Nepal’s footwear industry is small butgrowing, and has been identified as a priority export sectorby the government.Nepal’s footwear industry is a relativelysmall export industry, accounting for just 1.5 percent ofthe country’s total exports in 2017. Similar to other lightmanufacturing sectors, Nepal’s wage advantage in footwear isoffset by its low firm-level productivity. Most firms havepoor bookkeeping and a lack of accounting. Productionfacilities are ill-suited for manufacturing anddistribution, and conditions in many factories are poor,sometimes dangerous. Nepali footwear manufacturers need tostart by improving basic organizational and managementskills. There is a dearth of industry-ready education andskills, and an unavailability of trained manpower thatimpedes investment from both domestic and foreign companiesin these sectors. It is pertinent to focus on basicrequirements such as education and skills development toincrease the pool of skilled manpower in the country acrosssectors. Developing capabilities in Nepal’s small andmedium-sized footwear manufacturers requires investment inimproving managerial skills, upgrading quality standards,and modernizing production facilities to become safer andmore efficient. The government of Nepal can help thedomestic footwear industry by providing a vibrant tradepolicy to allow for deeper integration into regional valuechains, opening up opportunities for foreign directinvestment (FDI), and substantially improving the investment climate.
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