Namrata Sharma presentation

Poverty, Micro-Finance and Conflict in Nepal: 

Poverty, Micro-Finance and Conflict in Nepal A panel presentation by Ms Namrata Sharma, Nepal, During The Canadian Co-operative Association Meeting October 8-9, 2003 Ottawa

Poverty: 

Poverty Poverty is reflected not just in terms of per capita income of households, but also in terms of inadequate access to a range of services such as health, education, security etc

Poverty in Nepal: 

Poverty in Nepal [1] Source: Human Development Report [2] Source: NPC/UNDP-Nepal Human Development Report-2001 Table 1 [1] Source: Human Development Report [2] Source: NPC/UNDP-Nepal Human Development Report-2001

Country Context : 

Country Context 58% of Nepal’s population lives in the hills 38% of the population (approx. 25 m) are below the poverty line GNP per capita us $ 220 Difficult Geographical terrain Since 1996 Nepal is facing the escalation of internal conflict between Maoist Rebels and the Government 46 of Nepal’s 75 districts have been classified as 'highly affected' and another 20 (including Kathmandu) as 'affected' by the Maoist insurgency. The violent clashes between Maoists and the police/military have so far claimed more than 7,000 lives

Map of Nepal: 

Map of Nepal

Geographical Regions: 

Geographical Regions Plain (tarai) 35% population Hills 60% Mountains 5%

MF in Hills of Nepal: 

MF in Hills of Nepal Limited scale of operation and sparse population challenges financial viability and self sufficiency 90% of farm HH in hills have no access to institutional finance mainly rely on informal sector SACCOS-largest provider of MF services in hills

MF Development in Nepal : 

MF Development in Nepal Early 70s SFDP by ADBN Various government programs like PSL, RSRF, Various favourable Acts, establishment of wholesale organisation Informal/ Semi Formal Sector Formal Sector Community Based Sector

Status of Major Micro-Finance Service Outreach: 

Status of Major Micro-Finance Service Outreach

Status of Major Micro-Finance Service Outreach: 

Status of Major Micro-Finance Service Outreach

Advantages of SACCOS Model : 

Advantages of SACCOS Model Savings driven Self managed Building of Self management skills Flexibility of products/services Insurance products Financial/non-financial services

Disadvantages of SACCOS Model : 

Disadvantages of SACCOS Model High investment in training/capacity building Dominated by elites Move away from targeting the poor Difficulty in accessing external funds

Effect of Conflict on Rural Financial Sector : 

Effect of Conflict on Rural Financial Sector The costs of the conflict is expected to be around 8-10% of Nepal’s GDP The banking sector in particular it’s exposed branch network in the rural area has been a prime target of the rebels. An estimated 20-30% of the branch networks of three largest rural banks including Agricultural Development Bank, Nepal Bank LTD and Rastriya Banijya Bank has been vandalised by the maoists. Due to withdrawal of savings there is an estimated gap of US $ 128 million for loan There have been several cases where Different MFIs particularly Developmenet Banks have been looted by the Maoists in different branch offices. The Maoists have also forced MFIs to lower their interest rates

Effect of Conflict on SACCOs: 

Effect of Conflict on SACCOs It is interesting to note that most of the selfr promoted saving and credit cooperatives (SACCOS) have not been affected however there are cases where the SFCL SACCOS have been attacked Decrease in interest rates The averahe OSS and FSS are decreasing, equipment and infrastructure destroyed.

Coping strategies in SACCOS: : 

Coping strategies in SACCOS: information campaign at local, district and national level indirect dialogue with the Maoists on local level special security arrangements for cash and file management including - Preparing two copies of each documents; Each day the SACCOs deposit cash in the banks and have adopted the zero cash policy to avoid being looted; Insuring cash vaults are also being practiced now temporary transfer of operations to district headquarters and the immediate reconstruction, rehabilitation and relaunch of activities

II. ImpAct Assessment: 

II. ImpAct Assessment

ImpAct Assessment of SACCOS : 

ImpAct Assessment of SACCOS

ImpAct Assessment of SACCOS : 

ImpAct Assessment of SACCOS

Millennium Dev. Goal Focussing on Poverty and Dev Issues : 

Millennium Dev. Goal Focussing on Poverty and Dev Issues Free men, women and children from the abject and dehumanising conditions of extreme poverty, to which more than a billion of them are currently subjected. It is committed for making development reality for everyone and free the entire human race from want. Create both national and global environment alike, which is conducive to development and to the elimination of poverty. Urge both bilateral and multilateral donors to increase financial and technical assistance to the landlocked developing countries to meet their special development needs and to help them overcome the impediments of geography by improving their transit transport systems. Resolve further to halve the proportion of the world’s people whose income is less than one dollar a day and the proportion of people who suffer from hunger by the year 2015, and to halve the proportion of people who are unable to reach or to afford safe drinking water by the same date. Promote gender equality and the empowerment of women as effective ways to combat poverty, hunger and disease and to stimulate development that is truly sustainable. Develop and implement strategies that provide young people everywhere a real opportunity to find decent and productive work. Develop strong partnerships with the private sector and with civil society organizations in pursuit of development and poverty eradication.

Contribution of SACCOS to MDGIncrease in income: 

Contribution of SACCOS to MDG Increase in income

Increase in Food Expenses: 

Increase in Food Expenses

Decrease in Interest Rate: 

Decrease in Interest Rate

Map of Nepal: 

Map of Nepal