Nepal Conflict Timeline Gtz by liaoqinmei


									       BUSIINESS FOR PEACE:



                   U LD NG

               Strategy Paper
                   Prepared by:
          Padma Jyoti (NBI Coordinator)
             Hemlata Rai (GTZ Nepal)
           Armin Hofmann (GTZ Nepal)
     Helmut Grossmann (Free-lance Concultant)

                  January 2006
                                                                      National Business Initiative of Nepal

Tablle of Contents
Tab e of Contents

Table of Contents ...................................................................................................... 1

Executive Summary .................................................................................................. 2

Conflict Context: Nepal in Crisis ................................................................................ 5

GTZ-PSP: Getting the Private Sector on Board ......................................................... 9

Involving Local Businesses ..................................................................................... 13

Who Gets Involved? ................................................................................................ 16

What Needs To Be Done?....................................................................................... 19

   Awareness, Trust and Institution Building ............................................................ 19

   Socially Responsible Business Practices ............................................................. 23

   Social Investment ................................................................................................ 25

   Policy Dialogue .................................................................................................... 27

   Expected Outcomes ............................................................................................ 31

Annex A: Nepal Conflict Timeline ............................................................................ 33

Annex B: National Conference 2003 ....................................................................... 35

Annex C: NBI Declaration 2005 ............................................................................... 36

Annex D: Suggested Activities ................................................................................ 37

                                                     National Business Initiative of Nepal

Executiive Summary
Execut ve Summary

        Nepal today faces a crisis of unprecedented magnitude. A Maoist group has
been waging a so-called “People’s War’ since 1996, aiming at the abolishment of the
present constitutional monarchy and the establishment of a people’s republic. The
private sector and the national economy are suffering due to the conflict. Many
people are leaving the country to find work. The root causes of the conflict are
corruption, bad governance, concentration of power within a small elite, social and
political exclusion of minority groups in a feudal attitude and uneven development.

        In line with the country strategy of GTZ Nepal, the Private Sector Promotion
project (PSP) addresses the conflict situation in its project activities. A major initiative
of the PSP has been its work with the private sector to help it understand its role in
the conflict situation and to support it to make a contribution to peace-building. PSP’s
support is delivered through a joint business community undertaking known as the
National Business Initiative for peace (NBI). The NBI was conceived during a
National Business Conference in July 2003 with the aim to harness private sector
efforts in conflict transformation. The NBI at the present consists of 16 leading
business associations in Nepal. The private sector is considered a good partner for
conflict transformation and peace-building for a number of reasons, primarily
because the business community has a strong interest to end the conflict and
because it is presently the only segment in society that has a legitimately elected
representation on local, regional and national level.

This strategy paper is based on four assumptions:
      The most effective interventions may be indirect, addressing root causes of
       the conflict.
      Peace interventions need to be multi-level and multi-actors.
      Conflict sensitive business practices pay off.
      Investing in youth and socially disadvantaged groups makes perfect business

        The strategy aims at engaging local businesses for conflict transformation.
These enterprises are different from trans-national companies because they are
embedded in the local institutional, political and social context and cannot evade the

                                                    National Business Initiative of Nepal

conflict. The local businesses are encouraged to improve their social image and carry
part of the peace-building burden.

           The business community can only have a positive impact on the conflict if its
initiatives are supported by a wide range of companies, associations and private
sector individuals and if these actors are focused on one vision. This vision can be
provided by the NBI. The NBI will act as a central level coordinator of activities which
will be decided and implemented in a decentralized manner. District chambers will be
given a leading role in the NBI set-up. International donors, the government and
other civil society actors are partners. Dividing responsibility and leadership is crucial
because all business actors cannot be equally effective in all levels.

       The NBI and its partners will work in four areas: awareness raising, building
trust and institutional development; corporate social responsibility practices; social
investment; and policy dialogue.

       Raising awareness for conflict-sensitivity will have to be done in the business
community and the civil society. A public discussion on the cost of conflict may create
unity and solidarity. This broad based partnership will increase the private sector’s
policy influence. Trust into the private sector will also increase through more
transparency of companies, by promoting small-scale local enterprises and
cooperatives and by social investment. The trust and influence gained by the private
sector will enable it to form neutral platforms where divided communities can meet for

       Traditional attitudes of business people are a good starting point to localize
corporate social responsibility (CSR) toolkits and training manuals and contextualize
CSR concepts. Local resource persons can be used for CSR promotion. Individual
contributions and traditional philanthropic practices can be fed into business
membership institutions. Comprehensive training is needed on the private sector’s
responsibilities in the areas of workplace, market, community and environment.

       There are three major areas of social investment for the private sector:
investment in young people, investment in community infrastructure, and investment
in creating safe spaces for peace talks and legitimizing genuine peace-building

                                                  National Business Initiative of Nepal

      Nepali business leaders have influence on the conflicting parties and the civil
society. This power must be harnessed by the NBI. The business sector is in a
unique position of creating a platform for dialogue as they are in contact with all
conflicting parties. It may offer regional and national safe spaces for interaction
between the government and civil society representatives. At a later stage these
forums can also be used for dialogue between the conflicting parties. The private
sector must maintain the role of a neutral moderator. At the same time it must lobby
for the redistribution of revenues for development, for compensation and
empowerment of local communities affected by business operations, for conflict
transformation and corporate social responsibility as subjects in education, and for
CSR practices and peace certificates.

      The expected outcome of implementing this strategy until 2007 will primarily
be wide-spread awareness, a strong NBI with strong partners, enterprises improving
their social image and track record and the identification of a future peace agenda.

                                                         National Business Initiative of Nepal

Conflliict Context: Nepall iin Criisiis
Conf ct Context: Nepa n Cr s s

         Nepal today faces a crisis of unprecedented magnitude. 1 A Maoist group has
been waging a so-called “People’s War’ since 1996. The ostensible aim of the armed
Maoist struggle is the abolishment of the present constitutional monarchy and the
establishment of a people’s republic. The insurgency has already claimed more than
12,000 lives and continues to cause immense socio-economic damage to the
country. A recent paper published by the Asian Development Bank2 concludes that
conclude “that if development expenditures decline at the current rate (4.2%), the
total GDP growth loss is 8.3% for the period between the fiscal years 2005 and 2009,
an average loss of 1.7% of growth per annum. If the conflict intensifies and
development expenditure declines at twice the current rate (8.4%), total GDP growth
lost is 10.3%, an average loss of 2.1% of growth per annum.”.

         Most companies register high losses due to the numerous strikes, road
blockades and curfews as well as from extortion of protection money. Similarly the
conflict has accelerated some structural problems, which were already causing a
decline in export value of Nepali products. The development of the carpet industry, a
major foreign currency earner for Nepal, illustrates this statement. The export value
and volume of Nepalese hand-knotted carpets have been on decline since the early
1990s due to increasing competition from other Asian countries (see figure 1).

  Information used in this chapter is mostly based on: Microfinance and Private Sector Promotion in
Conflict, Case study: PSP/RUFIN, Nepal; Grossmann and Doce, Kathmandu / Frankfurt, June 2005. For
further information see also the detailed conflict timeline in Annex A.
 Measuring the Economic Cost of Conflict, Asian Development Bank, Sungsup Ra and Bipul
Singh, Working Paper Series No. 2, July 2005, Nepal

                                                       National Business Initiative of Nepal

          Figure 1: Export value and volume of Nepalese carpets








    1 9 /8 1
    1 9 /8 2
    1 9 /8 3
    1 9 /8 4
    1 9 /8 5
    1 9 /8 6
    1 9 /8 7
    1 9 /8 8
    1 9 /8 9
    1 9 /9 0
    1 9 /9 1
    1 9 /9 2
    1 9 /9 3
    1 9 /9 4
    1 9 /9 5
    1 9 /9 6
    1 9 /9 7
    1 9 /9 8
    1 9 /9 9
    2 0 /0 0
    2 0 /0 1
    2 0 /0 2

                                         Fiscal Year
                 Value in million US $                   Vol. in 10,000 sq. mtrs.

