Digitalization in Nepalese Perspective (Digital Economy Unit VI BIM Tribhuvan University)

 

Unit 6: Digitalization in Nepalese Perspective                                                                      7 LHs E-governance: concepts, process, and structure; E-governance practices in Nepal; Digital financial inclusion in Nepalese financial markets; Opportunities and challenges for digital transformation in the public sector; Digital transformation and the economic performance in trade, tourism, agriculture, and SMEs

Unit 6: Digitalization in Nepalese Perspective

      E-Governance: Concepts, Process, and Structure

Concept of E-Governance

E-Governance (Electronic Governance) refers to the application of information and communication technologies (ICTs) by government agencies for information sharing, service delivery, transaction processing, and integrating various systems and services between government-to-citizens (G2C), government-to-business (G2B), government-to-employees (G2E), and government-to-government (G2G). It transcends mere computerization of back-office operations; it aims to fundamentally transform the relationship between the state and its stakeholders through enhanced accessibility, transparency, accountability, and efficiency.

1. Ministry of Finance Website (mof.gov.np)

The Ministry of Finance (MoF) website serves as the central digital repository for Nepal's fiscal policies, economic data, and budgetary frameworks. It primarily operates in the Information Phase of e-governance, where the government provides one-way, static information to citizens, policymakers, researchers, and international donors.

Key Publications and Their Significance

A. Annual Budget

The ministry publishes the full budget speech and budget details for each fiscal year (e.g., FY 2082/83 BS / 2025/26 AD). The budget document outlines:

·         Revenue and Expenditure Estimates: For instance, the initial budget for FY 2025/26 was Rs 1,964.11 billion, later revised to Rs 1,688.32 billion .

·         Allocation Breakdown: Current expenditure (salaries, administration), capital expenditure (infrastructure projects), and fiscal management (debt servicing) .

·         Policy Priorities: Such as achieving 6% economic growth and limiting inflation to 5.5% .

This is important because: Citizens and businesses can track how tax money is planned to be spent. Journalists, economists, and civil society use this data to hold the government accountable.

B. Economic Survey

The Economic Survey is an annual report released before the budget. It analyzes Nepal's macroeconomic performance over the past year, including:

·         GDP growth rates

·         Inflation trends

·         Agricultural and industrial output

·         Trade deficits and remittance inflows

·         Fiscal discipline and public debt

This is important because: This document helps businesses make investment decisions, academics study economic trends, and international donors assess Nepal's financial health.

C. Fiscal Policies

The website publishes policy documents, strategies, and legal frameworks, including:

·         Red Book (Budget Details): Line-item breakdown of budget allocations to ministries.

·         Yellow Book (SOE Information): Details on State-Owned Enterprises.

·         White Book (Source Book): Sources of funding for development projects .

·         Domestic Revenue Mobilization Strategy: Plans to improve tax collection .

Organizational Structure Information

The website also explains the ministry's internal organization, listing its divisions:

·         Budget and Programme Division

·         Revenue Management Division

·         Economic Policy Analysis Division

·         International Economic Cooperation Coordination Division

·         Financial Sector Management & Corporation Coordination Division

·         Fiscal Federalism Coordination Division

·         Legal and Judgement Execution Division 

Each division's roles, functions, and contact information are provided, enabling citizens to direct inquiries to the correct department.

Limitations

Currently, the MoF website is primarily informational. Full transaction capabilities (e.g., online tax filing) are handled through the Inland Revenue Department's separate portal, not the main MoF site. This represents a classic example of the first stage of e-governance evolution – providing information before enabling interaction or transactions.

2. Nepal Law Commission Website (lawcommission.gov.np)

The Nepal Law Commission website functions as Nepal's official digital legal library. It provides free, public access to the complete body of Nepalese laws, acts, and regulations. This is a foundational e-governance service for the rule of law, legal transparency, and access to justice.

