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Symposium on Strengthening Microfinance in Nepal

Symposium on Strengthening Microfinance in Nepal was organized by the Centre for Self-help Development (CSD) on 27th July, 2024 (Ashad 12, 2081) at Hotel Yellow Pagoda, Kantipath, Kathmandu. The objective of the Symposium was to develop a road map for a strategic plan which    includes the major steps or milestones needed to achieve results and outcomes of 12-point declaration as propounded by 4th National Microfinance Members’ Summit organized on Falgun 5-6, 2080 (February 17-18, 2024). The symposium was divided into three sessions and in each session 4 different points out of 12 points were discussed where panelists and moderators in each session discussed on milestones and strategic plans to achieve each provision as indicated in the declaration. The participants were also divided into three groups where they discussed on their designated 4 points  and developed a  road map to achieve them.

Mr. Bechan Giri, Member of Organizing Committee of Fourth National Microfinance Members’ Summit and Executive Chief of CSD welcomed all the guests present in the Symposium. Mr. Shankar Man Shrestha, Chairperson of Organizing Committee of fourth National Microfinance members’ Summit  and Chairman of CSD referring to MFIs in other countries he said, “ Recently we attended the 14th Social Business Day in Manila, Philippines. We also attended  one of the local MFIs, AHON SA HIRAP INC. (ASHI Inc) in Manila, Philippines. Unlike in Nepal they have not compromised on the fundamental of microfinance in the Philippines where  loan size is not more than 1 lakh peso (NRs 1 lakh). Similarly, the Declarations of our previous Summits have been confined to files. In order to stop this, the Symposium is organized so that we will be able to prepare a road map in order to meet the provisions made in the Declarations. I also request CEOs to act as a progenitor to implement road map. To streamline and solve all the problems and issues prevalent in the microfinance, a roadmap for the 12th point declaration formulated in the Fourth National Microfinance Members’ Summit has been prepared.”

The first session focused on discussion on   Declaration 1-4 of the 4th National Microfinance Members' Summit, Dr. Gopal Dahit, CEO of Unique Nepal Laghubitta Bittiya Sanstha Ltd and moderator of the session queried the panelists on their thoughts on how to materialize the slogan of the 4th Summit, “Clean Microfinance, Prosperous Members”. Mr. Ram Bahadur Yadav said, “We should change our working modality without deviating from the fundamental of microfinance”. Mr. Dambar Bahadur Shah, General manager of Kisan Bahuudeshiya Sahakari Sanstha Ltd said, ”Along with MFIs the members should also have socio-economic growth. Mr. Dan Raj Pant, Deputy Chief Executive Officer, First Microfinance Laghubitta Bittiya Sanstha Ltd, said, “The general belief in microfinance is that if loan size increases  our institution will grow. We should establish members’ coordination and research department to gauge the socio-economic impact of our members. We should also  establish an award for a campaigner working at grassroots for the betterment of MFI.” Ms. Hira Thandar, Department Head, Forward Microfinance Laghubitta Bittiya Sanstha Ltd. shared the importance of centre meeting to develop rapport between the staff and members as well as entrepreneurship development for the socio-economic development of staff.

Dr. Dahit’s query on how to increase rapport between staff and members and build ownership of the members, Mr. Yadav said, “Training   and enterprise development departments should not be under human resource department. My institution is developing business development support service where we recruit technical staff like agriculture and veterinary experts. We have developed partnership with municipality and rural municipality associations so that we can share costs in order to organize skill development training program.” Ms. Thandar said that skill development training should be prioritized. Mr. Shah shared the importance of tracking as well as  control mechanism to minimize multiple financing and focus on enterprise development and  grievance handling mechanism. Mr. Dinesh Niroula, one of the participants, said that MFIs have not been able to disseminate positive impacts created to their clients. Mr. Shankar Man Shrestha, added, “In Credit Access (formally Grameen Kota) they have one audit team and one business development officer for every 5 branches.”

In the second session focus was on discussion on   Declaration 5-8 of the 4th National Microfinance Members' Summit, Mr. Sanjay Kumar Mandal, CEO of Jeevan Bikas Laghubitta Bittiya Sanstha Ltd and moderator of the session queried the panelists on how to better implement client protection principles, Mr. Sogat Bir Chaudhary, CEO of Aatmanirbhar Laghubitta Bittiya Sanstha Ltd said, “We should speak politely even to those who have defaulted on their loan and not pressurize them to repay their loan.” Mr. Bharat Shah shared the importance of life management training which helps us generate positive energy to counteract difficult problems. Ms. Sharada Pokharel, CEO of Upakar Laghubitta Bittiya Sanstha Ltd, said, “We should implement grievance redressal mechanism in centre meetings as well as bring ‘learn and earn’ modality  in schools.” Mr. Damodar Regmi, Deputy CEO of Jeevan Bikas Laghubitta Bittiya Sanstha Ltd said, “ We should bring a special package so that those left behind like hardcore poor, marginalized and excluded groups should be included.”

