A child born in Nepal will achieve only half of their potential productivity as an adult due to limited access to and poor quality of education and health services, according to a report by the World Bank (WB).
Unveiling Nurturing Nepali Talent to Foster Economic Growth – Nepal Human Capital Review, the multilateral lender stated that Nepal’s Human Capital Index (HCI) stood at 0.50 as of 2020. This means that children born today are expected to realise only 50 percent of their productivity potential as adults.
The HCI measures the accumulation of human capital and the future productivity of the next generation of workers. It is calculated based on three components—child survival, education, and health—and ranges from 0 to 1.
The report notes that Nepal’s economic growth is largely driven by wealth accumulation, which includes produced capital (infrastructure, buildings, machinery), natural capital (land, minerals, gas), human capital, and net foreign assets (such as reserves and foreign investments).
Although Nepal has made notable progress in health and education indicators over recent decades, one in four children remains stunted, limiting their learning capacity and future productivity. Compared to countries with similar income levels, Nepal’s per capita investment in education and health remains significantly low.
The report also identifies challenges in the implementation of federalism as a major factor behind low human capital accumulation. While federal restructuring aimed to improve service delivery in education and healthcare, unclear roles, inadequate funding, and weak coordination among different levels of government have constrained progress.
These implementation gaps pose serious barriers to effective delivery of education, health, and social protection services. Without addressing these federalism-related issues, accelerating human capital development in Nepal will remain difficult, the WB warned.
The report further highlights wide provincial disparities in human capital outcomes. Children born in Karnali Province are expected to achieve only 46 percent of their productivity potential, compared to 58 percent in Bagmati Province. Lumbini Province falls in between, with children projected to reach about 51 percent of their potential productivity.
