Innovation Department

Ambika Phuyal, a housewife from the Jitpurphedi community, never thought of herself as an entrepreneur. When a local NGO offered her training in making liquid soap, she was skeptical, as was her husband. But something about the chemistry-like process ignited a spark in her. Despite the skepticism of those around her, she invested her time and money in buying materials, guided by a simple yet powerful idea: “Soap is an essential part of daily life.”1Today, Ambika not only runs a successful small business providing soap to local restaurants, schools and neighbors; she has become financially independent and a role model for other women in her community.¹

Ambika’s story is not an isolated case. She is a shining example of a growing wave of social entrepreneurship sweeping Nepal. Young, educated, and ambitious Nepalis, tired of waiting for solutions from the government or big corporations, are taking matters into their own hands.²They are creating businesses not only to make a profit, but also to solve their country’s most pressing problems. This wave, born from a unique combination of socio-economic pressures and youthful energy, is changing Nepal from within, offering a new, more sustainable and inclusive path to development.

Fertile Soil: Why Nepal Has Become a Hub for Social Innovation

To understand why social entrepreneurship is gaining such momentum in Nepal, it is important to look at the country’s unique context. It is a land of enormous challenges, which in turn create enormous opportunities for innovation.

First, there is economic and political instability. Nepal’s economy relies heavily on remittances from workers abroad and on tourism, a sector that is highly vulnerable to global crises such as the COVID-19 pandemic.⁴Decades of political turbulence, civil war and the devastating earthquakes of 2015 have weakened state institutions.⁴ This has led to chronic underfunding of key public services such as health and education and has created a feeling in society that the government is unable to solve all problems.7The country continues to have high poverty rates, huge income inequality (the richest 10% of the population owns 26 times more wealth than the poorest 40%), and some of the worst road infrastructure in Asia.5

Against this backdrop, a new generation has grown up in Nepal. More than half of the country’s population is under 24 years of age.⁹Many of them have received an education, including higher education, but face an acute shortage of jobs in the formal sector of the economy.10This forces thousands of young people to leave to work abroad, depriving the country of its most valuable asset.⁹

It is in this vacuum, created by the failure of markets and state institutions, that social entrepreneurship becomes not just an idealistic choice, but a pragmatic alternative. For young, educated Nepalis, it is an opportunity not only to earn a living, but also to directly address the problems they see every day. It gives them both financial stability and a sense of purpose, making starting their own social business more attractive than migrating.

There is also a fundamental shift in thinking. New businesses are abandoning the traditional model of philanthropy, which views people as passive “beneficiaries.” Instead, they are building relationships based on partnership, viewing people as “clients” and “partners.”13A case in point is an organization that started out giving away free clothing, but found that it was creating inequality. So they switched to a model of selling clothing at a minimal price. This approach not only covered operating costs, but also restored dignity, created accountability, and laid the foundation for sustainable development that did not depend on donor funds.¹⁴

Doing Good by Doing Business: A New Definition of Success

So what is a social enterprise in the Nepalese context? In simple terms, it is a business model that uses commercial tools to achieve social goals.

This is not pure charity. Unlike non-profit organizations (NPOs), which rely on donations and grants to survive, social enterprises strive to be financially self-sufficient by selling goods or services.¹⁰

But this is not a traditional business either. While for an ordinary entrepreneur the main indicator of success is profit, for a social entrepreneur the double or even triple result is important: financial sustainability, positive social impact and care for the environment.16The mission to solve a social problem is a driving force, not just an add-on to the core business of corporate social responsibility.18As experts aptly point out, such companies “mix profit with purpose.”15Profit here is not an end in itself, but a tool for expanding and deepening the social mission.10

Such enterprises often operate in a hybrid format and occupy niches where market mechanisms have failed to meet public needs.¹⁹The main thing is that for them the social goal is the basis of all activities, and not a secondary task.¹⁹

Engines of Change: Stories of Real Impact

The essence of Nepalese social entrepreneurship is most clearly revealed in the stories of specific people and their projects that are changing the country in a variety of areas, from ecology to social justice.

For a Greener Nepal: Tackling the Environmental Crisis

The growing population, especially in the Kathmandu Valley, is putting enormous pressure on natural resources, leading to pollution and a waste management crisis.⁵In response, young innovators are creating effective business solutions.

• Analysis: This digital platform directly connects households wishing to recycle with informal waste pickers (Khaalisisi means empty bottles). The platform makes waste collection more civilized and efficient, increases the income of pickers, and increases recycling volumes.²¹
• Doko Recyclers и Biocomp: These companies show how an entire ecosystem of the circular economy is being formed. Doko Recyclers helps corporations and households manage waste, and Biocomp turns organic waste into high-quality compost, solving the problem of waste and soil degradation at the same time.²¹
• SmartPaani: This social enterprise offers affordable and sustainable solutions to water scarcity, such as rainwater harvesting and wastewater treatment systems. They address a pressing issue at the household level, making people’s lives better and safer.²¹

For a Fairer Nepal: Creating an Inclusive Society

Deep social inequality, particularly against women and marginalized communities, remains one of Nepal’s most serious challenges, limiting these groups’ access to employment and economic opportunities.⁷Social entrepreneurs are challenging this status quo.

