Kathmandu. KATHMANDU: The two-day Fifth National Microfinance Members’ Conference kicked off here today to discuss the current status, challenges and future course of the microfinance sector which has been a backbone for poverty alleviation, women empowerment and rural development of the country.
The two-day conference is being attended by policy makers, regulators, microfinance operators and more than 600 members from across the country.
Inaugurating the conference, Vice-Chairman of the National Planning Commission, Dr. Prakash Kumar Shrestha said that microfinance has played a major role in reducing the poverty rate in Nepal. According to him, poverty has come down to 20 percent in Nepal as per the new criteria and 4 percent as per the old standards. “However, some local levels in remote districts like Jajarkot still have up to 78 per cent poverty, so it is necessary for microfinance institutions to concentrate in remote areas rather than limited to urban areas,” said Dr Khatiwada. Shrestha said.
Discussing the problems seen in the microfinance sector in recent times, Dr. Shrestha pointed out the economic slowdown after COVID-19, lack of corporate governance and increasing non-performing loans as the main challenges. “Institutions should abide by corporate governance and members should also maintain financial discipline,” he added. He suggested that the microfinance sector should move towards the credit plus model and focus not only on credit flow but also on marketing of products.
He stressed on the need for microfinance to help in marketing as many entrepreneurs and farmers have been complaining that they have not got market. Stating that there was shortage of labour force in the country and demand for foreign employment had weakened due to the increasing migration and foreign employment, he urged the microfinance institutions to be reviled as per the changing technology and time change. The conclusions drawn by the two-day conference are expected to be an important guide for the regulatory bodies, the government of Nepal and the microfinance institutions themselves. Shrestha said.
Emphasis on making entrepreneurs not borrowers{
Conference organizing committee chairman Shankar Man Shrestha said the microfinance institutions should now become entrepreneurs and not just money traders. “Microfinance is not just a pure loan business, it should be linked with entrepreneurship. We should be able to turn our members into entrepreneurs and not just loanees. If the members become entrepreneurs, there will be no problem in loan recovery and their income will increase,” said Shrestha.
Nobel laureate Mohammad Yunus’s ‘three zero’ concept should make zero poverty, zero unemployment and zero carbon emission the main mantra of microfinance. Shrestha also expressed serious concern over the growing anomalies and anomalies in the microfinance sector. “It is unrealistic to have an equal number of members in the microfinance sector when the total household in Nepal is around 60 lakhs. “There is duplication in the data as a single person takes loans from three institutions on an average and the actual borrowers in microfinance are around Rs 29 lakh,” he said.
Shrestha said that although Nepal has been following the ‘rural model’ of Bangladesh since 2048 BS, many distortions and distortions have entered in it over time. He said that although this model was very effective in the beginning, later there was a deviation in microfinance which started as a social business. He complained that no action was taken in the report submitted to the then Governor even when the borrowers were on the verge of committing suicide due to multiple financing.
Chairman Shrestha urged the Nepal Rastra Bank (NRB) to pay special attention to the situation saying the situation could be catastrophic if the ‘manipulation’ taking place in the microfinance sector was not brought into reality. He also cautioned the board of directors and CEOs of the organizations concerned not to hide or cover up the truth and to walk on the right path.
Demand for setting up of ‘Microfinance Development Fund’ to systematize microfinance sector: Yadav
KATHMANDU: President of Nepal Microfinance Bankers’ Association Ram Bahadur Yadav has proposed to the government to establish a microfinance development fund to make the microfinance sector of Nepal more effective and systematic. He said this while addressing the fifth National Microfinance Members’ Conference here today. “It is necessary for the government to establish a fund coordinating with bodies like the World Bank and ADB. If the fund is made available to microfinance companies at concessional interest rates, the poor people will also get loans at a cheaper rate and it will be a win-win situation,” Yadav said.
According to Yadav, around 2.7 million people have availed direct loan facility through 51 microfinance units in operation and the total loan investment has reached Rs 500 billion. The share of savings is also above Rs 2 trillion. The sector directly employs around 22,000 employees, he said. He said that although some problems were seen in the microfinance sector in the past due to multibanking, unhealthy competition and misleading publicity, now those problems are moving towards resolution. Therefore, the microfinance sector is returning to its old rhythm and has moved ahead on the path of healthy competition, he said. Saying microfinance institutions alone were not the last measure of poverty alleviation, Yadav stressed the need of coordination with other state agencies.
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