Approaches and design of microfinance programmes for the ultra-poor in Nepal

Nav Raj Simkhada

doi:10.3362/1755-1986.00008

Approaches and design of microfinance programmes for the ultra-poor in Nepal

Microfinance programmes have emerged to serve the poor who are excluded by conventional banks and financial institutions. However, in the context of Nepal, accessible and sustainable financial services are still limited. Only 40 per cent of Nepalese are served by formal financial institutions. Experience has shown that people living in extreme poverty need several forms of support, such as grants for livelihoods and for purchasing productive assets, business development training, and financial literacy. This paper discusses barriers surrounding supply and demand side of financial systems for promoting financial inclusion. It argues that reaching the ultra-poor is only possible if appropriate strategies are devised to address the existing barriers that prevent inclusion of the unserved and under-served. The paper presents lessons learned from several initiatives to enhance financial inclusion in Nepal, and suggests approaches for serving the ultra-poor in the future.

Alliance for Financial Inclusion (2015) Global Policy Forum Report, Kula Lumpur: Alliance for Financial Inclusion.

Anderson, J. and Ahmed, W. (2016) Smallholder Diaries: Building the Evidence Base with Farming Families in Mozambique, Tanzania, and Pakistan, Washington, DC: CGAP.

Bateman, M. (2013) ‘Book review: Due Diligence: An Impertinent Enquiry into Microfinance’, Review of Radical Political Economics 45(3): 415–9 <http://dx.doi.org/10.1177/0486613412470100>.

Cheston, S., Conde, T., Bykere, A. and Rhyne, E. (2016) The Business of Financial Inclusion: Insights from Banks in Emerging Markets, Washington, DC: ACCION.

Cohen, M., Sebstad, J. and Stack, K. (2005) Training of Trainers’ Manual on Savings, Budgeting Debt Management and Banks’ Service, Washington, DC: Microfinance Opportunities.

Fahey, A. (2015) Building Stable Livelihoods for the Ultra-Poor, Cambridge, UK: Abdul Latif Jameel Poverty Action Lab and Innovations for Poverty Action.

Janssen, P. (2016) ‘Can Nepal wean itself off remittance reliance?’ The Banker [online], 1 November 2016 <http://ec2-54-72-50-240.eu-west-1.compute.amazonaws.com/World/Asia-Pacific/Nepal/Can-Nepal-wean-itself-off-remittance-reliance> [accessed 10 September 2018].

Mercy Corps Nepal (2014) Baseline and Client Survey for SAFAL, Kathmandu: Mercy Corps.

Montesquiou, A., Sheldon, T., De Giovanni, F.F. and Hashemi, S.M. (2014) From Extreme Poverty to Sustainable Livelihoods: A Technical Guide to the Graduation Approach, Washington, DC: CGAP.

Nepal Rastra Bank (NRB) (2016a) ‘Banking and financial statistics of Nepal’ [online] <http://nrb.org.np/bfr/bfrstatistics.php?tp=bank_fina_statistics&&vw-02-05-2017> [accessed 10 September 2018].

NRB (2016b) Monetary Policy for 2015/16, Kathmandu: NRB.

Rawlins, R. M. and Hwang, C. J. (2015) Developing a National Financial Inclusion Strategy: The Paraguay Experience [pdf], Washington, DC: World Bank <http://documents.worldbank.org/curated/en/896331467991998041/Developing-a-national-financial-inclusion-strategy-the-Paraguay-experience> [accessed 10 September 2018].

Scronce, E. (2015) Geography Matters When Talking About Smallholders, Washington, DC: CGAP.

Sharma, N., Simkhada, N.R. and Shrestha, R. (2006) Impact Assessment of Hill Based Cooperatives, Kathmandu: Centre for Microfinance.

Sheldon, T. (2016) Graduation Case Studies: An Opportunity to Learn and Scale Up, Washington, DC: CGAP.

Simkhada, N.R. (2013) ‘Problems and prospects of the cooperative sector in Nepal for promoting financial inclusion’, Enterprise Development and Microfinance 24(2): 146–59.

Simkhada, N.R. (2014) Expanding Microfinance Services in the Hills and Mountains of Nepal, Manila, Philippines: Asian Development Bank.

UNCDF and NRB (2014) Making Access Possible, Kathmandu, Nepal: UNCDF and NRB.

UNCDF and NRB (2016) Making Access Possible: Nepal Financial Inclusion Roadmap (2017–2022), Kathmandu, Nepal: UNCDF and NRB.

World Bank (2014) The Global FINDEX Database 2014: Measuring Financial Inclusion around the World [pdf], Washington, DC: World Bank Group <http://documents.worldbank.org/curated/en/187761468179367706/The-Global-Findex-Database-2014-measuring-financial-inclusion-around-the-world> [accessed 11 September 2018].

Yukl, G. (2006) Leadership in Organizations, 6th edn, Upper Saddle River, NJ: Pearson.