Category: Articles / Research

Entrepreneurs take risks with novel ideas that have yet to be verified and validated in the marketplace. Though entrepreneurs’ products and services have a high risk of failure owing to their unique nature, there is a good potential that the products and services they make will be innovative enough to create a whole new market and opportunity. Entrepreneurship development has the potential to play a key role in reducing poverty, increasing overall productivity and economic growth, and improving quality of life by empowering people to make informed decisions about a wide range of activities. There is a considerable correlation between the growth of entrepreneurial skills and individual and household wages, as well as their social well-being. Entrepreneurship is the ability to start a new enterprise to make more profits by way of producing or marketing goods and services to meet the needs and requirements of customers. Since Nepal has adopted a system of the mixed economy both private and Government sectors have been performing entrepreneurship functions in the process of industrialization. Enterprise improves their chances of getting investment by being willing to be compliant with the laws of the land, but most of them are not. Entrepreneurs, who have a vision, can track records, look at a financial situation with clarity, and work with limited resources to maximize output and cost-effectiveness by removing unnecessary costs are the ones likely to succeed in getting investment. Ideas don’t have to and usually are never perfect initially. But entrepreneurs need to have the readiness to work on iterative feedback. It is important to find angels who can also serve as mentors, and one needs to be on the same page as them, especially when talking about investment and impact. Entrepreneurs need to be educated first. Nepal is still in the early stages of equity and private financing – and there is a lot of misinformation on what PE investors can and have the right to do.

The Covid-19 pandemic began in China in December 2019 and has had a profound impact on the Nepal economy and many aspects of life since then. Governments’ preventive actions to limit virus spread (Lockdown) resulted in a massive social and economic disruption of entrepreneurship at all levels, with small-size enterprises and startups being among the most vulnerable. The negative impact was seen in enterprises all over the country, and most newly created businesses and startups were forced to fire their staff, resulting in widespread unemployment, a lack of productivity, and an economic slowdown. Due to the impact on the supply chain of both goods and services, many entrepreneurs and startups faced a major drop in revenue. Some of the impacts and obstacles that entrepreneurs faced during Covid-19’s tragic period, as well as the steps they took to protect their businesses, are below.

The decline in productivity:

With facilities being shut down temporarily, or permanently, companies were compelled to terminate their employees or send them on unpaid leave, and even a slight decline in the number of employees has led to decreased productivity and serious issues in businesses. During this difficult time, staff also experienced mental stress due to work or family pressures, which had a cumulative impact on their productivity over these months, making it difficult for the entrepreneurs to compete in the world,

Loss of an Employment:
UN Development Program in Nepal and conducted by the Institute for Integrated Development Studies shows that the COVID-19 pandemic has found that three in five employees have lost their jobs in the micro and small businesses that were surveyed; they have seen a fall of 95 percent average monthly revenue.

Mostly impact on the travel and tourism industry:
Due to the international travel restrictions travel and tourism entrepreneurs were the most impacted business. The tourism receipts in Nepal are projected to fall by 60 percent in 2020 resulting in a loss of foreign currency earnings worth USD 400 million as per the UNDP Nepal.

Operations and management:
Since December 2019, approximately two-thirds of the startups had reduced their expenses. In some companies, an aggressive reduction in cost was noticed, and in more than 10 companies 60%. Cost reduction was observed, with some startups showing a reduction of up to 76% by March 2020. These figures indicated that all of these reductions were directly related to the Covid-19 crisis (The Himalayans times).

Skilling constraints:
But capacitating skilled people is not enough. Retaining skilled people is another challenge, and perhaps the hardest one. Most skilled people seem to migrate to developed nations and although part of the recent interest in entrepreneurship among youth can be explained due to relatively high youth unemployment levels, it is not the first choice for youth to work in. While youth entrepreneurship does foster employment, economy, and development, most youths are reluctant in becoming entrepreneurs.  Another pressing problem is collaboration. Collaboration between different actors in the ecosystem does not happen often, especially regarding skill training and sharing learnings. It also stems from a lack of information and data tracking the type and effectiveness of training programs provided and any subsequent analysis of its outcomes. Ecosystem players are not being innovative in terms of providing training, although that has started to change in the past two to three years. Some argue that there already are a lot of programs for SMEs, but not many for the type that is needed to create startups that will absorb thousands of people. Innovation in technical and interpersonal skills is really important for this purpose. However, we lack the policy capacity, the technical and cultural capability to share learning across training, and a focus on evidence-based policy.