Key Features and Content

A. Comprehensive Act Repository

The website maintains an alphabetical index of all acts (ऐनहरुको वर्णानुक्रमणिका) in both Nepali and English. Examples are:

Act	Year
Nepal Citizenship Act, 2063	2006
Electronic Transactions Act, 2063	2008
Consumer Protection Act, 2075	2018
Money Laundering Prevention Act, 2063	2008
Human Trafficking and Transportation (Control) Act, 2064	2007
Domestic Violence (Offence and Punishment) Act, 2066	2009

B. Categorization by Subject Matter

The website organizes acts by thematic sections, such as:

·         Industry, Commerce, and Supply (खण्ड ८): Includes Iodized Salt Act, Industrial Enterprises Development Institute Act, Mines and Minerals Act, Black Marketing Act .

·         Criminal Law: Includes Human Trafficking Act, Money Laundering Act, Bonded Labour Prohibition Act.

·         Constitutional and Administrative Law: Includes Audit Act, Anti-Defection Act, Administrative Procedures Act.

·         Health and Education: Includes Drugs Act, Medical Council Act, University Acts.

C. Bilingual Access (English and Nepali)

The website offers content in both English and Nepali languages, making laws accessible to:

·         Nepali-speaking citizens (primary language of courts and legal proceedings)

·         English-speaking researchers, international lawyers, and development partners

Why This is Important for E-Governance

Stakeholder	Benefit
Citizens	Can understand their legal rights and obligations without hiring a lawyer for basic information.
Lawyers & Judges	Quick reference to statutes without carrying physical law books.
Students	Free access to legal texts for study and research.
Businesses	Can research compliance requirements (e.g., Companies Act, Foreign Investment Act) before investing.
Government Officials	Ensure decisions are legally grounded by referencing official acts.

Example of Use Cases

·         A citizen wanting to understand domestic violence laws can search for the Domestic Violence Act, 2066.

·         A business owner wanting to know black market penalties can read the Black Marketing and Some Other Social Offences and Punishment Act, 2032.

·         A foreign investor can review the Foreign Investment and Technology Transfer Act, 2075 (2019).

The Nepal Law Commission Act, 2063 (2007) established the Commission with the duty to compile, codify, and revise laws and make them accessible to the public . The website fulfills this mandate digitally.

3. Department of Immigration Website (nepalimmigration.gov.np)

The Department of Immigration (DoI) website provides essential information for foreigners seeking to enter, work, or reside in Nepal. It is a critical e-governance tool for tourism, foreign investment, and diplomatic relations.

A. Visa Requirements and Types

The website explains all visa categories, including:

·         Tourist Visa: Available on arrival or online; fees: $30 (15 days), $50 (30 days), $125 (90 days) .

·         Non-Tourist Visa: For longer stays, including employment, study, business, and volunteer work .

·         Diplomatic and Official Visas: For government and diplomatic personnel .

B. Visa Fees

The website clearly lists fee structures. For example, the official DoI page shows:

Non-Tourist Visa Type	Fee
Relation Visa (foreigners with Nepali relatives)	$10 per month
Marriage Visa	$15 per month
Press Visa	$15 per month
Single re-entry fee	Additional $20
Multiple re-entry fee	Additional $60

C. Processing Times and Procedures

The website outlines step-by-step application procedures. For a Working Visa, the process involves:

1.      Online application submission (mandatory for all non-tourist visas)

2.      Labor permit from the Department of Labour

3.      Recommendation letter from the relevant ministry (e.g., Ministry of Industry for factory workers, Ministry of Education for teachers)

4.      Document submission at the Department of Immigration in Kathmandu

5.      Visa issuance after verification (typically 30-45 days) 

Required documents are:

·         Valid passport (6+ months validity)

·         Employment contract

·         Educational certificates (authenticated)

·         Police clearance certificate

·         Medical examination report

·         Recent photographs 

D. Embassy and Consular Information

The website also assists Nepali embassies abroad in processing visas. For example, the Embassy of Nepal in Cairo states that all visa applications must be submitted online via the DoI portal before visiting the embassy .

