As Nepal enters a new phase of governance under the leadership of Balen Shah, the country stands at a critical juncture. Economic transformation can no longer rely solely on traditional sectors. The next leap must come from digital infrastructure, and the government must be bold enough to build it right.
What invests in Information Technology, different from roads or hydropower, is its asymmetric advantage: relatively modest capital can unlock exponential returns in productivity, service delivery, and global integration. And yet, Nepal’s past attempts at digital transformation have repeatedly made the same mistake of prioritising applications over foundations. The result is what we have today: fragile systems that collapse under scale, duplicated efforts across ministries, and citizens who have lost trust in government technology.
The opportunity before the Balen Government is not to build more apps. It is to build Nepal’s IT Highway, a resilient, scalable digital backbone that the entire nation can run on.
What the IT Highway actually means
The IT Highway is not a single system or platform. Think of it the way you think of physical highways; they do not move goods themselves, but without them, nothing moves. A digital highway enables data, services, and innovation to flow efficiently across the country. India’s Digital Public Infrastructure, anchored by Aadhaar, is the clearest example of what this looks like in practice: a platform so foundational that an entire digital economy was built on top of it.
For Nepal, this backbone must be built in layers. The first is pure infrastructure: seven regional data centres, one per province, each with disaster recovery capacity, hosting the scalable cloud services that all government systems will eventually depend on. The second is security: SOC2-compliant, centralised cybersecurity operations built to global standards. Cybersecurity must be embedded from day one, not retrofitted after a breach makes headlines. The third is a data exchange layer: a secure interoperability framework that enables government systems to actually talk to each other, eliminating the duplication and inefficiencies that currently cost the state enormous time and money. Only after these three foundations are in place should the fourth layer, applications to be built, be built, whether for e-governance, taxation, healthcare, or logistics.
This sequencing matters enormously. It shifts the government’s role from service builder to platform enabler. Once the highway exists, innovation can flourish on top of it, from both the public and private sectors.
Five areas that will define Nepal’s digital future
Built on this foundation, five strategic areas will determine how far Nepal’s digital economy can reach. The first is Digital Public Infrastructure (DPI). A national identity system with National ID integration, eKYC for instant verification, digital signatures, and document storage, exposed through open APIs, will allow private companies in fintech, e-commerce, and logistics to build services on top of government infrastructure. India’s DPI has already shown how dramatically this model can accelerate financial inclusion and economic activity. Nepal can replicate that.
The second is Artificial Intelligence. Nepal cannot afford to watch this revolution from the sidelines. The government must act as a catalyst: partnering with public-private entities to attract international AI data centre investment, funding a Nepalese national and regional languages translation models initiative similar to India’s Bhashini project, and establishing AI research and incubation centres, one per province, to build local talent and nurture startups.
The third is something far less glamorous but equally critical: a national addressing and geospatial system. Nepal’s informal addressing system is a silent tax on the entire economy. Every logistics company, every delivery service, every emergency response team, every urban planner hits this wall. A standardised national address system combined with a digital geospatial map is a foundational investment with economic spillovers that touch every sector, from e-commerce to disaster management to infrastructure planning.
Fourth, the government must invest in building a physical and institutional startup ecosystem. IT parks across provinces, incubation centres, a government innovation fund, venture capital attraction, and a mandate for open APIs on all public services – together, these create an “Open Government” model where private firms and startups can innovate on top of public infrastructure, generating employment and economic activity that the government could never produce alone.
Fifth, Nepal needs a government-supported, privately operated national messaging platform that is secure, scalable, and interoperable. This is not a luxury. Resilient communication infrastructure for citizens, businesses, and emergency services is a national security issue as much as a convenience one.
The mistake Nepal keeps making
Nepal’s past digital initiatives have almost always focused on building isolated applications, well-intentioned efforts that consistently suffer from the same problems: they cannot scale, they do not talk to other systems, and they must be rebuilt every few years. The pattern is expensive and demoralising.
The Balen Government has a chance to break this cycle, but only by committing to infrastructure first, standardisation second, and applications third. India’s experience makes the argument clear: Aadhaar and DPI did not succeed because they were applications. They succeeded because they became platforms and on those platforms, entire industries were built.
The time to build is now
Nepal does not need to copy any single country. It needs to build the right foundations for its own context – its languages, its geography, its federal structure. But the direction is clear. An IT Highway will improve how government works, attract foreign investment, give startups a real platform to grow on, and pull Nepal into the regional digital economy in a way that isolated applications never could.
The question is not whether Nepal will digitise. It will. The only question is whether it will digitise on solid foundations or fragile ones.
If the Balen Government has the discipline to prioritise infrastructure over short-term visibility, it can build a digital economy that is resilient, scalable, and inclusive. The window for that choice is open right now. The time to build is now.
