Thank you to the Nepal Economic Forum and the Institute of South Asian Studies (ISAS) for the opportunity to speak today. I was asked to speak about Nepal and the world, which you might argue, is a broad topic for a short speech. But as soon as I thought about today’s world, the global crisis we’ve all been grappling with lead us naturally into a conversation about global challenges and global solutions, marked by collaboration and partnership.
As per Mr. Gautam and just so eloquently set out, we’re all wrestling with the same sorts of questions:
How do we arrest the spread of COVID?
How do we reduce the effects of climate change on our people and planet?
How do we support our economies to grow and our people to prosper in an inclusive and green way?
Given the audience, I want to look at the Nepal-specific dimension to this last question. It seems timely, as we reach the closing stages of COP26, to consider what – next and how – from an economics perspective.
I’m not an economist (although at one point I was planning to be, but that’s another story); I’m a diplomat. And so, when I look at this question, I see it in terms of how we can help Nepal prosper in the interests of its people and ours.
It’s difficult not to be worried by the vulnerability of Nepal to climate change. This year has made that particularly visible and stark. But I’m also excited by the commitments Nepal has made. On Tuesday at COP26, the Minister of Forests and Environment announced an increase in Nepal’s net zero ambition. Rather than net zero by 2045, the Minister announced that Nepal would be carbon negative from 2045 and before that, its emissions will average net zero from next year on.
Not only that, but Nepal will halt deforestation, and increase forest cover to 45% by 2030, and ensure all vulnerable people are protected from climate change by 2030. These are ambitious targets and as Mr. Gautam said they can only be realized if USD 108 billion dollars of finance is invested in the period to 2050.
The scale of that is eye-watering and that sum cannot come from public finance, nor from development assistance alone.
But let’s be clear, the private sector is willing to step in. From organizations as varied as Development Finance Institutions, the World Bank, IFC, Dolma Fund, the Asian Development Bank, the Green Climate Fund, and other investors from across the region and beyond. I have heard the same message repeatedly:
The money can be found, but investors need confidence. Confidence in the rules, confidence in the timelines and confidence that Nepal is open for business.
So, I urge the Government and decision-makers: make this a predictable and welcoming investment environment. Lift the restrictions and speed up the approvals. Nepal’s green inclusive and resilient development will follow.
Donors have already committed USD 4.2 billion new money under the GRID agenda. That’s a great start, even if Nepal needs much more. Our assessment is that there is USD 46 billion worth of investment opportunities in Nepal – in energy, transport systems, water and waste management, and city infrastructure. These are areas ripe for private sector investment.
Some fear that foreign investment might be at the expense of existing Nepali businesses and jobs. That’s not what research and experience show.
Studies have shown that FDI can support economic growth, job creation, and technology transfer in developing countries. For example, in Bangladesh, South Korean investments helped build the capability to develop their garment industry which is now competitive globally. There are similar examples beginning to be seen in Nepal. Meera Biotech has received investment and technology transfer from the International Vaccine Institute, a South Korean bio-pharmaceutical company. And, with further investment from Business Oxygen, a Private Equity fund with investments from FCDO and IFC, Meera Biotech aspires to be part of the covid 19 vaccine supply chain.
Nepal is not short of potential. With foreign investment, products from Nepal can build strong brands and export across the world. The Tourism Industry could attract high-end tourists to enjoy its natural beauty and rich cultural heritage. The hydro-industry has huge untapped potential. With the right investment, including in transmission lines, Nepal could export its Monsoon-driven hydro surplus. There are many more opportunities like this, but you all know better than me, I’m sure, where they are.
So, if my first message is – improve the investment environment, my second is – create a strong pipeline of green growth investment opportunities. We can help. The British Government has supported the Investment Board Nepal for 10 years with just this in mind, and next year we want to support the Government of Nepal in hosting a Green Investment Summit to showcase Nepal’s green investment opportunities.
It’s worth pausing for just a moment on two of IBN’s successes, on which Nepal should build:
The Arun III Hydropower, Nepal’s Largest ever FDI deaI is due to complete in 2023. It has contributed greatly to clean energy transition. IBN has the potential to advance solar and hydropower projects, as well as electric transport and smart cities: nationally significant, transformative projects.
IBN has also leveraged USD 2 billion in investments, with a significantly higher figure in the project pipeline. Through biennial Investment Summits and its work to boost the pipeline of investments, IBN has retained its profile in spite of the challenges of COVID .
But to really make the most of IBN, it needs more autonomy. That includes the ability to hire its own staff. It could also play a critical role in helping businesses to navigate government systems and approvals, so I’m glad that the Board is developing its One Stop Service Centre capabilities.
And I don’t want to forget Special Economic Zones (SEZ) and industrial parks. If they are supplied with good infrastructures – like clean, green energy, and internet – and the right incentives are in place to attract the private sector to manage them, businesses will come and will generate products, services, and jobs. I hope the SEZ Authority will intensify its work to attract private operators of these sites, to help drive the reforms needed to make them work.
There are a host of other issues we could talk about on green growth; I’ve highlighted just two. But whatever the issues, I’m convinced that the answers lie in partnership.
At home in Nepal that has to be an inclusive partnership – one which includes women – in leadership, in start-ups, and in the decision making at all levels. Internationally, Nepal has a host of friends and I’m proud that the UK is the oldest of those. I encourage Nepal to take advantage of its friends and partners, putting more emphasis on the expertise it can invite in from different areas of the world. Economic diplomacy is not just about what the diplomats do overseas, but about the welcome that investors get here in Nepal. I know I speak for many when I say we stand ready to help.
So, here’s to partnership among friends, across sectors, and across the region.
Listen to the speech on our YouTube page –
Nicola Pollitt, currently serves as the British Ambassador to Nepal.