          The structural problems in the carpet sub-sector have been aggravated by
the conflict. Cost of production has gone up because the import of wool and the
export of carpets via roads has been constrained by frequent road-blocks and
curfews. Some companies had to shift to air-freight in order to meet commitments. As
a result the Nepalese producers find it even more difficult to compete with products
from India or China and have been losing significant shares of their international
markets. The incomes of approximately 160,000 people are in danger of getting lost.

          Since the local economy is damaged by the effects of the conflict the number
of Nepalese working overseas has increased dramatically. Approximately 25% of all
Nepalese households receive remittances from family members working overseas,
mostly in India, Malaysia and Arab countries. The volume of remittances has jumped
from USD 139 million in the year 2001 to USD 808 million in the year 2004 (i.e.
almost 14% of GDP). Human capital has become Nepal’s number one export: foreign
currency earned through remittances is far higher than income from tourism or
exports to India and Europe (see figure 2).3

 Nepal’s Remittance Economy - A Decade of Change (1996-97 to 2003-4), Elvira Graner and David
Seddon, Draft 2005

                                                            National Business Initiative of Nepal

                                 Figure 2: Foreign Currency Earnings in Nepal
                                       (based on Nepal Rastra Bank 2004)

                            50      exports to India
         [in billion NRs]

                            40      exp. to overseas countries
                            30      tourism
                                 8 1
                                 8 6
                                 8 7
                                 8 8
                                 8 9
                                 9 0
                                 9 1
                                 9 2
                                 9 3
                                 9 4
                                 9 5
                                 9 6
                                 9 7
                            19 9 8
                                /2 9

                                 0 1
                             20 02/ 2
                               03 03
                                 0 0
                              19 0/8
                              19 5/8
                              19 6/8
                              19 7/8
                              19 8/8
                              19 9/9
                              19 0/9
                              19 1/9
                              19 2/9
                              19 3/9
                              19 4/9
                              19 5/9
                              19 6/9
                              19 7/9
                              99 8/9
                              20 00
                              20 0/0
                              20 1/0


                                                                                             * provisional

                                                                                             Graner 2005

                   There is general agreement on some of the root causes of the conflict in
Nepal. These include:
         - uneven development and lack of livelihood opportunities in vast parts of the
         - endemic corruption and governance failures
         - concentration of power within a select clique
         - social and political exclusion of minority groups

                   With a per capita GDP of US$ 270 and a poverty incidence of 38% Nepal is
one of the poorest countries worldwide.4 In terms of UN human development index
(HDI) the country ranks 143 of 175 nations. The country suffers from a combination
of natural disadvantages and governance failings. The continuing Maoist insurgency
and political instability severely challenge Nepal’s developmental efforts. Even
without the added burden of a conflict and political turmoil, Nepal would be a poor
nation but it wouldn’t be as bad as it is now. The conflict cuts off people from
supplies, income opportunities and aid, particularly in rural areas. The absence of a
representative government at both the national and local levels also makes it difficult
to ensure that programs are designed and delivered through participative and
inclusive processes and structures. This situation has compelled some donors to
curtail or withdraw their developmental assistance (e.g. Danish DANIDA).

    Nepal Country Strategy and Program: 2005-2009. Asian Development Bank, Kathmandu, 2004

                                                   National Business Initiative of Nepal

        The seriousness of the situation was highlighted in a joint statement by the
donor community at the conclusion of the National Development Forum (NDF) in May
2004. Terming the current situation in Nepal as “untenable”, the donor community
has called for an end to the armed conflict and a return to representative government
as pre-conditions for development efforts in Nepal to succeed.

       An already difficult situation has been further exacerbated by the King of
Nepal’s sacking of an elected government (in October 2002) and assumption of
direct rule (since February 2005). The King’s moves, said to have been taken with a
view to resolving the Maoist problem, have created tensions between successive
governments appointed by the monarch and the mainstream political parties. Despite
the royal move of February 1 the ground-reality of the Nepali conflict remains the
same: it is still a triangular conflict with the monarchy, mainstream political parties
and Maoists as the major players of this conflict. A military victory for both the Royal
Nepal Army and the Maoist rebels appear illusive, whereas the mainstream political
parties also find themselves in a fix because they lack a mass support, at least in the
short run, to force the king to accept their demands.

       The Maoists, in the context of eluding military victory, seem to be desperate
to join hands with the mainstream political parties to turn this conflict into a bi-polar
fight. The mainstream political parties have so far dismissed such possibilities, but
the Maoists have continued their attempts to woo the political parties by siding with
them in opposition of the government.

                                                   National Business Initiative of Nepal

GTZ-PSP: Gettiing the Priivate Sector on Board
GTZ-PSP: Gett ng the Pr vate Sector on Board

        GTZ Nepal has responded to the conflict in the country by initiating efforts
aimed at mainstreaming conflict sensitive development and conflict transformation
within its programs and projects. Conflict sensitive development entails two broad
aspects: safety for people working in the conflict environment and taking the conflict
causes into account when planning and implementing activities. GTZ Nepal has
committed itself to the Basic Operational Guidelines (BOG) jointly developed by the
leading international donor agencies present in Nepal. The BOG emphasize that
donors are neutral towards the conflicting parties, but committed to the up-lifting of
the poor and the underprivileged of the country. The GTZ has also partnered with
British Department for International Development (DfID) to establish a Risk
Management Office (RMO), which primarily promotes safe and effective development
in conflict and good development practices.

        In line with the country strategy of GTZ Nepal, the Private Sector Promotion
project (PSP) addresses the conflict situation in its project activities. The PSP is a
joint development project of the governments of Nepal and Germany. The German
contribution is provided through German Technical Cooperation (GTZ) and the
Foundation for Economic Development and Vocational Training (SEQUA). The
objective of the PSP project is to enhance the competitiveness of Nepal’s private
sector to generate income and employment growth. The major counterpart of the
PSP is the Industrial Enterprise Development Institute (IEDI). The project also
partners with private businesses, business membership organizations, financial
institutions, other donors, non-governmental organizations and others.

        A major initiative of the PSP has been its work with the private sector to help
it understand its role in the conflict situation and to support it to make a contribution
to peace-building. PSP’s support is delivered through a joint business community
undertaking known as the National Business Initiative (NBI).

        The role of the private sector in a conflict context can be complex. Some
Nepali businesses have clearly prospered through their close ties with successive

                                                     National Business Initiative of Nepal

administrations and some individual companies may have benefited from the ‘war
economy’. However, the vast majority of the businesses suffer due to the conflict.

           In the case of Nepal, the following factors make the private sector a good
partner in conflict transformation and peace-building:

      The private sector in Nepal is not a direct party to the conflict.
      The private sector actors enjoy access to the conflicting parties
      The business community is in a position to mobilize resources to support a
       peace-building process
      The government has to work closely with the private sector to achieve
       economic development
      The private sector has an effective network and presence throughout the
      The private sector currently is the only legitimately elected body of the civil
       society in the country.

