemic.
The initiative supported by the USAID Tayar Nepal project promoted sales of essential items produced by 18 women entrepreneurs, exceeding projections by more than 80%.
Connecting the dots, especially for women
Ms. Sirimanne says strengthening support networks for women entrepreneurs to build the IT and digital marketing skills needed to flourish in e-commerce is key to empowering women in Nepal.
Several UNCTAD eTrade for all partners and other UN agencies are working closely with women-led micro, small and medium-sized enterprises (MSMEs) in Nepal to support their online transition.
When Sabji Land first moved its business online, e-commerce platforms such as Nepalicart, supported by the UN Capital Development Fund, helped them market their products. About 80% of Sabji Land’s online sales are currently done through Nepalicart.
UN Women and its partner, SABAH Nepal, have given business development and startup support to 1,300 rural women entrepreneurs, providing access to the e-commerce mobile app “Mero Pasal: My Shop”.
The EIF and UN Economic and Social Commission for Asia and the Pacific have joined forces through a project building e-commerce capacity among women-led SMEs in South Asia, including Nepal.
“UNCTAD will work with a wide range of stakeholders to ensure bridging the digital gender divide is at the top of Nepal’s e-commerce development strategy,” Ms. Sirimanne says.