Rebuilding the Nepalese Economy in the Aftermath of Covid-19

Terms of Reference

Background

Now into a phase-wise relaxation mode of reopening the economy after almost three months of nation-wide lockdown, Nepalese economy has a steep hill to climb for a full recovery, and growth over the mid-term. With seven out of ten enterprises operating in the shadow economy, the lockdown has pushed a significant portion of the economically active population within the country into complete inactivity. At least five million migrant labourers are running a risk of losing work in their host countries. For the bottom 80% of income earners who spend more on consumption than what they earn formally, this is a serious risk in terms of livelihood as their livelihood is supported either from remittance or income from the shadow economy. The tourism industry, contributing to as much as 7% of the GDP, is bound to suffer one of the biggest impacts requiring at least 18 months to return to present day normalcy (assuming we’re nearing the end of the nation-wide lockdown). Wholesale and retail trade have been losing as much as 1.5 NRs. billion (Euros 12 million) worth of output for each day of lockdown. Nepalese SMEs, esp. start-ups have been expressing that they are undergoing a serious cashflow crunch. Many are already out of business and those who have not had to shut their entire business, layoffs are a necessary evil to stay afloat. All in all, as per the current estimates, the economy is looking at a meagre ~2% growth, compared to 8% that was expected for the fiscal year 2019/2020.

While all of that has been happening in the economic front, naturally, a significant portion of the citizenry is looking at the government to come up with an unprecedented size of stimulus package. Unfortunately, as a low-income country, Nepal simply does not have the resources to do so. Even limited stimulus packages are likely to fall into the hands of the non-vulnerable group as the government lacks a data on who are the informal economy actors or the real vulnerable group. The Minister of Finance has been vocal about the state’s inability to respond to all groups’ expectations given the low economic base, and has been resorting to the bilateral and multilateral talks to raise grants or concessional loans to rebuild the economy in the aftermath of the Covid-19 pandemic.

Considering this background, Samriddhi Foundation sees the need to make two specific kinds of advocacy interventions to make sure that while Nepal works to rebuild its economy, the state adheres to the principles of economy, good governance, accountability and most importantly, upholds liberal values such that it allows the Nepali people to employ their resilience one more time as they have already shown in past crises (like the 2015 earthquake).

Interventions

Samriddhi Foundation is conducting two distinct kinds of interventions which it will advocate simultaneously with two major stakeholder groups. Samriddhi will conduct two researches and then work with respective stakeholders to influence policy processes that enable Nepali people to pursue prosperity – a goal that has been enshrined in the Constitution of the country.

i. Conditional Support from international partners

Crises are also times to realise the reforms that are pushed to the backseat at normal times in the pretext of political bargains. If we look at the trend of economic growth of modern Nepal (post 1990), we see that the biggest growth has been achieved in the 1990s with growth rate hitting as high as >8% in mid 90s; Nepal’s economy has not hit similar level of growth ever since. And the seeds for that growth were sown in the mid to late 80s as the international partners offered massive supports but with conditionality clauses. These conditions forced Nepal to venture into the first wave of economic reforms i.e. liberalization of the 1990s. But since the decade-long civil war broke out in the mid-90s and the following transition period culminating into a new Constitution in 2015, Nepal never ventured into the wave of second-generation reforms. This is thus, the best time to shift gears to next generation of reforms, and the international partners are the best suited ones to induce the government of Nepal to venture into that exercise.

This is also necessary because not only did Nepal’s reform process completely stopped after mid 90s, but Nepal started slipping further back in other indicators of a sound economy like economic freedom, control of corruption, transparency (in part of government spending) and accountability (in part of the public institutions). Nepali people have time and again proven their resilience, but this time, we need to additionally make sure that the institutions we have put in place allow the people to employ their faculties towards enhancing their own livelihoods and moving from poverty to prosperity.

