Handmade Paper in Nepal Value Chain Approach Partner for the Future Worldwide

Document technical information

Format pdf
Size 1.0 MB
First found Jun 9, 2017

Document content analysis

Language
English
Type
not defined
Concepts
no text concepts found

Persons

Walt Whitman
Walt Whitman

wikipedia, lookup

Michael Porter
Michael Porter

wikipedia, lookup

Barbara Rush
Barbara Rush

wikipedia, lookup

Organizations

Places

Transcript

Handmade Paper in Nepal
Upgrading with Value Chain Approach
Partner for the Future
Worldwide
Copyright © 2007
Deutsche Gesellschaft fϋr Technische Zusammenarbeit (GTZ) GmbH
German Technical Cooperation/Private Sector Promotion-Rural Finance Nepal
All rights reserved
Publisher
Deutsche Gesellschaft fϋr Technische Zusammenarbeit (GTZ) GmbH
German Technical Cooperation/Private Sector Promotion-Rural Finance Nepal
(GTZ/PSP-RUFIN)
Narayani Complex, Pulchowk, Lalitpur
PO Box 1457 Kathmandu, Nepal
Tel
: +977-1-5555289
Fax
: +977-1-5521712
Email : [email protected], rufi[email protected]
Internet
www.gtz.de/nepal
www.gtzpsp.org
Author
GB Banjara
Coordinator, Private Sector Promotion Project
ISBN: 978-99946-2-238-2
Photographs
All photographs © GTZ/PSP-RUFIN
Editor
Susan Sellars-Shrestha
Design and Print
Worldwide Print Solution, Nepal
Reproduction
This publication may not be reproduced in whole or in part in any form without
permission from the copyright holder, except for educational or non profit purposes,
provided an acknowledgement of the source is made and a copy provided to GTZ/
PSP-RUFIN.
Disclaimer
The information contained in this publication has been derived from sources
believed to be reliable. However, no representation or warranty is given in respect
of its accuracy, completeness or reliability. GTZ does not accept liability for any
consequences/loss due to use of the content of this publication.
Currency Conversion: 1 USD = 72 NPR
Foreword
Enhancing the competitiveness of Nepal’s private sector in order to generate income and
employment opportunities is the prime objective of the Private Sector Promotion (PSP) project
of German Technical Cooperation (GTZ). The project applies a set of methodologies and tools
to implement its impact oriented strategies. Activities are carried out, mainly with private
sector partners, in order to transfer knowledge, strengthen capacities, improve structures and
thus achieve high sustainability. PSP is working in seven selected subsectors using a value chain
approach. Handmade paper has been selected as one of the subsectors with good potential to
generate cash income and employment opportunities.
Nepalese handmade paper and paper products are popular in many countries in Europe, North
America and Asia. These products, which are almost wholly exported, are facing increased
competition from handmade paper/products from countries such as Thailand, the Philippines,
China and India due to their superior quality and competitive prices. There is a growing need
to improve the competitiveness of the handmade paper subsector in Nepal in order to ensure
the employment and income of thousands of rural employees involved in the industry.
In this context, and within the overall framework of the GTZ/PSP project, the value chain
approach has been adopted to identify appropriate areas of intervention and form strategic
alliances to address the challenges facing the handmade paper subsector. This publication
presents an overview of the handmade paper subsector and highlights the issues that need to
be addressed to enhance the competitiveness of the subsector.
I appreciate the efforts made by the author in collating and analysing the information and
bringing out this publication in this form. I do hope that this publication is useful for policy
makers, development agencies, handmade paper entrepreneurs and other stakeholders in
designing and implementing interventions in the handmade paper subsector.
Armin Hofmann
Principal Advisor
GTZ/PSP-RUFIN
i
Acknowledgements
The present publication was produced under the Private Sector Promotion
(PSP) project (Project Number 03.2461.6-001.00), which is being implemented
with the support of the German Technical Cooperation (GTZ). I highly
appreciate and acknowledge the financial support provided by the
Government of the Federal Republic of Germany, through GTZ, to implement
this project. I offer my sincere gratitude to Armin Hofmann, Principal
Advisor, GTZ/PSP-RUFIN, for his guidance and technical input.
I would like to thank Daniel Bagwitz for providing support during the
implementation of project activities. I would also like to thank my colleagues
in GTZ/PSP, Surendra Joshi, Anupa Pant, Arun Rana, Shameer Khanal, Ujjwal
Pokhrel and Anu Joshi for providing their thoughtful comments and advice
during the preparation of this document. My special thanks go to Susan
Sellars-Shrestha for peer review and editing of the manuscript and Ujjwal
Bajracharya for layout, design and computer setting.
I am grateful to the various stakeholders who took part in the meetings and
workshops, providing a wealth of information on various aspects of the
handmade paper subsector. I would especially like to thank the Nepal
Handmade Paper Association of Nepal, Federation of Handicraft Association
of Nepal and Handicraft Design Centre for their support in obtaining the
relevant data about the subsector.
GB Banjara
ii
Acronyms
AUSAID
BDS
CBI
CFUG
CoC
CVDS
DCSI
DED
DFO
DFRS
DOF
EU
FGD
FHAN
gsm
GTZ
HANDECEN
HANDPASS
HNCC
INGO
MOISC
MT
N/A
NGO
NPR
NSCFP
NTFP
PSP
RUFIN
SDC
SIP-P
SWOT
USAID
VC
VDC
Australian Agency for International Development
business development services
Centre for the Promotion of Imports from Developing Countries
community forestry user group
Code of Conduct
Conflict Victim and Disabled Society
Department of Cottage and Small Industries
German Development Service
District Forest Office
Department of Forest Research and Survey
Department of Forests
European Union
focus group discussion
Federation of Handicraft Association of Nepal
grams per square metre
German Technical Cooperation
Handicraft Design Centre of Nepal
Handmade Paper Association of Nepal
Herbs and NTFP Coordination Committee
international non-governmental organization
Ministry of Industry, Supplies and Commerce
metric ton
not available
non-governmental organization
Nepali Rupees
Nepal Swiss Community Forestry Project
non-timber forest product
Private Sector Promotion
Rural Finance Nepal
Swiss Development and Cooperation
Swisscontact Small Industries Promotion Programme
strengths, weaknesses, opportunities and threats
United States Aid for International Development
value chain
village development committee
iii
Contents
Foreword
Acknowledgements
Acronyms
1
Value Chain Promotion in Nepal by GTZ
1
1.1 Definition of Value Chain Promotion
1
1.2 Value Chain Promotion in Nepal
2
1.3 GTZ’s Approach to Value Chain Promotion
3
1.4 Selection Process of Subsectors
4
2 Handmade Paper in Nepal
5
3.4 Constraints
3.4.1 Fragmented Industry
3.4.2 Over-exploitation of Lokta
3.4.3 Paper Production Constraints
3.4.4 Design Skills and Technology
3.4.5 Policy Level Constraints
4 Value Chain Upgrading Strategy
4.2 Strengthening Capacity of Paper Makers
20
4.3 Strengthening Capacity of
Product Manufacturers
4.3.1 Code of Conduct
4.3.2 Training and Technology
21
21
22
22
22
22
22
2.2 Handmade Lokta Paper
6
2.3 Characteristics and Uses
6
2.4 Lokta Paper Making
7
2.5 Paper Product Making
8
4.4 Market Promotion
4.4.1 International Market Promotion
4.4.2 Domestic Market Promotion
2.6 Lokta Paper Supply Chain
8
4.5 Institutional Development
3 Analysis of Value Chain
11
3.1 Value Chain Map
11
3.2 Market Analysis
3.2.1 Domestic Market
3.2.2 Export Market
3.2.3 Customer Profile
3.2.4 Distribution Channels in Europe
3.2.5 Product Concentrations
3.2.6 Market Share of Producers
12
12
13
13
13
14
15
3.3 Economic Analysis
3.3.1 Price Trends
3.3.2 Competitiveness
3.3.3 Distribution of Value and Value Addition
3.3.4 International Benchmarking
3.3.5 SWOT Analysis
15
15
15
16
17
17
20
20
5
9
9
10
18
18
18
19
19
19
4.1 Vision, Goal and Strategy
2.1 History of Handmade Paper
2.7 Major Actors in Subsector
2.7.1 Lead Organizations
2.7.2 Map of Actors and their Functions
iv
i
ii
iii
5 Key Interventions
23
5.1 GTZ/PSP Interventions
5.1.1 Strengthening the Capacity of
Paper Makers
5.1.2 Strengthening the Capacity of
Product Makers
5.1.3 International Market Promotion
5.1.4 Domestic Market Promotion
5.1.5 Institutional Development
24
26
27
27
5.2 Impact Chain
28
Bibliography
Annex 1: Porter’s Diamond: Competitiveness
Rating of Handmade Paper Subsector
23
23
31
32
1
Value Chain Promotion in Nepal by GTZ
1.1 Definition of Value Chain Promotion
A value chain can be defined as a sequence of
productive processes from the provision of specific
inputs for a particular product to primary
production, transformation, marketing and
distribution, and final consumption.
According to Kaplinski and Morris (2003) ‘value
chain describes the full range of activities which are
required to bring a product or service from
conception, through the different phases of
production (involving a combination of physical
transformation and the input of various producer
services), delivery to consumers and final disposal
after use’.
A value chain systematically takes all steps of a
production process into account. It analyses the
links and information flows within the chain and
reveals the strengths and weaknesses (and even
losses) in the process. It also analyses the
boundaries between national and the international
chains, takes into account buyers’ requirements and
international standards, and allows international
benchmarking (Richter 2005). The value chain
approach addresses the so-called critical success
factors that determine if a product meets market
requirements with regard to quality, price,
dependability, volume, design and speed of delivery,
and, consequently, improves competitiveness.
Value chains generally include three or more of the
following actors: producers, processors, distributors,
brokers, wholesalers, retailers and consumers. The
partners in the value chain work together to identify
objectives; they share risks and benefits; and invest
time, energy and resources to make the relationship
work. The value chain approach is an actor oriented
approach and is very effective in tracing product
flows, showing value adding stages, and identifying
key actors in the chain and the relationships between
them (Schmitz 2005)
Value chain promotion is the development of each
stage in the value chain to enhance the
competitiveness of the industry. For example, the
introduction of new processing technologies can
ensure quality production; however, working at the
production end of the chain is not enough. This must
be coupled with efforts to market and distribute
products. Value chain promotion works with all
stages of the value chain, thereby having a greater
impact on development of the industry as a whole.
1
1.2 Value Chain Promotion in Nepal
The underlining objective of
development cooperation is to alleviate
poverty and contribute to the
development of a country. Nepal has a
predominantly rural population (85%)
and a fast growing but small urban
population (15%). Poverty is a rural
phenomenon in Nepal. In order to uplift
the economic situation of the rural poor,
the Government of Nepal and many
international organizations are
supporting rural producers to make use
of locally available resources to produce
commodities for income generation.
However, producing commodities alone
will not help rural producers if they
