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Nepal's SME Credit Dilemma: Analyzing the Effectiveness of New Government Support Programs and Innovative Fintech Solutions to Access Vital Finance
Small and medium enterprises (SMEs) are the cornerstone of Nepal’s economy, playing an indispensable role in its development and the welfare of the people. However, despite their importance, SMEs in Nepal face serious obstacles in accessing finance, which is called the “credit dilemma.” This dilemma not only constrains the growth of individual enterprises, but also limits the overall economic potential of the country.
SMEs contribute significantly to Nepal's gross domestic product (GDP), accounting for 22%1, and provide employment for approximately 1.8 million people.1They form the basis of the industrial sector, which accounts for about 13.5% of GDP, while the contribution of the manufacturing industry, where SMEs also have a significant share, is 5.3% of GDP.2These enterprises play a key role in maintaining economic stability, fostering innovation, and building efficient value chains, especially in sectors such as trade, services, small-scale manufacturing, agro-processing, and tourism. Given their widespread presence and contribution, the challenges faced by SMEs, especially in access to finance, assume macroeconomic significance. The sustainable development of this sector is directly linked to Nepal’s overall economic health and growth prospects.
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By Alpha Business MediaSmall and medium enterprises (SMEs) are the cornerstone of Nepal’s economy, playing an indispensable role in its development and the welfare of the people. However, despite their importance, SMEs in Nepal face serious obstacles in accessing finance, which is called the “credit dilemma.” This dilemma not only constrains the growth of individual enterprises, but also limits the overall economic potential of the country.
SMEs contribute significantly to Nepal's gross domestic product (GDP), accounting for 22%1, and provide employment for approximately 1.8 million people.1They form the basis of the industrial sector, which accounts for about 13.5% of GDP, while the contribution of the manufacturing industry, where SMEs also have a significant share, is 5.3% of GDP.2These enterprises play a key role in maintaining economic stability, fostering innovation, and building efficient value chains, especially in sectors such as trade, services, small-scale manufacturing, agro-processing, and tourism. Given their widespread presence and contribution, the challenges faced by SMEs, especially in access to finance, assume macroeconomic significance. The sustainable development of this sector is directly linked to Nepal’s overall economic health and growth prospects.