Poor productivity continues to hobble the Nepalese economy in spite of three decades of experimenting with a variety of development strategies. During this period, the country's national output has risen an average of 2 percent annually, the lowest in South Asia, and even today, the industry (including construction) accounts for a mere 13 percent of the GNP. No doubt that the country's disadvantageous terrain and poor resource base are largely to blame, but it is also true that a lot of good money has been wasted on unfeasible aid projects that petered out about the same time as the donor's money did.
A bright exception is the GTZ-spon-sored Small Business Promotion Project (SBPP), founded in 1983 as an outgrowth of the Bhaktapur Development Project (HIMAL, May 1987). In six years, the SBPP has exceeded virtually every one of its output targets, and established itself as Nepal's foremost business promotion center. In doing so, it has demonstrated the vibrance of small business as a sector of national development which might serve as a model for how aid can be channelled more productively.
Earlier this year, a comprehensive evaluation states that SBPP facilitated the establishment of more than 300 new enterprises (a 50 percent success rate among trainees), generated 1,500 new jobs, mobilized Rs. 25 million in capital resources, increased the value added of clients' businesses by an average of 40 percent, and published manuals, reports, and case studies on various aspects of business promotion.
Proof of the success of SBPP's approach is seen in the growing demand for its services by other agencies. Its promotional services division, created in March 1988, has trained field personnel from 21 NGOs, integrated rural development projects, HMG ministries and panchayat institutions, whose sub-sequent contribution to their own programmes then increased the multiplier effect of SBPP. For example, Save the Children USA sent two extentionists from its field staff in Gorkha District for an SBPP "training of trainers" course in new business creation. Within a year they had established 25 women's credit groups of five to 10 members each in seven Gorkha panchayats.