Smart cities, which are relatively new in the context of Nepal, are estimated to unlock the market potential of nearly US $20 billion by 2033. As per the National Urban Development Strategy 2017, the country plans to develop a smart city in seven provincial capitals. Similarly, it also aims to build four modern towns in Kathmandu, Lalitpur, Bhaktapur, and Kirtipur. To gear up the smart city development project, the Kathmandu Valley Development Authority (KVDA) is preparing a detailed project report (DPR) that will be on the table by the end of this year or early 2019. In addition, KVDA has allotted US $1.6 million for the DPR of the first phase of this smart city program. Nepal’s move to build smart cities is presenting enormous investment opportunities for global smart city market players.
According to International Finance Corporation, Nepal has an investment potential of US $3.4 billion in green building, US $10 billion in transport infrastructures, US $2.5 billion in electric vehicles, US $83 million in municipal waste management and US $686 million in smart urban water by 2030. These investment opportunities will also satisfy the nation’s climate targets set by the Paris Agreement.
Considering the immense opportunities offered by Nepal in the smart city sphere, South Korea has already committed to investing in Kathmandu and Pokhara, followed by four other municipal cities.
Moreover, to attract domestic or foreign investment in smart cities, the government of Nepal is opting for the Public-Private Partnership (PPP) model to bridge the funding gap. The entire project requires funding of US $1.3 billion annually; there is a US $1 billion funding gap. Hence, to accomplish the project, the country aims to raise 80% of the funds from the private sector and 20% from the public sector.
Besides lucrative opportunities for investors, the development of smart cities will contribute significantly to the transformation of the economy of this Himalayan nation. City-as-Customer Kathmandu alone is estimated to contribute nearly 45% of the nation’s GDP by 2025. It means investment in smart cities is likely to help Nepal become a middle-income nation by 2030.
Read more: Moving toward a ‘Smarter’ Nepal