Opportunities and challenges of small and mediun- sized enterprises in Lumbini province, nepal

Abstract

To boost up the Nepalese economy, there is an urgent need to substantially promote small and medium sized enterprises (SMEs). However, there are very limited studies that highlighted the challenges faced by entrepreneurs while operating the SMEs and opportunities that investors should have insights for their effective operations. Therefore, this study was conceptualized in the Lumbini Province of Nepal which have high potentiality of development and sustainable operationalization of SMEs. The data required for this study were collected through face-to-face interview with SMEs entrepreneurs (n=130) with the help of semi-structured questionnaire. Further, key informants’ interviews (n=15) and focus groups discussions (n=5) were also done for the triangulation of obtained information. At present, 68492 SMEs in total were found to be operating in Lumbini province, Nepal that comprises of 10.33% of national SMEs. Both provincial and national trends of SMEs displayed an upward trajectory, indicating ongoing growth in the number of SMEs during the last five years. Similarly, majority of SMEs entrepreneurs think that innovation, scale of business, access to finance, innovation, work experience, and geography are the major factors that provide ample opportunities for running the SMEs successfully in future at their sites. Additionally, thirteen major types of challenges were being faced by the entrepreneurs among which technological backwardness, absence of regulatory environment, inadequate training and infrastructure availability were ranked as the top five challenges. These findings can guide academia, policymakers, and stakeholders in enhancing future research, policymaking, situational analyses, and the structuring of SMEs support initiatives. This study also suggested targeted government initiatives to leverage identified success factors for SMEs enhancement in Lumbini province.