IMAGE: CATHY SCHOLL
In Nepal women make up the majority of the working-age population. Yet only a quarter of them participate in the labour force. The disparity is too large to be explained by culture alone. At its core stands a longer-burning failure: the collapse of the education system, particularly for girls.
Not long ago, Nepal was held up as a rare success in gender parity. Primary school enrolment among girls once topped 150% of the eligible population, inflated by re-entries and late starts, but still indicative of progress. That momentum has since withered. By 2022 enrolment had fallen to 116% and only slightly improved in 2023. The underlying causes are no mystery: declining public investment and worsening quality.
Over the last decade education has slipped down the government’s list of fiscal priorities. Since 2011 its share of the national budget has fallen from 17% to below 12%—well short of the country’s own target of 15%, and far below the 20% threshold recommended by global development agencies. Budget cuts alone did not cause the crisis, but they made it harder to respond. The pandemic delivered the coup de grâce, widening learning gaps and pushing thousands of girls permanently out of school.
Where funds do exist, they are poorly allocated. Roughly three-quarters of the education budget goes to teacher salaries. Just 3% is spent on improving access or quality. In theory, public schools are free. In reality, overcrowded classrooms and crumbling infrastructure as well as outdated materials are the norm. For many families, especially in rural areas, the marginal benefit of sending a daughter to school—only to see her emerge barely literate—no longer justifies the cost.
That is not irrational. It is the logic of a system in which effort brings scant reward. More than half of Nepali girls drop out before reaching upper secondary school. And many who stay on learn little. According to one national survey, fewer than 40% of young women can read a single sentence after completing primary school. The problem is not merely that girls leave school too soon, it is that the education on offer gives them little reason to stay.
The consequences are immediate and enduring. The World Bank estimates that every additional year of schooling can increase an individual’s future earnings by up to 20%. In Nepal, women with primary education earn nearly 20% more than those without. Those who complete tertiary education earn almost three times as much. In a country where half the population is under 25 and millions are vulnerable to poverty, that uplift is not theoretical. It is the difference between subsistence and self-sufficiency.
The government is not blind to the problem. A patchwork of schemes—scholarships, school meals, the hiring of more female teachers—seek to keep girls in the classroom. But such efforts rarely fix the central issue: the absence of quality. Even the best incentives cannot compensate for hollow content. When students emerge from school unable to read, the problem is no longer access but credibility.
Elsewhere in South and Southeast Asia, the economic returns of sustained educational investment are hard to ignore. Bangladesh, once poorer than Nepal on many metrics, has lifted female literacy and labour-force participation through targeted education reforms. Vietnam, which outperforms wealthier countries on international learning assessments, has turned disciplined public schooling into a platform for industrial upgrading. Nepal, by contrast, has yet to escape the low-skill, remittance-dependent model it fell into decades ago.
Migration obscures the problem. In recent years, remittances from Nepali workers abroad have propped up household consumption and masked serious weaknesses at home. But this dependence has a ceiling. Countries that rely on exporting labour while neglecting education rarely transition to higher-value economies. The data from the 2022-23 Nepal Living Standards Survey show a tight correlation between education and poverty: households led by individuals without schooling are 2.5 times more likely to be poor than those led by someone with at least a primary education. Where the head of household has completed higher education, poverty is virtually nonexistent.
Some economists argue Nepal should focus on growth first and education later. But the sequencing is less linear than it sounds. Education, especially for girls, is not just a social good: it is a growth strategy. It reduces fertility rates, improves child health, expands female labour-force participation and raises productivity. A study by the Malala Fund suggests that achieving universal secondary education for girls could lift average GDP in low-income countries by 10% within a decade.
For Nepal the opportunity cost of under-educating half its population is growing too big to ignore. The country’s demographic dividend—its youthful population—will only deliver returns if backed by serious investment in human capital. At present, the dividend is deteriorating into a liability: too many young people, too few skills.
Breaking this pattern means more than donor support or marginal budget increases. It calls for a political shift: one that treats education as central to economic planning, rather than an afterthought. That is a difficult pivot in a system that rewards patronage over performance, and where political turnover tends to outpace policy implementation. But the alternative is clear: Nepal risks becoming a case study in how promising demographics are squandered through policy neglect.
The government continues to promise reform. But in truth, it tinkers—adjusting curricula, adding programmes, reshuffling budgets. Meanwhile, most girls continue to exit the system without qualifications, let alone prospects. The education system is producing exactly what it is designed to produce: dropouts.
Nepal does not need to reinvent its development model. It needs to invest in the only input that consistently yields outsized returns: human capital. That begins with a classroom that teaches; a teacher who is trained; and a student who sees reason to stay.
Otherwise Nepal’s economic ambitions may stay what they currently are: underwritten by foreign labour and unsupported at home. ■
