A Generation’s Revolt, an Economy Reeling

"Once in a lifetime, it comes but a single day, bringing upheaval, turmoil, and disruption."

 

This line from poet Gopal Prasad Rimal aptly captures what unfolded in Nepal on September 8 and 9. What began as a protest by Generation Z against the social media ban quickly escalated into a nationwide movement demanding accountability from entrenched political elites and an end to corruption and crony capitalism. In just two days, the country witnessed scenes of unprecedented upheaval that shook Nepal’s political, social and economic foundations.

 

The initial demonstration, focused on a seemingly narrow issue, soon spiraled into a generational uprising. By the evening of September 9, government buildings, including the iconic Singha Durbar, were engulfed in flames. Private properties and businesses were vandalized, and the administration of Prime Minister KP Sharma Oli collapsed under mounting pressure. The protests became Nepal’s most consequential youth-led revolt in decades, reflecting the deep frustration of a generation long weary of political stagnation.

 

With Sushila Karki now sworn in as Nepal’s first female prime minister and an interim government already in place, the political situation is showing signs of stabilizing. A parliamentary election has been scheduled for March 5, 2026, signaling a tentative return to institutional normalcy. Yet the Gen Z protests struck the economy at the worst possible moment—just ahead of Dashain, when consumer spending typically peaks. The timing magnified economic losses, leaving businesses, investors and ordinary citizens reeling.

 

The destruction dealt a severe blow to Nepal’s fragile economy, occurring just as activity had been gradually recovering over the past six to nine months. Since the onset of the COVID-19 pandemic in early 2020, the economy has endured a turbulent four-year period, with the private sector bearing the heaviest burden—particularly over the past two years.

 

 

As Nepal struggled to emerge from the pandemic-induced downturn, soaring interest rates—driven by a shortage of investment-grade liquidity in the banking system—together with weakening demand created formidable challenges for businesses across the country. Structural weaknesses within the economy, coupled with global uncertainties—especially those stemming from the Russia-Ukraine war—further compounded pressures on Nepal’s private sector.

 

As if it were not enough, the Gen Z protests delivered a fresh jolt, disrupting government institutions, private enterprises and the tourism sector alike. Investor confidence plunged sharply, and the psychological impact on entrepreneurs added another layer of difficulty to the already daunting task of recovery.

 

Singha Durbar, Nepal’s central administrative complex, was at the epicenter of the unrest. Fully restored after the 2015 earthquakes at a cost of Rs 870 million, the complex houses 24 ministries including the Office of the Prime Minister. During the protests, critical government documents were destroyed, and key judicial bodies, provincial offices, and more than 100 local executive offices sustained damage. Looting further drove up the cost of reconstruction.

 

The private sector, which contributes roughly 80% of Nepal’s GDP and employs 3.5 million people, was hit particularly hard. The country’s largest supermarket chain, Bhat-Bhateni Super Store, bore the brunt of the damage, with 12 of its 28 outlets looted and set ablaze. Losses were estimated at around Rs 11 billion. Twelve outlets, including its flagship store at Bhatbhateni, were completely destroyed, with both structures and inventories lost. Chairperson and Managing Director Min Bahadur Gurung has confirmed that while 12 stores were entirely gutted, the remaining nine suffered partial damage.

 

 

The Hilton Kathmandu, a five-star property developed by Shanker Group, was also destroyed. Built at a cost of Rs 8 billion, with 70% financed through loans from nine banks, its collapse has put Rs 5.02 billion in bank loans at risk.

 

Other high-profile targets included Chaudhary Group’s Santugal factory, which was set ablaze, and the Chandragiri Cable Car—partly financed through public investment—which was vandalized.

 

The Immediate Fallout

 

The Nepali stock market was jolted by the protests that began on September 8. On the very day of the unrest, the Nepal Stock Exchange (NEPSE) Index was down by 35.99 points, reflecting early investor nervousness. Trading was suspended for 10 days after the protest, and when the market reopened on September 18, it suffered a far more severe blow, plunging 160.33 points to close at 2,511.91, as investors rushed to reassess risk amid persistent uncertainty.

