Figure 24. Extent that poor accessibility hinders business growth

5.2 Poor accessibility to roads and financial services

The barrier of poor accessibility is most severe in Karnali followed by Lumbini. Poor accessibility also hinders enterprises from accessing financial services. Many of the banks prefer immoveable collaterals with good road access. Land and building without adequate road access receive a low valuation which compounds challenges of accessing finance for businesses.

Figure 24. Extent that poor accessibility hinders business growth

Poor accessibility was a result of any or a mix of the following factors:

● Low road density. Among the three provinces, Karnali had the lowest road density. There are still many areas in Karnali which are only passable by mules and sheeps. Residents in these areas have to walk three to four days to reach trading places. In Lumbini, some roads going to tourism sites are still in a state of disrepair making travel longer and expensive. Province 2 has the highest road density among the three provinces but the quality of road surface is deteriorating which impacts safety, reduces speeds and increases travel time to the extent that the existing road asset is underutilised and underperforming (PPPC 2020).

Province Type of Road and Length (in kilometers) Total Road Mud/Unpaved Gravelled Black (in km) Topped Road Density (per sq km)

Province 2

2,696 2,831 344 5,871 0.61

Lumbini

Karnali

5,293 2,793 845 8,931 0.40

2,453 193 79 2,725 0.10

Source: Ministry of Federal Affairs and General Administration as of mid-March 2020; (MoF 2020)

● Seasonality of road access. Road network of Nepal spans about 70,000 kilometres. Only about 26% of total road network provides year-round transport facilities in the country (Paudel 2019). ● Poor road maintenance. Over half of the local road network constructed is no longer useable because of lack of maintenance (Paudel 2019). The roads require reconstruction or rehabilitation.