           The most important factor that makes the Nepali private sector a good
partner in the peace-building project perhaps is the ample interest within Nepal’s
business community to engage in activities that will support peace and development.
Moreover, since the business community is presently the only segment in society that
has a democratically elected representational body, the private sector enjoys a
legitimacy to demand fair development. However, entrepreneurs lack the knowledge
and understanding of their potential role in peace-building. They also do not possess
the necessary skills to play a constructive and politically correct role. It is against this
background that in early 2003 GTZ-PSP has partnered with the private sector to
support them in their efforts on conflict transformation. Major activities to date

      Forming and facilitating a core group of private sector leaders to ‘champion’
       the case for business engagement with conflict in March 2003;
      Organizing a National Conference on “The Role of the Private Sector in
       Peace-building, Reconciliation and Development” in July 2003;
      Providing support for a planning workshop to frame strategies and programs
       aimed at peace-building, in February 2004;

                                                            National Business Initiative of Nepal

      Providing technical support in setting up a secretariat of the NBI in December
      Facilitating the NBI meetings and providing technical assistance to the NBI to
       implement its campaign and strategies.
      The NBI was conceived during the National Conference of July 2003 and with
       an aim to harness private sector efforts in conflict transformation. The NBI at
       the present time consists of 16 leading business associations in Nepal. (see
       Annex B for the full text of the conference resolution and Annex C for the
       Declaration of NBI

   Figure 3: Actors involved in the National Business Inititaive

       National Business Initiative: Actors
                                            Organizations     Donor

                            Communities                            Other


                                             & other

       This strategy paper is based on the basic assumption that the most effective
intervention into a complex and intractable conflict may be indirect, i.e. addressing
the root causes of the conflict. Therefore, it is proposed that the business-led peace
initiatives should primarily focus on reducing social and economic inequalities.

       The other basic assumption is that peace interventions in a complex conflict
must take place at various levels and that multiple implementers / actors need to be
involved. The interventions must be applied over a long period of time and in a
coordinated manner. It is envisaged that private sector actors will be involved at three

                                                           National Business Initiative of Nepal

levels of local, regional and national to work in four areas of awareness raising and
institutional development, corporate social responsibility practices, social investments
and policy dialogue.

           Here,    the   private      sector    is
identified as a significant civil society                      Basic Assumptions:
actor in the peace-building project in
                                                            The most effective
Nepal.     The     proposed     activities      will
                                                             interventions may be
primarily focus on young people and                          indirect, addressing root
disadvantaged groups (esp. low-castes                        causes of the conflict.

and women). According to the National                       Peace interventions need to
                                                             be multi-level and multi-
Population Census 2001 almost 60
percent of the Nepali population is
                                                            Conflict sensitive business
younger than 25 years of age.5 Apart                         practices pay off.
from the national interest it also makes                    Investing in youth and
perfect business sense to mobilize the                       socially disadvantaged
                                                             groups makes perfect
productivity of these people. The primary
                                                             business sense.
interest     of    the    private      sector    is
economical;        therefore,   this     strategy
paper avoids expecting entrepreneurs to deviate from their major focus, but attempts
to make them aware that conflict sensitive business practices pay off.

 National Population Census 2001 - Summary Sheet (Final Results) (18 July 2005)

                                                     National Business Initiative of Nepal

IInvollviing Locall Busiinesses
  nvo v ng Loca Bus nesses

          Economic actors are embedded in institutional, political and social contexts
that shape their preferences and determine what they want, when they get it and
what they need to be able to achieve what they want. This is especially true for local
private sector businesses which operate out of challenging environments like
ongoing conflicts. However, international experiences show that, despite being
shaped by its environment, the local private sector can significantly contribute
towards creating a desired environment and in the process contribute to peace-
building and conflict transformation (e.g. South Africa).

          Certain segments of Nepalese society
                                                            Local Businesses are:
are prejudiced against local business-people,
assuming they are either opportunists or                       Embedded in
remain uninvolved in the solution of social                     institutional, political
                                                                & social context
problems. In order to change this public
prejudice, entrepreneurs need to work pro-                     Cannot evade the
actively towards creating a new social image.                   conflict like trans-
                                                                national companies.
Nepal’s private sector needs to invest a lot of
energy to prove their commitment to social                     Need to create a new
development and peace-building. They need to                    social image of
support      institution   building,   community
initiatives and good governance.                               Need to share peace-
                                                                building burden

          The local private sector actors are
different from their transnational counterparts in
their options and limitations mainly because they are more specific to their local
context and situation. International companies can simply pull out of an instable
market whereas their local competitors have no choice but to remain there and
struggle with the instability. Local entrepreneurs are more vulnerable because they
are part of the system, have a social network and personal obligations. On the other
hand they may have tremendous power to positively influence society and
government due to their contacts and national networks. Therefore, local businesses
cannot evade the conflict but they can do a lot to promote peace.

                                                                National Business Initiative of Nepal

            In a conflict context local businesses and the society at large suffer various
economical and societal costs. Businesses will suffer directly from increased
operational costs in risk management and
                                                                Costs of Conflict & Benefits of
other indirect costs like lost business
opportunities and human resources. They
                                                            Indirect Societal Costs of Conflict
may        further     suffer      from     decreased
government              attention,          decreased            Internal costs to the country,
investment in private sector development                          regional or locality
                                                                 External cost to the international
and       infrastructure,     and     destruction      of         community
existing infrastructures. A report claims that
                                                            Direct business costs
Nepal lost anything between Rs. 55 to 88
billion      on      GDP     and     destruction       of        Security costs
                                                                 Other risk management costs
infrastructures in seven years between 1996
                                                                 Material losses
and 2003.6                                                       Opportunity costs
                                                                 Capital costs
                                                                 Personnel costs
The lack of social investment will also affect                   Litigation costs
                                                                 Reputation costs
the growth of the private sector in an
indirect way. Due to the hike in defense                    Business Benefits of Peace
expenses the government expenditure on
                                                                 Better investment opportunities
social and economic services has declined                        Reduced operational costs
by more than 1 percent of the national GDP                       Reallocation of national state
between 1998 and 2003. And this trend is                         Reallocation of national state
likely to continue in the future. The total                       expenditure
                                                                 Reallocation   of   international
security expenditure in 1998 was Rs. 5.46                         funding
billion – i.e. 1.8 percent of GDP and 9.7
                                                            Source: Nelson, 2000
percent of the annual budget. During the
last seven years the security expenditures
has quadrupled in absolute terms to Rs. 19 billion, or about 4 percent of the GDP and
15 percent of the annual budget.7 In Nepal, social sectors and infrastructure building
have become major casualties of the conflict. Real spending in key social sectors -
education, health and drinking water - remains virtually stagnant.

 Dhakal, Ameet. “Insurgency bleeds Nepal off Rs. 55b” (7/27/2005)
    Dhakal, Ameet. “Conflict puts budget in the red” (7/27/2005)

                                                       National Business Initiative of Nepal

        It is a common simplistic assumption that increased economic activities and
creation of wealth automatically will contribute to social development and poverty
alleviation. It also frequently assumed that increased economic activities will prevent
the further escalation of the conflict in Nepal. From the conflict perspective, however,
economic development is neither inherently good nor inherently bad. It can cause or
aggravate conflicts, but it can also help to solve them.