 

In the days that followed, the market remained volatile. Between September 21 and 25, the index oscillated, with notable gains on September 21 (111.70 points) and September 23 (58.63 points), followed by minor dips of 27.89 points on September 24 and 2.35 points on September 25. Turnover fluctuated sharply, peaking at over Rs 9 billion on September 21, signaling sporadic bursts of trading activity as investors navigated the tense post-protest environment.

 

 

While Dashain shopping remained relatively unaffected, automobile sales suffered a serious setback. Dealerships across the country struggled with disruption, destruction and operational paralysis. “The unrest has hit the automobile sector severely. Several showrooms and warehouses were vandalized, vehicles destroyed and inventories looted. Beyond the physical damage, investor confidence has been shaken, disrupting the entire value chain,” said Karan Chaudhary, President of the NADA Automobiles Association of Nepal.

 

The timing could not have been worse. Just a month earlier, two major auto expos—NAIMA Nepal Mobility Expo and NADA Auto Show—had generated around 4,000 vehicle bookings. The rapidly growing electric vehicle (EV) market had fueled optimism for a strong festive season. Traditionally, 40–50% of the country’s annual vehicle sales occur during this short, vibrant period.

 

Meanwhile, the banking system has remained largely stable, but the insurance sector is grappling with an unprecedented surge in claims and payouts. Nepal’s non-life insurance industry is facing its most turbulent period in decades. Already weakened by shrinking profits and rising disaster-related claims, the sector has now been hit by an extraordinary financial shock. The Gen Z protests have left insurers confronting the largest claims payout in the nation’s history—far surpassing previous crises and exposing vulnerabilities in the country’s reinsurance framework.

 

 

Within just two weeks, 2,988 claims worth Rs 23.39 billion were filed across 14 non-life insurers and four micro-insurance firms. In both volume and value, this dwarfs every prior single-event loss in Nepal’s insurance history.

 

The 2015 earthquakes had triggered Rs 16.5 billion in claims, COVID-19-related policies accounted for Rs 16 billion, and the September 2024 floods and landslides generated Rs 12.27 billion. “This is the largest claims event Nepal has ever faced,” Sushil Dev Subedi, Executive Director of the Nepal Insurance Authority (NIA), said. “The destruction of insured assets on such a scale has never before been recorded.”

 

Around Rs 100 Billion Loss to the Private Sector

 

The September–October period is traditionally Nepal’s busiest business season, with Dashain and Tihar driving nearly 40% of annual sales. This year, however, the protests struck at the peak of activity, disrupting markets across the country. Preliminary estimates from private sector organizations suggest losses in the range of Rs 80 billion to Rs 100 billion, affecting more than 15,000 jobs.

 

Federation of Nepalese Chambers of Commerce and Industries (FNCCI) President Chandra Prasad Dhakal said they were still collecting detailed information on the damage across the country.

 

 

The Confederation of Nepalese Industries (CNI) estimates the physical damage to be significantly higher—roughly 5% of GDP, or around Rs 300 billion. According to CNI President Birendra Raj Pandey, damage to private-sector assets alone exceeds Rs 100 billion.

 

The hotel and hospitality sector suffered losses of approximately Rs 25 billion, affecting nearly 25 establishments. Auto dealerships, showrooms and warehouses—particularly in Kathmandu’s Thapathali area—incurred about Rs 15 billion in damages.

 

Over 15,000 private-sector jobs—mostly in hotels, tourism and retail—have been affected. This includes positions at Bhat-Bhateni Supermarket, Chaudhary Group, Chandragiri Cable Car and Maulakalika Cable Car. The Hotel Association of Nepal (HAN) estimates that around 2,000 hospitality jobs alone have been disrupted.

 

Despite these losses, many businesses have pledged not to lay off staff immediately. However, further job losses are expected as operations gradually resume.

 

 

Psychological Blow to Private Sector

 

Nepal’s private sector has weathered political upheavals over the past two decades—the Maoist insurgency, the 2005–06 political movement, the Madhesh Movement, protests during the promulgation of the new constitution, and India’s economic blockade in 2015. Each time, it emerged resilient. This time, however, business leaders are shaken like never before. Attacks on personal properties, coupled with a largely passive state apparatus, have severely dented their confidence.