cannot sell their products and if there is
little value added at their end of the value
chain. It is equally important to link rural
producers with markets and sustain and
grow these links so that they form a
perpetual growth cycle of production and
consumption.
Connecting rural producers with markets on a
sustainable basis is a very challenging task. Value
chain promotion helps to build sustained links
between rural producers and urban markets.
Globalization has brought with it unique
opportunities for developing countries in terms of
access to markets for their products. However, in
order to be able to benefit from these opportunities,
these products must be competitive on global
markets. Value chain promotion helps to develop
systemic competitiveness by looking at the whole
chain of production activities and strengthening the
overall production chain.
GTZ has long been involved in economic promotion
in Nepal. During the 1980s and early 1990s GTZ
initiated the Small Business Promotion Programme,
popularly known as the SBPP project. The focus of
this project was the development of
entrepreneurship in urban centres. The project
selected potential entrepreneurs, trained them
through entrepreneurship development training
programmes and encouraged them to create
enterprises.
2
Between 1998 and 2003, GTZ shifted its attention to
the development of the enterprise service market
using a business development services (BDS)
approach. The main lessons learned in this phase
were: (i) in very weak markets like Nepal, the service
market itself is highly dependent on the capacity of
enterprises to pay for, and benefit from, business
development services; and (ii) some of the
constraints in certain value chains were outside the
scope of the BDS approach and could not be
effectively addressed with service interventions
alone. To address these issues, the project refocused
its priorities from services alone to commodities or
value chains.
Nepal became a full member of the World Trade
Organization in 2003. Following this development,
in June 2004 GTZ focused its attention on the value
chain promotion of selected commodities. GTZ
initially focused on two sectors, orthodox tea and
hand knotted carpets, as part of GTZ’s Private
Sector Promotion (PSP) programme. GTZ/PSP has
now expanded this programme to include five other
subsectors, namely bamboo, handmade paper,
honey, mandarin oranges, and medicinal and
aromatic plants.
1.3 GTZ’s Approach to Value Chain Promotion
GTZ/PSP’s approach to value chain promotion
consists of the following five key steps:
In order to identify subsectors suitable for value
chain promotion, selection criteria were developed.
Based on these criteria and a series of internal
meetings of project professionals, as well as external
meetings with subsector stakeholders (including
industry associations, government officials and lead
entrepreneurs in each subsector), subsectors were
selected for value chain promotion.
various industry stakeholders. These activities range
from improving the production process; ensuring
product quality through development of industry
codes of conduct and labelling; the development of
new markets/products; facilitation of vertical and
horizontal business linkages; strengthening the
provision of business development services;
institutional capacity building; and easing of policy
level constraints. Strategic linkages with other
donors and supporting institutions working in the
various subsectors were actively pursued during this
phase.
2. Mapping and analysis of value chains
5. Monitoring and evaluation
After the selection of the subsectors, a detailed
value chain map was developed for each subsector.
This was done using a participatory approach in a
series of joint workshops with the main stakeholders
in each subsector. Based on the value chain maps, a
detailed analysis of each subsector was then
conducted to identify the constraints hindering the
growth of each subsector and the opportunities.
Baselines were created in each subsector to measure
two important indicators chosen for evaluation: (1)
competitiveness (i.e., enterprises in at least five of
the seven subsectors say that competitiveness in the
subsector has improved compared to February
2005) and (2) value addition (i.e., local value
addition in at least five subsectors increased,
compared to February 2005). Impact chains were
developed to align activities with strategies and
expected impacts. A separate advisor was appointed
for the monitoring and evaluation of activities in all
subsectors. This has helped the project to achieve
transparency, as well as objectivity, in the monitoring
of interventions and evaluation of results.
1. Selection of subsectors
3. Development of intervention strategies
After the value chain mapping and analysis phase,
GTZ/PSP again worked with industry stakeholders
to identify a common vision for each subsector, to
set goals and develop intervention strategies to
reach these goals.
4. Interventions and implementation of activities
A detailed depiction of the above steps is presented
in Figure 1.
Based on the agreed intervention strategies,
activities were planned and implemented with the
Setting system
boundaries
Deciding whether
to engage in value
chain promotion
Selecting a
value chain for
promotion
Value chain
analysis, strategy
formulation and
facilitation
Typical fields of
intervention
Monitoring and
evaluation
Analysing a
value chain
Facilitating
business linkages
Monitoring and
measuring impact
Visioning/
determining the
strategy
Strengthening
service systems
Facilitating the value
chain development
process
Figure 1
The Value
Chain
Promotion
Process
Introducing quality
standards
Advice on sector
and chain policies
3
1.4 Selection Process of Subsectors
In early 2004, GTZ/PSP undertook comprehensive
research to identify subsectors suitable for value
chain promotion in Nepal. GTZ/PSP was already
working in two subsectors, orthodox tea and hand
knotted carpets. Other subsectors were selected in
consultation with various stakeholders including the
Trade Promotion Centre, the Ministry of Industry
Supplies and Commerce, Ministry of Agriculture
and Cooperatives, INGOs and experts from
different subsectors.
High
Bamboo
Medium
From the analysis, five new subsectors were chosen
for value chain promotion to make a total of seven
subsectors (along with orthodox tea and hand
knotted carpets) for implementation.
Bamboo
Hand knotted carpets
Handmade paper
Honey
Mandarin oranges
Medicinal and aromatic plants
Orthodox tea
Attractive:
Handmade paper
Honey
Mandarin oranges
Medicinal and aromatic plants
Silk
Veterinary services
Wool
Medium
High
Low
Table 1
Subsector
Attractiveness
Matrix
Potential to Increase Rural Incomes and
Alleviate Poverty
The follow criteria were identified and used to select
subsectors suitable for value chain promotion:
market demand/growth potential
unmet market demand
potential to increase income at rural level
opportunities for market linkages
potential for employment generation
number of small enterprises (outreach)
potential for value addition
trade potential/competitiveness
external environment (e.g. government policies,
taxes, etc.)
A SWOT analysis was also carried out for each
sector to determine its strengths, weaknesses,
opportunities and threats. The subsectors were then
mapped in an attractiveness matrix (Table 1).
Not Attractive:
Trout Farming
Ginger
Domestic Tourism
Dairy
Low
Potential Market Demand
4
2
Handmade Paper in Nepal
2.1 History of Handmade Paper
The invention of paper can be regarded as the
beginning of the knowledge era in human history.
Even before paper, people drew objects and
characters on cave walls, rocks and dry leaves.
However, it was only possible to write books and
print money after the invention of paper. It is
believed that paper was first invented in China
about 2000 years ago.
Handmade paper-making is a traditional craft of the
inhabitants of rural Nepal. Since the 12th century AD,
traditional handmade lokta paper has been produced
in the hills of rural Nepal (Biggs 2005). Lokta paper
has historically been used in Nepal for all government
documents and religious texts. Until 1959, it was
compulsory for all government legal correspondence
to be done on lokta paper. Even today, most Nepalis
have their birth certificate (janampatri) on handmade
paper and all land ownership papers (lal purja) are
also still written on handmade paper.
In addition to government offices, the biggest
demand for handmade paper previously came from
Buddhist monasteries as they printed, wrote and
drew the teachings of Buddha on lokta handmade
paper. More recently, tourism has created a demand
for lokta paper and paper products including
stationery, lamp shades, wall paper and wrapping
paper. Many urban Nepalis now use greeting cards,
visiting cards and invitation cards made from
handmade paper.
There have been some technological innovations in the
production of handmade paper in Nepal. Producers
can now offer a larger variety of colours due to modern
‘dip dyeing’ techniques and paper can now be made
smooth for writing and printing through the
calendaring process. Techniques for cutting, pasting
and binding are also improving day by day.
The modern handmade paper industry in Nepal
started in the 1980s with the establishment of
Bhaktapur Craft Printers, a UNICEF supported
project. This company was created to provide
employment opportunities for the people in Baglung,
Parbat and Gorkha districts. Since the 1990s, a few
private sector companies have also started producing
handmade paper and paper products for export and
the tourist market. The handmade paper industry in
Nepal currently employs about 4000 families in rural
areas in paper making and another 2500 people in
Kathmandu in paper product making.
5
2.2 Handmade Lokta Paper
Handmade paper is the paper formed from pulp
using a hand-held mould, matrix or other device.
Although the most printers and publishers now use
machine made paper, handmade paper is widely
used as a form of artistic paper and to make
interesting stationery and handicraft products.
Handmade paper in Nepal is categorized according
to the raw material from which it is made. There are
two main types of handmade paper in Nepal: lokta
paper and argeli paper.
Lokta paper is made from the inner bark of a wild
shrub locally known as lokta (Daphne papyracea
and Daphne bholua). The lokta plant grows
naturally in most coniferous forests in Nepal at an
altitude of 2000m to 4000m. According to the
Handmade Paper Association of Nepal
(HANDPASS), there is about 110,481 metric tons of
raw lokta (bark) available in Nepal. Of this, it is
estimated that only 800 to 1,000 metric tons is
collected each year.
paper but it is less preferred by producers in
Kathmandu as argeli mixed paper cannot be dyed
using the dip dyeing process.
Both lokta and argeli plants are from the Daphne
family although, in terms of their fibre strength and
other fibre characteristics, they are very different.
Lokta fibre is stronger than argeli fibre. The argeli
plant can be commercially cultivated as its growth
cycle is faster (2–3 years). Lokta, on the other hand,
is a naturally occurring plant and is not cultivated.
Once cut, lokta takes six to eight years to regenerate
to a point where it is ready for extraction.
In the current phase of the project, GTZ/PSP has
been working exclusively with lokta paper and paper
products for value chain promotion in the
handmade paper subsector.
Argeli paper is made from the bark of the argeli
plant (Edgeworthia gardeneri), a fast growing shrub
