Senior economist Dr. Chandra Mani Adhikari is the Chairman of the Citizen Investment Trust (CIT). Dr. Adhikari’s team has focused its efforts on collecting more funds and diversifying its investments in order to contribute to the national development.
The CIT is planning to start making investments in the Upper Tamakoshi Hydropower Project. This will be its first initiative to invest in the hydropower sector. The enterprise has agreed to provide the national pride project with Rs.2 billion as a loan. It is also in the process of investing Rs.200 million as its share investment in the project.
Laxman Kafle of The Rising Nepal talked to Dr. Adhikari on the CIT’s plans and programmes as well as the current status of the Nepalese economy. Excerpts:
What are the current activities of the CIT?
We are working as per the CIT’s objectives and missions. We have prioritized fund collection by encouraging the general people. Under this initiative, we have come up with various schemes such as the saving increment programme, citizen unit account, gratuity fund, civil insurance fund and education insurance fund.
We are investing the funds in secure areas. In addition, we have also aimed to make investments for contributing to the country’s economic development. For the last three years, the CIT’s fund collection has been increasing significantly and reached Rs.28 billion. Three years ago, we had just Rs.15 billion fund. Our fund has been increasing by around 25 per cent annually. We have been collecting about Rs. 6 billion annually. We have started offering Rs.100, 000 as accident insurance for each of individual depositors.
We are effortful in institutional restructuring and amending the existing policies for diversifying our investments. Similarly, we also have made investment criteria for investing in the fixed deposit. We have stopped investing in financial institutions and development banks since last year after some of the development banks were in crisis.
I have thought of increasing the CIT’s paid-up capital to Rs.500 million. Currently, the institution’s paid-up capital has reached Rs. 280 million from Rs.100 million.
We are also working as an issue manager and market maker.
What is the CIT’s investment portfolio?
Although we planned to diversify the investments, we could not do it as per our plan due to limited legal procedures. Now we are in the process of amending the existing portfolio polices. Now, we have invested around 56 per cent (Rs. 15.63 billion) as fixed deposit investment, 8 per cent (Rs. 2 billion) in the government’s bond, 14 per cent (Rs. 4 billion) in term loans, 8 per cent (Rs. 1.94 billion) in share market and 14 per cent (Rs. 3.80 billion) in housing programme.
We have been facing a major challenge for financing because there are no any viable projects and investment climate. As we are bound to invest in limited sectors due to the existing policies, we are amending them. We are ready to finance if any feasible project come forward.
Despite having a huge amount in its coffer, it seems that the CIT is not able to invest in mega projects. What do you say about this?
Yes, we could not invest in mega projects. This is because we have yet to identify viable projects due to lack of technical manpower. We are trying to have a sound technical team for identifying the potential sectors. Now we have planned to invest in the Upper Tamakoshi Hydropower Project. This will be our first investment in the hydropower sector. We have agreed to provide Rs.2 billion as a loan and invest Rs.200 million as share investment.
We have already started investing in hydropower and share market. We seek to increase our investment in these areas. Tourism and hospitality and low-cost housing are new areas we have intended to invest in. We also have plans to invest up to 10 per cent of the total resources in tourism and hospitality sectors.
The CIT could invest in the low-cost housing either directly venturing into the projects or financing such projects initiated by others. We also want to invest in urban infrastructures through a public-private partnership (PPP) model.
The CIT has also provided loans to the Nepal Oil Corporation (NOC) for purchasing fuels. But ordinary depositors and the CIT’s employees have not been in favour of investing offering loans to the NOC.
We are confident that the loans given to the NOC are secure, although the latter is reeling under financial crisis. As the government has stayed as a guarantee, we do not have any problem with giving loans to the NOC. We can provide loans as per our investment portfolio. However, we do not provide loans continuously to a single borrower even the government stays guarantee. As per the present investment portfolio, we cannot provide more than 20 per cent of the total funds as loans to a single borrower. Now the CIT has provided about Rs.4.13 billion to the NOC. This is just a 13 cent of the total funds. So, we could provide additional loans to the NOC if the government takes guarantee. Until now, the corporation is paying interest to us on a regular basis.
As an economist, how do you assess the country’s present economic situation?
Although some of the economic indicators have been improving, the Nepalese economy is still in a ‘wait and see’ situation. In the first eight months of the current fiscal year, some of economic indicators were positive. But almost 70 per cent the country’s economy is in a deteriorating stage. Our economy is consumption and import-base, which will remain affected in long-term. The inflow of remittance into the country has increased significant this year as compared to last year. The balance of payment is in a surplus position, and the government’s budget also is in surplus.
The surplus of budget reflects that that the government has failed to increase the capital expenditures, which will hit the country’s development. In the present, the country’s economic growth should have been at least 6 per cent, but it is just 4 per cent.
What should the government and the political parties do for accelerating the country’s economic development?
In my opinion, the economic model is a must to drive the nation towards a right track. The government and the political parties should reach an understanding on common economic agendas for utilizing the available resources. Unless the economic agendas do not get a priority, we cannot think of a better economic situation of the country.
The ongoing political unrest has affected the country’s economy adversely. Potential investors are waiting for the new constitution and political consensus on economic agendas. The government should create a more business-friendly environment for prosperous Nepal. The government should invest in infrastructure development and energy sectors, which are essential for attracting investments.
The share market has improved with the progress in the peace process. Will the share market keep improving?
The NEPSE index increased with the progress in the peace process. But the growth may not be reliable. But the unexpected fluctuations in the index have reflected that the some individuals have been playing games. We need to understand that it is unnatural if the NEPSE index records a double-digit growth. In such a situation, new investors will not come in the capital market.
The authorities concerned should determine the standard point of the NEPSE index. The government should create public awareness about the capital market. I am confident that the NEPSE index will show a downturn trend in the days to come.
The government is preparing budget for the next fiscal year. What should be the size of the new budget?
As the budget is a political document, the political parties want to increase the budget size. Its size will be of about Rs.450 billion. The government should present its budget as per its expenditure capacity.
The political parties also should equally focus on political and economic issues considering their inter-linkage and importance for the nation’s overall development.