 

“Never before have the private properties of businessmen been targeted like this,” said an entrepreneur who wished to remain anonymous. “We have weathered previous political upheavals, but this time it was terrifying as mobs entered our homes—even our bedrooms.”

 

The private residences of Binod Chaudhary, Nepal's only billionaire listed in Forbes, his brother Basant Chaudhary, Shekhar Golchha, former president of FNCCI, and his brother Sanjay Golchha were either vandalized or torched.

 

Targeting the private sector so directly has demoralized business owners, many of whom are now wary of future investments. Entrepreneurs who operate legally, pay taxes and employ thousands are questioning the security of their operations. On the other hand, international markets have received a clear signal that Nepal is not fully investment-friendly. This will complicate efforts to attract foreign capital.

 

 

Rebuilding confidence in the sector will be costly and long-terms. The scars on the economy, investor sentiment and public trust are likely to be felt for months, if not years.

 

The unrest underscores a persistent tension between resilience and vulnerability for the private sector. Many businesses are now adopting a cautious, wait-and-watch approach, seeking signs of stability after Tihar and Chhath. There is growing concern that such unrest could recur.

 

“The large capital expenditure investments from the private sector are unlikely in the near future,” said an industrialist. “Both foreign and domestic investors are holding back due to the unrest.”

 

Economist Poshraj Pandey said the Gen Z-led protests are likely to leave a measurable dent in GDP, potentially slowing growth and creating long-term challenges for the private sector. “The incentive for the private sector is profit-making. But today, earning money itself is being portrayed almost as a crime,” he said.

 

Gen Z has energized long-standing debates around corruption, unemployment and the capture of state institutions. While these issues have long been raised by the private sector, the youth’s voice has been stronger, more unified, and capable of mobilizing large numbers against crony capitalism. The premise of their movement was sound. However, had it taken the form of peaceful campaigns or structured protests, the outcomes might have been far more constructive, said an industrialist.

 

Private sector representatives say that Nepal, which has endured turbulence for decades, did not need fresh violence to compound existing challenges. The unrest has deepened uncertainty, leaving a crucial question: how will political parties and the interim government navigate the coming days?

 

 

Investor sentiment has already turned negative. Both foreign and domestic investors are withholding new commitments until credible investigations are conducted and stronger assurances on property rights and contract enforcement are provided. With interest rates already low in Nepali banks, strategic investors may delay fresh commitments for six to twelve months. In the near term, the conservative approach is clear: protect existing assets, safeguard current investments and reduce exposure to speculative projects.

 

FDI: A Tougher Sell Ahead

 

Over the past year, Nepal has made significant efforts to streamline its FDI regime and position itself as a viable destination for investment. Key steps included first sovereign rating, the issuance of an ordinance in January 2025 to amend half a dozen crucial laws—later endorsed by parliament—and the formation of a High-Level Economic Reforms Advisory Commission. These measures generated a sense of optimism among domestic investors.

 

However, there are concerns that these gains may be at risk. FDI has remained minimal over the past seven to eight years. While protests may not immediately impact FDI figures, convincing foreign investors to commit to Nepal will become increasingly challenging.

 

The broader international context further complicates matters. Global donors and development finance institutions are increasingly inward-looking, redirecting aid toward domestic priorities. Several global shifts were already underway, irrespective of Nepal’s protests. After the US signaled it would no longer guarantee Europe’s security, European governments redirected aid and spending toward strengthening their own defenses. Similarly, with the US polling the plug on USAID, other major donors have adopted more inward-looking policies. For Nepal, which is already struggling to attract significant FDI, this has created an even more challenging external environment. Flows from development finance institutions (DFIs), historically modest, have also come under scrutiny as donor countries refocused their development agendas on domestic priorities. Although Nepal has not received negative signals from DFIs after the protests, securing aid or external support has become noticeably more difficult than a year ago.

 

“Investor sentiment has already turned negative. Both foreign and domestic investors are withholding new commitments until there is a credible investigation or stronger assurances on property rights and contract enforcement,” said Suyes Pyakurel, Managing Director, MM Group of Companies. "From a conservative standpoint, the priority is to protect existing assets—safeguard what already exists and reduce exposure to new, speculative projects.”

