Kathmandu, 25 Jan: Nepal’s position in the use of Artificial Intelligence (AI) appears weak, according to a study report published by Microsoft’s AI Economy Institute. While interest in and use of AI are gradually increasing in Nepal—similar to other developing and emerging countries—the country continues to lag behind globally.
At a time when AI is becoming central to economic and social activities worldwide, developing countries such as Nepal are falling behind in its adoption, the report titled “Global AI Adoption in 2025: A Widening Digital Divide” shows. The study warns that the growing gap in AI usage between developed and developing countries could further deepen the global digital divide.
According to the report, Nepal ranks 76th out of 147 countries in terms of “AI diffusion,” or the global spread of AI usage. Although the countries were not ranked competitively, the assessment was based on the use of generative AI technologies and tools—such as chatbots, digital assistants, and content creation systems—by the working-age population.
Nepal’s position falls below the global average, indicating weaknesses in digital infrastructure, skills, and policy frameworks. However, within South Asia, Nepal’s AI adoption and growth rate is more positive than that of other countries except India. The report states that around 13 percent of Nepal’s working-age population uses generative AI technologies and tools. While usage has increased slightly compared to early 2025, Nepal still lags far behind countries where AI has been deeply integrated into education, business, and public services.
The report notes that AI adoption tends to be slower in countries with unequal internet access, high device costs, and low levels of digital literacy—conditions that still affect a large portion of Nepal’s population.
The United Arab Emirates (UAE) leads the world in AI adoption. India ranks 64th and China 61st. Among South Asian countries, Bhutan and the Maldives are not included in the list. Compared to major global economies, Nepal’s gap is significant. The United States ranks 24th, while countries such as Singapore and other developed nations show AI adoption rates many times higher than Nepal’s. According to the report, countries that invested early in digital infrastructure, skills development, and clear regulatory frameworks have been able to expand AI rapidly and widely.
The findings also show that AI usage is growing rapidly in high-income countries, while most low- and middle-income countries remain clustered near the bottom of the list. This trend poses a risk of further reinforcing global digital inequality.
The report concludes that countries with higher AI adoption are gaining productivity and competitive advantages. In contrast, in countries like Nepal, AI usage remains largely limited to personal use by employees, students, and individuals rather than being systematically adopted by government institutions, organizations, or businesses.
Similar concerns were reflected in the United Nations Development Programme’s (UNDP) Human Development Report 2025, released a few months earlier, which focuses on AI and inclusive development. The report highlights the relationship between the Human Development Index (HDI), technology, and AI, noting that AI has the potential to improve education, healthcare, and service delivery. However, it also warns that limited access to technology and skills could cause AI to further widen inequality.
Microsoft’s report emphasizes that policy preparedness is critical for AI adoption and expansion. Countries with national AI strategies, effective regulation, and public investment in skills rank higher in AI usage.
In Nepal, although a national AI policy has been formulated, responsibilities related to digital transformation are spread across multiple ministries and agencies. Development partners have expressed concern that this has led to a greater emphasis on control rather than regulation. Long-standing policy ambiguity and lack of coordination are often cited as major obstacles to the inclusive growth of the technology sector.
Both reports note that interest in AI is increasing in developing countries. The growing use of AI tools in education, content creation, and digital work indicates strong underlying demand. According to Microsoft’s report, if infrastructure and policy barriers can be addressed, this demand could translate into broader adoption and expansion.
Overall, analysts conclude that Nepal—currently positioned in the middle of the 147-country list—faces the key challenge of transforming rising interest in AI into widespread use through clear policies, improved infrastructure, and skills development.