with a unique triangular branching pattern. The
white skin (bark) of the argeli plant is extracted,
dried and most of it is exported to Japan in its raw
form where it is used to make Yen, the Japanese
currency. Argeli is also mixed with lokta to make
2.3 Characteristics and Uses
Lokta paper is known for its durability and inherent
resistance to insects. The lokta fibre is possibly one of
the longest and strongest natural fibres in Nepal. Thus,
paper made from lokta fibre is very strong. The uneven
distribution and length of fibres gives lokta paper a
unique texture. Most papers dissolve when put into
colour solutions; lokta paper does not Therefore, lokta
paper can be dyed using the dip dyeing process. The
flexibility of this process gives enormous possibility for
designs and colours in lokta paper.
Handmade lokta paper is used to make various
products in Nepal, which find good markets in
6
A lokta plant
Europe, the USA and Japan. Popular
products made from handmade paper
include diaries, notebooks, lamp shades,
writing sets, photo albums and frames,
coloured and plain sheets, gift boxes, bags,
greeting cards, wrapping paper and other decorative
products.
Virtually anything can be made from paper, from
toys to fashion garments. The range of products that
can be made from paper is limited only by the
imagination.
Lokta bush
Sizing paper pulp in a wooden frame
2.4 Lokta Paper Making
The lokta plant is found in 52 of the 75 districts of
Nepal, all of them hill districts (Dongol 2003).
However, paper production is currently done in only
32 districts. Until the beginning of 2003, about 313
handmade paper enterprises were registered with
the Department of Cottage and Small Industries
(DCSI). Of them, 268 were registered as cottage
industries and 45 as small-scale industries. Of the
registered industries, about 170 enterprises are
currently in operation in different parts of the
country providing employment to approximately
4000 families. Women constitute about 80 percent
of those employed in lokta paper making. A typical
paper-making factory has an investment level of
about NPR 30,000 to NPR 200,000.
Raw lokta paper sheet
Paper making is a manual process. Paper is produced
in batches, each batch consisting of 5 dharni (12.5 kg)
of lokta raw material for processing.
The collectors peel the raw bark from the lokta bush
in the forest and dry it in the sun to reduce the
weight. The dried bark is carried to the village by
porters where paper is produced. The lokta is
immersed in water to soften and it is cleaned to
remove the black spots and impurities. Lokta
soaking operation is usually done at night to save
the time. The cleaned lokta is cooked in a 100 litre
drum in a mixture of water and caustic soda. The
cooked lokta is washed with clean water to remove
the caustic soda. The clean lokta is then beaten with
a wooden mallet to make it into pulp. In some
villages where electricity is available they are using
mechanical beater now a days. The softened pulp is
then moulded in 20 inch x 30 inch wooden frames
by spreading the thin pulp (with a proper mix of
water and pulp) to make flat sheets of paper. The
frames are dried in the sun, after which the paper is
taken out of the frame.
The five main handmade paper producing districts
are Jajarkot, Dailekh, Bajhang, Rukum and
Solukhumbu. Other prominent districts where lokta
paper is produced are Sankhuwasabha, Baglung,
Parbat, Myagdi, Ramechap, Dolakha,
Sindhupalchowk, Ilam and Taplejung. The paper
sheets are produced in these districts, then brought
to Kathmandu valley where they are made into
different products for export.
7
Paper Colouring process
2.5 Paper Product Making
Production of notebooks
There are about 100 paper product enterprises in
Kathmandu directly employing a total of 2,500
people. In February 2006, GTZ/PSP conducted a
sector survey of 30 representative paper product
enterprises. The majority (77%) of these enterprises
were run by sole proprietors or as partnerships; six
(20%) of the 30 were registered as private limited
companies; and one was registered as a cooperative.
Most of the enterprises are run as family businesses.
The average sales turnover in the year 2005 for each
of these enterprises was NPR 9.5 million. The
average number of clients per enterprise was eight
and the average number of countries exported to
per enterprise was six.
2.6 Lokta Paper Supply Chain
Lokta paper is one of those rare products from
Nepal in which all the elements of the supply chain
are based on local resources. Paper making uses
local raw materials, local labour and local expertise
(technology). Value addition takes place both in
urban as well as rural areas. Income is shared by
both rural and urban people. Therefore, the
promotion of quality paper/product-making has
great potential to alleviate rural poverty in the hill
districts of Nepal.
A highly simplified supply chain for lokta paper
making in Nepal is shown in Figure 2.
Figure 2
Supply Chain
for Lokta Paper
8
Lokta bark
peeled from
lokta plant in
the forest
Lokta paper making is a seasonal business in the
hills. Typically, lokta paper making begins in
November and ends in June before the start of
monsoon. The raw paper made in the hills is
brought to Kathmandu and sold to paper product
manufacturers. The paper product makers produce
various stationery and handicraft items and export
them to mostly to Europe and America. Ninety
percent of paper products made in Kathmandu are
exported; the remaining 10 percent are sold locally.
Paper product making in Kathmandu continues year
round.
Paper production in the rural
hills
Paper product making in
Kathmandu
Export market
(Europe and
USA) (90%)
Local market
(10%)
2.7 Major Actors in Subsector
2.7.1 Lead Organizations
Along with GTZ/PSP, the lead organizations which
are involved in promotion of handmade paper
subsector are:
1. Handmade Paper Association of Nepal
(HANDPASS)
2. District paper maker associations
3. Federation of Handicraft Association of Nepal
(FHAN)
4. Department of Cottage and Small Industries
(DCSI)
5. Department of Forest Research and Survey
(DFRS)
6. Community forestry projects
The Handmade Paper Association of Nepal
(HANDPASS) is an association of both paper
makers and paper product manufacturers/exporters,
although paper product makers in Kathmandu
mostly dominate its membership base. HANDPASS
was established in 1996 and currently has 80
members. Of these 80 members, 14 exclusively
make paper; the rest make paper products. The
association is quite strong and active in providing
services to its members. GTZ/PSP is closely
collaborating with HANDPASS in implementing
interventions in the subsector and working to build
the capacity of HANDPASS to be the lead
organization in the subsector.
promotional activities for the promotion of
handmade paper. In order to provide the design
related services to the entrepreneurs, FHAN with
support from the Government of Nepal has
established and managed Handicraft Design Centre
of Nepal (HANDICEN).
The Department of Cottage and Small Industries
(DCSI) is a government department under the
Ministry of Industry, Commerce and Supplies. The
DCSI has a training institute of its own and provides
training to paper makers on a regular basis.
The Department of Forest Research and Survey
(DFRS) is responsible for lokta research and the
survey of lokta inventory in the national forests of
Nepal. Based on their survey, the District Forestry
Offices (DFOs) allocate annual quotas of lokta to the
local producers for harvesting.
There are several community forestry projects
operating in various hill districts all over Nepal.
Community forestry projects work through
community forestry user groups (CFUGs). These
donor supported community forestry projects
usually cover an entire district. For example, the
AUSAID supported Australian Forestry Project is
working in Sindhupalchowk district; while the SDC
In recent years, district paper maker associations
(formed by local entrepreneurs) are active in a few
district, e.g., the Dolakha District Paper Makers
Association and the Ramechap District Paper
Makers Association. These associations are often
weak and dominated by a few large paper makers.
The Federation of Handicraft Association Nepal
(FHAN) is an umbrella association for handicraft
producers in Nepal. It has a well functioning
secretariat and office infrastructure. Its services to
members include training, seminars and the
organization of local exhibitions. It also facilitates
members to participate in international trade fairs
and expos. FHAN is responsible for issuing
exporters with the export origin certificate. FHAN
has several committees and sub-committees under
it. One of them is Handmade Paper Product
Development Committee. FHAN also co-finances
Mapping of stakeholders
9
enterprise development units based on NTFPs
(non-timber forest products).
Organizations such as Swisscontact-Small
Industries Promotion Programme (SIP-P) and
Centre for the Promotion of Imports from
Developing Countries (CBI) have provided
support to this sector in the past mainly in the area
of quality improvement of paper and paper product
making and export promotion.
Discussion of stakeholders
supported Nepal Swiss Community Forestry Project
(NSCFP) operates in Dolakha and Ramechap
districts. These projects initially worked on
conservation, but now the focus has shifted to the
sustainable use of forest resources by the local
community for income generation and improved
livelihoods. Community forestry projects work
directly with CFUGs and, therefore, play an
important role in ensuring the supply of lokta on a
sustainable basis. Many of these projects are starting
Figure 3
Major Actors in
the Handmade
Paper Value
Chain and their
Functions
2.7.2 Map of Actors and their Functions
The micro, meso and macro level players in the
subsector are shown in Figure 3. At the micro level,
there are the lokta collectors, paper makers, product
makers, wholesalers and retailers. At the meso level
there are various associations and groups including
HANDPASS, FHAN and CFUGs, which provide
business development services to the industry and
lobby government bodies in relation to policy. At the
macro and policy level, there are institutions such as
the DCSI, the Department of Forests (DOF) and the
Ministry of Industry, Supplies and Commerce
(MOISC), which formulate and implement policy.
Micro: Direct Actors
Lokta
collectors
Paper
makers
Product
makers
Consumers
Meso: Support Services/Subsector Organizations
CFUGs
HANDPASS
Organize
farmers
Macro: Public Institutions
Policy
formulation
Services to
members
FHAN
Policy
implementation
and enforcement
DOF, DCSI
10
Wholesalers
& retailers
MOISC
Lobbying,
services
3
Analysis of Value Chain
3.1 Value Chain Map
The value chain map of the handmade paper
subsector is depicted in Figure 4. It was developed
under the professional supervision of GTZ/PSP in
various strategic workshops involving all the key
and relevant stakeholders in the subsector. The
value chain map outlines the actors involved in the
industry, from cultivation/collection of raw
materials to production of paper and paper
products, and distribution to the domestic and
export markets.
paper makers/cooperatives and lokta collectors/
cooperatives at the village level. The market
orientation (represented by the arrow on the left)
shows the direction of the product flow from bark
collection to paper production to product
manufacturing and distribution, with all the steps in
between.
The value chain map also explains the
interrelationship between actors at different levels
