Promoting Cottage And Small Industry
For Poverty Alleviation

By Khilendra Basnyat

THE cottage and small industry sector contributes about sixty-five per cent to total export and fifty-eight per cent to total value addition. Of the total industrial sector, this sub-sector constitutes about ninety-five per cent.

It has been estimated that Nepal’s traditional cottage and small industries, such as basket making, the weaving of cotton fabrics, the manufacture of floor covering and ghee-making employ one million workers.

In general, cottage and small industries are involved in food processing, cereal and oil milling and ghee-making despite the fact that there is a trend towards cereal and oil milling by special merchanised units, cottage and small-scale industry production for the market comprises chiefly textiles (cotton fabrics and floor coverings) and bamboo products.

In the recent times, cottage industries have been defined as manufacturing establishments with a fixed investment. Most manufacturing is of cottage or small scale type. Light consumer goods industries dominate the structures of manufacturing. More than half of these enterprises are light industries such as carpet, rug and furniture manufacturers, grains, sawmills and tiles. Intermediate and capital goods manufacturing activities have made limited progress in Nepal during the last four decades. Ownership in cottage industries has been found to be private in the form of either a private firm or a private limited or partnership company. According to the Central Bureau of Statistics in 1992, in the first nine months of 1990-1991, one thousand and one hundred and twelve cottage and small industries were registered with the Department of Cottage Industry, with a total investment of twelve thousand and two hundred and sixty-two million. Of these, nine hundred and sixty-four were private firms, fourty-three private limited companies and one hundred and thirty-two partnership firms.

Among the various types of cottage and small-scale industries registered in the afore-mentioned department were polyester hosiery, woollen yarn, metallic untensils, food processing, cotton textiles, electrical applicances, stationeries, paints, bricks, tile, stone and concrete, wax candle and footwear units that produced basic needs type commodities. Until recently hand knitted woollen carpets and handicrafts were the two leading items which contributed heavily to export earnings.

The Nepal Textile and Cottage Enterprises Extension Office was established in 1993 B.S. in order to create industrial consciousness through the propagation of cottage industries. Due to this institutional initiative in the course of time the present day cottage and small Industry Development Department, Cottage Industry Committee and Industrial Enterprises Development academy are involved in this sector through their branches in different parts of the country.

The Industrial policy 2049, and Industrial Enterprises Act 2049 have also placed emphasis on the development of cottage and agro-based industries based on local means and resources.

With a per capita cultivated land of only about 0.2 hectare, farming does not provide full employment to the entire rural labour force of our country. In this context, cottage industries can play a very important role in augmenting the
income from farming for the marginal and landless farmers. According to a report published by the International Labour Organisation in 1980, the rural poor are expected to benefit a great deal from the expansion of cottage and small-scale industries.

Despite advantages from cottage and small-scale industry, the technology applies in such industry is of subsistence nature and fails to maintain equality and costs at desired levels. As a result, such industries are unable to compete with foreign goods. It is too late to bring in suitable and low cost technology and familiaries entrepreneurs with it.

Shortfalls have been felt on the part of the affiliated bodies in the variety of training programmes. In fact, it is believed that the training programmes can be conducted smoothly through accumulation of fund from district development committees and other non-governmental organisations. Each district development committee has sufficient budget allocated for this purpose.

It has also been realised that training and marketing should be conducted for the staff of handicrafts sales centre and retail outlets in different districts in order to make them competitive.

The producers should be able to link with such retail outlets so that they need not rely on intermediaries for selling their products and buyers need to wander in the quest of such products.

Women can play a significant role in promoting cottage and small-scale industries. In this regard, income generating schemes are also being carried out at the local level under the heading of small enterprises.

Women who received a three-month skill development training have not been able to use their new skills on a commercial basis because such a short training is unable to impart adequate knowledge and competency to launch their products in the market for sale and run a small industry.

According to the trainees, the three-month course is only suitable for imparting general knowledge and it can no longer establish one on a vocational footing. What most trainees think is that the duration of training needs to be extended; they need to be familiaries with modern equipment apart from providing better trainers.

Today, unemployment has been an acute problem in our country. The development of cottage and small industries helps increase employment opportunities. A momumental effort to develop and expand cottage and small industries by utilising traditional skills and local resources can create more employment opportunities.

Export-oriented industries such as woollen products and metal curios can earn a huge chunk of foreign exchange and also provide adequate employment opportunities.

The Ninth Plan aims at promoting cottage and small-scale industries that can generate self-employment, making licensing and registration procedures flexible as well as simple, conducting management training and introducing a programme package with technical support for creating employment in the non-agricultural sector in order to raise income levels and the purchasing capacity of rural people.

Such entrepreneurship is of immense importance in Nepal because it takes one towards self-reliance with the use of limited capital and locally available resources.

Today, poverty has plagued about half of the total population of the country. With the readvent of democracy in 1990 poverty has been become the main objectives of development planning and the present Ninth Plan singles out poverty as the sole development objectives using area-based programme infrastructure to the more undeveloped and isolated regions and targeting indigenous people, the oppressed and downtrodden, women and children.

The low capital requirement is one of the striking features of cottage and small-scale industries, which makes it significant in any strategy for poverty alleviation in Nepal.

Leeward Side Of Census

THE 10th census came and went but nobody came to ask of me and my family. It is perhaps the data collectors did not find us at home. And I being busy in my days’ schedules did not know where to register my family figures, neither did I bother to do it. In this situation, how could the government know whether we do exist or not? And of course, we, the genuine citizens of Nepal, are not in the list of the national population and, in this sense, are officially deprived of the state facilities, if the authorities provide such amenities at all. I do not know whether there are many like us – maybe there are, maybe there are not. But my case clearly shows that there are a large number of outsiders in the capital who have either been missed out or doubly counted in the census. How can, in this sense, the government find out the exact number of its citizens?

Census are taken everywhere in the world with a view to finding the status of the citizens so that the planners and the policy makers would be able to implement the right plans at the right place and time as per the magnitude of population. Such plans for the common welfare pave way for the overall national development. And in Nepal the present census was carried out with a slogan "No Omission, No Repetition".

The irony, however, is that there seems to have been many omissions and repetitions posing difficulty in the government’s attempt to find out the exact number of people living in the country.

The genesis of the problem is the dual residence of many Nepalis who live in cities and yet have not left their village abode. Since we have communication problems in most of the villages in the country, the old parents back home will either register their offspring in the census list or simply think that they, wherever they are, will do it themselves. The confusion begins with this as the enumerators too are not clear as to what should be done in such cases. Chances are that a person away from home is counted either in both places or not counted at all.

Back in the city, especially in the capital, those who live in rented houses are vulnerable to be missed out. The first cause behind this is their absence from home. There are many families whose nature of job does not allow them to stay at home generally at the time when the data collectors come to collect the information. But on the other hand, the house owners, for fear of being caught, hide the exact number of tenants living in the house. The source of their fear is that if the government finds that they receive a hefty sum as house rent, they might have to pay tax, as a matter of fact, that of course hasn’t happened as yet. A large number of house owners, who have hired their houses, tend to evade the levy.

Therefore, in order to avoid such hurdles in the process of collecting information, the authorities should come up with a clear-cut vision and policy. The provision of enlisting the people in the national statistics needs to be made clear ensuring "no omission, no repetition." They need to ensure that a person is enumerated only at one place. Secondly, they should take up some stringent measures regarding the issue of house renting if they really want a fair result of the census.