The Youth and the Internet Village

Nepal is uniquely situated between India in the south and China in the North. Being landlocked, the landscape is quite distinct with a beautiful mixture of plains, hills and the mountains. With a total area of 147,515 km2 and a population of 30 million, it is bigger than 100 other countries. Since centuries, the population primarily resides based upon 2 geographical locations.

(1.) The Hills and Mountains

(2.) The Plains (Terai)

Because of the East-West highway inside the plains, the proximity of the Indian border and better access to major markets, there has been a tendency of people migrating from the hills and mountains down towards the plains since a couple of decades.

The economy of Nepal runs mostly based on agriculture which employs 60% of the population but contributes just 25% of its GDP. With a total GDP of $36 billion and just a GDP per capita of $1300, it is still an underdeveloped country.

Because of the lack of jobs and industries inside the country, there has been an exodus of workers migrating to other countries in search of work. It is estimated that as much as 20% of the total population are working in foreign countries which has resulted in significant increment in remittance.

Nepal is slowly becoming a remittance based economy where remittance contributes almost 30% of its GDP. Such a high dependency on remittance could prove harmful in the sense that the money might be used for consumption rather than for productive investment.

With exports of just $1 billion and imports of over $11 billion, the trade deficit runs to over $10 billion in Nepal.

With such a sluggish and deficit economy, most youths dream of going overseas for better opportunities. How can we create the right environment for our youth to work and create their business startups within Nepal?

In advanced economies, the process has been accelerated by a combination of private investments including seed, angel, venture capital, and private equity funds, with full support from the government.?However, many of these elements are missing or are vague in the Nepali landscape and might take a very long time to be established. So what can be done right here and right now for our youths to start their own small businesses within Nepal?

We will present a specific business case in Nepal with regard to selling the Internet as a service in villages, suburban areas and towns.

Let’s assume that Mr. Bhim who is from a village in Nepal has just completed his undergraduate studies and is planning his next career move. He has the following options:

(1.) Study further in a local university (Fee: $8000)

(2.) Study further in a foreign university (Fee: $50,000)

(3.) Start a local job (Salary $300/month)

(4.) Go overseas for work (Salary $1000/month)

(5.) Start a local business (Investment: $15000)

Since we want Mr. Bhim to start a local Internet business which involves building a fiber network, he will need an initial capital of $15,000 which might be available to him either from his family, friends or by getting a loan from cooperatives and banks using property as collateral.

In order for Bhim to start an Internet Service business, he first needs to register a company in Nepal. Once his company is registered within 20 days, he will need the following to get his business running:

(1.) Find a suitable location where the Internet is limited or non-existent to its residents.

(2.) Find a suitable (ISP) like Konnect Nepal which will let him resell the internet.

(3.) Purchase the equipment and make a small network to deliver broadband to homes.

(4.) Create and deploy a small team (2-4 employees)

With the technical guidance and help from the Internet Service Provider (ISP), it will take Bhim 1 to 2 months to create his fiber network for broadband delivery. Konnect Nepal will leave no stones unturned and use all its resources to make the startup a success.

Once Bhim builds his network, he has to find at least 100 users to make it a break-even business. In reality, a profitable and viable business model will be created when he manages to connect 500 users within his network. Let us check the monthly revenue balance sheet from his 500 users.

As we can see from the above revenue sheet, Bhim will earn $2425 per month from 500 users connected to his network. If a local entrepreneur can earn $2425 monthly, it will have a positive impact not only for him but also for his family in Nepal. Mr. Bhim is also generating local employment for 4 more persons in addition to providing the internet service to his village.

This is just a small business example which Bhim can start but there are dozens of other business sectors such as delivery services, software development and trading just to mention a few in Nepal.

We just need to develop a culture of entrepreneurship with some risk taking which then needs to be made self sustainable and beneficial to society without going overseas for employment. That being said, migration will not stop overall but even if it can be reduced by 10%, its positive effect will be ten-fold to Nepal.