in the chain. The different functions of the actors in
the value chain include lokta bark collection,
transportation of lokta from the forest to the nearest
paper making village, production of lokta paper by
rural producers, transportation of lokta paper in
bulk sheets to Kathmandu for paper product
making and, finally, distribution to local (10%) and
export (90%) markets.
1. Semi-organized channel
2. Organized supply channel
Income is distributed down the value chain (as
indicated by the arrow on the right) from large
buyers in Europe and the USA to the paper product
makers in Kathmandu, eventually reaching the
The handmade paper subsector can be broadly
divided into two types of supply channels
(Figure 4):
The semi-organized channel is made up of many
small players, such as the lokta collectors who eke
out their livelihood by collecting lokta from the
forest and selling it to local transporters and village
paper makers. The paper produced by these small
rural producers is purchased by various small
intermediaries such as road head traders and small
paper makers who on-sell it to small paper product
manufacturers in Kathmandu.
The organized supply channel is made up of a few
organized paper makers (usually cooperatives)
11
operating in at the district level, who are vertically
integrated with the bigger paper product makers in
Kathmandu. Some of these cooperatives/large paper
makers have direct investment from a large paper
product maker. The cooperatives/large paper
makers have more bargaining power with their
buyers in Kathmandu than small rural producers
and enjoy lower production costs due to economies
of scale.
Figure 4
Value Chain
Map of
Handmade
Paper
Subsector
Export market
M
a
r
k
e
t
O
r
i
e
n
t
a
t
i
o
n
The arrows linking the organized channel and the
semi-organized channel indicate the strength of the
relationship between actors in each channel. For
example, the dotted arrow linking farmers to large
paper product makers indicates a weak link. Large
paper product makers often prefer to source paper
from the cooperatives/large paper makers as they
generally provide better quality paper and larger
quantities (indicated by the solid arrow).
Semi organized
channel
Organized
channel
Buyers Europe,
USA
Large buyers in
Europe, USA
Local market
Product trading
Smalltraders
Product production
Product
manufacturers
Wholesale trading
Wholesalers
Paper collection
Road traders
Paper production
Farmers
Transportation
Porters
Bark collection
Lokta collectors
Gift shops,
e.g. shops in
Thamel
3.2 Market Analysis
3.2.1 Domestic Market
Although handmade paper has been widely used by
the Government of Nepal for many years, its domestic
use is not growing significantly. Reliable data in
relation to domestic consumption is difficult to
obtain. Most of the low quality paper that is rejected
by the large export buyers ends up on the domestic
market. Entrepreneurs estimate that the local market
for lokta paper is not more than 10 percent of the total
market. Lokta paper is expensive compared to
ordinary paper, thus, its use by local consumers is
limited by affordability. Domestic consumption is also
limited by the lack of serious marketing efforts by
local companies. Popular handmade products in the
local market include marriage cards, visiting/business
cards and files/folders.
12
Local exhibition
Large paper product manufacturers
and exporters
Cooperatives/
large paper makers in villages
Lokta collectors/
cooperatives
I
n
c
o
m
e
D
i
s
t
r
i
b
u
t
i
o
n
3.2.2 Export Market
The export of handmade paper products has
increased consistently over the last nine years.
According to the FHAN, handmade paper products
are the fifth largest export product in the handicraft
category (after pashmina products, woollen
products, silver jewellery and metal statues).
The export figures in Table 2 show that handmade
paper products have registered a steady and healthy
growth in terms of exports over the last decade.
The top five export destinations for handmade paper
are the USA (28%), UK (20.4%), France (16.2%),
Japan (6.1%) and Switzerland (5.1%). Together these
five countries account for about 76 percent of total
exports (FHAN 2006). Sixty-five percent of
handmade paper products go to EU countries,
making the EU the largest market for Nepali
handmade paper products. According to CBI
market research, the total market size for handmade
paper in the EU is estimated at 24.5 million Euros.
The top export items to the EU are office paper,
writing pads, files, folders, binders and exercise
books, followed by envelopes.
International exhibition
3.2.3 Customer Profile
Typical customers of handmade paper in Europe are
people who are conscious of handmade products and
who love collecting or giving exotic gifts. According
to handmade paper entrepreneurs, psycho-graphical
profile of a typical handmade paper buyer would be a
female in her forties/fifties with fine taste for
handmade products. She may love exotic products,
she may be environmental conscious and she would
be sympathetic towards products made by poor
people in developing countries. However, according
to some entrepreneurs, handmade paper products
are also being increasingly purchased by young
consumers who have no such stereotypical image.
3.2.4 Distribution Channels in Europe
Handmade paper is being sold in EU through five
main channels: shops for alternative goods, shops
for stationery and gift items, papeteries (European
speciality paper shops) shops, flower shops and
Internet shops (Figure 5).
Fiscal Year
Export Value
(Million NPR )
% Increase Since
Previous Year
% of Overall Export of Handicraft
Products from Nepal *
1997/98
96
43.8%
N/A
1998/99
138
32.6%
10.6%
1999/00
183
3.8%
2.5%
2000/01
190
27.9%
2.8%
2001/02
243
13.2%
8.9%
2002/03
275
9.5%
10.7%
2003/04
301
-12.6%
11.7%
2004/05
263
2.3%
9.2%
2005/06
269
Table 2
Export Trends
for Nepali
Handmade
Paper
1997–2003
9.3%
* Compared to the total handicraft product exports for the same year
Source: Federation of Handicraft Association of Nepal (2006)
13
Figure 5
Distribution
Channels
for Handmade
Paper in Europe
Exporters of Nepali handmade paper products
International trade shows/fairs
Distribution channels (wholesalers, agents, buying groups,
purchasing cooperatives)
Existing &
Potential
Distribution
Channels
Shops for
alternative
goods, special
events,
special
markets
Customer
Profiles
Shops for
stationery,
office
supplies,
gifts
Customers who love
exotic products
A market survey carried out by GTZ in June 2006
found that lokta paper is currently being distributed
only through shops selling alternative or exotic
goods. Only a limited number of buyers who love
exotic products from developing countries tend to
buy Nepali lokta paper products from these shops.
There is huge potential to promote lokta paper
products through mainstream channels. However,
due to the lack of marketing efforts, most Nepali
exporters have not been able to promote their
products through these channels. To market
through these channels, the Nepali handmade paper
industry has to meet the quantity and quality
requirements of the mainstream market.
Papeteries
Shops for
Stationery,
gifts
Shops for
flowers
and gifts
Internet
shops
Shops for
interior
design,
deco
products,
paper lamps
Customers who look for quality, branding, design and functionality
dependent on about four or five products. The
overwhelming majority of entrepreneurs are
producing diaries/notebooks and coloured sheets
(Table 3). Both of these products are the most basic
traditional paper products, indicating a low level of
sophistication in product development.
3.2.5 Product Concentrations
Despite the diversity of products that can be made
with handmade paper, most entrepreneurs are
Table 3
Product
Concentration
2001 and 2004
Product
Year 2001
80%
80%
Lamp shade
52%
15%
Writing sets, stationery
46%
45%
Photo album/frames
42%
30%
Coloured /plain sheets
40%
80%
Gift boxes
18%
20%
Bags
20%
5%
Greeting cards
20%
15%
Wrapping paper
8%
30%
Decorative items
4%
4%
Source: BISCONS (2000) FGD with paper product entrepreneurs, May 2004
14
Year 2004
Diaries/notebooks
3.2.6 Market Share of Producers
Table 4 shows the relative market share of large and
small producers. Like in most industries, the field is
dominated by a few large enterprises, while many
small operators compete for the remainder. The top
five producers of handmade paper products in Nepal
Category of Producers
hold 64.3 percent of the market share, the middle 20
producers hold 21.5 percent, the lower middle 20
hold 10.7 percent and the majority (bottom 50) hold
only 3.5 percent of the market share. Small
enterprises need to increase their market share or
they will be uncompetitive in the long run.
Market Share (Million NPR) % Market Share % Cumulative Market Share
Top 5 producers
180
64.3%
64.3%
Middle 20 producers
60
21.5%
85.8%
Lower middle 20 producers
30
10.7%
96.5%
Bottom 50 producers
10
3.5%
100.0%
280
100.0%
Total (estimate for 2004)
Table 4
Market Share of
Producers
Source: FGD with paper product entrepreneurs, May 2004
3.3 Economic Analysis
3.3.1 Price Trends
3.3.2 Competitiveness
All the paper sheets produced are 20” x 30” inches
in size. This is due to the limited technology used by
rural producers (farmers use standard frames 20 x
30 inches in size).
The competitiveness of the handmade paper
subsector was analysed using Porter’s Diamond1.
According to Porter, there are four home base factors
or conditions that support or hinder organizations
from being competitive in global markets.
1. Demand conditions
2. Factor conditions
3. Related and supporting industries
4. Firm strategy, structure and rivalry
Thick paper fetches a higher price than thin paper
because it requires more raw materials. In terms of
demand and value, the most popular paper is 40
gsm followed by 20 gsm.
Table 5 shows that the price of lokta paper
increased between 2001 and 2004. However, prices
virtually stagnated between 2004 and 2006.
Considering inflation and increases in the
production costs (e.g., wages and transportation
costs), the increase in the price of lokta paper
between 2004 and 2006 is not sufficient from the
rural paper makers point of view.
Paper Size (Inches)
GSM
Demand Conditions: A more demanding local
market creates national advantage. For example, a
trend-setting local market helps local firms to
anticipate global trends. Handmade paper is
Michael Porter in his book, ‘The Competitive Advantage
of Nations,’ proposed a model consisting of determining factors of national advantage known as Porter’s
Diamond.
1
Average Price per Sheet*
2001
2004
2006
NPR 13
NPR 15–16
NPR 16
20x30
40
20x30
20
NPR 7
NPR 7–8
NPR 8
20x30
15
NPR 4
NPR 6–7
NPR 7
20x30
10
NPR 3
NPR 4
NPR 4
20x30
5
NPR 2
NPR 3
NPR 3
Table 5
Price Trends
for Handmade
Paper
*Wholesale price e.g. the price that the paper traders charge to the paper product manufacturers
Source: FGDs with subsector entrepreneurs in May 2004 and December 2006
15
primarily considered an export product in Nepal
and only a nominal domestic market exists. Hence,
local demand conditions do not encourage national
competitive advantage.
Factor Conditions: Factor conditions are basically
production factors and include the availability of
skilled human resources, technology, capital and
infrastructure. Local disadvantages in relation to
production factors force innovation. In other words,
adverse conditions such as labour shortages or
scarce raw materials force firms to develop new
methods, and this innovation leads to a national
competitive advantage. One of the arguments in
favour of the handmade paper industry is the cost
