Formal registration of micro and small industries in Nepal has plummeted by 75% over the past five years, signaling a severe contraction in the country's formalized entrepreneurial base.
The sharp decline persists despite government policy initiatives aimed at boosting the sector, suggesting that regulatory incentives have failed to offset underlying structural barriers.
Entrepreneurs point to a triad of constraints stifling growth: limited access to finance, poor market connectivity, and ineffective government support mechanisms.
Industry experts note that the majority of micro-enterprises remain in the informal economy, where they struggle to scale due to a lack of institutional backing and legal protection.
This informalization trend undermines tax collection and limits the sector's contribution to GDP.
The data reinforces broader concerns about Nepal's economic resilience.