Strategy

Samriddhi will work with the reform champions of the era of 1990s and build a strong case for economic reforms working closely with stakeholders in the government as well as development partners.

ii. A pragmatic stimulus package

Regardless of the capacity of the state, the government is bound to promise some sort of fiscal stimulus package in response to the growing demand for one from all sectors of the economy as it will also give a leverage to the current majority government going into the next round of elections. However, a poorly executed fiscal stimulus could mean greater unintended costs in the long run than the intended relief in the short run. In fact, a stimulus need not be all fiscal; policy reforms that ease engaging in economic activities and earning a decent livelihood for oneself while working to create solutions to the existing problems in the society would be more sustainable and beneficial for the economy as a whole.

Samriddhi will thus look into prospects of two interventions in this front: a small emergency fiscal stimulus to offer a cushion to the poor and the vulnerable from the shock of the pandemic, and means to balance government expenditure and revenue as it engages in a short term stimulus activity; and a series of policy reforms that will create opportunities for all to engage in economic activities by themselves and earning a livelihood by themselves (for example deregulating certain economic sectors where global technological innovations have far outpaced the economic policies that Nepal adopted in the 1990s).

Strategy

This intervention will be a public intervention from the very beginning and Samriddhi will leverage its networks with the government, private sector, civil society and development community to conduct a series of public private dialogues to arrive at an action plan that could be owned by the government. Samriddhi will conduct the initial study, the findings of which will be taken to extensive consultation to garner inputs and plans of action from the wide array of stakeholders as aforementioned.   

Call for quotations

In order to deliver this project, Samriddhi invites quotations from interested consultants for the following tasks and responsibilities. Interested individuals or consulting agencies are requested to send in detailed quotations including estimated costs, and detailed resumes to:

either info@samriddhi.org via email, or,

via post to Samriddhi Foundation, PO Box No.: 8973, NPC 678, Kathmandu, Nepal, or,

hand deliver the quotation to Samriddhi premises at 664, Bhimsengola Marga, Minbhawan Kharibot, Kathmandu, Nepal.

Kindly mark the positions that is being applied for on the cover of the envelope. The quotations should reach Samriddhi by 24 july, 2020, no later than 5.00 PM Nepal Standard Time. Contract award will be communicated by 31 July, 2020 to all the applicants.

Position: Research Guide (X2)

The Research Guide for each research project will be responsible for:

  • Designing the study including scoping
  • Identifying relevant literatures and guiding the research assistants through the literature review and international case studies.
  • Conducting qualitative interviews and consultation meetings with relevant stakeholders to gather information on the stakeholder’s views and position on reform ideas being studied,
  • Highlighting international best practices, and
  • Drafting the research paper.
  • Providing overall direction to the study,

The Lead Research consultant should have the following qualifications:

  • Have a Master’s degree or higher in Social Science (preferably economics),
  • Have at least 5 years’ experience in policy process,
  • Have an understanding of the policy process in Nepal,

Preference will be given to candidates who have participated in policy reform process in the past

Duration: The Researcher Guide will work on this project for 10 man days. Please specify which of the two researches you are applying for. You can apply for both researches as well. However, Samriddhi Foundation will award contract for only one of the projects if deemed qualified upon review of the application.

Position: Research Assistants (2X2)

The Research Assistants will be responsible for:

  • Conducting literature review under the guidance of the research guide.
  • Mapping stakeholders related to the research topic.
  • Conducting qualitative interviews and assisting in consultation meetings with relevant stakeholders to gather information on the stakeholder’s views and position on reform ideas being studied,
  • Studying international best practices
  • Initial drafting of the research papers

The Research Assistant should have the following qualifications:

  • Have a Bachelor’s degree or higher in Social Science (preferably economics),
  • Have an understanding of policy process in Nepal,

Preference will be given to candidates who have participated in policy reform process in the past

Duration: Four Research Assistants will work on these two projects (two per research) for 14 man days each. Please specify which of the two researches you are applying for. You can apply for both researches as well. However, Samriddhi Foundation will award contract for only one of the projects if deemed qualified upon review of the application.