Why This Matters for E-Governance

Function	Benefit
Pre-arrival Information	Tourists and workers can prepare documents before traveling, reducing confusion at the airport or border.
Transparency	Clear fee structures prevent bribery or overcharging by agents.
Efficiency	Online applications reduce paperwork and waiting times at immigration offices.
Security	Digital records enable background checks and tracking of foreign nationals in Nepal.

Limitations

While information and online application submission are digital, the final visa issuance often still requires physical presence at the Department of Immigration in Kathmandu or at a Nepali embassy abroad. Visa fees are sometimes collected in cash at the embassy after document verification. This places the service in the Interaction Phase (download forms, apply online) but not yet the full Transaction Phase (fully online payment and issuance without physical visit).

Summary based Comparison

Website	Primary Function	Key Publications/Services	E-Governance Stage
Ministry of Finance	Fiscal policy transparency	Annual Budget, Economic Survey, Red/Yellow/White Books, division structure	Information Phase
Nepal Law Commission	Legal transparency	Alphabetical index of all acts, bilingual laws, subject-wise categorization	Information Phase
Department of Immigration	Immigration procedures	Visa types/fees, online application, document checklists, embassy coordination	Interaction Phase

These three websites represent foundational e-governance services in Nepal. The Ministry of Finance website democratizes access to fiscal data, enabling budget transparency and public accountability. The Nepal Law Commission website democratizes access to legal information, strengthening the rule of law and access to justice. The Department of Immigration website streamlines international travel and labor mobility through clear procedures and online applications.

All three function primarily in the information and interaction phases of e-governance. The next step for Nepal is to integrate these into full transaction and transformation phases – where, for example, a foreign investor could simultaneously check immigration rules (DoI), review business laws (Law Commission), and calculate tax obligations (Ministry of Finance) through a single, interconnected digital platform.

Process of E-Governance

The process of e-governance typically follows a staged evolution model:

1.      Information Phase: Government websites provide static, one-way information (e.g., forms, policies, contact details).

2.      Interaction Phase: Citizens can download forms, email officials, and interact via comment boxes or forums.

3.      Transaction Phase: Full online services (e.g., paying utility bills, filing taxes, applying for passports) with digital payment integration.

4.      Transformation Phase: Complete re-engineering of government processes; data is shared across departments, eliminating redundant data entry and enabling proactive service delivery.

Stages of E-Governance Evolution

E-governance develops gradually through four major stages. Each stage represents a higher level of digital maturity, efficiency, and citizen engagement.

1. Information Phase (One-Way Communication)

This is the initial stage of e-governance where government institutions create an online presence through websites or portals. Information flows only from government to citizens, meaning it is one-way communication.

The goal is to inform citizens, not to interact or provide services.

Features

• Static web pages
• No user interaction
• Basic information availability
• Limited updates

Types of Information Provided

• Laws, policies, and regulations
• Office addresses and contact details
• Public notices and announcements
• Downloadable forms (PDF)

Examples

• A ministry website publishing policies and annual reports
• Citizens downloading a citizenship application form but submitting it physically
• Early websites of the Government of Nepal providing general information

Limitations

• No feedback mechanism
• Time-consuming for citizens (still requires physical visits)
• No efficiency improvement in service delivery

2. Interaction Phase (Two-Way Communication)

In this stage, e-governance becomes interactive, allowing two-way communication between citizens and government.

Citizens can now engage with government platforms, though services are still not fully online.