In the third session the focus was on discussion on   Declaration 9-12 of the 4th National Microfinance Members' Summit, Dr. Mahendra Giri, CEO of Sahara SACCOS and moderator of the session queried the panelists on achievements made in the field of environment management, enterprise development and digital technology and how to move forwards in context to their institution. Mr. Deepak Nidhi Tiwari said, “ When Chepang,  one of indigenous communities of Nepal, living in Madi of Chitwan district were forcefully evacuated by the Army, Chhimek Samaj Sewa Sanstha, mother organization as well as promoter of Chimmek Laghubitta Bittiya Sanstha Ltd supported them in building a house as well as involved them in income generating activities in partnership with Madi Municipality. We have conducted numerous activities and will continue to conduct activities in the field of environment and enterprise development.” Ms. Shova Bajracharya, CEO of Manushi Laghubitta Bittiya Sanstha Ltd. said, “As per our commitment towards, ‘One MFI One Eco-village’, we have launched Eco-village Program in Dharpa, Bahrabise Municipality of Sindhupalchowk District  where currently 137 households have benefitted from our program. We have carried out enterprise development activities while addressing the issue of environment degradation. We will continue which such activities.” Mr. Sundar Shrestha, CEO of Laxmi Laghubitta Bittiya Sanstha Ltd said, “ We have incorporated Real-time Data (RTD), where information is delivered to core banking system immediately after financial transaction in our tablet banking. This way we have been able to know exact amount of loan that needs to be paid by our borrowers at real time.” Mr. Bishal KC, CEO of Bauddha Grameen Bahuudeshiya Sahakari Sanstha Ltd shared said that his organization collects milk from the villagers and deposits the money in their account digitally right after the milk has been received. Mr. Sanjay also said that Progress out of Poverty Index (PPI) is used to measure the socio-economic impact of the members of his organization. There are 10 indicators and survey takes 10 to 15 minutes per households and is conducted every two years. The enumerator has to compulsory visit the members home as there is location tracking system in the app.

The next session was focused on discussion and Preparation of Road Map for the Implementation of the Declaration of the 4 th NMMS (in three groups moderators of the session 1, 2 and 3). The 1st group focused on   eradicating multiple financing and making microfinance vigilant so one member is able to take loan from only one institution. It also prioritized on carrying out Progress out of Poverty Index  (PPI) to gauge the progress of its members. It also gave emphasis on grooming and developing at least one member of each center into entrepreneur. It planned to restrict larger size loan to a member initially but prioritized on gradual increase in loan size after each cycle.  It focused on promotion of 3Zero Clubs, digital literacy and brining special programs for youth entrepreneurs.

The second group focused on creating grievance redressal cell in each MFI. It also prioritized on youth entrepreneurships program. It also empathized on promoting 3 Zero Clubs based on zero poverty, zero unemployment through the promotion of enterprises and zero net carbon emission with particular focus on promotion of eco-village. It also focused on credit plus program like healthcare and  education. It also focused on developing incubation centre in schools so that students  are groomed into becoming entrepreneurs from an early age and also incorporating the concept ‘Learn and Earn’. It also focused on providing digital literacy as well as promote youth entrepreneurship programs.

The third group focus on encouraging dormant members to enroll in enterprise training program  in order to groom and develop them as entrepreneurs. It also focused entrepreneurships development through assuring environment friendly approaches as well as promoting indigenous technology by developing at least one eco-village per MFIs. It also prioritized on creating enterprise desk  and providing technical services through hiring experts having expertise in particular field in each MFIs in order to develop and groom entrepreneurs. It also gave emphasis on providing digital literacy to their members and developing manual in order to prioritize and institutionalize digital  transactions in their organization as well development of socio-economic indicators and integrating into core banking system to measure the progress of their members.

Regarding the participants feedback, Mr. Madhaw Prasad Sharma from Laxmi Laghubitta Bittiya Sanstha Ltd said that the activities mentioned in  12 point declaration is achievable but one organization should play a lead role in implementing activities outlined in the declaration. Ms. Uma Bohara, Board Member of Swabalamban Laghubitta Bittiya Sanstha Ltd, said, “We should carry out activities prioritized in the Declaration in partnership with local level institutions.”

Mr. Shankar Man Shrestha, in his closing remark said,” The declaration is in line with principle, tenets and fundamental of microfinance. I hope it will help in brining microfinance in the right track and regain the past glory it once had.” He also said that microfinance does not recommend collateral based lending and having worked in Agriculture Development Bank collateral auctioning is a very lengthy and tedious task and there are instances where banks may not fully recover the total amount from the collateral.” He also said that if this initiative of implementation of the road map is successful,  microfinance would move in the right direction and achieve its past glory.

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