Economic Divide: A Hindrance in Nepal’s Digital Economic Growth

15 May, 2020

Economics and Trade

Today, the world’s largest taxi company - Uber - does not own taxis; biggest retailer – Alibaba - does not own inventories. The global economy is undergoing transformation. Conventional businesses and services models are changing. The transformation, so far, was going on at a normal pace. However, Covid19 led lockdown has pushed countries to shift to digitalisation even faster and realise its relevance in the present scenario.


People are forced to stay indoors. Due to this, the conventional mode of transaction of goods and services has halted. Everyone has gone digital, be it public or private entities. For Nepal, it could be the time for entering the digital space with full force. This could be the new model for governance to deliver service s to the citizens in need. It is therefore important to understand the significance and the upcoming challenges for Nepal’s digital economy.


Nepal’s digital growth would significantly contribute to the socio-economic growth as well. Nepal sees its Digital Nepal Program as a catalyst in achieving its vision of meeting the sustainable development goals (SDGs). However, this digital growth depends highly on the operational and delivery framework. The SDGs helps to promote a long term approach to address global challenges that are not typical just for some countries but are faced by most and require joint actions.


Covid19 crisis has similar intensity and therefore calls for a collective effort by each country in order to fulfil their SDG goals amid crisis. But there are certain challenges, that Nepal is facing today despite mobile penetration exceeding 100% and internet penetration reaching 63%. In fact, Nepal Telecommunication Authority reports, an addition of 2.25 million new internet users in 2017 alone, translating into approximately 250 new internet users every hour. The digital challenges have surfaced amid covid19 crisis again. However, digital economy requires a little more than just a mobile penetration.


Due to lockdown, a lot of government and private services have shifted online. In a recent webinar organized by Asian Institute of Diplomacy and International Affairs (AIDIA) on “Covid19 and Digital Economy”, Mr Biswas Baral (Editor of Annapurna Express), explains the implications of economic divide on the digital divide quoting the case of recent shift from traditional mode to the online mode of education in Nepal due to lockdown.  He mentions that, “students are locked down at homes, being taught online”. Apparently, “these online classes are taking place in private colleges only. In government colleges these facilities are not available. There is no logistics available. Due to which poor students are feeling vulnerable”, he adds. This economic divide can be seen in the terms of accessibility and the digital infrastructure of the country.


As per Nepal’s Living Standard’s survey, income inequality in Nepal is significant and growing. In 2010/11, Nepal has one of the highest Gini coefficients in the world, at 49.49%. Palma ratio, ratio of the income of top 10% and bottom 40% income share, shows similar story. In 2010/11, the ratio had rapidly risen from 2.28 in 1995/96 to 3.32 in 2010/11. This means that in Nepal, income of the richest 10% is more than three times higher than that of the poorest 40%.  The non-compliance of lockdown guidelines in Nepal’s rural sector, can be attributed to this divide.  


For most of the people in Nepal, next meal is a larger concern. The government is trying to make people aware about the crisis and its implications through all possible digital platforms and also physically. However, the message is not resonating in same manner across Nepal. The primary concern of a poor in Nepal is the next meal of the day and not Corona. Unless, people’s basic needs are met, talks on digitization would sound just fanciful. Present government needs to cater these needs first. The state needs to prioritize its priorities.


In a nutshell, one could say that digitization without proper infrastructure could easily enhance the economic divide in society. In order to boost digital economy, the states need to provide electronic channels to the people. Through which the economy gets boosted. However, not all states are well prepared for that neither do they have infrastructure for that. Computer skills, literacy of the population do also play a very major role. Digital economy was not only about accessibility but also inclusivity. If digital divide continues then it would create not so inclusive digital economy. In order to achieve strong digital economy we need to engage every sector of the population. The major idea being, leaving no one behind.


The views expressed above belong to the author.  




Webinar Discussion on Covid19 and Digital Economy, organized by Asian Institute of Diplomacy and International Affairs, 2020. Read More:

Report on Fighting Inquality in Nepal: The Road to Prosperity, 2019. Available at: