In Nepal, multiple sectors, economic growth slammed by pandemic and lockdown, study finds

UNDP initiates livelihoods recovery program for the most vulnerable

June 10, 2020


Kathmandu—The COVID-19 pandemic and resulting lockdown to contain it have hit Nepal’s tourism, entertainment, and transport sectors hard, slamming projected economic growth and pushing three in every five people working in small or micro enterprises out of jobs, a forthcoming study on the impact of the coronavirus, commissioned by UNDP, warns.

Tourism receipts in the landlocked Himalayan country are projected to plunge by 60 percent in 2020, or roughly US$400 million, with remittances expected to drop by 15 to 20 percent, according to the impact assessment, which surveyed 700 businesses, 400 individuals, and more than 30 public and private sector entities. Projected GDP growth of 8.5 percent before the pandemic has been revised downwards to below 2.5 percent in  2019-2020, with a constrained and modest rebound through 202.

The pandemic has hit both formal and informal small and medium-sized business hard, with 60 percent of workers in those enterprises reporting that they are now jobless, with average monthly incomes down 95 percent. Moreover, these businesses say they will survive for two months at most should lockdowns to contain COVID-19 continue, according to the study, which will inform government policies and programs aimed at recovery from the pandemic.

Working from home, attending online classes, and ordering groceries for home delivery are out of reach for the vast majority of Nepal’s 30 million people. Among government responses, those surveyed prioritized cash subsidies as most important, followed by interest rate subsidies, concessional loans, rental waivers, and utility subsidies.

The World Bank has also warned that “the pandemic will hit hard low-income people, especially informal workers in the hospitality, retail trade, and transport sectors who have limited or no access to healthcare or social safety nets” and that the COVID-19 shock will likely reinforce inequality in South Asia.”

Responding on the ground

UNDP in Nepal has now launched a livelihoods recovery program to help the country’s most vulnerable people cope. In the first phase, implemented jointly with local governments, more than 2,000 hard-hit daily wage-earners and migrant workers will receive short-term employment though small-scale community and tourism infrastructure projects in 11 badly affected municipalities. They will also have access to skills training and technology support, with the aim of launching up to 600 micro-enterprises to generate longer-term livelihoods. 

Short-term jobs for another 1,200 people will involve tree-planting, construction, and improvement of community infrastructure such as irrigation canals, water systems, and rural roads. UNDP is meanwhile designing a dedicated program to create an additional 5,000 short-term jobs for the unemployed tourism and hospitality sector workers. 

These activities, part of UNDP’s socio-economic recovery response, are funded with US$1.5 million of UNDP’s own resources. UNDP is also repurposing existing projects to support a broader COVID response, with local governments co-financing in some instances.

Complementing the work of specialized UN agencies, UNDP is also supporting provincial and local governments to strengthen their health systems, including by providing much-needed medical supplies, assessing and supporting quarantine facilities, and raising public awareness on COVID-19.