        Most conflicts are driven or sustained by an economic agenda to some
extent. In Nepal, there is not a big war economy so far. However, some businesses
benefit from the situation; for example, the country has witnessed a huge increase in
the volume of air travel, because - despite of the cost - people would rather travel by
air for safety reasons; local transport companies have been charging an additional
risk levy, and some suppliers are enjoying a price hike in essential goods. However,
the numbers of businesses that are profiting from the conflict are out-numbered by
those who have suffered. The Maoists have been extorting “donations” from people
and demand the registration of enterprises for tax purposes to finance their
insurgency. This practice is decreasing the purchasing power of the people, and at
the same time, increases the prices of products. This “bleeding effect” may have a
negative impact on the economy for many years to come - even if violence is

        Nevertheless, the local private sector has much to contribute to peace
through their economic influence and political contacts, their large financial
resources, their connections at all societal levels and their capacity to drive balanced
development. The Berghof Research Center handbook “The Role of Local Business
in Peacebuilding” identifies two reasons why local businesses need to be part of
peacebuilding efforts: first, because the private sector is always politically active to
protect their interests, and second, it has the capacity to deliver skills and resources
that a peace-building project needs to a large extent.8

 The Role of Local Business in Peacebuilding ; Berghof Research Center for Constructive Conflict
Management, 2005.

                                                  National Business Initiative of Nepal

Who Gets IInvollved?
Who Gets nvo ved?

        Acknowledging the fact that local businesses are part of the existing conflict
context, the Nepali private sector has coined its basic credo: “There can be no
successful business in an unsuccessful society and there cannot be a successful
society without successful business” (see annex A). However, the business
community can only have a positive impact on the conflict if its initiatives are
supported by a wide range of companies, associations and private sector individuals
and if these actors are focused on one vision. This vision can be provided by the NBI.

        Presently     the   National   Business
                                                           Who Gets Involved?
Initiative (NBI) consists of 16 business
                                                         The NBI will act as a
membership          organizations,        whose           central level coordinator
membership is spread on national, regional               Activities will be decided
and local levels. The NBI at the national level           and implemented in
will act as a coordinator for all business-led            decentralized manner

peace-building    initiatives and provide a              District chambers will be
                                                          given a leading role
leadership role in the national level policy
                                                         International donors, the
                                                          government and other
                                                          civil society actors are
The peace-building activities will be decided             partners

and carried out in a decentralized manner by             All private sector actors
                                                          cannot be effective on all
regional and local businesses, individually
and collectively. Apart from the local private
sector actors local political, governmental
and non-governmental actors are also considered to be important partners and
stakeholders. The communities will play a very significant role in implementation of
activities and projects. They will be consulted to identify projects, partners and modes
of implementations.

        The strategy envisages to give the district chambers a leading role in
implementation for several reasons:
                District chambers can play a crucial role in generating peace
                 dividends at the local level;

                                                      National Business Initiative of Nepal

                  They can have a key function in strengthening regional economic
                   activities through business associations;
                  They can better persuade policymakers because they are closer to
                   the ground realities affecting peace and stability;
                  They are in a better position to encourage and monitor corporate
                   social responsibility (CSR) practices in all alliance programs and
                  They are crucial in minimizing negative economic impact of the
                   conflict. By helping their members generate economic incentives
                   locally they may contribute towards mitigating brain-drain and
                   ensuring local supplies for local needs. This is extremely important for
                   a stable economy once a political conflict comes to an end, and
                   national energy needs to be focused on social transformation.
                  They are in touch with the grassroot-level business community, the
                   national level representations and with the local conflicting parties.
                   Hence they are in a position to work at all levels and also across the
                   divisive lines.

           Since Nepal depends heavily on the bilateral and multilateral donors for its
development budget securing support from the international donors may result in
galvanizing and encouraging a peace-building role for the private sector. Similarly, by
partnering with the government companies can ensure buy-in from local authorities
which will be crucial to establish social investment projects. Collaborating with other
non-economic sectors offers practical advantage of collective impact in wider peace
movement and simultaneously provides safety in numbers. Furthermore, active
engagement with other civil society actors ensures greater contribution of financial
and skill recourses for long term interventions. For example various domestic and
international development organizations may want to offer financial support and/or
provide expertise in social transformation activities. This will eliminate the
dependency of NBI and other individual chamber on a few financial sources.

          In order to be effective the private sector also needs to develop leadership at
various levels. Developing leadership at various levels will help to divide
responsibilities, devolve authorities and decentralize ideas and implementation of
those ideas. Since this method encourages involvement of a maximum number of

    Berghof Research Center, 2005.

                                                                 National Business Initiative of Nepal

actors, it encourages ownership at all levels involved. Moreover, dividing
responsibility and the leadership role is crucial because all business actors cannot be
equally effective in all levels. There needs to be frequent vertical and horizontal
interaction between all business actors across the local, regional and national levels.
The businesses also need to develop a proper channel to ensure that the concerns
at the local or regional level can effectively feed into the national level leader
represented by National Business Initiative (NBI) and vice versa.

        Figure 4: Leadership to make Businesses conflict sensitive

                       Leadership to Make
                   Businesses Conflict Sensitive
                                                                NBA at National Level: Value Creation
                                                                •Establish that private sector is a
                                                                stakeholder in societal wellbeing.
                                                                •Establish that private sector can play a
                                                                role in building peace and
         BMOs at Regional Level: Risk                           conflict transformation
                                                  NBI at
         •Develop and implement policies
                                              National Level:
         and procedures to minimize           Value Creation
         damages that may result from
         their business operations
         •Create environment for business
         partners to make aware and                BMOs at
         comply with policies and              Regional Level:              Member Companies at Local
         procedure                            Risk Minimization             Level: Compliance
                                                                            •Comply with national regulations
                                            Member Companies at             and internationally agreed laws,
                                                Local Level:
                                                                            conventions and standards

                                                    National Business Initiative of Nepal

What Needs To Be Done?
What Needs To Be Done?

           The proposed strategy is a mixture of short term, medium term and long term
activities on local, regional and national levels. Three areas are being addressed10.
         Compliance with national and international regulations and standards.
         Risk Mitigation to minimize damage from business operations.
         Value Creation to create positive societal value by undertaking conflict
          transformation initiatives.

          This strategy paper proposes that individual businesses would lead at
compliance level, the business membership organizations would lead at risk
mitigation level and the NBI would lead at value creation level. This, however, will not
exempt any of these business actors from their roles and responsibility in other

          The first step will focus on raising public awareness for conflict-sensitive
behavior, building trust and institutional development. The second step deals with the
application of conflict-sensitive practices in companies as well as in the civil society.
The third step encourages businesses to engage in social investment primarily aimed
at young people. The final step is to build up capacities of the private sector to
effectively engage in policy dialogue and to increase the sector’s impact on the larger
peace-building project at the national level.

