While the impacts of the pandemic have been severe, there is also an opportunity for Nepal to pursue digitisation in all spheres of service delivery.

COVID-19 had already touched 41.5 million people and has taken more than 1.1 million lives worldwide as of October 2020. Nepal’s case was no different, with 153,000 reported cases and 829 deaths. The largest economies in the world have been hit hard with negative GDP growth and so has Nepal. Many industries and sectors have been impacted and are struggling to get back to the new normal to live with COVID-19.                                                                           

Until the pandemic hit, Nepal had been a true believer in manual processes. Perhaps it is because Nepali are so relaxed that most things tend to be done at its own pace, whether it is government processes, business activities, billing & record keeping, or deliveries. But COVID-19 pushed almost every business and service provider to automate their processes, including their record keeping, sales, customer acquisition, supply chain management, marketing, delivery management, and payments. All of a sudden, insurance companies realised that their decades-old agent-based network was not working. The capital market awakened overnight to realise that less than 2 percent of its investors had access to its online platform even two years after its online trading platform was launched. Remittance companies dependent on cash-based agent delivery mechanism moved towards direct-to-bank account deposits. And banks and financial institutions, who had been extremely aggressive on opening up new branches, reduced the number of footfalls by increasing their digital services.

The government too expedited the automation of its public data/information, approvals process, and revenue collection and payout processes, which it had been attempting to do for many years.

Sectors that had already adopted technology within their core product and service delivery were better able to survive the pandemic. Many others have adapted, using digital technology in electronic record keeping, governance, education, social interactions, trade, services, banking and finance and other.

A shift in education

Education has hit the most by COVID-19 with schools closing down amidst fears of the coronavirus. By April 2020, a total of 1.6 billion students in 192 countries, representing 90 percent of all students, were not going to school, according to the UNDP Human Development Report. But some schools and colleges have been able to go online to continue with the learning and education.

A major challenge for teachers and students has been to migrate from a physical classroom to online teaching and learning using technologies like Zoom, Google Classroom, Teams, etc. However, this has also created a major digital divide, particularly in Nepal, with those who do not have access to such tools. Schools and colleges were unprepared to transition to online teaching, and limited access to the internet deprived students from their basic right to education. There was also indecisiveness on some policy level matters related to acceptability of online classes, evaluation procedures, and access to internet. Access to technology for the students and readiness of schools, especially public schools and colleges, will be critical to reducing this digital gap in education.

Governance going online

The federal government initiated e-payments for its payout transactions in 2015 and its revenue collection transactions directly to/from banks accounts of beneficiaries in 2018. It took over three years for government agencies to migrate from cheques to direct-to-bank deposits. Such digital payout transactions have seen exponential growth, from Rs 3.1 billion during fiscal year 2016/17 to Rs 221.1 billion in the fiscal year 2019/20. During the COVID-19 lockdown period, from mid-July to mid-October 2020 (first quarter of the fiscal year 2020/21), the volume for government transactions (payout and revenue collection) increased by 943 percent compared to the same quarter last fiscal year.

In order to meet the public demand for service delivery, multiple government ministries, departments and local government units took the initiative to introduce their own web and mobile based applications. Some such initiatives are the Local Government App released by the federal Department of Information Technology; Smart Palika rolled out by few local governments; online No Objection Certificates from the Ministry of Education; online Export Import Code renewal by the Department of Customs; online registration and renewal at the Office of the Company Registrar, Department of Industries; and online personal event registration at the Department of Civil Registration. All of these initiatives are related to the collection of public data and service delivery. Such data collection has helped to some extent but has also resulted into fragmented outcomes due to decentralized initiatives and uncoordinated implementation. There exists a risk of having multiple systems without integration with each other and a risk of personal and business information exposure.

Banking and financial services

The investment in banking and financial technology has been given utmost importance in the recent past, but COVID-19 has put it at centre stage for regulators and banks & financial institutions (BFIs). There are technologies being implemented by the BFIs for customer acquisition, new product development, service delivery and improving operational efficiency. Sizeable upticks in card subscription (9.48 percent), mobile banking (35.46 percent), internet banking (12.41 percent), and other similar digital instruments were seen in the fiscal year 2019/20.

Transaction values and volumes have also grown, further escalating during the COVID-19 period. Transaction value during the month of August-September (second month of the current fiscal year as per Nepal Rastra Bank data) increased to for digital transactions of NCHL (non-cheques) to Rs 215.0 billion, cards to Rs 34.1 billion, mobile banking to Rs 20.3 billion, internet banking to Rs 4.7 billion, and digital wallets to Rs 7.3 billion. Similarly, automation in various banking products, including online self-service activations, transactional data driven loan disbursements, and similar other digital services are being introduced for product innovation by BFIs with their rollouts being preponed due to business requirements during the lockdown.

Beyond COVID-19

The pandemic has given Nepal’s businesses and the governments an opportunity to automate and digitise its processes, which will eventually help them stand stronger and be more resilient in similar situations in the future. But Nepal has a weak institutional memory, as was seen after April 2015 earthquakes. So there is also a big likelihood that businesses and customers will move back to old manual processes once things normalise.

However, traction already generated for digitization during the lockdown and the extreme pressure that businesses and the government have suffered from customers has left with no option but to move towards digital channels. The focus by all stakeholders should be on scaling-up the existing digital infrastructure, including easy access to telecom and internet services; bringing service providers, including businesses and government agencies, on board the digital ecosystem in a sustainable manner; and customer awareness and engagement.

The impacts of COVID-19 have been severe but one silver lining is the chance to maximise the opportunities provided by digitisation for better livelihoods.

Neelesh Man Singh Pradhan is the Chief Executive Officer of Nepal Clearing House Ltd. The views expressed here are personal.