Nepal’s 2nd microfinance summit focuses on expansion: report

Microfinance Focus, Feb 16, 2010: The second microfinance summit was held in Kathamndu on Saturday with the aim of uplifting people’s lives through new innovations and strategies. Finance Minister Surendra Pandey inaugurated the summit by putting coins into a coin-box, said a report in The Himalayan Times.

Mr Pandey hailed microfinance institutions for their role in poverty alleviation and urged them to expand their services across Nepal. “The contribution of microfinance will be included in gross domestic production (GDP),” he said urging microfinance experts to reduce interest rates and rethink the spread and period of payment.

Microfinance institutions are providing services to over 1.8 million poor and disadvantaged families around the country, said summit coordinator Dr Harihar Dev Pant.

Microfinance service started in Nepal during 1975-76 from a small farmer project but it has grown rapidly after 1990. “There are many challenges in service expansion due to financial and technical reasons,” he said adding that because of these reasons the cost of operation of MFs has also gone up, according to the report.

Among the total 31 per cent Nepalis below the extreme poverty line, MFs are serving 20 per cent. It has been an effective tool for poverty reduction.

Philipp Kruschel, Senior Advisor of German Technical Corporation (GTZ) Include, expressed disappointment at the reduced productivity of the industrial sector due to political interference and energy shortage. He, however, expressed happiness at the progress made in microfinance sector in the recent past. “Microfinance institutions should lead the way to develop small and medium scale industries,” he said.

Microfinance institutions are getting tremendous success that banks have not been able to get in the last seven decades, said Nepal Rastra Bank (NRB) acting governor Krishna Bahadur Manandhar.

He urged microfinance institutions to expand their horizon from the rural poor to the poorest. “NRB has prepared a Microfinance Act and it is under scrutiny,” he said adding that NRB may grant deposit mobilisation facility to microfinance institutions.

Discussions on 11 papers were concluded on the first day of the summit. Ganesh Bahadur Thapa, chairman of Center for Microfinance, presented a paper on inclusive economic growth while Naresh Shrestha presented a paper on socio-economic part of microfinance institutions. Other papers presented were about good governance, government’s role in microfinance development, sustainable microfinance and difference between individual and group lending.

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