Awareness, Trust and Institution Building

          In order to be effective in peace-building the Nepalese private sector needs to
focus first of all on raising awareness and building trust. Lack of support from the
larger society can be a serious constraint to a business-led peace-building initiative,
as seen in Sri Lanka during the 1990s: the Ceylon Chamber of Commerce made an
attempt to broker an agreement between the government and the LTTE (Liberation
Tigers of Tamil Eelam) but failed because the general public was not in favor of the
business-led proposal. In the meantime the Business for Peace Alliance (BPA) has

     Nelson, 2000

                                                   National Business Initiative of Nepal

been established, representing seventeen chambers of commerce from all over Sri

         It is envisaged that the Nepali       Awareness, Trust and Institution
private sector will seek partnership,                     Building:

collaboration and cooperation with                Raising awareness for
                                                   conflict-sensitivity in business
genuine actors of the larger civil
                                                   community and civil society
society,     government        and     other
                                                  Public discussion on the cost
supporters like the international donor            of conflict to create unity and
community.       The     Nepali     business       solidarity

sector can carry out awareness raising            Broad based partnership to
                                                   increase influence
activities at two levels. A set of
activities will be developed targeting            Creating a neutral platform
                                                   where divided communities
businesses to raise awareness as to                can meet for dialogue
why the private sector needs to get
                                                  Build trust into the private
involved in peace-building. Another                sector by increasing
set of activities will be targeted at the          transparency of companies, by
                                                   promoting small-scale local
non-business sectors to gain their
                                                   enterprises and cooperatives
support for a business-led peace-                  and by social investment
building initiative.                              Establish the NBI as a
                                                   platform and focal point of the
                                                   private sector’s conflict
           The   first   activity    towards
                                                   transformation and peace-
raising awareness will be to initiate a            building efforts
public discussion on the costs of the
conflict. Various research institutions are already working on this matter. Their
findings will give credibility to the public discussion while the engagement of the
business sector will ensure that the public discussion does not remain an academic
exercise. The public discussion will create a sense of unity and solidarity between the
business and the non-business sectors. Moreover, the broad public discussion will
help the private sector to gain more influence which can be invested in policy
dialogue and peace negotiations.

           The awareness-raising campaign must also put emphasis on improving the
social image of the Nepali business sector. The public will have to be informed about
the positive contribution the private sector makes to the society at large. Examples of
existing good business practices in the country need to be documented and shared
with the public. The same applies to the business community. Chamber to chamber

                                                      National Business Initiative of Nepal

exchange visits and presenting real life cases of good practices are often an effective
way of inspiring others to adapt such practices.

        Since the majority of Nepali businesses are family concerns they are not very
transparent in their operations. However, there is an urgent need that companies
become transparent to gain the trust of the communities where they operate.
Transparency will also help to make the positive contributions of local businesses
known to the society at large. Transparency involves adherence to the laws of the
country, e.g. with regard to taxes and labor laws.

        The second approach to gain the trust of the people can be to work with
community-owned       cooperatives.     Various    types    of   cooperatives   are   being
successfully run in Nepal, which have tremendously enhanced leadership abilities of
those involved. Some individuals with cooperative experiences have already made
marks in local government bodies. These leadership potentials can also be
channeled into the private sector if the cooperatives are granted BMO membership.
This would lend a voice to communities and small producers in BMOs and in policy
making processes in higher levels, which is not the case at the present. Granting
BMO memberships to cooperatives will also broaden the bases of the chambers
ensuring a better connection between the national level business players and their
grassroots level counterparts. This will earn a stronger power currency for the whole
private sector. A stronger power currency can be decisive when the business sector
engages in policy dialogues.

        The third possible approach can be outsourcing economic activities to
community-based businesses and individuals. This would ensure that profits are
distributed in a more balanced manner. Generating shared economic activity across
lines of haves and have-nots is perhaps the most significant contribution the private
sector can make. It not only serves to promote trust but also create a sense of mutual

        Fourthly, the private sector can do various socio-economic activities within
the local communities to show their commitment to transparency and their support for
social development. In addition to that amending the existing hiring policies to ensure
that the maximum number of graduates from rural areas, disadvantaged groups and
conflict affected or conflict prone areas will further build trust.

                                                  National Business Initiative of Nepal

        There is yet another way that the private sector can contribute to the society
i.e. to making available human resources as against providing only financial
assistance. Some transnational businesses in Nepal are already offering sabbaticals
to those employees interested in social and development work. This can be
replicated in local businesses. Larger companies can offer paid leave to their
employees to train small and medium enterprises on corporate social responsibilities
or to work as volunteers at NBI. This would be a large contribution for institutional
development of NBI and mainstreaming CSR in smaller businesses.

        Apart from training those who are already employed, the private sector can
address potential future employees. Feeding the subject of CSR into business
schools is one way of doing this. At the national level the NBI may sponsor an annual
competition for students in the theme of “business and society”. These activities will
help young people to internalize the concepts of CSR and socio-economic justice.

        Finally, raising awareness and building trust must be translated into an
institution, which makes use of trust and awareness. For this purpose the NBI was
formed as a platform and focal point of the private sector’s conflict transformation and
peace-building efforts. The NBI offers membership to all business membership
organizations in Nepal. Presently there are 16 such organizations within NBI. The
members form an executive board, which elects a chairperson and other office
bearers. Several committees are engaged by the board to plan and implement
activities, such as awareness campaigns, conferences, training on CSR, etc. The
NBI has a small secretariat to organize its daily business.

        NBI has to be part of the business community and it must have the mandate
of all organized business people to act on their behalf. If this broad mandate is
lacking there will be a divide between those businesses that support NBI and those
that are against it. In that case NBI would fail and the Nepali private sector would
lose its credibility and mandate to lead the peace-building process. Therefore, NBI
must engage in continuous interaction with all private sector players. This can be a
lengthy and tiring exercise, which requires leadership skills. However, there is also a
need for developing leadership in the various business membership organizations
because it is them who will create the strength needed for the policy dialogue.

                                                  National Business Initiative of Nepal

Socially Responsible Business Practices

         Apart from some large scale businesses like commercial banks, luxury hotels
and airlines, local businesses operating in Nepal can be categorized as small and
medium enterprises (SMEs), which are mostly run and inherited by family members.
In this business environment a modern
corporate culture cannot develop easily.          Socially responsible business
Traditional values and ties are still more
                                                     Use traditional attitudes of
important         than      corporate    social
                                                      business people as starting
responsibility.                                       point.

                                                     Localize CSR toolkits and
         However, if carefully planned and            training manuals and
                                                      contextualize CSR
implemented the traditional values and
norms can be transformed into tools to
                                                     Use local resource persons
promote corporate social responsibility               for CSR promotion
(CSR).      Traditionally     Nepali    society
                                                     Institutionalize individual
encourages charity and philanthropy; and              contributions and
many individuals contribute generously to             traditional philanthropic
their respective communities. Developing
                                                     Comprehensive training on
toolkits and training manuals that localize
                                                      private sector’s
and contextualize the concepts of CSR                 responsibilities in the areas
will be the first attempt towards promoting           of workplace, market,
                                                      community and
socially responsible business practices in

         The NBI at the national level and local BMOs at district and regional levels
can contribute in preparing CSR trainers who would be designated to train local
businesses all over the country. Additionally, utilizing the CSR trained employees of
the Nepal branches of various trans-national businesses like Surya Nepal and
Standard Chartered Bank as local training resource persons may help in further
localizing CSR concepts, increasing cost effectiveness of trainings and encouraging
business partnerships between local and trans-national companies.

         The small and medium size of the businesses can prove an asset in
promoting CSR practices. The SMEs have an advantage of faster decision-making

                                                   National Business Initiative of Nepal

processes and therefore could introduce and promote CSR practices easily. In fact,
many Nepali business people already are doing good work in the social field but this
is not known to the public. Therefore, business membership organizations should
document and publish such good examples and invite members to learn from them.

