Mention Nepal and the imagination conjures up images of the majestic Himalayas, the ancient temples of Kathmandu, and serene monks. That image is certainly true, but it is no longer complete. Today, a dynamic new story is unfolding against the backdrop of eternal snows – the story of a technological revolution led by a younger generation of Nepalese. Armed not with ice axes but with laptops and smartphones, these innovators are not waiting for change, but actively creating it, solving their country’s most pressing problems with the help of technology.

This shift is not just a collection of disparate initiatives, but a powerful trend backed by numbers. While there were only about 300 registered startups in Nepal in 2015, by 2023 their number had exceeded 1,500. This explosive organic growth has not gone unnoticed. In 2024, the Nepalese government took a historic step by formally approving the Startup Support Policy, defining a “startup business” in law for the first time. This is not just a formality. The new policy opened up access to a government-backed soft loan program worth 1 billion Nepali rupees (about $7.5 million), providing young companies with collateral-free loans at minimal interest rates. This marked a shift from years of promises to real action.

However, this internal rise comes amid serious external and internal challenges. Nepal has fallen to 107th place in the global startup ecosystem rankings, reflecting intense competition and structural issues. The country continues to struggle with a massive "brain drain": as of 2022, about 1,700 young people leave Nepal every day in search of work abroad, depriving the economy of its most valuable resource - talent. Political instability and bureaucracy (ranked 94th in the ease of doing business index) create additional obstacles. The private equity market, although developing, is still in its infancy compared to neighbouring giants such as India.

Kathmandu is a city of contrasts. Ancient temples listed as a UNESCO World Heritage Site sit alongside chaotic urban sprawl, and the spiritual serenity of the Himalayan foothills is drowned out by the deafening noise of traffic. Nepal’s capital, once a secluded valley, is now choked by the effects of rapid and largely uncontrolled urbanization. For millions of its residents and visitors, the daily reality is hours-long traffic jams on narrow streets, mountains of garbage on the roadsides, and paradoxical rolling blackouts in a country with colossal hydroelectric potential. This urban chaos is not just an inconvenience, but a systemic crisis that undermines the economy, public health and the very quality of life.

Yet it is precisely in the depths of these problems that a unique opportunity lies. Unlike many of the world’s megacities, burdened with outdated 20th-century infrastructure, Kathmandu can take a technological “generational leap.” The city can bypass the phase of incremental, costly, and inefficient modernization and embrace integrated, intelligent 21st-century solutions. In this context, the concept of a “smart city” ceases to be a futuristic fantasy or a fashionable slogan for politicians. For Kathmandu, it becomes a pragmatic and vital plan of action – a roadmap for transforming chaos into order, and problems into opportunities.

This study examines three of Nepal’s most pressing challenges – transport, waste management and energy efficiency. It demonstrates how concrete, globally proven innovative solutions can be adapted to the realities of Kathmandu. We look at how the government’s official vision, enshrined in documents such as the Digital Nepal Framework, can become the basis for real change, and what steps need to be taken to make Smart Kathmandu not a dream, but a reality that improves the lives of every citizen.

In the imagination of many, Nepal is a country of majestic, snow-capped Himalayan peaks, ancient temples and serene monasteries, attracting tourists from all over the world. But behind this facade lies another reality. Nepal is one of the world’s least developed countries, where daily life for millions of people is a struggle for basic resources that are taken for granted in other parts of the world. It is an agricultural country where almost a third of the population lives below the poverty line and the GDP per capita is just over US$1,000.

This harsh reality is compounded by a host of systemic challenges. An economy heavily dependent on agriculture cannot provide jobs for everyone, leading to a massive exodus of young people, especially men, to work abroad. According to the 2021 census, nearly a quarter of Nepalese households (23.4%) have a family member permanently residing abroad. This demographic shift not only reduces birth rates to record lows, but also leaves villages without a working-age population.

Against this background, the state, despite numerous five-year development plans, often finds itself unable to solve the fundamental problems of its citizens. Political instability discourages large-scale foreign investment, while bureaucracy and lack of resources hinder the implementation of effective programs on the ground. The situation is complicated by deep-rooted social barriers such as the caste system and gender inequality, which limit women and lower castes' access to education, economic resources and political power.

Imagine a resident of a remote Nepalese village, lost among the majestic peaks of the Himalayas. For him, a simple illness such as pneumonia or complications during childbirth turns into a death sentence. The nearest hospital may be several days away, a grueling trek along dangerous mountain trails. In emergency situations, the only hope is expensive and risky helicopter evacuation, which is only available to a few. This is not a scenario from an adventure movie, but a harsh reality for millions of Nepalese.

