Nepal's formalisation machinery is there: Now make it work
Summary
Nepal’s informal sector remains vast, with more than four-fifths of employed working-age people estimated to be outside the formal system. The article argues that the country already has the institutions for formalisation, but needs better coordination, stronger incentives, and simpler pathways for workers and small businesses to join.
Key Points
- Nepal’s informal sector remains extremely large, with the World Bank estimating 81.8 percent of employed working-age people were informal in 2023/24.
- The country already has major formalisation tools in place, including digital company registration, integrated customs systems, tax IDs, and social security incentives.
- Very few informal and self-employed workers have enrolled in the Social Security Fund, showing that existing systems are not yet attractive enough.
- The article calls for interoperability across state databases, a coordinating authority, and local-level outreach to make formalisation practical and beneficial.