Features

• Email communication with officials
• Online inquiry forms
• Feedback systems
• Downloadable and partially fillable forms

Types of Interaction

• Asking questions via email
• Submitting complaints or suggestions
• Participating in discussions or forums

Examples

• A citizen emails a government office to inquire about a passport
• Online complaint registration system in municipalities
• Feedback options in portals like apps developed under Nepal’s digital initiatives

• Government portals allowing queries and feedback
• Local governments collecting citizen opinions online

Limitations

• Still requires physical presence for final processing
• Slower response times
• Limited integration between departments

3. Transaction Phase (Service Delivery Stage)

This is a major advancement stage, where complete services are delivered online. Citizens can perform actual transactions digitally, including payments.

This stage introduces efficiency, convenience, and time-saving.

Features

• Online applications and submissions
• Digital payment systems
• Secure authentication (login systems, OTP)
• Real-time processing

Services Available

• Paying utility bills
• Filing taxes
• Applying for passports or licenses
• Business registration

Examples

• Online tax filing through Inland Revenue Department Nepal
• Paying electricity bills using digital wallets like eSewa or Khalti
• Online company registration via Office of the Company Registrar

Advantages

• Saves time and cost
• Reduces corruption (less human contact)
• Improves efficiency and service delivery

Challenges

• Requires strong IT infrastructure
• Cybersecurity risks
• Digital literacy required

4. Transformation Phase (Fully Integrated Digital Governance)

This is the most advanced stage where government systems are fully digitalized and integrated across departments.

Instead of citizens repeatedly submitting the same information, data is shared automatically between agencies.

The focus shifts from service delivery to smart governance.

Key Characteristics

• Integrated databases across ministries
• Paperless governance
• Automated decision-making systems
• Proactive service delivery

What is “Re-engineering”?

Government processes are redesigned, not just digitized. This means:

• Eliminating unnecessary steps
• Automating workflows
• Improving efficiency

Examples

• A citizen’s birth registration automatically updates:
• Citizenship system
• Health records
• Education databases
• Renewal reminders for licenses sent automatically
• Integrated apps like Nepal’s citizen service platforms combining multiple services

• Countries like Estonia provide fully digital governance where:
• Voting, taxes, healthcare, and education are integrated

Nepal is partially in the transaction stage and gradually moving toward transformation, with initiatives like:

• Integrated digital platforms
• Data-sharing efforts across government bodies

Advantages

• Highly efficient governance
• Reduced duplication of work
• Better policy-making through data analytics
• Citizen-centric services

Challenges

• High implementation cost
• Data privacy concerns
• Need for strong cybersecurity systems
• Institutional coordination required

Stage	Communication Type	Key Feature	Example
Information	One-way	Static info	Government websites
Interaction	Two-way	Feedback, email	Online inquiries
Transaction	Full service	Online payments	Tax filing, bill payment
Transformation	Integrated	Smart governance	Data sharing across agencies

The evolution of e-governance from information to transformation reflects a shift:

• From simple online presence → to fully digital, citizen-centered governance

For Nepal, the priority is to:

• Expand digital infrastructure
• Improve digital literacy
• Strengthen cybersecurity
• Move toward integrated systems

Top of Form

Bottom of Form

Structure of E-Governance

The structural framework consists of:

• Back-end Infrastructure: Data centers, servers, network connectivity (NICNET in Nepal), cloud storage, and cybersecurity systems.
• Middleware: Application Programming Interfaces (APIs) that allow different government databases (e.g., citizenship, land records, vehicle registration) to communicate.
• Front-end Platforms: Web portals, mobile apps (e.g., Nagarik App), Common Service Centers (CSCs), and digital kiosks.
• Legal Framework: IT Act, Electronic Transaction Act (ETA), Data Protection Act, and Public Service Delivery laws.
• Human Capital: Trained IT personnel, digital literacy among civil servants, and change management units.

E-governance operates through four main interaction models:

1. G2C (Government to Citizen)
• Example: Online citizenship services, passport applications
2. G2B (Government to Business)
• Example: Online business registration, tax filing
3. G2G (Government to Government)
• Internal data sharing between ministries
4. G2E (Government to Employee)
• Employee management systems

      E-Governance Practices in Nepal

Nepal has made gradual but significant strides in e-governance, especially after the restoration of democracy in 1990 and the federal structure implemented in 2015. Key practices include:

Major Initiatives:

·         Nagarik App (Citizen App): A flagship mobile platform providing over 100+ digital services (e.g., income certificate, residence certificate, character certificate, marriage registration) without requiring physical visits to government offices.