Nepal’s health crisis is not just a collection of individual problems, but a complex systemic collapse that experts increasingly call a “syndemic” – a situation in which several epidemics and adverse social factors mutually reinforce each other, creating a vicious circle. Geographical isolation, compounded by the fact that 75% of the country's territory is mountainous, is just the tip of the iceberg. The country suffers from a catastrophic shortage of medical personnel: there is one doctor per 25,000 patients, while the WHO recommended rate is 1 per 1,000. Most of the qualified specialists are concentrated in the capital Kathmandu, leaving rural areas with virtually no medical care.

At the dizzying heights of the Himalayan grasslands, where the air is thin and life clings to every scrap of earth, a collector, bent over, spends hours scanning the earth. He is not looking for precious stones or metals, but for something far more valuable: “Himalayan gold.” It is not a mineral, but Yarsagumba (Ophiocordyceps sinensis), an amazing hybrid of a mushroom and a caterpillar, the cost of which on the world market may exceed the cost of gold. This phenomenon is the clearest symbol of Nepal’s hidden economic potential. The country’s unique biodiversity, from alpine meadows to the tropical forests of the Terai, is not just a natural heritage to be protected, but a vibrant economic resource that can become the basis for innovation and global business.

Nepal today stands at a crossroads. On the one hand, the country has a rich reserve of raw materials - endemic plants, unique agricultural crops and centuries-old traditional knowledge about their use. On the other hand, the path from a traditional recipe to a competitive product on a supermarket shelf in New York or Tokyo is long and thorny. It requires not only high-quality raw materials, but also modern technologies, branding, well-established supply chains and, most importantly, reliable protection of intellectual property.

This study tells the stories of Nepali entrepreneurs, local communities, and international companies who are trying to navigate this journey. Using four unique products—from a fabulously expensive mushroom to rice from the world’s highest rice paddy—we examine how Nepal is turning its biological treasures into sought-after commodities, and the systemic challenges it faces in creating a sustainable and innovative bioeconomy.

For 33-year-old Jyoti Baniya, a poultry farmer in Syangja district, her day begins not with a bank statement but with a simple tap on her smartphone. After undergoing digital literacy training, she moved all her farm’s financial transactions online. “I feel much more at ease because I no longer have to handle cash, it has taken a huge burden off my shoulders,” she says.1Her story is not just an isolated incident, but a vivid illustration of the quiet but powerful revolution that is unfolding across Nepal.

Despite its rugged mountainous terrain, deep-rooted socio-economic problems and status as one of the poorest countries in South Asia, Nepal is undergoing a profound technological transformation. Financial technology, or fintech, is not just a convenience for the urban elite here, but a critical tool for national development. The innovation promises to connect every citizen to the formal economy, from the farmer on the Terai plains to the entrepreneur in a remote mountain village.

In this article, we explore how Nepal is making the digital leap. We begin by examining the underlying problem—pervasive financial exclusion—and then dive into how digital payments and microcredit are changing the game. Through success stories, we see the real impact of these technologies on people’s lives, analyze the remaining obstacles along the way, and look into the future of finance in the Himalayan kingdom.

The global IT outsourcing market is a huge and growing arena. Its size is projected to increase from US$651.54 billion in 2024 to US$850.73 billion by 2029, showing a strong CAGR. At the epicentre of this frenetic activity is the Asia-Pacific region, which is both the largest and fastest growing market in the world. For Nepal, located at the heart of this region, a window of opportunity of historic proportions is opening up. With global IT spending continuing to rise after recent economic and political turmoil, demand for quality IT services remains robust.

However, geographic location alone does not guarantee success. Being in the most dynamic region of the world means not only proximity to opportunities, but also proximity to the fiercest competition. On the one hand, there is IT giant India, which has long and firmly occupied a dominant position in the global outsourcing market. On the other hand, there are ambitious and fast-growing players, such as Bangladesh, which are actively increasing their human resources potential and pushing out the recognized leaders. In these circumstances, the strategy of simply copying the Indian model, based on scale and low cost, is a losing proposition for Nepal. Trying to compete with India on the number of programmers or the cost per man-hour is to enter a race where the winner is already known.

The Nepalese IT industry is thus at a critical juncture. Further growth and globalization require not passively following regional trends but developing its own unique strategy. The path to success for Nepal is not a race to the bottom but an ascent up the value chain. It involves moving from competing on price to competing on value, from being a mere implementer to being a partner with deep and sought-after expertise in niche but fast-growing technology areas. This article is a study that proposes concrete steps for such a strategic maneuver.

