There are currently 46 so-called Least Developed Countries (LDCs), a UN designation.

They have participated in one international conference in Doha, Qatarfocused on how best to support their development and future graduation from the LDC group.

Subhash Nepali (left) and colleagues mark the launch of the Least Developed Countries (2019) report for Nepal.
Subhash Nepali (left) and colleagues mark the launch of the Least Developed Countries (2019) report for Nepal.

“In the 1970s, when Nepal was first included in the UN’s Least Developed Countries (LDC) list, my parents worked as porters carrying food and other items 68 kilometers from the country’s only highway to their district of Arghakhanchi.

At the time, people lived on an average annual per capita income of $70 and more than 60 percent of the population lived in hunger and extreme poverty.

Until the 1990s, my parents couldn’t feed us a full meal a day; and I still vividly remember queuing at the Sarkari Khaddya Godam – the government food warehouse – to buy subsidized food.

Chasing development aspirations

Fifty years later, the situation in the country is very different. In 2021, Nepal qualified to graduate from the “Least Developed Country” category after meeting for the third time the threshold levels on two of three indicators: the Human Asset Index and the Economic Vulnerability Index, which assess the country’s health, education and economy’s exposure to natural shocks such as drought, natural disasters and instability in agricultural production.

Nepal’s achievements go far beyond meeting these official thresholds. By 2020, poverty was reduced to 17 percent, and by 2022, the level of hunger (assessed by the Global Hunger Index) was reduced from severe to moderate. Improvements to roads and infrastructure mean that the countryside is now better connected.

On issues of gender equality and health, Nepal has also made significant progress, achieving parity in school enrollment by 2019 and significantly reducing the five-year mortality rate to 28 deaths per 1,000.

A young girl studying hard in Nepal.

ADB/Samir Jung Thapa

A young girl studying hard in Nepal.

Economic, security and climate challenges

Achieving these milestones has not been easy, especially for a country that endured a decade-long armed conflict from 1996-2006 and experienced a challenging peace-building process in the aftermath. In 2015, Nepal was also hit by the tragic 7.8 magnitude earthquake that claimed over 9,000 lives and reduced GDP growth by over 1.5 percentage points from an estimated 4.6 percent that year.

Not long after I joined the UN in Nepal in 2010 as a development analyst, the fourth UN Conference on the Least Developed Countries was held in Istanbul, marking an important step in Nepal’s long journey towards graduation from the least developed countries.

Aiming to implement the “Istanbul Program of Action”, Nepal put forward its own 12th National Plan to prioritize the MUL degree. Three years later, under the 15th Plan, 2024 was given as the hard deadline for Nepal’s graduation, which was delayed to 2026 due to COVID 19 pandemic.

As an economist at the UN Resident Coordinator’s Office (RCO) in Nepal, an important part of my role is to support the government and other development partners’ preparations for this critical transition. What impact will it have on communities across the country? How can we work together to reduce potential risks? These are some of the questions that have guided my work in the RCO over the past three years.

In the short term, graduation is likely to keep Nepal’s economy stable. In the longer term, however, there are many challenges, including supply-side constraints on goods, insufficient structural transformation and the loss of flexibility to promote micro, small and medium-sized enterprises (MSMEs) for which we already support national authorities.

A farmer plants rice in Rupan, Nepal.

© CIAT/Neil Palmer

A farmer plants rice in Rupan, Nepal.

Harnessing the potential of Nepal’s “infant” businesses

Together with my colleagues from the Resident Coordinator’s Office, we have provided technical support to the Government of Nepal as they formulate the Smooth Transition Strategy (STS). This strategy focuses on accelerating economic transformation by bringing in foreign direct investment, expanding the revenue base, accessing development finance, especially climate finance, and catalyzing private investment.

Engaging with neighboring least developed countries and drawing on the expertise of the UN development system from national, regional and global levels has been an important part of the smooth transition process.

Preparing Nepal for this transition requires a wide range of UN support; which is the reason for the UN’s sustainable development Cooperation framework (2023-2027) has adopted the LDC degree and inclusive economic transformation as one of the central, cross-cutting pillars to guide the operations of the entire UN system in the country.

All of these efforts will help create jobs and improve the ability of local governments to deliver services and promote Nepal’s many micro, small and medium enterprises, which make up nearly 99 percent of businesses in the country. If connected to regional value chains, these MSMEs, or ‘infant industries’, many of which are women-led, have enormous potential to drive progress towards the SDGs and Nepal’s own development goals.

Beyond Doha

The UN Resident Coordinator in Nepal, Hanaa Singer, along with other government officials and development partners attended 5th UN Conference on the Least Developed Countries in Doha to present the country’s success in crossing the least developed graduation thresholds.

As we approach the finish line and prepare to transition from the status of one of the world’s least developed countries, we must take on the additional responsibility of ensuring irreversible and sustainable graduations, and work together to ensure that no parent ever struggles to give birth their family or send their children to school as my parents and many others from my generation once did.

This is a proud moment for Nepal and a proud moment for me personally. Our graduation sends a positive message to the world that Nepal is ready for the next chapter.”