advantage accruing from cheap labour. If we look at
this using Porter’s theory, this factor has actually
stifled the innovation potential of the subsector.
Experts have opined that we are actually wasting
our important resource, lokta, by exporting low
value, low cost products produced using cheap
labour and low cost, primitive technology.
Industry Strategy, Structure and Rivalry: Local
conditions, such as the number of enterprises, the
size of enterprises and domestic rivalry affect firm
strategies. While a firm may prefer less rivalry, more
local rivalry is better for the industry in the long run
as it puts pressure on firms to innovate and improve.
Local rivalry in handmade paper subsector is
Table 6
Distribution of
Costs and
Margins across
Value Chain
somewhat intense due to the large number of small
firms which are producing the similar products.
Related and Supporting Industries: When local
supporting industries are competitive; firms enjoy
more cost effective and innovative inputs. This
effect is strengthened when the suppliers themselves
are strong global competitors. There are virtually no
local supporting industries for the handmade paper
subsector in Nepal, despite the fact that the Nepali
handicraft sector as a whole is diverse and growing.
According to Porter’s Diamond, the competitiveness
of the handmade paper industry is favourable in
terms of demand conditions and industry structure
whereas neutral in terms of factor conditions and
support industries (Annex 1). There is much that can
be done to make this subsector more competitive.
3.3.3 Distribution of Value and Value Addition
Value chain analysis looks at where value is being
created and how margins are being distributed across
the whole value chain. Table 6 shows the distribution
of operating margins across the value chain for the
production of a standard 40 gsm paper sheet. Usually,
the lokta collector does not receive a profit share but
is paid a daily wage. The paper product maker
collects, on average, NPR 10 per sheet, which is
approximately 10 times more than the paper maker.
Lokta
collector
Paper
maker
Product
maker
Sales Price/Sheet
NPR 1
NPR 7
NPR 40
COGS*/Sheet
NPR 1
NPR 5
NPR 15
Gross Margins/Sheet
0
NPR 2
NPR 25
Sales and Admin Costs
0
NPR 1
NPR 15
0**
NPR 1
NPR 10
Operating Profit
Consumer
Europe
* COGS is cost of goods sold ** The lokta collector is paid a daily wage and, hence, does not earn an operating profit.
Note: The figures used in this table are for a standard 40 gsm sheet of paper.
Table 7
Distribution of
Value Addition
across the
Value Chain
Lokta
collector
Sales Price/Sheet
Paper
maker
Product
maker
Consumer
Europe
NPR 1
NPR 7
NPR 40
NPR 270
Cost of Raw Materials
0
NPR 1
NPR 7
NPR 40
Gross Value Added
0
NPR 6
NPR 33
NPR 230
To International Price
0.4%
2%
12%
85.6%
To National Price
2.5%
15%
82.5%
% Value Added
16
production is achieved mainly due to Nepal’s lower
raw material and the labour costs. Most of the raw
material used to make Thai saa paper comes from
neighbouring countries such as Laos, Cambodia and
Myanmar, increasing the cost.
3.3.5 SWOT Analysis
Rope made from lokta
Table 7 shows the distribution of the value addition
across the value chain. Value addition is the
difference between the sales price and the cost of
the input (raw material) at each stage of the value
chain. Lokta collectors value add comprises of a
mere 0.4 percent of the total value addition based
on the international price and only 2.5 percent of
total value addition based on the local price.
Product makers contribute almost 12 percent of the
value addition based on the international price and
82.5 percent based on the local price.
The handmade paper subsector has many strengths.
Lokta paper is unique and is currently produced only
in Nepal. There are many geographically diverse
markets for lokta paper including the USA, Europe,
Australia and East Asia. The diversity of markets is
matched by the diversity of the products that can be
made from lokta paper. With each product, potential
new product markets can be explored.
However, the handmade paper industry is currently
limited by the low quality of paper being produced.
There is no standardization of paper and paper
products and the industry lacks skills and
techniques, particularly in relation to design.
Only a small fraction of the total lokta resources
available have been tapped so far. However, lokta
Looking at Table 6 and 7 together, it can be inferred
that the net profit for paper makers is low because
of the low level of value addition at this stage. Most
of the value addition is taking place at the product
level in Kathmandu and, hence, there is a higher
level of profitability at this level.
3.3.4 International Benchmarking
As lokta paper is an export oriented product, it is
useful to know the production cost of similar
products in competing countries (i.e., to give a
benchmark). Thai mulberry (Saa) paper production
was taken as a similar product for comparison
(Table 8). The production cost of lokta paper per
sheet (20 gsm, 20 x 30 inch) is nearly 45 percent
lower than Thai Saa paper. This lower cost of
Cost Component
Discussion of entrepreneurs during SWOT analysis
Thai Saa Paper
Nepali Lokta Paper
Cost/Sheet
(NPR)
% of Cost
Cost/Sheet
(NPR)
% of Cost
Raw material (dried bark)
3.6
44%
2.3
52%
Fuel
0.2
3%
0.3
7%
Chemical (pulp making)
1.6
20%
0.3
7%
Labour
2.7
33%
1.5
34%
Other costs (local taxes, transportation, etc.)
Total variable cost (per 20 gsm sheet)
NA
8.1
Table 8
International
Benchmarking:
Thai Saa Paper
and Nepali
Lokta Paper
NA
100%
4.4
100%
Sales price: Thai paper NA | Lokta Paper NPR 7.5
17
resources are fast being depleted in more easily
accessible districts, such as Dolakha and Ramechap,
resulting in increased raw material costs. The
handmade paper subsector has an increasing and
unlimited market potential. If more lokta resources
could be tapped in a sustainable way, Nepal could
expand into more lucrative niche markets.
Competition from countries such as China and
Table 9
SWOT
Analysis–
Handmade
Paper
India, difficulty in keeping pace with the fast
changing market tastes and the price war between
many of the small players are some of the prominent
threats facing the subsector.
Table 9 gives an overview of the strengths,
weaknesses, opportunities and threats facing the
handmade paper subsector.
Strengths
Weaknesses
Export oriented product with geographically
diverse markets
Crude technology used in lokta paper making is
resulting in low quality
Diversity of products that can be produced
differentiation (many different products can be
made)
Lack of standardization and poor quality of
handmade paper products
Almost all raw materials and skills are local
Confusion in relation to product positioning
Low capital investment required
Lack of qualified technical and design expertise
able to meet export requirements
Unique features of lokta fibre, which is basically
available only in Nepal
Low production costs compared to other
handmade paper countries (e.g. Thai Saa paper)
Opportunities
Threats
Niche market opportunities (emotional buyers
influenced by products being handmade in a poor
country)
Dwindling resource base of lokta in accessible
areas may threaten the supply of raw materials
Only a small fraction of the total lokta potential
has been tapped so far
Unhealthy competition resulting in lower quality
and price wars
Increasing and unlimited market potential
Fast changing consumer tastes and few feedback
mechanisms
Better quality and competitively priced products
from other countries
3.4 Constraints
3.4.1 Fragmented Industry
There are too many small paper makers involved in
the collection of raw material and production of
paper and, as a result, there are no economies of
scale. Many of these small players add little or no
value to the final product. These small, fragmented
micro-entrepreneurs often compete with each other
by price cutting, which eventually makes everyone
poorer. There are huge inefficiencies and very low
levels of productivity, particularly in the
unorganized channel.
There is also a very low level of coordination
between small paper makers and large paper
product makers. If a paper product maker cannot
18
meet a large export order, they often drop the order
rather than coordinate with smaller manufacturers.
However, following the collaborative marketing
initiatives of HANDPASS, this situation is
improving.
3.4.2 Over-exploitation of Lokta
In the more easily accessible areas, lokta resources
are being depleted. Lokta has been continuously
harvested in some districts, without rotational
management, for several years. This has resulted in
a shortage of lokta. In addition, poor quality (not
well dried and whitish in colour) and immature/
undersized lokta has started to enter the market due
to a lack of knowledge of cutting and sorting.
3.4.3 Paper Production Constraints
There are many constraints on the production of
paper including:
Insufficient quantities of raw material for paper
making factories to run at full capacity.
Priority is given to quantity rather than the
quality of paper produced (due to the piece rate
system).
Lack of trained and highly skilled manpower,
which leads to inefficiencies and low quality.
Untrained workers, combined with a lack of
quality control/grading knowledge at each stage
of processing, leads to a high rate of rejection by
buyers in Kathmandu.
Lack of sufficient water for cleaning lokta is
another constraint on quality.
Farmers usually do not have any long-term
production and inventory planning mechanism.
Lack of product diversification in paper making;
only a standard sized paper (20 x 30 inches) is
being produced. Many established factories in
Kathmandu are now bringing lokta directly from
the districts (illegally) so that they can make
paper according to their own requirements.
Lack of financial resources for high volume
production.
Lack of basic managerial skills. Most of the
paper makers in the villages are farmers who
produce paper on a seasonal basis only. They do
not maintain business records; in fact, there is
no documentation whatsoever.
Lack of marketing skills leaves paper makers at
a disadvantage when negotiating with buyers
in Kathmandu. There is a lack of organized
and diversified markets. Most paper makers
are contracted by the middle-men. There is
negligible direct contact between paper makers
and manufacturers in Kathmandu.
3.4.4 Design Skills and Technology
Most handmade paper product manufacturers
depend heavily on their buyers for design and
product innovations. Some of the big
manufacturers, such as Nepali Paper Products Pvt.
Ltd. and Gate Paper, even have foreign designers
sent to work with them by the buyers. However, for
most of the small producers, lack of design skills is a
big constraint. There are no competent local
designers available and the few entrepreneurs who
are good at design do not want to share their skills
with others.
A consultant2 who visited to Nepal to train local
manufacturers on book-binding techniques had to
say this in his final report (Mueller 2002):
The equipment used is so modest that it is
unbelievable that such (appreciable) quality can
be achieved. Due to the lack of machinery,
nobody is able to produce as per specifications of
an order. All producers are focused on serial
production and export to Europe and USA.
Mr Mueller further added that:
In most factories I visited, I could spend one day.
In some factories this led to instant relevant
changes; in other factories nobody was available
with the competency and initiative to accept
innovations.