·         e-DHR (Electronic District Health Record System): Digital health records management, improving maternal and child health tracking.

·         DoITC (Department of Information Technology & Communication): Provides gov.np domain hosting, email services, and technical support.

·         Nepal Government Integrated Data Center (NGIDC): Centralized data storage and security infrastructure.

·         Online Tax Filing (IRD system): The Inland Revenue Department allows VAT, income tax, and excise returns entirely online.

·         Land Record Digitization: The Ministry of Land Management has digitized Lalpurja (land ownership certificates) in several districts, reducing land disputes.

·         E-Passport: Introduction of machine-readable, biometric e-passports with online application and tracking.

Challenges in Practice:

·         Digital Divide: Urban (especially Kathmandu Valley) vs. rural and remote hill/mountain regions have stark disparities in internet access and electricity reliability.

·         Interoperability Issues: Many databases remain siloed; a citizen’s data in the election commission often does not sync with the revenue office.

·         Low Digital Literacy: Especially among older citizens, women in rural areas, and marginalized communities.

·         Resistance to Change: Bureaucratic inertia and fear of transparency among some public officials.

      Digital Financial Inclusion in Nepalese Financial Markets

Digital financial inclusion refers to the delivery of affordable, accessible, and secure financial services (payments, savings, credit, insurance) to underserved and unbanked populations using digital technologies like mobile phones, point-of-sale (POS) terminals, and biometric identifiers.

Current State in Nepal

·         Mobile Banking: All commercial banks offer mobile apps; Nepal has over 20 million mobile subscriptions and about 15 million internet users (as of 2025 estimates).

·         Fonepay: A domestic interbank payment network allowing QR-based payments, fund transfers, and bill payments across participating banks.

·         ConnectIPS: A centralized payment gateway for online banking, bill payments, and government fee collection.

·         Remittances: Nepal receives ~$9–10 billion annually in remittances; digital wallets (e.g., eSewa, Khalti, IME Pay) have significantly reduced cash handling and transfer costs.

·         Microfinance & Cooperatives: Many are adopting digital loan disbursement and collection via agent banking.

Key Achievements

·         Banking access extended to all 753 local governments (rural municipalities and wards) via branchless banking and mobile agents.

·         QR code payments widely accepted even in small vegetable shops and taxis in urban areas.

·         Social security allowance disbursed digitally via bank accounts, reducing leakage.

Remaining Gaps

·         Trust & Security: Cyber fraud, phishing scams, and unauthorized transactions deter usage.

·         Infrastructure: Unstable power and poor mobile signal in remote areas (e.g., Humla, Mugu).

·         Gender Gap: Women are 15–20% less likely to own a mobile bank account compared to men.

·         Regulatory challenges: NRB (Nepal Rastra Bank) must balance innovation with consumer protection.

      Opportunities and Challenges for Digital Transformation in the Public Sector

Opportunities

Opportunity	Overview
Efficiency & Cost Reduction	Automating repetitive tasks (e.g., tax filing, permit issuance) reduces paperwork, time, and administrative costs.
Transparency & Anti-corruption	Digital records leave audit trails; services like public procurement portals minimize discretionary decisions.
Improved Service Delivery	Citizens in remote areas can access services without traveling days to district headquarters.
Data-Driven Policy	Real-time data on health, education, and revenue enables evidence-based planning.
Inclusive Governance	Voice-based services and apps with Nepali language interfaces can include illiterate and disabled citizens.