 
The greatest challenge to creating and sustaining a viable entrepreneurship ecosystem is the collective mindset of the Nepali people. Nepali is resilient –both a good thing and a bad thing, and they possess a challenge-overcoming mindset as well for the most part. However, Nepalese are also characterized by a fast-cash earning, rent-seeking, risk-averse, and security-oriented mindset. This is reflected in the challenge many young entrepreneurs have in convincing their risk-averse parents to support -or at least not actively hinder – their entrepreneurial aspirations. There is also the issue of glorification. Entrepreneurship has become a fad where young people are simply interested in being called an entrepreneur because of the spotlight it brings to them. This is a consequence of entrepreneurs holding a lot of social influence, and the media’s tendency to capitalize on this. As a result, there is a mismatch between true entrepreneurs and those who just want the title of entrepreneur.
The impact has already started to surface in several sectors like tourism, trade and production linkages, supply, and health. Especially the entire service industries: tourism, aviation, and hospitality sector have been hit hard by the outbreak. With the launch of the visit Nepal 2020 campaign in January, the country was hoping to attract two million visitors, but due to the corona pandemic, the campaign got canceled which has shattered the hospitality and tourism-related business sector. With this, the tourist arrival rate has declined to below 10 percent, from 70 percent before the Covid-19 outbreak. The tourism sector, being one of the largest industries, has been contributing 8 percent to Nepal’s economy. Likewise, the cancellation of all spring mountaineering expeditions, including Everest ascents, has resulted in the job loss of around 13,000toursr, trekking, and mountain guides. The outbreak has affected people’s lives as well as the private and public sectors. Banks are suffering from a loss of their investments in hospitality and aviation due to the coronavirus tourist slump. Not only this, but the impact has been also visible in the manufacturing industries. As most raw materials including pharmaceutical chemicals come from China, the supply of these raw materials has decreased drastically (WTO, 2022). Based on a painstaking survey of 700 businesses and 400 individuals, and consultations with over 30 private sector organizations and government agencies, conducted doggedly during the lockdown, we find that the COVID-19 pandemic has disrupted supply chains, shut or threatened the survival of small and informal enterprises, and made people highly vulnerable to falling back into poverty through widespread loss of income and jobs (UNCTAD, 2001). Semi-affected industries include plastic and home appliance manufacturers/traders, educational institutions and child-care centers, beauty parlors, and hair salons, consultancy service providers, hospitals and clinics, the construction sector, pharmaceutical producers, under-construction hydropower, and renewable energy projects.
Finally, the nature of the health problem, new social distancing and health norms, the type of goods (essential or luxury) in the business, and the ability to transition to online and remote employment all contribute to the sector’s performance during the COVID-19 issue. The service, hospitality, and tourism industries were among the hardest hit. Despite the recession, e-commerce and technology sectors that were able to adapt to changes in consumer spending and habits and provide online services did well. Therefore, this is a brief explanation of the growth of entrepreneurship in Nepal and the impacts of the pandemic on such a sector. Thus, entrepreneurship stands as a catapult from which Nepal can launch its youth to the future. This will depend on how well young people are capacitated through skill training and eased to access investment, how deeply the government, the civil, and the private sector foster collaboration and knowledge sharing, and how effectively Nepalese as a people can change their cultural mindsets from one of risk-averseness to one of risk-willingness. It is the responsibility of all the stakeholders in the ecosystem – the educators, the investment community, the government, students, and entrepreneurs themselves, to ensure that the ecosystem as much as the individuals are glorified, safeguards that training is up-to-date with global standards and not subject to nepotistic and unjust practices, and to embolden future generations to come up with contextualized solutions to problems ailing our community, our economy, and our society.

