Elon Musk’s DOGE swiped $329 million in humanitarian funding from Nepal, leaving a Gen Z tech revolution to transform the budding country’s economy

“Everyone went through denial first that this was even happening, to just deep grievance at how it was being done,” she told Fortune.

According to Basnyet, USAID’s closure led to an estimated 30,000 direct job losses in the country. Among a raft of slashed humanitarian aid projects was foundational educational opportunities in Nepal, including support for early grade reading in Nepal across all its 35 districts, teacher training, and reviewing and refunding educational materials. Basnyet was left with the puzzle of recreating those services and resources—and building new ones—without the same steady funds Nepal had received from the U.S. since 1951, when it became Nepal’s first bilateral aid donor.

“How do you use all of the skills and the experience you’ve gained in different ways to create an environment where you still felt like you had dignity, second life, all of the knowledge and relationships, within a really short period of time?” Basnyet said.

The answer lay in Nepal’s private sector. Though considered a lower-middle-income country with a GDP of $1,447⁩⁨ ranking 124th of 145 countries tracked by the Harvard Kennedy School Growth Lab, Nepal is ready to grow its economy. It’s sandwiched between the commerce giants of India and China, and with more than 40% of its population between the ages of 16 and 40, is experiencing a “youth bulge” of talent and labor.

And without USAID, the small country’s private sector is making strides toward building up Nepal’s economy. Nepalis, afterall, are no strangers to disruptions. A series of widespread Gen Z-led protests last year gave way to a new and young government, led by 36-year-old former rapper Balen Shah.

Last year, Basnyet co-founded Aadyanta Advisory, a Nepal-based strategic advisory firm, which over the course of one year supported nearly 400 young Nepali innovators and founders and helped jumpstart the nation’s industrial push. It’s one of several efforts to give a jolt to Nepal’s economy, many of which are in partnership with the U.S. embassy, which provides funding opportunities and policy advocacy to support the private sector.

Basnyet’s transition from public servant to private sector industrialist mirrors Nepal’s own economic shift.

“I’m still continuing to do the same work, which is basically advocating for locally led, globally connected economic development efforts, stronger partnerships, private sector engagement, and how development happens in this country,” Basnyet said. “I’m doing much of the same work, but now as an entrepreneur.”

Nepal’s burgeoning tech hub

Pukar Hamal, founder and CEO of San Francisco-based SecurityPal, refers to Nepal’s capital of Kathmandu as “Silicon Peaks,” a burgeoning tech hub nestled in the Himalayas rather than California’s Santa Clara Valley.

SecurityPal, which manages corporate cybersecurity assessments, has a large office in Kathmandu and is one of about a dozen publicly traded U.S. companies with operations there.  

“I wouldn’t say Nepal is most people’s first choice destination,” Hamal, a Nepali immigrant now living in the U.S., told Fortune. “But I think that that’s changing.”

That potential for change comes in part thanks to Nepal’s more than 6,000 rivers and streams that flow down from the mountains and are strengthened by monsoons and melting glaciers, which allow the country to run on 99% hydropower. It has more than 100,000 megawatts of hydropower that can be tapped, and that number is expanding as technology improves, but the country has only tapped about 5,000 of it, Hamal estimated. 

Then there’s the burgeoning labor force, a result of the population swelling after a decline in infant mortality and increase in fertility rates, yielding a cohort of young people, many of whom speak English.

This shift is a recent one, according to Amir Thapa, the executive director of the American Chamber of Commerce in Nepal (AmCham Nepal), a coalition of American businesses in the country. Nepal’s trade relationship with the west began in earnest in the 1990s, when the country established its multiparty democracy, developing a private sector propped up primarily by banking. The years leading up to this shift saw Nepal actively seek out foreign aid, a practice that grew in the 1990s. Through 2025, the country approved nearly 7,500 foreign investment projects worth about $5.5 billion. To Thapa, the model wasn’t sustainable.

“Back in the day, I think our relationship was so dependent on development grants,” he told Fortune. “There was so much assistance that was coming from the states, and that was the expectation.”

“When USAID was gone, we took that as an opportunity because we knew that there is going to be a void to create a partnership with the private sector here in Nepal,” he added.

Thapa believes Nepal has shed enough of its “conventional” mindset that its growing tech sector can effectively replace the loss of foreign aid. Large U.S. corporations like Coca-Cola and MetLife have expanded operations to the country, bringing with them jobs. AmCham had 42 members two years ago and 72 today. In 2025, Nepal exported about $1 billion in information technology products, and Thapa said the government has the goal to bring that total to $20 billion over the next 10 years.

