Growth Potentials of Micro and Small-Scale Enterprises in Nepal

Rajendra Khatri; Punya Prasad Regmi; Nirmita Shrestha; Dikshya Barasaini; Rabita Shrestha Mulmi

doi:10.36948/ijfmr.2026.v08i04.85469

Growth Potentials of Micro and Small-Scale Enterprises in Nepal

Author(s)	Mr. Rajendra Khatri, Prof. Dr. Punya Prasad Regmi, Ms. Nirmita Shrestha, Ms. Dikshya Barasaini, Dr. Rabita Shrestha Mulmi
Country	Nepal
Abstract	Micro, Small and Medium Enterprises constitute a critical component of Nepal's economy by generating employment, enhancing household incomes, reducing poverty, and promoting inclusive and balanced economic development. To strengthen the MSE sector, the Government of Nepal has implemented several support initiatives, including the Micro Enterprise Development Programme for Poverty Alleviation (MEDPA) and the Youth and Small Entrepreneur Self Employment Fund (YSEF). Alongside these programs, a large number of enterprises have also been established independently through private initiative. This study evaluated the effectiveness of these support modalities using a longitudinal causal comparative research design. A total of 1,219 enterprises representing all seven provinces and three ecological regions of Nepal were followed over a three-year period (2023 to 2026) through baseline, follow up, and endline surveys. The study compared four groups: MEDPA supported enterprises, YSEF supported enterprises, independently established enterprises, and project supported beneficiaries. The results identified inadequate access to finance as the most significant constraint to enterprise growth, reported by 77% of YSEF beneficiaries, 71% of both MEDPA beneficiaries and independent entrepreneurs, and 60% of project beneficiaries. Access to affordable credit emerged as the highest priority financial need, identified by approximately 80% of respondents, underscoring the importance of expanding affordable financing mechanisms for enterprise growth. Comparative analysis further showed that project supported enterprises consistently outperformed the other groups, achieving the highest levels of product development (80%), process improvement (86%), sales growth (84%), and enterprise sustainability (84%). These findings demonstrate that integrated project-based support combining financial assistance, technical services, and business development interventions is more effective in enhancing enterprise performance than conventional support programs alone. The study highlights the need for strengthening access to finance, business development services, technology adoption, and market linkages to improve the competitiveness and long-term sustainability of micro and small enterprises in Nepal.
Keywords	MSMEs, Entrepreneurship, Employment, Growth Indicators, Sustainability
Field	Sociology > Economics
Published In	Volume 8, Issue 4, July-August 2026
Published On	2026-08-18
DOI	https://doi.org/10.36948/ijfmr.2026.v08i04.85469

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Growth Potentials of Micro and Small-Scale Enterprises in Nepal

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