Land can be considered the most important resource in Nepal. The piece of land possessed by ascending the parental land property division is the predominant practice of land tenure in all parts of the country. The supply of land is limited, and it is a scarce resource. The issue, therefore, should be proper utilization and sustainable management of the land. The land is the principal factor for development in the agriculture sector in our country. Land ownership in Nepal has always been unequal. Such unequal ownership meant few households owned large tracts of land, which they leased out among poorer households for cultivation, while the majority remained as tenants with little or no land of their own. Until the 1960s, the land was held under various forms of tenure, such as radar, birth, and guthi, or the customary kipot system. Nepal’s land-reform legislation converted communal land (kipot) that had historically been held by indigenous groups into state land (raikar) in the 1950s. Land-reform legislation subsequently converted raikar into private land, and a 1967 amendment to the Land Act reasserted the abolishment of all communal land. Land in Nepal is classified as (1) private land; (2) state land; or (3) Guthi land. An estimated 28 percent of land in Nepal is privately held in ownership or under leasehold.

The most important and progressive land reform was enacted in 1964 A.D. ( i.e. 2021 B.S.). It abolished intermediaries collecting taxes, imposed land ceilings, and contained provisions for redistribution of surplus land above the ceilings to needy farmers and institutions, rent control, and other measures to improve the security of tenants, farming practices, and compulsory savings and credit by farmers. The Land Act (1964, amended 6 times) and its regulations: (a) abolishes the system of intermediaries collecting taxes from tenants by transferring control over taxation to District Land Revenue Offices and Village Development Committees (VDCs); (b) transfers land managed by the state into private land (raikar); (c) imposes ceilings on agricultural land; (d) limits rent to a maximum of 50 percent of the gross annual production of the main crop; (e) requires tenant certification, i.e., registration; (f) institutes a compulsory savings program; and (g) establishes a Commission on Land Use Regulation to address consolidation and division of land and boost farm cooperatives. The Land Reform Act – 2021 aims to divert ‘inactive’ capital and labor from land to other economic sectors, bring about an equitable distribution of cultivable land, improve the standard of living of ‘actual tillers’ who depend on land for their livelihood, and maximize agriculture production(preamble). This Act abolishes the zamindari system of land ownership (section 3). Ceilings on ownership are specified in section 7 and vary according to geographical location. The maximum size of an agriculture holding is 6.6 hectares, while the largest homestead may cover 0.66 hectares (section 7). Land over these ceilings is to be acquired by the ‘prescribed authority’ (section 15) upon payment of compensation (section 19). The land so acquired may be sold or re-allotted (section 21).

The name Guthi/Trust is borrowed from a traditional culture where Guthi means a committee where certain groups of people come together during the time of celebration or adversity. At that time, social service was limited and youth had fewer opportunities to get involved in such activities. Mahesh Chandra Regmi wrote the standard works on land tenure in Nepal. He reckoned that 4% of all cultivated land was held under Guthi land tenure at the end of the Rana period. The key distinction between Guthi land tenure and Guthis as an institution needs to be brought to the forefront. The law needs re-drafting with that in mind and making it 100% clear that there is no intention to interfere with or try to control private Guthis. The Guthi system is a trust, whereby land is donated to this trust. The main objective of the Guthi is to do welfare for the people by undertaking a religious activity such as the installation of an idol of god or construction of a temple. There are two kinds of Guthis in practice. They are RajGuthi (state-run Guthi) and Fiji Guthi (private Guthi). RajGuthi includes chat Guthi (exempted Guthi).

