Bhattarai for expanding rural access to finance, says no to donors prescription

Former finance minister and vice-chairman of the Unified Nepal Communist Party of Nepal (Maoist) Dr Baburam Bhattarai today said that the government must bring its own policy to expand access to finance in the rural areas. "The prescriptions from the donors won't work," he said.
Addressing the second Microfinance Summit here, he stressed on institutional investment for rural farmers and small entrepreneurs. The policy should focus on women as there is a rare incident of default by women entrepreneurs, he said adding that the policy should focus on indigenous, dalits and janajatis and extend their reach to finance. "There is no alternative to enabling the lower strata of society through microfinance to uplift their living standards," he said.
He also urged enough research on microfinance and target groups before starting any programmes for them. "Instead of depending on foreign jobs and consumption, we should focus on savings and production to develop an independent economy," he added. "There is no option other than enabling people through microfinance for the socio-economic transformation of society."
"Half of the total population has no access to formal financial channels," Mercy Corps deputy director Sanjaya Karki said, presenting his paper on 'Microfinannce in value chain'. Due to lack of access to formal financial channels, the majority of the rural populace still has to depend on local merchants, he said adding that these merchants charge higher interest rates.
Instead, the farmers are benefitting from microfinance, Karki said adding that Agriculture Development Bank and credit and cooperatives are giving service through price value chain.
Senior Programme Officer of GTZ-Include, Roshan Shrestha said the price value chain would be more effective if cooperatives involved in production and processing, implement it. Presenting his paper on 'Business Model for Value Chain finance through cooperatives,' he said that cooperatives can be more effective. The cooperative invloved in production can paly a role of bridge between the small producers and finance companies and help price-value chain, he said. "But there should be legal provision. Except lending, cooperatives can also help the target groups by serching for them new markets and training them," he added.
Commenting on the papers, Dr Purushottam Shrestha, CEO of NNMB, said that the central bank and the government have neglected the microfinance sector. "The government that talks about poverty alleviation has not said a single word in the budget about microfinance," he complained.
Saliya Ranasinghe, consultant, said that the small farmers might have also been cheated in the microfinance.
The second day of the Microfinance Summit 2010 also saw various working papers and the participants actively discussed the papers. Graham A N Wright, director of Micro save; Megha Raj Gajurel, senior manager at RMDC; Ralf Radeermacher, director at Micro Insurance Academy and Anurag Mishra of Standard Chartered bank also presented their papers.