         Business can be seen as having responsibilities in four different areas, the
workplace, the market, the local community and the environment. At the workplace
level businesses need to respect and comply with standards and legal provision
related to human rights and labor rights. At the market-level they need to comply with
good corporate governance practices like adherence to standard code of ethics,
using globally accepted accounting practices, disclosing relevant information to
consumers and transparency in operations. These practices help them to be
responsible to their investors, their workers and consumers.         Thirdly, companies
have a responsibility to get engaged in the local community. Businesses are part of
the community. Different communities have different expectations from the local
private sector; therefore, companies should engage communities in identifying their
needs and expectations and work towards addressing them. Finally, the businesses
need to work towards minimizing negative environmental impacts. Resource efficient
technologies and practices are generally more environmental friendly and also save

         Very few Nepali firms are engaged in CSR practices, either because they do
not understand the relevance or because they do not know how to go about it.
According to a study published by Action Aid Nepal in the year 2003 most local firms
were aware about various social problems but only one fifth of them had undertaken
initiatives or made contributions to help address those social problems.11 In order to
ensure a comprehensive understanding of CSR the NBI (National Business Initiative)
can take a lead in seeking collaboration of different organizations and agencies
specializing in the four areas to develop training programs. Involvement of different
organizations will ensure broad based support and legitimacy. It may also open up
opportunities for further partnerships in other areas of peace-building.

         Applying socially responsible business practices benefits the companies
themselves since they earn a good reputation, which in turn may mean that they can

  A Study on the Status of Corporate Social Responsibility in Nepal - Action Aid Nepal and
Lotus Holdings Pvt. Ltd., Kathmandu, 2003

                                                            National Business Initiative of Nepal

get and keep the best employees available in the market; that they need to invest
less in training employees; and that they increase the value of their brand name (esp.
important for exporters). In addition, a firm with a good reputation may also get
access to socially responsible investment funds which will further strengthen
compliance to social standards.

           It is envisaged that so-called “Peace Certificates” will be awarded to
companies that are not involved in the war economy and actively promote social
justice and peace. A group of highly reputed organizations (like the UN or
International Alert) will be asked to get involved in auditing certifying local companies.
Those companies that are rated positively will receive a certificate which they can
also use as a label on their products and as an asset in their marketing campaigns.
Their benefit will be not only increased sales but hopefully also reduced likelihood to
be attacked by the conflicting parties.

           The activities under this segment will complement those envisaged under the
category of awareness raising and trust building, and at the same time they will
strengthen and create the background for activities planned under the social
investment category.

Social Investment

           Young people are the most vulnerable and volatile social group in any
society. Therefore, social investment initiatives undertaken by the Nepali private
sector should primarily be aimed at youth, esp. from disadvantaged groups.
Supporting young people to prepare themselves for jobs and offering them job
opportunities also makes business sense because it provides companies with skilled
staff. Every year hundreds of thousands of Nepali youths fail their high school exams
but the government does not offer them any kind of fallback opportunities12.

           In partnership with governmental and semi-governmental institutions, like the
Council for Technical Education and Vocational Training (CTEVT) and the Industrial
Enterprises Development Institute (IEDI), the private sector can adopt three
approaches in this regard: (a) to sponsor young people of disadvantaged groups and
     Lal, CK “How about those who did not pass?” 7/7/2005

                                                           National Business Initiative of Nepal

those from conflict affected areas to get training in vocational skills, (b) to offer grants
to local non-government and community organizations through district chambers to
train local youths in entrepreneurship skills and equip them to find employment, and
(c) to support education for conflict transformation in schools. - In order to make
these training initiatives effective the NBI or one of its partners could do a regular
needs assessments in the country, identifying what kind of skills are needed in local

           The aforementioned activities address                      Social Investment:
various conflict transformation issues and help                      Invest in young people
the Nepali private sector to establish itself as a                    because they are the
“connector” rather than a “divider” in the                            most vulnerable group

ongoing conflict context.13 First of all these                       Train youths so that
                                                                      they can get good jobs
activities will promote the tripartite partnership
                                                                     Promote partnership
between         communities,       government        and
                                                                      between private
companies, which will create a broad base of                          sector, communities &
support for private sector initiatives. Secondly,                     government

public-private cooperation will be promoted by                       Reward peaceful
channeling corporate resources to address an
                                                                     Consult local
urgent national need. Thirdly, this approach
                                                                      communities and
rewards peaceful behavior of young people.                            engage other
Fourthly, the activities will help the overall                        stakeholders for social
Nepali economy by making Nepali workers
more competitive. According to Nepal Labor
Force Survey 1998-1999 the net laborer
exchange between Nepal and India is the equal, but Indian guest-workers take home
more money from Nepal than Nepali workers from India because more Indians are
employed in semi-skilled jobs and thus earn more money14.

           Furthermore, these activities will address some of the common wrong
assumptions that businesses hold when implementing social investment strategies.
They mistakenly believe that creating employment and wealth will always do well to
the society. Thus they overlook the possible harms that the private sector can cause
to society. Since the suggested activities are not limited to certain areas or groups,

     Do No Harm: How aid can support peace or war. - Anderson, M.B.; Lynne Rienner Publishers 1999
     Nepal Labour Force Survey 1998-1999. Central Bureau of Statistics, Kathmandu, 2000

                                                   National Business Initiative of Nepal

and thus minimizes instigating jealousy between communities. The activities will
focus on addressing the root causes of the Nepalese conflict i.e. social inclusion and
disparities, rather than reacting to episodic symptoms of hostility between

        The other area of social investment can be construction of social or economic
infrastructure, which is the most traditional way of private sector involvement.
However, business people need to be more thoughtful in this respect. Local
communities should be consulted regarding their needs and other stakeholders, such
as the local administration, must also be part of the effort. In Nepal community-
owned and managed schools may be very suitable for social investment by the
private sector. Business people can enter into partnership with existing groups like
forest users, water users, mothers’ group or local youth clubs.

Policy Dialogue

        Policy dialogue is the most difficult part of the strategy presented in this
paper. There are a number of good reasons for the business sector to get involved in
policy dialogue but there are also a number of risks.

        Nepali business leaders are well connected, not only to other business
people in the country and overseas but also to the conflict actors, the royal family,
politicians, administrators, military and the Maoist rebels. Therefore, national and
regional business leaders have a large potential to positively influence the political
decision-making process. Yet equally, there is a risk that this power might be
exercised negatively. In order to harness this potential for conflict transformation
business leaders must have a shared vision. The NBI offers this vision under its own
strong leadership. NBI has already published its basic principles to expresses its
neutral position towards the conflict parties. Thus the private sector will also be better
able to resist pressure to side up with one of the conflicting parties. However, being
neutral does not mean the private sector will dismiss opportunities to collaborate for
peace with various stakeholders.

                                                          National Business Initiative of Nepal

          The business sector is in a unique position of creating a platform for
dialogue. Due to its influence and democratic institutional set-up the business
community’s call for dialogue cannot be
                                                                   Policy Dialogue:
ignored by any segment of society and even
                                                                 Harnessing the
not by the conflicting parties. In a first step, the
                                                                  influence of business
business community may create regional and                        leaders
national safe spaces for interaction between                     Creating safe spaces
the       government        and    civil      society             for dialogue
representatives.     This    can   be      helpful   in          Preparing the forum for
fostering an understanding of each other’s                        possible peace
perspectives and exploring opportunities for
                                                                 Private sector as
cooperation. In a second step these forums
                                                                  neutral moderator and
may be used for policy dialogue on conflict                       lobbyist
transformation and for the preparation of                        Lobby for development,
peace-building. If one day there will be peace                    compensation,
                                                                  empowerment, peace
negotiations between the government and the
                                                                  and CSR education,
Maoist rebels this policy platform created by                     and CSR practices.
the private sector may prove to be very useful
as a neutral ground to meet. Of course, the
private sector will not be able to play the role of neutral peace negotiator but an
international diplomat might find the ground prepared.