Normally, the Guthi established by the kings and members of the royal family are called RajGuthi. Those Guthis established by the people, and the Guthi taken over by the government due to various reasons are known as RajGuthi. Chhut Guthi is a variety of RajGuthi. The Guthi office such as Guthi Sansthan was established in Nepal for the smooth functioning of the government-sponsored Guthis or RajGuthis. The important aspect of the Guthi system is the land endowment for sustaining Guthis.  With the establishment of Guthi Sansthan in 1964, RajGuthis and other Guthis registered in Guthis Sansthan were managed well. This contributed to the continuation of Guthi management. The Guthi System should be regarded as an important intangible cultural heritage. It is very important when talking about Guthis to be clear whether one is talking about the Guthi form of land tenure or the Guthi institution. Guthi was developed as a kind of cooperative, a community organization. This system was very effective in carrying out social, religious, and cultural activities in the past as it set guidelines for service to humanity and society, which cannot be seen from the economic point of view like land and building. The biggest problem it faces is that of encroachment. Lots of Guthi land has been encroached on and already turned into private land. Thus, there is a historical connection but where traditions and ritual functions are supported by Guthis or where the law needs to be designed to provide fairness to agricultural tenants’ efficiency between Guthi and its management. People donated land for various purposes, such as religious piety or to fulfill the obligation one’s social status affords. Moreover, this was done to avoid the state confiscating the land in times of political unrest. To protect Guthi/Trusts land should automatically come under government ownership. In the present context, Guthi lands have been occupied by various persons for their benefit. Hence, they should be controlled and monitored.

The primary objective of this reform was to redistribute land to landless and smallholders. Land rights can be acquired by inheritance, purchase, government land allocation, or tenancy. Foreigners cannot own or rent land in Nepal. Foreigners may acquire land in the name of a business entity registered in Nepal; however, they may not acquire land as personal property. The Constitution of Nepal allows the state to acquire land if such acquisition is in the public interest. Public interest is, however, undefined which raises concerns about the inappropriate transfer of land out of the hands of some to the benefit of others. The government must compensate landholders for any land-taking, including any acquisition during land-reform initiatives set by the law (Art 25 of the Constitution of Nepal – 2072). Strengthening land and property rights is central to ending extreme poverty, reducing hunger, and promoting resilient societies. Clear, secure land rights create incentives that enhance food security, economic growth, and sustainable development. Land use is the founding source of livelihood. Moreover, Land ownership norms require cooperative ownership, recognition of customary ownership or civil conflict over continuing failure of the state to redress injustices in land distribution in countries like Nepal. A land ownership system in which the state or nation owns the land and citizens own only rights to use that land is also common in post-revolutionary economies. In most agrarian countries, where land is so important to the local livelihood, it remains uncommon to see foreigners permitted to own land, although they may lease land.

In conclusion, The need for constitutional recognition and protection of the right to own landed property collectively in different forms has become greater in recent years. This is to enhance access to land for those households and communities, who relied on land use for their livelihood. The use rights may however be quite extensive and amount to relatively full possession and rights to dispose of the land for profit. Hence, the Realization of economic, social, and cultural rights through enhancing equitable access to land is a must to address one of the root causes of the decade-long armed conflict and political and social justice movements in Nepal. The implementation of this Act is continuously ignored while the government authorizes the private sector to be involved in transforming agricultural land into haphazardly made town planning. land reform was gradually becoming a forgotten agenda given the lack of genuine political will towards turning the goal of ‘equitable access to land’ for peasants into a reality.

The service-profit chain establishes relationships between profitability, customer loyalty, employee satisfaction along with productivity. Profit and growth are stimulated primarily by customer loyalty. Loyalty is a direct result of customer satisfaction. Satisfaction is largely influenced by the value of services provided to customers. Value is created by satisfied, loyal, and productive employees. Employee satisfaction arises from high-quality support services and policies that enable employees to deliver results to customers. Successful service managers pay attention to the factors that drive profitability and growth, investment in people, technology that supports front-line workers, and effective recruiting and training practices at every level. Value is created by satisfied, loyal, and productive employees. Building a profitable company is one of the most important goals for any business. The above-mentioned factors play a much bigger role in determining profitability, where the service profit chain comes in. The service profit chain contributes to determining key actions that can lead to long-term profitability. The balance and harmony between key employees and key customers are strong determining factors that regulate customer satisfaction, retention, new acquisitions, and revenue optimization. The service-profit chain model tries to link all the components required to make an organization successful that performs well in one aspect and poorly in another will eventually develop problems that affect the entire organization. The factor highlights the importance of the links between quality management, a good workforce, and exceptional service to the customer. If the vehicle hire company wants to introduce a service-profit chain process linking their profits with the employee and customer satisfaction then the vehicle hire company must emphasize the essence of the following factor of the service-profit chain process.