Nepal, a country of majestic Himalayas and ancient culture, is on the cusp of a technological transformation. With all the ingredients for success in the global digital economy – a young, ambitious and English-speaking population, low skilled labor costs, and a strategic geographic location between two tech giants, India and China – the country has a unique opportunity to make an economic leap. The global trend towards digitalization and the growth of the IT outsourcing market opens an unprecedented window of opportunity for developing countries, allowing them to integrate into global value chains without the need for large-scale industrial investments.

But between the Nepalese government’s ambitious declarations and the harsh reality lies a chasm. This article explores why dreams of technological breakthroughs are systematically dashed by poor governance, political instability, and a lack of coherent strategy. At the center of our analysis is the story of the Kavrepalanchok IT Park. Built at great expense more than two decades ago, it remains empty, a silent monument to lost opportunities and dashed hopes.

Why did this multi-million dollar project, intended to be the flagship of Nepal’s IT industry, become a ghost town? The answer reveals deep systemic problems that are holding back the country’s entire tech industry. We analyze the tech park’s failure as a symptom of broader problems, assess the disconnect between progressive policies on paper and barriers in practice, explore the phenomenon of a hidden IT economy that thrives despite, rather than because of, government support, and finally offer a concrete roadmap for reform. Drawing on the successful experiences of neighboring countries, we show how Nepal can turn its enormous potential into reality by moving from empty buildings to a vibrant, policy-proof tech ecosystem.

At first glance, the success story of Nepal’s IT sector seems undeniable. In 2022, the country’s IT services exports reached an impressive $515 million, showing a staggering 64.2% growth compared to the previous year. The sector has become the country's main export product, accounting for 1.4% of GDP and 5.5% of foreign exchange reserves. Forecasts for the 2024/25 financial year predict a further increase in the contribution of ICT to GDP to 1.94%. This boom is supported by a vibrant ecosystem of over 100 IT services export companies and a huge community of freelancers who serve global giants in the US, Europe and Japan. Nepal is no longer just an emerging market; it has become a prominent and competitive player in the global IT outsourcing industry.

However, this optimism is tempered by the harsh reality hidden in human capital statistics. According to a World Bank report, a shocking 91% of Nepalese adults are unable to perform basic digital tasks such as copying and pasting text.6The country ranks a dismal 124th out of 134 countries in Wiley's Global Digital Skills Gap Index. While the IT sector is thriving, only 0.16% of the population has an ICT education and only 2% has a STEM (science, technology, engineering and mathematics) education. This creates a profound mismatch: the high-tech, export-oriented industry struggles to find skilled workers domestically. The situation is exacerbated by infrastructure problems: more than 30% of firms suffer from frequent internet outages, leading to significant losses.

This contradiction – rapid growth amid a severe shortage of basic skills – represents not just a gap, but a chasm. The current boom appears to be driven by a small, highly skilled elite. This growth model is inherently unsustainable. Without a broad pipeline of new talent, the sector will inevitably hit a ceiling, fail to scale, and become overly dependent on a few key workers. This is already leading to unhealthy wage inflation (100-200% increases when people switch jobs) and is undermining the sustainability of the entire industry. In the long term, this threatens to create a deep socio-economic divide, where a highly paid “tech elite” thrives while the majority of the population is left out of the country’s most promising sector of the economy. Thus, bridging the skills gap is not just a business challenge, but a matter of national economic security and sustainable development.

When you think of Nepal, your imagination conjures up images of the snow-capped peaks of the Himalayas, the ancient temples of Kathmandu and the trekking trails leading to Everest Base Camp. That image is certainly true, but it hides another, equally exciting peak that a new generation of Nepalis is now conquering: the peak of tech entrepreneurship. Off the beaten track, in the offices and co-working spaces of Kathmandu, a quiet revolution is unfolding. A country long associated with an agrarian economy and tourism is rapidly transforming into one of South Asia’s most dynamic startup hubs.

The numbers speak for themselves. If in 2015 there were only about 300 startups in Nepal, then by 2023 their number exceeded 1,500. Nepal is ranked 5th in South Asia by StartupBlink's startup ecosystem rankings, and its capital, Kathmandu, is among the top 1,000 cities in the world to start a business. Information technology has become the leader in terms of the number of investment deals, attracting the attention of both local and international investors. This rapid growth is a testament to the tremendous energy and entrepreneurial spirit that has gripped the country's youth.

However, behind the impressive quantitative growth lies a troubling paradox. Despite the increase in startups, Nepal has slipped several places in the global rankings over the past year, ranking 107th in the world. This fact points to a “maturity gap”: enthusiasm and the number of ideas outpace the development of the supporting infrastructure – accessible capital, progressive legislation and qualified personnel. The ecosystem is growing in breadth, but not yet in depth. Many projects fail to move from the idea stage to a sustainable business, and the path to the status of a “unicorn” – a technology company with a valuation of more than $1 billion – seems insurmountable.