As elsewhere, the business community in post-peace agreement Nepal is being held up as the engine of growth and recovery from conflict and poverty. Much hinges on business' ability and willingness to deliver on these expectations, not only in terms of stimulating growth, but also for promoting social equity and cohesion. For policy and programming to be effective, policymakers need to be mindful of and reflect micro- and macro-level realities of the business environment,
including barriers to doing business, as well as how business impacts on the social, political and conflict environment.
This working paper presents key issues, findings and recommendations from a series of research efforts carried out in Kathmandu, as well as Parsa and Morang, two districts in the eastern and central Terai that sit on the east-west industrial corridor, in the course of 2008. The research aimed to better understand the challenges around linking economic recovery and the wider peace
process in Nepal, and sought to surface district- and Kathmandu-level perceptions of relevant stakeholders, especially among the business community.
The target audience for this briefing is Nepali government officials, civil society and private sector representatives, as well as the donor community active in Nepal. Recommendations for each group are included in section 3.
Business perceptions on conflict, peace and outlook on economic recovery: Survey highlights and recommendations
Key survey findings
Perceptions of conflict impacts and coping mechanisms:
- "Majority lost from conflict": loss of markets and customers are seen as the most significantimpact of conflict on business.
- Bandh are the most significant disruption to business today, yet a legitimate means for someto raise grievances.
- There is limited business recognition of "war" and "criminal" economies and their impacts.
- Business perceive the economically weakest as hardest hit by the conflict.
- Different coping mechanisms are utilised by business in response to adverse impacts.
Perceptions of past and current conflict dynamics:
- Lack of economic opportunity plus ineffective party politics are believed to have fuelled the Maoist insurgency.
- Exclusion is not perceived to be a conflict cause, contrary to much policy discourse.
- Economic activities are not seen by business as a significant source of tensions at the local level today.
Business outlook, opportunities and challenges:
- Business respondents do not feel the future is bright, despite growth.
- Remittances are seen as a key household survival strategy and employment generator, though a limited stimulus for wider economic activity.
- At the same time, some also see problems arising from out-migration.
- Unsurprisingly, the size and status of business determines access to funding.
- Law and order and lack of good governance are identified as key barriers to business, though not as investment needs.
- Electricity is the top investment requirement, though mainly for larger business.
- The majority of businesspeople expect central government to deliver on investment needs.
- Business respondents have limited expectations of donor agency investment.
- Opportunities to reach out to business as a partner for development are not yet fully exploited.
Impacts of business operations on the social and conflict context:
- On average, different types of group affiliations are seen to facilitate doing business.
- Business practices may therefore reinforce social divisions.
- Indeed, the composition of workers among corporate business interviewed reflects broader challenges of ethnic and caste-based inclusion.
- Young people are not viewed negatively by business overall, despite some obstacles and exceptions.
- Corporate respondents were more open to employing former members of state security forces than armed groups or political party youth wings.
- Few respondents report having disputes with their workers and other actors outside their companies.
- Sources for dispute resolution are varied and could be strengthened more systematically.
- There are potential opportunities to build on business charity to make it more strategic.
Key recommendations and conclusions
include opportunities for improving multi-stakeholder collaboration to tackle economic recovery and peacebuilding challenges, and policy-making and programming:
- Be mindful of the "political economy" of each locality;
- Understand and be sensitive to the ways in which business operations themselves may feed tensions and grievances at the community level;
- Design business environment reform and programming based on business and community needs and interests;
- Raise awareness among the business community of development and peacebuilding efforts andpolicy debates at the centre, and pull them in;
- Build on local ingenuity and initiative to identify opportunities for strengthening the role of business in promoting local peace economies; and
- Combine economic development interventions with security and political analysis and planning.