In his report, Mr Mueller recommended that a
practical training institute be established and
equipped like a factory offering specific courses,
short term courses on special subjects and complete
vocational training.
3.4.5 Policy Level Constraints
The Government of Nepal has not yet been able to
introduce a systematic lokta harvesting management
plan and resource inventory in lokta harvesting
districts. Although lokta harvesting is regulated by
permits, in many government controlled forests these
permits are being violated. Lokta permits, issued by
the District Forest Office (DFO), are often issued late
(in December/January), instead of in September,
which is the ideal time for lokta collection. Lokta is
also illegally collected by cutters from neighbouring
districts. Boundary lines for lokta collection are also
not clearly defined, which results in haphazard
cutting and encroachment on forests.
Forest officials sometimes give licences to more
number of factories than lokta resources can sustain.
In one village development committee (VDC),
licences were issued for 34 factories, when the lokta
resource of the VDC could sustain only three.
There is also the problem of multiple taxation.
Farmers have to pay a fees at all stages of the process
from obtaining a permit for lokta collection, to the
release of paper into Kathmandu (chhut purjee).
Multiple checks along the highways by security
forces cause further problems for paper makers.
2
Markus Mueller, Manager of Basel Paper factory in
Switzerland
19
Innovation in paper a paper chair
4 Value Chain Upgrading Strategy
4.1 Vision, Goal and Strategy
Given the tremendous potential of the handmade
paper subsector, GTZ/PSP has chosen handmade
paper as a focus sector under its subsector
promotion component. GTZ/PSP focuses on
reducing poverty by enhancing competitiveness and
local value addition in order to generate income and
employment. GTZ/PSP has the following shared
vision, goal and strategy to promote this subsector
in collaboration with the stakeholders.
Vision: To position the handmade paper subsector
among the top three exporting handicraft
subsectors in Nepal.
business development services; increase the
productivity and quality of paper making; and
ensure the sustainable exploitation of lokta
resources.
Strategy: In order to achieve this goal a marketoriented upgrading strategy was developed using
the value chain approach. The strategy focuses on a
number areas of intervention:
1. Strengthening capacity of paper makers
2. Strengthening capacity of product
manufacturers
3. Market promotion
4. Institutional capacity building
Goal: To increase the export volume and value of
handmade paper; increase the provision and use of
4.2 Strengthening Capacity of Paper Makers
During a focus group discussion organized by GTZ/
PSP with HANDPASS members in May 2004,
handmade paper makers in Dolakha were asked to
20
identify their most pressing concerns/industry
constraints and come up with ways to address these
constraints.
The paper makers identified the unsustainable
harvesting of lokta resources and lack of quality
paper production as the main constraints on the
industry and suggested the following activities/
services to strengthen the capacity of paper makers:
transfer of skills in lokta cutting and debarking
training for high quality paper making
development of alternatives to firewood for lokta
cooking
standardisation of lokta paper
grading of paper based on quality
national and international exposure visits for
paper makers
As a result of the feedback given by paper makers in
this FGD, GTZ/PSP developed its strategy to
strengthen the capacity of paper makers. As part of
this strategy GTZ/PSP is working together with
industry partners to facilitate research on the
cultivation of lokta towards sustainable harvesting.
GTZ/PSP is also facilitating training and exposure
visits to improve the quality of paper making and
encourage paper makers to organize themselves into
cooperatives so that they can better access business
development services (BDS) and as a platform for
negotiating with buyers.
4.3 Strengthening Capacity of Product Manufacturers
GTZ/PSP’s strategy in relation to paper product
manufacturers focuses on product design and the
development of high value products. GTZ/PSP is
working with industry partners to improve the
capacity of paper product makers to produce
innovative, high quality products in more cost
effective manner and enhance the marketability of
their products. To achieve this GTZ/PSP has two
main strategies:
1. Development of an industry code of conduct
2. Improving skills through training and technology
vi. Support the improvement of the livelihoods
of people in remote area where very limited
economic activities are possible
Other measures which need to be taken in this
subsector include design improvement, product
specialisation and improved linkages between small
and large players in the supply chain to facilitate
sub-contracting.
In order to enable members to comply with the
quality standards and provisions of the CoC, a
monitoring team is being formed. This monitoring
team will provide regular feedback and also settle
any disputes among member companies in relation
to compliance with the CoC.
4.3.1 Code of Conduct
GTZ/PSP supported HANDPASS to develop an
industry code of conduct. The objectives of the
Code of Conduct (CoC) are to:
i. Develop a mutual understanding among the
members of HANDPASS and the producers and
the exporters of the Nepali paper
ii. Expand the export business of handmade paper
by way of joint marketing efforts
iii. Support the business growth of member companies
by producing the quality paper products
iv. Preserve and promote the art of making traditional
handmade paper.
v. Create awareness among lokta producers in rural
area on environmental issues and offer support
for the sustainable management of lokta resource.
To achieve these objectives the CoC focuses on the
following five areas:
1. Raw materials and their sustainable management
2. Services to employees of member companies
3. Preservation of the environment
4. Institutionalization of the member company
5. Preservation of culture and traditions
Training on production improvement
21
4.3.2 Training and Technology
GTZ/PSP is also working with various partners
(including HANDPASS and FHAN) to upgrade
industry skills and technology to capacitate
handmade paper product manufacturers to produce
quality products with innovative designs to meet the
demand from European markets.
4.4 Market Promotion
4.4.1 International Market Promotion
To understand the market for handmade paper in
Europe, GTZ/PSP commissioned a study
(Schabmair 2006). The research found that there is a
reduced demand for exotic paper products in
Europe. Nepali handmade paper products are
considered poor quality in terms of workmanship
and design; therefore, it is difficult for buyers to
justify the price of lokta paper products. Nepali
handmade paper products are mostly being
promoted through shops for alternative goods, at
special events or special markets. Opportunities
exist to market lokta paper products through other
mainstream channels such as stationery shops, gift
shops, papeteries, flower shops and through the
Internet. It was also found that European customers
were unaware of the uniqueness of lokta. The report
recommended that Nepali handmade lokta paper be
promoted in the European market to improve its
Figure 6
Nepalokta Logo
image and make
consumers aware of
the unique attributes
of lokta paper.
To address this, GTZ/
PSP together with
HANDPASS and
industry stakeholders
developed the
‘Nepalokta’ brand. HANDPASS members, who are
signatories and comply with the provisions of the
CoC, will be entitled to use the Nepalokta brand on
handmade paper products. The brand logo and
slogan ‘The New Spirit in Paper’ have been
developed to create awareness in the international
market of the uniqueness of Nepali handmade lokta
paper and paper products and to stand for quality.
4.4.2 Domestic Market Promotion
The rising middle class and changing tastes of urban
consumers, especially in the Kathmandu, means
that there is the potential to increase the domestic
market for handmade paper. HANDPASS has
formed a special task force to promote lokta paper
on the domestic market. GTZ/PSP is supporting
HANDPASS to promote lokta paper locally through
trade fairs, buyer seller meets, seminars and lobbing
with the government to use the handmade paper.
4.5 Institutional Development
GTZ/PSP is working with HANDPASS to
implement activities under all of the above
strategies. The institutional development of
HANDPASS is crucial to the success of such
interventions. The membership base of
HANDPASS is currently weighted towards paper
product makers. This must be expanded to include
paper makers so that the organization becomes
22
truly representative of the industry. The handmade
paper industry needs a provider of business
development services. GTZ/PSP is working to
strengthen the capacity of HANDPASS to provide
such services, and to lobby the government in
relation to policy, which will eventually create a
positive policy and business environment for the
subsector.
5 Key Interventions
Design contest winner holding the prize
5.1 GTZ/PSP Interventions
As a matter of principle and in order to achieve long
term sustainability, GTZ stresses on implementation
of activities by the local organisations; while GTZ
plays a role of facilitator. Majority of activities are
geared towards capacity building of the enterprises
and the local stakeholders.
GTZ/PSP implements interventions according to
the following principles:
Cost sharing: GTZ/PSP shares the cost of
interventions/activities with the implementing
partner. Funds from third parties are also
actively pursued whenever possible.
Collaboration with stakeholders: Developing
the value chain is a joint effort by many
stakeholders. The efforts of a single organization
are not enough. In order to optimize the
limited resources of the project and to ensure
a higher level of impact, GTZ/PSP seeks active
collaboration with other stakeholders including
other projects, supporting institutions, donors
and the government agencies.
To upgrade the handmade paper subsector it is
necessary for interventions to focus on both paper
makers and paper product makers. Intervening in
only one part of the value chain will not enhance the
competitiveness of the entire subsector. The critical
constraints must be addressed first; however, the
non-critical constraints also need to be carefully
examined and interventions initiated.
Various interventions have been implemented in the
handmade paper subsector. The activities listed
below consist mainly of interventions carried out
from July 2005 to December 2006.
5.1.1 Strengthening the Capacity of
Paper Makers
While paper product makers are fairly well
organized and concentrated in the Kathmandu
Valley, paper makers are comparatively disorganized
and scattered over 32 districts. GTZ/PSP is focusing
its paper making interventions on five districts:
Dolakha, Sindhupalchowk, Ramechap,
Sankhuwasabha and Panchthar.
GTZ/PSP has facilitated the following activities to
strengthen the capacity of paper makers in the
districts.
23
Lokta tissue culture
Participants of handmade paper training in Kathmandu
Paper making training
GTZ/PSP supported district paper making
associations/groups of companies to organize several
trainings for paper makers in Dolakha,
Sankhuwasabha and Kathmandu. Altogether 50
paper makers from 9 districts benefited from these
trainings. Product manufacturers in Kathmandu who