a. Employee Satisfaction: The first step to great loyalty is employee satisfaction. Basic satisfaction is closely connected to job context and content right is driven by the dream team cycle. Measurement of the internal quality of a business can be done through the analysis of sentiment that employees have towards their job and working environment. Hence, it is important to have state-of-the-art job-related training, and skill development workshops toward the reduction of time and effort for employee satisfaction. In the end, it improves overall internal quality. Vehicle hire companies can do some training for dealing with customers. The company also can give some referral bonuses and bonus incentives for employee satisfaction.

b. Value drives business ethics. Service experience to provide basic satisfaction one must give value to the consumer. Most remarkable thing is that customer satisfaction can only be measured by regularly interacting with the customers and capturing honest feedback from them. Reports from field sales teams, complaint letters, telephone service logs, the customer cares are very common and important listening ports for improving customer satisfaction. Positive feedback is often converted into recommendation and help in organic marketing.  Many customers associate value with an emotional aspect of the purchase based on experiences. For example, if the vehicle hire company can create a well-priced product that has exceptional guarantees, can create hotline numbers, customer cares, nice hospitality, or some discount vouchers then it creates a good impression on customers. The customer might not consider the product instead values, emotions, ethics, and experiences can play vital roles.

c. Customer Satisfaction is closely linked with expectations.  Customers often relate to a certain frontline employee as a representative or ‘face’ of the company. Such customer relationships combined with measures of delivery determine the total employee productivity of the organization. Employee productivity leads to an increase in the value provided to the customer which Increases the value required for businesses to move management closer to the customer and provide frontline service employees the freedom to tweak a standard service/process to suit the customer’s needs. Thus, vehicle hire companies can make catalogs related to the vehicle for a short overview of products or services. The employee must be convinced of the service guarantee and give value to customers from various dimensions including greetings, hospitality, respectful words, and so on.

d. Customer Loyalty is the number one factor driving profits and growth in the service business. A fan club or followers that adore services is a very valuable asset. The network is essential in this competitive era. Vehicle hire companies can gain customer loyalty and retention through the impact of customer satisfaction. To gain customer loyalty, the customer has to perceive value for money spent. The service-profit chain model recognizes that a customer becomes loyal through this perceived value. Since customer expectations constantly change, the organization must recognize and support these changes.

e. Employee Productivity drives Value. The workforce of a company can help to drive the company’s profits. When an organization has engaged, productive, and highly satisfied employees, the organization will have a higher chance of succeeding. A vehicle hire company can have business employees with good working knowledge of the product, the employees have a better ability to service and satisfy customers. Product knowledge comes from both experience and seniority with a company. New employees typically cannot relate to customers as effectively as employees with years of experience working for the company. Hence, vehicle hire companies can seek experienced employers in the same field. The service-profit chain model recognizes that employee retention directly impacts customer satisfaction.

f. Employee Loyalty is an essential component for retaining great service people in their positions over time and has a direct effect to deliver value. Replacing an established employee who has a strong service relationship with a potential end consumer is an effortless task. Therefore, the real cost of turnover includes the cost of recruitment and training as well as the loss of productivity and customer satisfaction. Employee recognition may often involve little more than informing individual employees or employees as a group about service improvements and individual successes. Vehicle hire companies must give priority to carrying out programs for employee loyalty. Come meet and greet sessions, parties, employees’ working environment, and incentives can be factors for employee loyalty. 

g. Profit and Growth are the signs of a successful business firm that has a purpose aroused primarily by customer loyalty. Loyalty is a direct result of high customer satisfaction. Satisfaction is largely influenced by the value of services provided to customers. Value is created by satisfied, loyal and productive employees. Lastly, employee satisfaction is a result of high-quality support services and policies that empower employees to serve customers well known as internal quality. Vehicle hire companies must influence and need to look at an internal quality that arises from the satisfaction of employees and customers along with effective management. Hence from all points of view, good service must be a vehicle hire company to introduce a service-profit chain process linking their profits with employee and customer satisfaction.