Private equity: A force for SME growth

Further reforms can help the market grow and attract more investments and best practices.

In just half a decade, since the private equity market first broke ground in Nepal, it has provided welcome support to local entrepreneurs. With better access to capital, small businesses can now dream bigger. Private equity funds bring more than money to the table. They help build or grow dynamic, job-creating companies that can be potential game changers, spurring the development of the business ecosystem. For Nepal, this can help stimulate its economy, especially in the face of a global pandemic. Our research shows that 17 million small and medium sized enterprises (SMEs) in the developing countries have unmet financing needs, notably because young, growing businesses lack the track record to qualify for bank loans. So, they require "risk capital"—where there is higher risk tolerance than bank loans—which is hard to access in countries with fragile economies.