IMAGE: LUIS TATO/AFP–GETTY IMAGES FILE
WHEN AJAY DAS spent two and a half years as programme director for the Asia Foundation’s civil society and media programme in Kathmandu, he was doing what thousands of Nepal’s most capable graduates had done before him: choosing a career in the development sector over anything the private economy offered. The programme paid well, demanded real expertise, carried international prestige and did work that mattered. In January 2025 he received word that the Trump administration had cancelled the programme’s five-year budget of $18.5m. His team had to stop.
Das was one of tens of thousands of Nepali professionals whose working life ran through the development sector. The numbers explain why. An entry-level programme officer at an international NGO in Kathmandu earns between Rs80,000 and Rs120,000 a month. A commercial bank officer at the same career stage earns between Rs30,000 and Rs50,000. A UN or World Bank national professional earns two to four times the INGO rate again.
In a country where the formal economy offers very few paths to a juicy professional salary, the development sector does not merely compete with banking and private enterprise. It comprehensively beats them.
Nepal has 54,000 registered NGOs as of 2025, up from a few hundred when democracy opened the civic space in 1990. A further 140 international NGOs are registered with the government’s Social Welfare Council, alongside UN agencies, bilateral development banks and a constellation of consultancies that serve them. An estimated 100,000 formal and informal civil society organisations operate in total. The sector is not a sideshow to Nepal’s economy. For educated, English-speaking professionals in Kathmandu, it is the economy. A Kathmandu Post analysis found that 60-70% of Nepal’s local elected leaders have formal experience working with NGOs before entering government. The development sector, as well as employing Nepal’s talent, shapes the professional formation of the people who eventually govern the country.
What it does not do is build a productive base. The NGO premium in salaries does not come from revenue generated by Nepali customers. Meaning it comes from donors in Washington, London, Geneva, Tokyo and Brussels, allocated through project cycles that typically run two to five years and expire. A talented Nepali economist who joins a development organisation spends her career studying poverty, writing reports on malnutrition in Karnali, designing monitoring frameworks and flying to conferences in Bangkok where the findings are presented to other professionals in the same circuit. The knowledge she accumulates is real and sometimes valuable. It does not, however, build the export capacity, or the technological base, or the private-sector institutional depth that would generate employment for the people her reports describe.
The private sector has noticed the talent competition for years and largely lost it. Banks, tech companies and the handful of Nepali firms with some market ambitions cannot match INGO salaries and do not try. A senior commercial banker in Kathmandu says that the most ambitious graduates from Tribhuvan and Kathmandu universities now treat banking as a fallback option not an aspiration. “They work here for two years to build a CV,” he says, “and then they apply to Save the Children.” Whether the private sector’s inability to compete is a weakness or whether the development sector has simply pre-empted the talent pool is a chicken-and-egg argument. The outcome is the same.
The USAID withdrawal from Nepal in early 2025 has produced the largest single shock to this equilibrium in thirty years. The US had committed $659m to Nepal over five years; most of that commitment is now cancelled. Thirty-four active USAID programmes in Nepal were eliminated. Programs worth Rs95bn were affected. Nepal’s Ministry of Labour estimated that over 27,000 skilled and semi-skilled workers would lose development-sector employment by mid-2025. The Karnali Integrated Rural Development and Research Centre, which had operated in Jumla for 26 years and employed 145 people, became dormant overnight. More than 300 NGOs, consultancies and nonprofit firms faced an abrupt funding crisis.
The proximate consequences (programs interrupted, communities without services, professionals suddenly unemployed) are real and damaging. The longer-term consequence is more ambiguous. Nepal’s development sector spent three decades absorbing a proportion of its most capable professionals into a project economy funded by foreign taxpayers and calibrated to donor priorities rather than domestic market needs. The USAID shock is forcing a reckoning with that dependency. Vibhav Pradhan, a researcher at the Institute for Integrated Development Studies, a think tank, told Science magazine in June 2025 that the crisis had exposed “a highly fragile, aid-dependent system” and that Nepal needed to “allocate domestic rather than external resources for critical functions”.
Whether the professionals dislocated from the development sector will redirect their skills towards building private enterprise or just wait for the next funding cycle from the EU, the World Bank and bilateral donors who are still present, is the question Nepal’s labour market will spend the next several years answering. The gap in salaries has not changed. The private sector has not suddenly become more competitive. And the 54,000 NGOs, most of them small and poorly funded, are not going away. The brain-gain that the development sector extracted from Nepal’s productive economy over thirty years will not reverse itself because one large donor left. What it might do, at the margin, is persuade a fraction of Nepal’s next generation of graduates that the project economy is a less secure home than they were led to believe. ■
