Nepal Infrastructure Summit (NIS) 2022, will be hosted by the Confederation of Nepalese Industries (CNI) on 8-9 September and is expected to gather over 1000 participants including the Government of Nepal, private sectors, foreign dignitaries, think tanks and investors. NIS 2022 aims to: i) build on the legacy of the past three editions of the Summit to continue identifying key constraints to infrastructural development in the current context ii) catalyze reforms promised by the government for infrastructure development; iii) forge stronger networks and alliances in the region for seamless connectivity and shared growth; iv) attract large scale private investment in Nepal’s core needs and strengths; v) prioritise the delivery of green, climate-resilient infrastructure projects that help achieve the Sustainable Development Goals (SDGs).
The first edition of Nepal Infrastructure Summit, titled ‘Accelerating Investment in Infrastructure’ was held in 2014. The second Summit in 2017 was themed “Private Sector as an Indispensable Partner”. Whereas, the third Nepal Infrastructure Summit in 2019 was themed “Resilient Infrastructure for Sustainable Development”. The fourth Infrastructure Summit is themed “Infrastructure for Growth”.
Why “Infrastructure for Growth”? Since the last NIS in 2019, Nepal’s economic growth contracted by 2.37 percent in 2019/20 owing to Covid-19. Economic activities came to a standstill globally and the world experienced unprecedented supply chain disruptions, both of which impacted growth adversely. Nepal has set an ambitious economic growth target of 8 percent for FY 2022/23 while the growth rate for current fiscal is estimated to be around 5.84 percent. There is a compelling argument for infrastructural investment as a stimulus post-Covid-19.Further, an uncertain world economic environment, escalating climate vulnerability, increasing economic cost of climate change, and the need for all countries to reduce their carbon emissions compels Nepal to use this window of opportunity not just to internalize environmental externalities but also to pro-actively pursue long-run multipliers. Thus, NIS 2022 seeks to reinforce the idea that in the path to economic recovery, the best bet is investments in infrastructure with focus on green infrastructure and financing. Dialogue on urban development, concept of “livable cities” with focus on green infrastructure is also included.
Public funding of capital projects has increased in recent years, but gaps remain, of between US$77B and $136B until 2030, according to a recent CNI-IIDS study, in just four priority sectors of energy, transport, urban development and water and sanitation. The pandemic forced countries to redistribute the budget earmarked for infrastructure to other urgent priorities. Post pandemic global events are causing global supply chain disruptions, energy/fuel crises, trade wars, economic sanctions, protectionism, fragmentation leading to soaring commodity prices. The IMF expects global prices to rise by 8.7 percent in developing economies. Inflation (CPI) in Nepal in June, 2022 was at 8.56 percent, the highest in the last five years.
Record current account deficit combined with brewing Inflation and currency devaluation make it particularly difficult for Nepal as the nation relies heavily on imports. The record balance of payment deficit has made a significant dent on the external position. Major infrastructure initiatives therefore must necessarily consider the prospects of generating a trade surplus given an extremely challenging situation that the country is facing on its external front. To add to this, Nepal is currently undergoing a major liquidity crunch pushing the money market rate very high. The increased interest rate on government treasuries has further posed challenges in mobilizing resources for infrastructure investment. NIS 2022 seeks to fill this gap through a dialogue on innovative financial instruments and modalities by taking both local and international investors into confidence. A stronger network and connectivity in the region in the form of new air routes, better roads, transmission lines, electricity grid as well as policies regarding trade will not only address some of these challenges but also protect from external shocks, provide a foundation towards greater regional integration and lead the country towards sustainable long-term growth.
Broadening the scope of infrastructure:The Summit has a special focus on ICT. Nepal, although well endowed with natural beauty, has difficult terrain and topography for connectivity. Being landlocked, both internal and external movement of goods and people is costly and inefficient. ICT is one area where goods (services) are independent of distance and weight. Further, the pandemic has increased the dependence on digital infrastructure for connectivity. NIS 2022 believes that investment in digital infrastructure and technology integration will help Nepal ride the digital wave, develop a competitive edge and be part of the global value.
NIS 2022 will revive the zeal for policy reforms: Innovative financing modalities, foreign direct investments, further engagement of the private sector, technology adoption and digital transformation require a solid foundation of policies, strategies, and governance – married with a zeal for sweeping legal and economic reforms spearheaded by the central government in coordination with its subnational counterparts. To this end, NIS 2022 is designed to ensure participation of provincial representatives, which will bring a bottom-up approach to growth and enable reforms for inclusive growth.