Nepal's private sector invested Rs 7.1 billion in the Information and Communication Technology (ICT) sector across 109 industries from 2017 to 2023, according to the latest report of the World Bank. This investment has contributed to the creation of 6,746 jobs, according to the World Bank’s estimates.

The report entitled Nepal National Economic Outlook: Nepal's Economic Growth Potential Unveiled, released on Monday, highlights that Nepal’s ICT sector is diverse, comprising small, medium, and large industries. Industries with capital of  less than Rs 150 million are considered as small industries while medium industries have capital between Rs 150 million and Rs 500 million, and large industries are those having capital exceeding Rs 500 million.

According to the World Bank report, Nepal relies heavily on imports for ICT-related goods and services, including internet bandwidth, computers, and mobile phones. The country imports internet bandwidth primarily from India and China, with Rs 4.7 billion spent on bandwidth purchases in 2023 alone, added the World Bank data.

The telecom, computer, and information technology services sector accounts for 10 percent of Nepal’s total service exports, equivalent to 0.3 percent of GDP. Nepal ranks second in South Asia in IT service exports, behind Pakistan, the report stated.

Digitally delivered service exports have seen an annual growth rate of 11.6 percent from 2005 to 2023. By 2023, these exports accounted for more than 50 percent of Nepal’s total service exports, demonstrating strong potential in the global digital economy.

The report further stated that Nepal lags in ICT goods production and exports despite the growth in service exports. The report attributes this weakness to low foreign direct investment (FDI) in the sector.

"Nepal has not been able to export ICT goods due to low foreign direct investment (FDI). Countries like China and Vietnam have developed this sector through FDI," the report states. Nepal imports ICT goods equivalent to 1.2 percent of GDP, with mobile phones and computer equipment being the primary imports.

The report suggests that boosting FDI could help Nepal develop its ICT goods sector, similar to how China and Vietnam have strengthened their industries through foreign investment.