Nepal aims to achieve middle-income country status – commissioned study analyses future opportunities for cooperation

Nepal is preparing for graduation from the least developed country (LDC) category in 2026. The Ministry for Foreign Affairs commissioned a study for an analysis of the changing relationship between Finland and Nepal, because the cooperation will expand and partnerships will diversify after the transition.

School girls washing their hands.
Finland has engaged in long-term development cooperation with Nepal in water sector. Photo: Liisa Takala/MFA

In recent decades, Nepal has achieved its development goals rapidly: extreme poverty, for example, has decreased considerably. Another significant example of success is the improved availability of sanitation and water, one of the areas where Finland has supported Nepal.

Due to internal and external events in Nepal, developments have not been straightforward. The challenges that the Nepalese society and its economy have encountered include the civil war in 1996–2006, earthquakes in 2015, and the Indian trade blockade, as well as, most recently, the effects of the COVID-19 pandemic and the war in Ukraine.

“I don’t see any single reason why Nepal couldn’t rise from the least developed country category. The country has potential and human resources, especially among the educated young population,” says Pertti Anttinen, Finland’s Ambassador to Nepal.

“However, Nepal should be able to diversify its economy and increase the volume of its exports, which in turn can offer opportunities for Finnish companies as well,” Anttinen continues.

The report recommends continued cooperation in the education sector

A study commissioned by the Ministry for Foreign Affairs analyses the effects of Nepal’s graduation from the LDC category on the relationship between Nepal and Finland and future opportunities for cooperation.

One of the aims set for the report was to identify practices that could be used for reviews in similar transition country contexts, that is, when another Finland’s partner country graduates from the LDC category.

According to the report, the Nepalese transition opens up plenty of opportunities for cooperation for Finland, for example for Finnish companies. Cooperation could focus especially on the sectors and themes where Finland has been active for a long time already, such as education, water, sanitation and hygiene, and work related to human rights and climate change.

The report recommends partnerships in technical and vocational skills education, especially focusing on the needs of Nepalese migrant workers. Higher education and investments in research and innovation are also considered important.

Finland has supported Nepal and been at its side for a long time

Nepal has been one of Finland’s partner countries since the 1980s. Over the decades, Finland has engaged in long-term development cooperation with Nepal, especially in the forest and water sectors and in education.

In 2021–2024, Finland’s development cooperation focuses on improving the quality of education, on water and sanitation, and on promoting equality and social justice. In the cooperation with higher education institutions (HEI-ICI) funded by Finland, the main emphasis is placed on teacher education and digital learning tools.

In addition, Finland participates in the work of UN agencies and development finance institutions in Nepal multilaterally. Finland conducts very close cooperation with the EU in Nepal.

Many Finnish CSOs engaged in development cooperation have been operating in Nepal for a long time. They contribute to strengthening the local civil society and reach especially the most vulnerable people.

The Finnish University Partnership for International Development (UniPID), which is a network that manages collaboration between researchers and the Ministry, is responsible for the content of the commissioned study. 

The report was prepared by researchers Avinash Dhital, Uma Sigdel and Uttam Babu Shrestha. This study is an independent document and does not necessarily represent the official position of the Ministry for Foreign Affairs.  


Hanna Päivärinta

The author works as a Communications Officer at the Department for Communications in the Ministry for Foreign Affairs.