• HattiHatti Nepal: This organization gives vulnerable women the opportunity to learn the craft of dressmaking. They make beautiful clothes and accessories from recycled saris, thus combining environmental awareness with women’s empowerment.²²
• Sharmila Adhikari’s Mushroom Farm: With training and an interest-free loan from an NGO, Sharmila built a successful mushroom growing business. But she didn’t stop there, and formed a group of 23 other women to help them gain similar opportunities. Her story is a shining example of how one person’s leadership can trigger a chain reaction of positive change.¹
• Sukhawati Store: A unique enterprise that sells used goods at affordable prices to low-income families. Most importantly, it specifically creates jobs for people with physical and mental disabilities, directly solving the problem of their social isolation.²⁴

The most innovative Nepalese social enterprises do not see ecology and social justice as separate issues. They understand their deep interconnectedness. For example, projects like HattiHatti or Shakti Milan, which produces bags from recycled bags and employs women in the process.²², demonstrate a holistic approach. They recognize that women are disproportionately affected by climate change and poverty, and that empowering them is a key strategy for building a sustainable future. This holistic view is one of the defining features of Nepalese social entrepreneurship.

Table: Faces of Nepali Social Business

Domino Effect: How Individual Projects Change the Entire Country

The impact of this wave of social entrepreneurship goes far beyond individual success stories. It is creating a tangible ripple effect that is transforming Nepalese society and economy on multiple levels.

From an economic perspective, social enterprises, like all small and medium-sized enterprises (SMEs), are a vital source of jobs in a country where neither the state nor large industry can provide full employment.¹¹They create meaningful jobs, especially for young people and women.²²By developing local production chains, they help keep capital within communities, making local economies more resilient.²⁵Overall, SMEs already contribute 22% to Nepal’s GDP, and social enterprises are playing an increasingly prominent role in this sector.²³

The social impact is even more complex. For women and marginalized groups, having their own income means not only financial freedom, but also increased self-confidence and a greater role in decision-making in the family and community.¹In addition, these businesses become training centers where people acquire practical skills—from marketing and finance to leadership—that are rarely taught in the formal education system.²⁶Finally, they change established stereotypes – about the value of waste, about the capabilities of women, or about the potential of people with disabilities.¹⁴

The impact of one social entrepreneur often extends far beyond their own business. The story of Sharmila Adhikari, who not only started her mushroom farm but inspired 23 other women to do the same, illustrates this multiplier effect perfectly.¹Social entrepreneurs are more than just business owners; they are community leaders and builders of new ecosystems. Their success inspires others, creating what researchers call “a stable ecosystem around a new equilibrium.”29This is exactly how real changes in the country happen, from the bottom up.

The Way Forward: How to Keep the Movement Moving

Despite impressive successes, the path of social entrepreneurs in Nepal is still full of obstacles. One of the main ones is the lack of a clear legal status for social enterprises. This creates confusion over registration, taxation, and regulation, which seriously hinders their growth.⁸

Another pressing issue is access to funding. Social enterprises often find themselves in a “valley of death”: they are too commercial for traditional grants, but their social mission scares off traditional investors and bankers who are purely profit-oriented.⁸The SME financing gap in Nepal is estimated to be $2.8 billion.13Added to this are the problems common to all Nepalese businesses: poor infrastructure, power outages and bureaucracy.5

However, the future looks bright as a strong support ecosystem is forming around this movement. The Nepalese government is beginning to recognize the importance of startups and is developing policies to support them, such as the Nepal Startup Fund and easing the rules for foreign direct investment.³⁰

International organizations play a key role. The International Finance Corporation (IFC) specifically finances banks to provide loans to women entrepreneurs.²³The International Labour Organization (ILO) works to create an “enabling environment for sustainable enterprises.”33And UNICEF, through its Ideas Studio, supports young innovators at an early stage.12Finally, at the local level, there is a network of organizations such as Bikas Udhyami and NEDI that provide young entrepreneurs with mentoring, training and advocacy.2

Ultimately, Nepal’s wave of social entrepreneurship is more than just a collection of inspiring stories. It is a fundamental, youth-driven paradigm shift in the country’s development. These young innovators are not waiting for ideal conditions; they are building a better future here and now, one venture at a time. Their work embodies a new vision for Nepal—one that is more sustainable, inclusive, and self-sufficient.

Alpha Business Media

A publishing and analytical center specializing in the economy and business of Nepal. Our expertise includes: economic analysis, financial forecasts, market trends, and corporate strategies. All publications are based on an objective, data-driven approach and serve as a primary source of verified information for investors, executives, and entrepreneurs.

See Full Bio