The Landscape for Impact Investing in South Asia: Nepal

This paper develops an understanding of the impact investing market in Nepal. It covers key supply-side themes such as the current status and trends in terms of the types of active investors, capital deployment, and opportunities for and challenges to investing. The paper also evaluates the demand for impact capital, challenges to accessing capital and opportunities for enterprise growth, and the vibrancy and scale of the supportive ecosystem necessary for the industry. It finds that Nepal’s small population, low GDP per capita, and political instability are deterrents to investments in the country, resulting in it having a small impact investing market. Other key findings include:

• Investor interest are observed in some economic sub-sectors, particularly tourism and hospitality, and hydropower;
• Impact investing in Nepal is fairly limited, reflecting a small investment landscape;
• Estimated impact investment deployed in the country is USD 17.3 million;
• There are eight impact investors active in Nepal although half of these are in an indeterminate state;
• DFIs are the most active players in the market by capital deployed, but these too have entered the market recently;
• Transport and tourism and hospitality are two sectors that are currently receiving the largest portion of capital.