buy paper from these districts say that the quality of
paper has improved as a result of these trainings.
Exposure visit
Ten paper making entrepreneurs from Dolakha,
Ramechap and Sindhupalchowk, who had previously
undergone paper making training in 2005,
participated in an exposure visit in March 2006 to
observe paper making in Baglung district. The visit
was organized by the District Cottage Industries
Office of Dolakha with support from GTZ/PSP. As a
result of the exposure visit, the functioning of the two
cooperatives in Dolakha and Ramechap (Jiri) (of local
paper makers, lokta collectors, CFUGs and selected
traders) has improved. The larger cooperatives now
own and manage the paper factories, creating
economies of scale and increasing their bargaining
power with buyers.
Research on lokta tissue culture
GTZ/PSP, HNCC, HANDPASS and NSCFP are
conducting a research programme to develop an
alternative method of mass production of lokta through
tissue culture. The research phase will last for two years
starting from 1 December 2005. If the research results
are successful, the protocol will be disseminated and
strategies developed for mass production.
24
5.1.2 Strengthening the Capacity of Product
Makers
The objective of this intervention is to improve the
quality of handmade paper products to suit the
tastes and meet the needs of both local and
international buyers.
Code of conduct
In order to promote healthy business practices, GTZ/
PSP supported HANDPASS to develop a voluntary
code of conduct (CoC) for its members. After a series
of meetings and discussion among the members,
HANDPASS has developed a 31 point code of
conduct for its members. As at January 2007, thirty
companies have signed the Code of Conduct.
Exposure visit to India
GTZ/PSP supported HANDPASS to organize an
exposure visit for paper product makers to Jaipur,
Bombay and Pune in India in March 2005. During
this visit, two participants learnt about business
practices and technology and picked up a number of
ideas on how to improve paper production and
design (which were disseminated to other members
through HANDPASS). As a result of this visit, one
entrepreneur has introduced bar code technology to
improve his company’s inventory accounting system.
Exposure visit to Thailand
GTZ/PSP supported HANDPASS and FHAN to
organize a study tour to Bangkok and Chiang Mai in
Thailand in June 2006. During the visit, 20
manufacturers and exporters visited paper and
paper product manufacturing companies, paper
cooperatives, equipment suppliers and a research
institute. Participants learnt about improved
processes for paper making (e.g., sheet making,
paper lifting, cooking and drying); modern
equipment and techniques (e.g., cutting machines,
cylinder mould vats, glazing machines, heat
stamping, creasing, bag/box making, gluing, binding
and packaging); new production methods (e.g., the
use of different adhesives, dyes and pigments); and
methods for combining different types of raw
materials in paper making (e.g., bamboo, wood and
metal).
month long training on book binding. The 50
participants also learned how to use the new
equipment purchased by HANDPASS. During the
training, three trainers were groomed as local
trainers to provide further training in future.
Eventually, the equipment will be managed by
HANDECEN in a training institute.
International product design
contest
Participants of exposure visit to Thailand
Acquisition of new equipment/training on book binding
In response to industry demand, GTZ/PSP and
HANDPASS combined resources to procure a set of
standard tools/equipment for product making and
to conduct training on book binding techniques.
HANDPASS financed the cost of equipment (Euro
9000) and GTZ/PSP financed the cost of the trainer
(Euro 10,000). Seven new high quality tools were
purchased by HANDPASS (grooving machine,
Facher Planax, driller, eyeleting machine, board
cutter, heftlade and ring-wire binder). In November/
December 2006, a European trainer provided a
Book binding training
From September to
November 2006, GTZ/PSP
together with HANDPASS,
organized the Nepal Lokta
Design Contest. Entrants included young
designers and art academies from around the world
(Europe, Asia and Canada). The contest was designed
to encourage product design innovation. Twenty-one
designers submitted their designs, out of which 13
were selected for prototyping. Fifteen companies in
Nepal have developed the prototypes. The best
designs were prototyped and displayed at the Paper
World Fair in Frankfurt in January 2007 where the
winners were announced. The winners have been
invited to visit Nepal to produce a collection together
with the manufacturers in May/June 2007.
Training for conflict victims and the disabled
In July 2006, GTZ/PSP supported the Conflict
Victim and Disable Society (CVDS) to conduct a
three-month basic product development training
for 30 conflict victims and disabled persons.
Participants learnt various aspects of paper making
and product design. This training was followed by a
four-month advanced training (with additional
Conflict victims and disabled people in a three month paper making training
25
support from HOPE E.V) with the same group, from
October 2006 to January 2007. After the training,
CVDS will employ the participants and market their
products locally as products produced by conflict
victims and disabled persons.
European market assessment
5.1.3 International Market Promotion
Competitors product analysis
Europe is the largest market for Nepali handmade
paper and GTZ, being a European organization,
has a better understanding of the European market
than say the American market. Thus market
promotion activities have been mainly focused on
European markets. The objective of the
interventions in this area were mainly to promote
the image of lokta and handmade paper products
in European markets.
The same researcher then came to Nepal and
conducted research on the Nepali market and to
show some products available on the European
market. About 100 product samples produced from
different competing countries (including Europe
and Asia) were procured and presented to 20
product manufacturers in Nepal by a European
marketing expert. The colour, design and the trends
currently in use in the European markets were
explained to the product manufacturers. The
researcher also surveyed some of the manufacturing
companies in Nepal and observed that equipments
and tools used by these companies were not
appropriate and they needed to be upgraded.
Asia Invest
In order to meet the resource requirements for
international market promotion, GTZ/PSP, together
with HANDPASS, submitted a proposal to the EU’s
Asia Invest project. Asia Invest accepted the
proposal and is supporting GTZ/PSP and
HANDPASS for international market promotion for
a period of three years (January 2006 to December
2008). Additional resources were leveraged from
HANDPASS entrepreneurs and GTZ project funds.
These funds were used to conduct some of the
activities that follow.
To understand the market for handmade paper in
Europe, GTZ/PSP commissioned a researcher to
conduct market research in Europe (Schabmair
2006).
Development of a Nepalokta brand
In order to promote the brand awareness of the
lokta paper and products from Nepal, a logo under
the brand name of Nepalokta was developed with a
slogan of ‘The New Spirit in Paper’. This logo was
unveiled and promoted in the European markets
through a joint marketing campaign in the Paper
World Fair in January 2007 in Frankfurt, Germany.
Participation in Paper World
Nepal Lokta stand in the Paper World Fair January 2007
26
Fourteen entrepreneurs were selected to
participate in a joint marketing of Nepali
lokta paper products in the Paper World
Fair in Germany in January 2007. These
companies underwent rigorous training by
a European trainer to improve production
quality. Then the companies developed up
to three product lines for the fair. These
products, along with some unique and
innovative products from the design
competition, were displayed in the special
trend hall in Messe Frankfurt at the Paper
World Fair between 24-28 January 2007.
The entrepreneurs got the opportunity to
directly interact with about 320
international buyers during the fair. Many
entrepreneurs received on the spot orders
from the buyers.
5.1.4 Domestic Market Promotion
GTZ/PSP also facilitated the following activities to
promote handmade paper on the domestic market:
Exhibition
To promote the use of handmade paper products in
the local market, FHAN, in collaboration with
HANDPASS and GTZ/PSP, organized a two day
Exhibition Cum Buyer Seller Meet in September
2005. Altogether, 27 producers participated in this
event. The fair was attended by 700 potential buyers
including the exporters, executives from five star
hotels, banks, supermarkets, retail paper/gift shops,
cargo companies, online businesses, foreign staff
from NGOs and INGOs, government officials and
diplomats. In a survey carried out during the fair, 84
percent of exhibitors said that the fair was highly
productive for them. Almost 50 percent of
exhibitors later said that they received orders as a
result of contacts made during the fair. HANDPASS
and FHAN are going to organize a similar meet
again in 2007.
Exhibition cum Buyer Seller Meet 2005
were organized, one in December 2004 and one in
December 2006. In these planning workshops,
subsector development plans were drawn up after
intense discussion among key association members.
These planning workshops have enabled HANDPASS
members to have a common vision, mission and
goals, and to define strategies to achieve these goals.
These workshops have helped to build a strong team
spirit among HANDPASS members.
Institutional linkages
GTZ/PSP has supported HANDPASS to build
institutional linkages with paper making companies,
research institutions and machine suppliers in India
and Thailand.
Advertisement for
the Exhibition cum Buyer Seller meet
Brochure
GTZ/PSP supported the development of a brochure
titled ‘People, Plant, Paper, Practices and
Possibilities in Lokta’ by a private company called
Crafted in Kathmandu. The brochure was
distributed to the visitors at the exhibition in 2005.
5.1.5 Institutional Development
GTZ/PSP has been working to strengthening the
capacity of its main implementing partner,
HANDPASS, to effectively provide services to its
members.
Strengthening of secretariat and staff
The development of the HANDPASS secretariat is
important for the sustainability of interventions in
the subsector. From having one part-time employee
in December 2004, HANDPASS now has three fulltime employees and a fully fledged office with
meeting and secretarial facilities. The executive
secretary of HANDPASS has participated in
training on the value chain approach and she also
attended the Paper World Fair in Germany in
January 2007. These activities have increased the
motivation level of the staff and enabled them to
provide better services to their members.
Strategic planning workshops
In order to orient the newly elected HANDPASS
board members, two strategic planning workshops
27
5.2 Impact Chain
GTZ/PSP has a results-based monitoring system in
place to enable project steering and to provide annual
progress reports. The monitoring system is based on
impact chains. An impact chain is the flow of impact
from activities to outputs, to use of outputs, to direct/
indirect benefits, to national development goals. An
impact chain covers the value chain from primary
inputs to final marketing and measures changes
against a given initial situation.