“We lack employment creation out here,” Thapa said. “The role of U.S. companies is really important in order to create those jobs, and the tech sector has been doing that.”

Nepal’s Gen Z revolution

A large part of Nepal’s growth will depend on its young people staying in the country. 

“Nepalese youngsters are hungry,” Thapa said. “They are really trying to prove themselves that they can do something amazing in a global market, and when they have an opportunity to work for U.S. companies, I think their dedication, their commitment, is in a different level, and that’s why it’s getting better, and that’s why the momentum is out there.”

Though Nepal’s population may be eager to learn and work, it’s also seeing a mass exodus of working-age youngsters, with about 1,500 young people leaving the country for foreign work each day, according to data from Rastriya Shramik Mahasangh Nepal (RSMN), a federation of labor unions.

Despite the shift toward a service-based economy, Nepal is still predominantly agricultural, and those farming jobs earn about 67% less than the national average, per Glassdoor data. The creation of more tech sector jobs may increase the chances of Nepali youth staying in the country, but growing Nepal’s domestic workforce has remained urgent—and contentious.

Growing Nepal’s labor force was one of the many promises of its new Prime Minister Shah, who vowed to create 1.2 million jobs. Nepal elected Shah in March following a surge of violent protests in the country led by Gen Z demonstrators following a government ban of social media platforms. It fanned the flames of citizens already united in their anti-corruption, anti-censorship stance toward a government that had become increasingly unstable over the last decade. More than 75 civilians were confirmed dead following the protests, and more than 2,000 were injured.

Private sector leaders are hopeful about Shah’s administration and the surge of young people in leadership, including the majority of Shah’s ministers, who are under 40. He has called for increased private-sector partnerships, the restarting of state-owned factories to boost industry, as well as implement revenue reforms to combat corruption. The new administration ultimately promised more stability that could entice more youth to stay and work.

“We have a government in power with almost entirely new faces who are stepping into power for the first time, so there is a sense of optimism, accountability,” Basnyet said. “There’s of course people on wait-and-watch mode, ‘Let’s see what the government does,’ but for now I feel extremely optimistic.”

Growing pains

The new administration is facing one of its first major tests. In August, flash floods from a collapsed glacier swept through the country, killing 1,300 and leaving more than 5,000 missing. The total damages from the disaster are estimated to exceed $2.56 billion.

Nepali lawmakers have slammed the administration over bureaucratic delays in distributing resources after the floods, including medical equipment and staffing of medical facilities. The country was initially slow to accept foreign aid, but has since received tens of millions of dollars in foreign aid, including over $5 million from the U.S. State Department.

Aid has also come in the form of tech companies contributing to the Prime Minister’s Disaster Relief Fund, including $10 million from Nvidia and $460,000 from BYD and its Nepal distributor Cimex. Pukar, as well as Renegade Insurance CEO Rashik Adhikari, launched a relief drive, matching donations up to $20,000 to the government’s relief effort.

The widespread response to the disaster is illustrative of the relationship between Nepal’s public and private sectors in this time of transition.

“Neither government nor the private sector can carry the whole chain of risk,” Basnyet said. “A telecom company can get an alert onto millions of phones, but it cannot detect a glacier collapsing high in the Himalayas. An insurer can help transfer some losses, but it cannot make the poorest household insurable, or compensate for unsafe infrastructure and missing risk data.”

To be sure, Basnyet said USAID’s absence is “noticeable.” In 2015 following the Gorkha earthquake, the agency deployed a 128-person team and pledged $10 million to recovery efforts, a sum that eventually topped $64.5 million. What was more valuable, Basnyet said, was USAID-supported hospitals and search-and-rescue teams that created an infrastructure of preparedness. She continues to be concerned by a trend Finance Minister Swarnim Waglé described to the New York Times as a “cascading effect” of other wealthy countries pulling back on aid as the U.S. does.

But Basnyet also maintains Nepal’s best path forward is maintaining global cooperation while building a country that can stand on its own when it needs to.

“I don’t think the lesson is that Nepal should remain aid-dependent. It should not,” Basnyet said. “We need to use our own public resources better, mobilize much more domestic capital, and draw more deliberately on business, the diaspora, and philanthropy.”