July 2006
EDITORIAL

The private sector's habit of expecting government help in all respects has to undergo a 180 degree change. In fact, despite all those fears about insurgency in the past and their remnants today, the opportunities are such that if a private sector enterprise, whether big or small, is really honest in its efforts, it can conquer the whole rural market (84 per cent of Nepal's 25 million people) without giving anyone the chance of slightest complaint. Rather such monopolisation will be praised by everybody.

Examples of such private sector initiatives are available just across the border in India where ITC has partnered with the rural people and set up a system whereby, on the one hand, entrepreneurship is growing in the rural areas by modernising agriculture and thereby creating new business activities, on the other hand ITC itself is benefiting immensely. The e-Choupal initiative of ITC has empowered the rural people by providing them the access to business information and services from the government and other private sector enterprises. Over 2.5 million farmers in five states have achieved up to 20 per cent higher output prices, enhanced yields and reduced transaction costs by eliminating cost-intensive intermediate steps in the production and distribution chain. By 2010, ITC eChoupal plans to reach 10 million farming households in 100,000 villages across India.

Recently, ITC has also started setting up big malls near villages to supply them with modern amenities that the farmers have started demanding with their increased purchasing power. If the same is done here, neither the government nor any insurgent would be able to pose hurdles to it as it is benefiting the villages and if anyone dares to pose hurdles the villagers themselves would be up against such forces.

It is only an example. The idea is to give rural areas something and get something in return. Unless the market in the rural areas is increased, the private sector cannot increase its sales. Orienting only towards exports is not enough. Perhaps it was one of the major reasons for fomenting dissatisfaction in the rural areas creating a breeding ground for insurgency despite the unprecedented growth in the country's GDP during the 1990s. This is exactly why those who argue for emphasis on distribution rather than on growth are getting popularity while forgetting that there will be nothing to distribute if there is no growth.

What the private sector company has to do is to help the rural businesses be formalised by helping in their registration and getting credit. They should educate their rural counterparts on concept of risks and return and how to minimise them. They have to provide the inputs and technology and look after the marketing of the products from their rural partners. A big private sector organisation can be the hub and the rural enterprises so developed can be the spokes.