          However, there are several aspects that may put the idea of creating such a
platform at risk. In the context of the ongoing conflict the private sector needs to be
very careful of maintaining its neutral position and its social image. Trust could get
lost easily if one of the conflict parties or the civil society would perceive the private
sector to take sides or to do not enough itself for peace. There are various
stakeholders with very diverse interests, even within the business community. The
NBI and its members will have to strictly keep to their role of moderator.

          Having said that the private sector should only be a moderator it is also true
that it should lobby for necessary changes:

         Redistribution for development: The private sector can lobby the government
          to ensure that a certain percentage of the tax paid to the government remains
          with the local communities. The resources thus generated can be used for
          local development. However, it falls into the private sector’s responsibility to

                                              National Business Initiative of Nepal

    convince the government that they are serious about assisting the local
    people. To display their commitment the private sector can decide to invest a
    small percentage of their net profit for socio-economic development of the
    general Nepalis through a business trust or a similar institution. As a
    contribution of the government the business sector can negotiate for tax
    exemption in money thus invested for social development.

   Compensation and Empowerment: The Nepali private sector can advocate for
    compulsory    context   analysis   and   impact   assessment     prior   to   the
    establishment of an enterprise. This would also be binding for trans-national
    companies and other foreign direct investment projects. The context
    assessment may include assessing the non-monetary value of land, which
    may prove to be crucial in protecting cultural rights of minority groups. In
    order to ensure that the non-monetary value of land is properly calculated the
    participation of the communities is extremely important. Thus the communities
    would be empowered and compensated. - One way of achieving it can be to
    lobby the government to ensure its outdated compensation terms conform to
    current market rates. The private sector can also insist on providing
    investment advices to communities who get compensated with cash to ensure
    economic stability for villagers, and they can lobby for land-for-land
    compensation as a huge majority of Nepalis depend on agriculture for their
    livelihood and are rarely equipped with any other skills to sustain themselves.

   Conflict Transformation and CSR in Formal Education: To ensure the
    concepts of conflict transformation and corporate social responsibility are
    introduced in the education system the private sector needs to lobby with the
    education authorities. Conflict transformation can be taught in primary and
    secondary schools, CSR should be made part of degree courses in business
    schools or enterprise development institutions, like the Industrial Enterprise
    Development Institute (IEDI).

   Added Value through Peace Certificates: Many Nepali manufactures are
    export-oriented. Their major markets are in industrialized countries where the
    clients want to buy products that do no harm to people and the environment.
    The experience of the Nepali carpet industry with regard to child labor is a
    good example how the social image of a product can destroy or strengthen

                                         National Business Initiative of Nepal

the market position of an industry. Similarly, the business community should
have a policy dialogue among themselves how to improve the image of their
products by promoting peace. A peace certificate as outlined in the chapter
on CSR may be a good incentive for enterprises to get involved.

                                                    National Business Initiative of Nepal

Expected Outcomes
Expected Outcomes

       This strategy paper aims at enabling the local private sector to contribute to
conflict transformation and peace-building. It expects the National Business Initiative
(NBI) to play a pro-active role in implementing various socio-economic activities that
may be crucial in transforming the present conflict and securing permanent peace for
Nepal. It targets to empower the Nepali entrepreneurs and their federations to
engage in a policy dialogue. The following outcomes are expected until 2007:

      The general public knows about the National Business Initiative and its

      There is substantial press coverage of the National Business Initiative and its

      Entrepreneurs become conscious of their role in conflict transformation and

      Local chambers initiate conflict-related activities;

      Entrepreneurs apply socially responsible business practices in order to
       contribute to just socio-economic development;

      Businesses reach out to the communities with conflict-relevant socio-
       economic development activities;

      The private sector will mobilise civil society for conflict transformation
       activities led by the private sector;

      The NBI will increase its membership;

      Additional donor organizations will actively support the NBI;

      Enterprises will be awarded “peace certificates” which will improve their
       image in the public;

      The number of cases that will subject the private sector to harassment and
       intimidation by any of the conflicting parties decreases;

      The private sector starts engaging in policy dialogue with government at
       various levels;

                                                  National Business Initiative of Nepal

      Entrepreneurs and their federations identify topics for a future peace agenda
       and are able to present them.

        The activities proposed in this paper are flexible and there are options to
choose from. Since the conflict is dynamic, the intervention also needs to be
dynamic. NBI must be able to address the challenges of an ever changing conflict
environment. In order to be able to do this the NBI will conduct an annual evaluation
to measure the progress made by its members in implementing CSR and social
investment activities. The evaluation, apart from measuring success or failure, will
also try to recognize the changing nature of goals through the life of an intervention.
The evaluation process will be highly participatory: the evaluator will engage many of
the people who are keys to implementation of an intervention so that there would be
a broad based ownership of the findings of the evaluation. If the key people feel
ownership of the findings, there is higher chance that those findings will be
implemented in the future. This process will be more effective in adjusting an
intervention to address the changing conflict context; and the increased sense
ownership will be crucial for success of any intervention.

                                                    National Business Initiative of Nepal

Annex A: Nepall Conflliict Tiimelliine15
Annex A: Nepa Conf ct T me ne15

1990 - King Birendra bows to pressure and agrees to a new democratic constitution.

1991 - Nepali Congress Party wins first democratic elections. Girija Prasad Koirala
becomes prime minister.

Political instability

1994 - Koirala's government defeated in no-confidence motion. New elections lead to
formation of a Communist government.

1995 - Communist government dissolved. A radical leftist group, the Nepal
Communist Party (Maoist) begins insurrection in rural areas aimed at abolishing
monarch and establishing a people's republic.

1997 - Continuing political instability as Prime Minister Sher Bahadur Deuba is
defeated and replaced by Lokendra Bahadur Chand. Chand is then forced to resign
because of party splits and is replaced by Surya Bahadur Thapa.

1998 - Thapa stands down because of a party split. GP Koirala returns as prime
minister heading a coalition government.

1999 - Fresh elections give majority to Nepali Congress Party. Krishna Prasad
Bhattarai becomes prime minister.

2000 - Prime Minister Bhattarai steps down after a revolt in the Nepali Congress
Party. GP Koirala returns as prime minister, heading the ninth government in 10

2001 April - General strike called by Maoist rebels brings life in much of the country
to a virtual standstill; police arrest anti-government demonstrators, including some
opposition leaders, in Kathmandu.

2001 June - King Birendra, Queen Aishwarya and other close relatives were killed in
a shooting spree most probably by drunken Crown Prince Dipendra, who then shoots
himself. Prince Gyanendra crowned King of Nepal on 4 June

2001 July - Maoist rebels step up campaign of violence. Sher Bahadur Deuba
becomes prime minister, heading the 11th government in 11 years, after Girija
Prasad Koirala quits over the violence.

2001 July - Deuba announces peace with rebels, truce begins.

2001 November - Maoists say peace talks have failed, truce is no longer justified.
Launch coordinated attacks on army and police posts.

   Source: Edited version, information available at

                                                    National Business Initiative of Nepal


2001 November - State of emergency declared after more than 100 people are killed
in four days of violence. King Gyanendra orders army to crush the Maoist rebels.

