Since its monarchy was replaced with a democratic republic in 2008, Nepal has struggled to attract foreign investment to modernize key industries. Foreign direct investment into Nepal accounts for only 0.3 percent of funds flowing to South Asia, and the country needs significant investment to address multiple challenges, including climate change and COVID-related disruptions to the economy. Nepal’s Himalayan region is at heightened risk of floods and landslides as a result of climate change. In addition, the World Bank estimates that Nepal’s per capita COVID-related job losses are the largest in the region.
Solution and Impact
A DFC equity investment in Dolma Impact Fund II will support investments in healthcare, renewable energy, and technology. Dolma Fund Management, the first private equity fund manager dedicated to investing in Nepal, will target investments that reduce dependence on imported energy, help mitigate the impacts of flood, landslide, and drought on its largely agrarian economy, while promoting the introduction of technology that promotes financial inclusion.
The transaction will help to boost U.S. investment in a country whose stable democracy is critical to American foreign policy. With women serving in one-third of the roles in senior management, the project also advances DFC’s 2X Women’s Initiative.