 

According to Shabda Gyawali, investment director at Dolma Fund, the unrest carries another risk: reputational damage. “The most visible targets were multinationals and FDI-backed companies, including Hilton and Ncell. Such incidents inevitably send a discouraging signal to potential investors,” said Gyawali. To counter that perception, he suggested mobilizing the diplomatic apparatus to reassure the world that Nepal is open for business and eager to welcome investment. “Capital flows where it is welcomed, but it stays where it is well treated,” he added.

 

Breaking the Chains of Crony Capitalism

 

While the private sector has borne the brunt of this destruction, political analysts argue that some attacks stem from its nexus with political leadership. This connection allowed certain business houses to exploit vested interests. Recent federal budgets highlighted this troubling trend, with measures repeatedly tilted to benefit select business groups.

 

For decades, some segments of the private sector leveraged access to political and bureaucratic circles to push policies serving narrow personal interests. Over time, this cycle of influence and favoritism became deeply entrenched.

 

Over the past two decades, corruption in Nepal has evolved into a highly structured kleptocratic system. Nurtured by powerful political figures and orchestrated by a few influential intermediaries, this network has infiltrated political parties, the bureaucracy and the judiciary. In partnership with state institutions, it systematically siphons resources from ordinary citizens, consumers and public coffers. This covert yet robust nexus between politics and business permeates sectors such as public procurement, natural resources, finance, health and education, leaving genuine competition and fair opportunities out of reach for Nepal’s emerging entrepreneurs and diaspora investors seeking a transparent market.

 

Entrepreneurs see one of the most significant outcomes of the recent Gen Z protests as the disruption of this entrenched crony-capitalist network. With legacy parties now on the backfoot, those who thrived solely on political patronage have been reset.

 

 

The movement championed fair business competition, transparency, innovation, and market efficiency. The critical question now is whether this cycle can finally be broken. “Crony capitalism thrived when bureaucrats, politicians and businessmen colluded for personal gain. We hope the interim government functions smoothly and successfully delivers elections, paving the way for a new government that dismantles this old nexus and ensures competition in Nepal occurs on a truly level playing field, encouraging new entrepreneurs to rise,” said Suman Rayamajhi, co-founder and managing director of Upaya.

 

Reform & Digitization

 

Despite political turmoil, some macroeconomic indicators remain positive. Foreign currency reserves are at record highs and inflation is under control. Yet these gains have not sufficiently reached the population, creating a disconnect between statistical indicators and lived realities.

 

Structural reform, transparent governance and digitization can lay the groundwork for more resilient, inclusive growth. Economists and entrepreneurs emphasize that recovery requires strategic reforms alongside stability. Crony capitalism, long a source of public frustration, must be replaced with transparent and accountable governance.

 

“The government must advance the recommendations of the Rameshore Khanal-led Commission, particularly those concerning FDI and DFIs, to ensure that policy support aligns with urgent financing needs,” said Gyawali.

 

Digitizing government processes can improve efficiency, transparency and public access. The private sector must embrace transparency, ensure accurate financial disclosures and push for reforms in government procurement. Simple measures, such as QR codes for public project data, could dramatically improve accountability.

 

“The interim government may not execute everything—but it can set the tone,” Ananda Bagaria, Managing Director of Nimbus Holdings, said, highlighting the importance of incremental measures that signal genuine reform.

 

The Path Forward

 

Nepal has weathered political and economic storms before. If harnessed wisely, the recent unrest could catalyze a transformation toward better governance, a more resilient business environment and renewed investor confidence.

 

Although the protests have come at a cost, there is a silver lining. Political leaders, bureaucrats and other stakeholders are likely to exercise greater caution. Even if progress is modest at first, good governance practices can begin to set a precedent. Leaders will remain aware that unfulfilled promises may trigger strong public outcry. Most importantly, more young and educated voices will find space in policymaking.

 

Breaking the chains of crony capitalism is a positive development—and if sustained, these networks could be dismantled for good. “Recent developments may have created fertile ground for more accountable and genuinely dedicated figures to emerge in Nepal’s future politics,” said Pyakurel.

 

This is the cover story of October 2025 issue of New Business Age magazine.