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Submitted to Submitted by MICRO, SMALL and MEDIUM MICRO, SMALL AND MEDIUM ENTERPRISES OF CONSTRUCTION MARKET IN NUWAKOT AND DHADING DISTRICTS, NEPAL FINAL REPORT JULY 25, 2018 Submitted By Submitted To Nepal Development Research Institute Mott MacDonald, Shree Durbar Tole, Pulchowk, Lalitpur GPO Box: 8975, EPC 2201, Kathmandu, Nepal Kathmandu, Nepal Email: [email protected] Telephone: +977-1-5537362, 5554975 1 Nepal Development Research Institute (NDRI) is pleased to be a part of Mott McDonald’s Micro, Medium Small Enterprise project. We thank Mott McDonald for entrusting NDRI to carry out such an important study. We express our sincere thanks to Mr. Howarth Simon E, Team Leader of PURNIMA and Mr. Rabindra Bahadur Singh, Private Sector Development Lead, for extending requisite administrative and management support in organizing and hosting the assessment. We would like to thank all the participants for their kind participation in the study. We are grateful to all the government stakeholders, Mayors and President of municipalities, ward chairpersons of the sample municipalities, chief administrative officers, district leaders of FNCCI, FNCSI, District Contractor Association, and business leaders for taking time out of their busy schedule for the study. NDRI also acknowledges their contribution in this research. The interactions with each of them have contributed significantly to develop the report. Last but not the least, NDRI also offers gratitude to the entire research team: Prof. Dr. Punya Prasad Regmi, Team Leader, Mr. Jeebanath Adhikari, Team Coordinator, and the field researchers Mr. Ram Prasad Devekota, Rita Pandey, Manoj Karki and Sunita Dhital for their hard work from inception period to project accomplishment. Dr. Jaya Kumar Gurung Executive Director Nepal Development Research Institute 2 Table of Contents Table of Contents .................................................................................................................................. 3 Abbreviation and Acronyms .................................................................................................................... 5 List of Tables .......................................................................................................................................... 6 List of Graphs and Figures ....................................................................................................................... 7 Executive Summary ................................................................................................................................ 8 CHAPTER ONE .................................................................................................................................. 10 INTRODUCTION TO STUDY ........................................................................................................... 10 1.1 Background .................................................................................................................................... 10 1.2 Objectives ................................................................................................................................. 11 1.3 Scope of the Study .................................................................................................................... 11 CHAPTER TWO................................................................................................................................. 12 RESEARCH METHODOLOGY ........................................................................................................ 12 2.1 Method and Tools ...................................................................................................................... 12 a. Desk Review ......................................................................................................................... 12 b. Site Selection......................................................................................................................... 12 c. Primary Data Collection ...................................................................................................... 13 d. Direct Observation ............................................................................................................... 13 e. Quick Survey: ....................................................................................................................... 14 f. Key Informant Interviews: ................................................................................................... 14 2.2 Field Monitoring, Management and Quality Assurance .......................................................... 14 Pre-testing of research tools and finalisation .............................................................................. 14 Recruitment and Orientation Training to Research Team: ....................................................... 14 2.3 Data Management and Analysis Plan........................................................................................ 15 2.4 Deliverables and Timelines ........................................................................................................ 16 CHAPTER THREE............................................................................................................................. 17 MAPPING OF SMALL ENTERPRISES ........................................................................................... 17 3.1 Construction Materials and Suppliers ...................................................................................... 17 3.2 Development of Markets in Nuwakot District .......................................................................... 18 3.3 Estimated Number of Small Enterprises of Construction Market in Nuwakot District .......... 20 3.4 Development of Markets in Dhading District ........................................................................... 20 3.5 Estimated Number of Small Enterprises of Construction Market in Dhading District........... 23 3.6 MSME Registration ................................................................................................................... 23 3 3.7 Source of Investment for MSMEs in Construction Market ..................................................... 24 CHAPTER FOUR ............................................................................................................................... 26 FINANCIAL REQUIREMENTS AND ITS ARRANGEMENT ....................................................... 26 4.1 Willingness to Expand Business ........................................................................................... 26 4.2 Utilization of Fund to Expand Business .................................................................................... 27 4.3 Availability of Capital to Expand Business ............................................................................... 27 4.4 Source of Capital to Expand Business ....................................................................................... 28 4.5 Problems in the Source of Loan................................................................................................. 29 4.6 Required Size of Capital for Business Expansion ..................................................................... 31 CHAPTER FIVE ................................................................................................................................. 33 CONSTRAINTS OF MSMEs ............................................................................................................. 33 CHAPTER SIX.................................................................................................................................... 36 CONCLUSION AND RECOMMENDATIONS................................................................................. 36 6.1 Conclusion...................................................................................................................................... 36 6.2 Recommendations .......................................................................................................................... 37 Annex –I: Situation Analysis of Sample Municipalities and Market Area in Dhading ..................... 39 Annex – II: Situation Analysis of Sample Municipalities and Market Area in Nuwakot.................. 41 Annex – III: Data Collection Format in Municipality and District ................................................... 43 Annex – IV: Area of Data Collection and Respondents in Districts .................................................. 44 Annex – V: Sample Respondents in Districts ..................................................................................... 45 Annex VI: Quick Survey Questionnaire for Supply Side Actors ....................................................... 46 Annex VII: KIIs for Financial Intermediaries ................................................................................... 48 Annex VIII: KIIs Questionnaires for Municipality ............................................................................ 49 Annex IX: Observation Notes on Market Prospects .......................................................................... 50 4 Abbreviation and Acronyms BFIs: Bank and Financial Institutions CFUG: Community Forestry User Group CSEB: Compressed Stabilized Earth Blocks DCCI: District Chamber of Commerce and Industries DDC: District Development Committee DFID: Department for International Development DRR: Disaster Risk Reduction GDP: Gross Domestic Product GoN: Government of Nepal HCB: Hallow Concrete Block KII: Key Informant Interview
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