2002 February - Maoists kill 127 in weekend raids on several government targets.

2002 April - Maoist rebels order five-day national strike, days after hundreds are
killed in two of the bloodiest attacks of six-year rebellion.

2002 May - Intense clashes between military and rebels in the west. Rebels declare
one-month ceasefire, rejected by the government. Deuba visits Britain and other
states, seeking help in the war against Maoist rebels. US President George W Bush
pledges $20 million.

2002 May - Parliament dissolved, fresh elections called amid political confrontation
over extending the state of emergency. Deuba expelled by his Nepali Congress
party, heads interim government, renews emergency.

2002 October - Deuba asks king to put off elections by a year because of Maoist
violence. King Gyanendra dismisses Deuba and indefinitely puts off elections set for
November. Lokendra Bahadur Chand appointed to head government.

2003 January - Rebels, government declare ceasefire.

2003 August - Rebels pull out of peace talks with government and end seven-month
truce. Rebels call three-day general strike in September. Political stalemate; clashes
between students/activists and police; resurgence of violence continues.

2004 May - Royalist Prime Minister Surya Bahadur Thapa resigns following weeks of
street protests by opposition groups.

2004 June - King Gyanendra reinstates Sher Bahadur Deuba as prime minister.

2004 August - Maoist rebels stage week-long blockade of Kathmandu, stopping
supplies from reaching the city.

2004 December - Maoist rebels again stage a week-long blockade of capital.

2005 1 February - King Gyanendra dismisses Prime Minister Deuba and his
government, declares a state of emergency and assumes direct power, citing the
need to defeat Maoist rebels.

2005 30 April - King lifts the state of emergency

                                                    National Business Initiative of Nepal

Annex B: Natiionall Conference 2003
Annex B: Nat ona Conference 2003

       Conference Resolutions from the National Conference, June 2003
       “The Role of Private Sector in Peace-building, Reconciliation and

1. There can be no successful business in an unsuccessful society and there can
   be no successful society without successful business. Realising this symbiotic
   relationship between business and society, the participants reiterate the
   appropriate role of the business community in conflict resolution process and
   establishing lasting peace in the country.

2. The business community cannot play the role of a principal actor; it can only act
   as a facilitator, interlocutor or a conciliator. However, the participants realise the
   need for competent, devoted and organized leadership.

3. Building trust relationship between private sector, government and the parties to
   the conflict is a precondition for initiating peace process. Building trust
   relationships should be a reciprocal process.

4. Due to the insurgency and political instability prevailing in the country, costs of
   doing business have substantially increased in Nepal. The shrinkage in economic
   activities has further aggravated the conflict situation by way of dislocation of
   people, mass migration and unemployment creation. This damage has further
   retarded our development efforts.

5. The private sector believes that peace and stability are critical to Nepal's long-
   term economic development and prosperity. While welcoming the peace process,
   the private sector is concerned about the current uncertainty, particularly its
   negative impact on prospects for investment, economic growth and job creation.

6. The private sector acknowledges its responsibility in supporting efforts to secure
   a permanent solution to the conflict and is committed to working with all parties to
   the conflict to ensure that the opportunity for peace is not lost.

7. The private sector recognizes that a just solution to the conflict can only be
   achieved by addressing the underlying causes. In this undertaking, the private
   sector is committed to harnessing its collective resources and networks in pursuit
   of equitable and sustainable development.

8. The participants realize the need to establish an alliance of business community,
   to be named the National Business Initiative to support the peace process and to
   reconstruct the economy.

                                                                 National Business Initiative of Nepal

Annex C: NBII Decllaratiion 2005
Annex C: NB Dec arat on 2005

Our Commitment for Peace
The National Business Initiative (NBI) is a joint undertaking of Nepal’s private
sector. This demonstrates our commitment for a sustainable peace through just socio-
economic growth. We voluntarily agree to abide by the following basic principles,
which comply with the national and international standards of socially responsible
business practices.

        We are committed to improve the quality of life of all Nepalese through
         development of entrepreneurship, creation of opportunities and generation of
        We believe that there can be no successful business in an unsuccessful society
         and there can be no successful society without successful business. Prosperity
         requires peace.
        We are part of the Nepalese society, therefore; we are committed to
         investments for socio-economic betterment of all of us together.
        We, the business community, are committed to overall well-being of our
        We believe that businesses have to be transparent; and sensitive to the needs
         of all, including the poor and the marginalized regardless of their politics,
         ethnicity, caste, religion and gender.
        We employ people on the basis of suitability and qualification only.
        We are non-political, and we are open to cooperate in all genuine endeavors
         for peace.
        We do not accept being subjected to violence, abduction, destruction,
         intimidation, extortion or threats to the rights of free peaceful living of citizens
         in any manner.
        We oppose forced and intimidated contributions in cash or kind to any parties.

                     Padma Jyoti                                            Chandi Raj Dhakal
        Coordinator, NBI Executive Committee                  President, Federation of Nepalese Chambers of
                                                                     Commerce and Industries (FNCCI)
                 Rajesh Kazi Shrestha                                      Narendra Bajracharya
    President, Nepal Chamber of Commerce (NCC)                   President, Hotel Association Nepal (HAN)
                   Ang Dendi Sherpa                                          Umesh Shrestha
 President, Federation of Nepalese Cottage and Small        President, President, Private and Boarding Schools
                   Industries (FNCSI)                                     Organization (PABSON)
                    Shanti Chaddha                                             Saroj Pandey
President, Federation of Women Entrepreneurs’ of Nepal    President, Nepal Petroleum Dealers’ Association (NPDA)
                  Sukunt Lal Hirachan                                            Nirmal Gurung
  President, Federation of Contractors’ Association of        President, Nepal Association of Foreign Employment
                     Nepal (FCAN)                                             Agencies (NAFEA)
                Chiranjiwi Lal Sarawagi                                         Ashok Sharma
  President, Nepal National Marwari Council (NNMC)           President, Nepal Film Producers’ Association (NFPA)
                     Dr. Bhola Rizal                                               Hira Udas
 President, Association of Private Health Institutions of         President, Federation of Nepalese Transport
                     Nepal (APHIN)                                           Entrepreneurs (FNTE)
                                  And its growing rank of Associates and Members

                                                     National Business Initiative of Nepal

Annex D: Suggested Actiiviitiies
Annex D: Suggested Act v t es

                                                    Short Term    Medium         Long Term
Raise awareness/ gain commitment
     Advertisements/slogans in print &                       
         electronic media
     Articles in newspapers/press                                                          
     Stickers /brochures                                                                    
     Regional conferences/workshops                                                         
Institutional support for NBI
     Study trips                                                                            
     District conferences                                                                   
     Networking events                                                                     
     Formulate binding/non-binding codes
         for businesses                                                     
Responsible business practices
     Manuals and toolkits                                                   
     Training of trainers                                                                   
     Conferences                                                                            
     Networking with regional &                                                             
         international CSR organizations                      
     Interactions with trade unions                                                         
Social Investment
     Collaboration with schools to                                                 
         organize events on the theme of
         “business and society’
     Partnerships with technical schools to                                         
         provide scholarships for young
         people from conflict ridden & conflict
         prone areas
     Establish a ‘Business Trust’ to                                               
         collaborate with civil society in crisis
     Collaborate with business schools                                              
         and government to incorporate
         conflict sensitivity & CSR education
     Support for socio-economic projects                                            
Policy Dialogue
     Research and advocacy interventions                                                    
     Specialized consultancy missions                                                       


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