Challenges

Challenge	Overview
Infrastructure Deficit	Fiber optic coverage is incomplete; many rural local governments lack reliable electricity and internet.
Cybersecurity Risks	Government websites often face hacking attempts; absence of a robust national cyber incident response team.
Legal & Regulatory Gaps	No comprehensive Data Protection Act (still in draft); unclear liability for digital service failures.
Human Resource Shortage	Shortage of IT officers in local governments; high turnover of trained staff to private sector.
Digital Divide	60%+ of rural households lack a computer; smartphone ownership is lower among women and the poor.
Legacy Systems	Many ministries still rely on paper-based workflows and incompatible software.

 

      Digital Transformation and Economic Performance in Trade, Tourism, Agriculture, and SMEs

a. Trade

·         Digital Customs (ASYCUDA World): Nepal has implemented automated customs clearance at major border points (Birgunj, Bhairahawa), reducing clearance time from days to hours.

·         Electronic Letter of Credit (e-LC): Banks issue LCs digitally, facilitating faster import/export.

·         Challenges: Lack of integrated trade portal; small traders still rely on manual processes; cross-border e-commerce with India and China is underdeveloped.

b. Tourism

·         Online Visa & Permits: Tourists can apply for visas online; trekking permits (e.g., for Everest, Annapurna) are available via apps and websites.

·         Digital Marketing: Hotels, trekking agencies, and local homestays use social media, OTAs (Booking.com, Airbnb), and payment gateways to attract and serve international tourists.

·         Post-COVID Recovery: QR-code-based entry, digital health declaration forms, and cashless payments at heritage sites improved safety and convenience.

·         Opportunity: Virtual reality (VR) tours, AI-based itinerary planners, and integrated tourism apps (e.g., Nepal Tourism Board app) can boost off-season and niche tourism.

c. Agriculture

·         Digital Advisory Services: SMS-based weather forecasts, market prices, and pest alerts (e.g., Rastriya Krishi Sahara).

·         e-Marketplaces: Platforms like Hamrobazar Krishi and Sajilo Krishi connect farmers directly to buyers, reducing middlemen exploitation.

·         Geo-tagging of Farms: Government programs geo-tag coffee, tea, and cardamom farms for traceability and subsidy tracking.

·         Challenges: Low digital literacy among older farmers; limited integration with cooperatives; absence of soil sensor networks.

d. Small and Medium Enterprises (SMEs)

·         Digital Payments: Even small retail shops, street vendors, and restaurants now accept Fonepay QR, eSewa, and Khalti.

·         Cloud-based Accounting: SMEs use free/affordable tools like Hamro Account, Mero Lagani for bookkeeping and tax compliance.

·         E-commerce Platforms: Sastodeal, Daraz, Gyapu allow SMEs to sell nationwide without physical branches.

·         Government Support: Digital micro-loans via Prabhu Bank and Nirdhan Utthan Bank; SME registration online via Company Registrar’s Office.

·         Challenges: Cybersecurity awareness is low; many SMEs lack formal digital strategy; high commission fees on e-commerce platforms reduce margins.

Digitalization’s Impact on Key Sectors

Sector	Positive Impact	Persistent Challenge
Trade	Faster customs clearance; e-LC	Low integration of small traders
Tourism	Online permits; digital marketing	Underdeveloped cross-border e-commerce
Agriculture	Price info via SMS; farmer-buyer platforms	Low tech adoption among older farmers
SMEs	QR payments; e-commerce access	Cybersecurity risks; high platform fees

 

Digitalization in Nepal is no longer a futuristic concept but a present reality, albeit unevenly distributed. While the government has made notable progress in e-governance through the Nagarik App, digital financial inclusion via Fonepay and eSewa, and sectoral transformation in trade, tourism, agriculture, and SMEs, significant structural barriers remain. Overcoming the digital divide, enacting robust data protection laws, investing in rural ICT infrastructure, and fostering digital literacy across all demographics will determine whether Nepal can harness digital transformation as a true engine for inclusive economic growth and good governance.