Table 10 shows the impact chain for the handmade
paper subsector.
Table 10: Impact Chain of Activities
Component 1: Strengthening the capacity of paper makers
Major Activities
Outputs
Utilization of Outputs
Paper making
training in
Dolakha,
Sankhuwasabha,
and Kathmandu for
the paper makers
Paper making training in Dolakha,
Sankhuwasabha and Kathmandu
conducted.
The quality of paper from the trained
paper makers improve as a result of these
trainings.
…50 paper makers from 9 districts have
benefited from these trainings.
….Product makers confirm that the
quality of paper has improved.
Paper makers from Dolakha, Ramechap
and Sindhupalchowk were taken for an
exposure visit to Baglung.
Paper makers exchange their experiences
in paper making and cooperative
Quality and
management.
quantity
of paper is
… Paper makers form cooperatives,
increased.
achieve economies of scale and enhance
their bargaining power.
Exposure visit for
paper makers
… 10 entrepreneurs went to observe the
paper making in Baglung district.
Support for
research on tissue
culture of lokta
plant
One year long research on tissue culture
The sustainability of the lokta resource is
of lokta plants jointly conducted by NSCFP, increased.
GTZ and HANDPASS with the help of the
…Results yet to come (this project is to
Department of Plant Resources.
be extended for one more year).
…Ongoing tissue culture research.
Some innovative products
28
Direct Benefit
Component 2: Strengthening the capacity of product makers
Major Activities
Outputs
Utilization of Outputs
CoC prepared.
Develop a code
of conduct for
… CoC signed by 30 handmade
handmade paper
paper entrepreneurs.
product subsector
Exposure visit for
entrepreneurs to
Thailand
Exposure visit to Thailand
conducted.
… 20 entrepreneurs visited
machine manufacturers, Saa
paper manufacturers and paper
cooperatives in Bangkok and
Chaingmai, Thailand.
Direct Benefit
CoC implemented by entrepreneurs with an
objective to enhance fair business practices.
… 50% of the entrepreneurs who have signed the
CoC actually implement it.
The entrepreneurs upgrade their current
technology to increase productivity and product
quality.
… One entrepreneur bought three machines from a
Thai supplier and others changed their production
layout and production methodology after the visit.
Procurement of
new equipment
and book binding
training
A month long Book Binding
training conducted.
Entrepreneurs improve the book binding techniques
and proper use of machines to enhance the quality Increase in
quality and
of paper products.
… 50 persons working in several
diversification
handmade product factories in
… 50% of the entrepreneurs apply the knowledge of products.
Kathmandu benefited from this gained in the training.
training.
… 3 trainers were developed as local trainers and
these trainers will provide further training in future.
Support training
for making
handmade paper
products for
conflict victims
and disabled
persons. (3 + 4 = 7
months)
A 7 month long training on
product making conducted.
…30 persons received the first
three month long training in
paper product making.
The Conflict Victims and Disabled Society, the
organization which is implementing the training,
gives employment to successful participants.
…30 training participants are employed by CVDC.
….20 more persons are receiving
the advanced product making
training in handmade paper.
Component 3: Market Promotion
Major Activities
Outputs
Utilization of Outputs
Conduct product
comparison
and analysis of
handmade paper
products
Products made in Europe and
other Asian countries were
brought to Nepal and compared
with Nepali products.
Awareness of the entrepreneurs regarding the
need to increase their product quality increased.
Support for the
development of
Nepalokta logo
Conduct market
research of
handmade paper
in the European
market
Organising Nepali
handmade paper
promotional forum
in a Major European
Fair (Paper World)
… About 100 products from
Europe brought and compared
with products from Nepal.
Nepalokta logo developed.
Direct Benefit
… HANDPASS purchased equipment worth 9000
Euro to improve products.
The logo establishes a brand image for Nepali
handmade paper in international arena.
Promote
image of
… Nepalokta logo promoted in Europe.
lokta and
A market research report has
Awareness level of HANDPASS members regarding handmade
paper
been produced.
the European market is enhanced.
products on
…The findings of the report have …14 entrepreneurs have participated in the Paper domestic and
been presented to 30 HANDPASS World Fair, Germany in January 2007.
European
members and a CD containing the
markets.
report has been circulated.
… Nepalokta logo.
Nepali handmade paper
promotional forum organized.
The uniqueness and the strengths of Nepali
handmade paper communicated to the European
buyers.
… 14 entrepreneurs participated
in the Paper World Fair, Germany … 320 international buyers made inquiries about
in January 2007 and displayed
Nepali lokta paper products. Positive response
their products
received from buyers about Nepali lokta paper and
products.
29
Component 3: contd …
Major Activities
Outputs
Utilization of Outputs
Organise an
international
competition
on lokta paper
product design
A contest with young designers
The most innovated design will be commercialized
from design academies in Europe by inviting the designer to visit Nepal to produce a
and individual designers is
collection.
conducted.
… 15 Best designs were prototyped and displayed
… 32 designers from different
in the Paper World Fair, Germany in January 2007.
parts of the world participated.
Two winning designers will work with producers in
21 designers submitted their
Nepal to commercialise their products
designs for competitions.
Organise a buyer
seller meet on
handmade paper
products at the
national level
National buyer seller meet
organized
…30 enterprises displayed their
products in the 2 days exhibition.
Sellers meet the institutional local buyers.
…84% of participants say that the buyer seller
meet was fruitful.
Direct Benefit
Promote
image of
lokta and
handmade
paper
products on
domestic and
European
markets.
…16% of the exhibitors received immediate orders
…500 recorded visitors visit this at the exhibition.
fair.
Component 4: Institutional Development
Major Activities
Outputs
Conduct strategic Two strategic planning workshops
planning workshop conducted (one in December 2004 and
one in December 2006) to orient the newly
with HANDPASS
elected board of HANDPASS and develop
the strategies and interventions in the
handmade paper subsector.
… Strategies developed in the workshop.
Conduct value
chain training for
entrepreneurs and
key stakeholders
of HANDPASS
30
Value chain training conducted for
partners of GTZ/PSP.
… 5 entrepreneurs from the handmade
paper subsector (from HANDPASS)
participated in the training.
Utilization of Outputs
Direct Benefit
Strategies and activities developed with
stakeholders and adopted by GTZ/PSP for
The capacity
development of the subsector.
of the main
… GTZ/PSP implements the strategies
implementing
with support from the stakeholders.
partner,
HANDPASS, is
strengthened
Executives of HANDPASS understand the to effectively
importance of value chains and upgrade
render
businesses accordingly.
services to its
members.
… Participants further share the learning
with the fellow entrepreneurs.
Bibliography
Banjara, GB (2001) Handmade Paper Making in Dolakha and Ramechap Districts,
Swisscontact/SIPP, Kathmandu.
Biggs Stephen & Messerschmidt (2005) ‘Social Responsibility in the growing Handmade Paper
Industry of Nepal’, Elsvier, World Development, Vol. 33 No. 11.
BISCONS (2000) Strengthening Specific Handicraft Subsectors: Study of Handmade Paper
Products, Swisscontact/SIP-P, Kathmandu.
Dongol, BD (2003) Problem with the Operation and Export of Nepalese Handmade Paper,
(unpublished)
Haggblade, SJ & Gamser, MS (2001) Field Manual for Sub-Sector Practitioners, Gemini
Publication US.
HANDPASS (2003) Lokta Production and Handmade Paper Making in Nepal-Problems and
Way Forward’? Kathmandu, (Unpublished).
Kaplinsky, R & Morris, M (2003) A Handbook for Value Chain Research, Gapresearch.org,
Institute of Development Studies, University of Sussex UK, http://www.ids.ac.uk/ids/global/
pdfs/vchnov01.pdf, accessed 1 December 2006.
Lusby F (2002) Subsector/Business Service Approach to Program Design, Micro Enterprise
Development, USAID, Washington DC.
Maharjan, B (2004) Proceedings of Handmade Paper Sub-sector Development Planning
Workshop, HANDPASS, Kathmandu.
Mueller, M (2002) Training Report, Swisscontact/SIPP, Kathmandu (Unpublished).
Pant, A (2006) Assessing Competitiveness of Handmade Paper Subsector, GTZ/PSP internal
report, GTZ, Kathmandu.
Porter, EM (1998) The Competitive Advantage of Nations, The Free Press, New York.
Richter, P (2005) The Application of the Value Chain Methodology in Development Projects:
Reporting on the Sri Lankan Experiences, GTZ-Integration, Sri Lanka.
Schabmair, H (2006) Market research of handmade paper and paper product in the European
market – with particular reference to Nepalese handmade paper: Lokta paper, submitted to
GTZ/PSP (unpublished).
Schmitz, H (2005) Value Chain Analysis for Policy-Makers and Practitioners. International
Labour Organisation, Geneva, http://www.ilo.org/dyn/empent/docs/F204969253/VCA_book_
final.pdf, accessed 1 December 2006.
31
Annex 1: Porter’s Diamond: Competitiveness Rating of Handmade Paper Subsector
Factors
Rating
I) Demand Conditions
1. Size of domestic demand
2
2. Large number of buyers
3
3. Sophistication of buyers
5
4. Presence of multi-national corporation buyers
3
5. Growth rate of domestic demand
3
Average
3.2
(Favourable)
II) Factor Conditions
6. Raw material availability
4
7. Human resource availability and skill
3
8. Knowledge base and research capabilities
2
9. Capital availability
4
10. Infrastructure
2
Average
3.0
(Neutral)
III) Industry Structure
11. Large number of enterprises/no monopoly
4
12. Efficient size
3
13. Domestic rivalry
4
14. Entry barriers
4
15. Congruence between sector and firm goals
3
Average
3.6
(Favourable)
IV) Support Industries
16. Design and product development
2
17. Marketing, market research and advertising
2
18. Training
2
19. Research and development
2
20. Component and machinery suppliers
3
21. Producers associations
5
22. Promotional institutions
3
Average
2.7
Note: 4.1-5.0 Highly Favourable | 3.1-4.0 Favourable | 2.1-3.0 Neutral | 1.1-2.0 Unfavourable | 0-1.0 Highly Unfavourable
32
(Neutral)
July, 2004
• Subsector selection
• Conduct studies
Project Area
Project Identification
June, 2005
• Subsector strategy
• Hierarchy of objectives
• Outputs and activities
• Assess risks, alternatives
• Baselines
Project Design
COMPLETED
Source: A. Pant, GTZ/PSP-RUFIN
December, 2007
Reviews and acceptance of
results
Document lessons learned
Deliver final evaluation
Plan new phase activities
or exit
Objective achieved
End of Project
PLANNED
Project Implementation
February, 2007
July, 2005
• Planning of activities, work plan
•
• Implementation modalities
• Verify performance
•
• Modify as required
•
• Progress monitoring
•
• Reports
Project Plan
UNDERWAY
PROJECT CYCLE OF GTZ PSP’S INVOLVEMENT IN HANDMADE PAPER SUBSECTOR
Deutsche Gesellschaft für
Technische Zusammenarbeit (GTZ) GmbH
- German Technical Cooperation GTZ/Private Sector PromotionRural Finance Nepal
Narayani Complex, Pulchowk, Lalitpur
PO Box 1457 Kathmandu, Nepal
Tel
+977-1-5555289
Fax
+977-1-5521712
Email [email protected], [email protected]
Web www.gtzpsp.org
www.gtz.de/nepal

Similar documents

×

Report this document