Thursday, September 6, 2012

Converting youth to job-makers rather than job-seekers

Mega Bank Nepal has launched the 'SME Banking Year' campaign for the current fiscal year with a dream to convert majority Nepali youths from job-seekers to job-makers.
"Let's start with the best that we can do rather than wait for somebody to do something for us," says chief executive of the bank Anil Shah, hoping that it will take only three to five years before financial institutions turn to Small and Medium Enterprises (SMEs) banking, unlike how it had taken a decade for consumer financing to jumpstart.
He is confident that financing SMEs is not only the future of the economy but the banking sector as a whole. The confidence, he exudes, comes from his personal experience as a consumer financing head about 15 years back, when he was involved with Standard Chartered Bank Nepal. "When we started consumer financing then, a lot of people were apprehensive about it, but today consumer financing is one of the key portfolios of every financial institution," he shares.
Shah maintains that financial institutions need to promote handicrafts, carpets, pashmina, agro-based processing units, and similar enterprises because they have a niche market for their products and SME units will be able to capture those markets. "Keeping our structure and scope of the economy in mind, if the country wants to promote ‘Made in Nepal’ goods then it is going to be SMEs rather than large corporates," he adds.
SMEs represent the driving forces of sustainable local economic development throughout the world. They form the base of economies, stimulate private property, and entrepreneurial capabilities, which, due to their flexibility, can quickly adjust to market changes, generate employment, create diversified economic activities, and contribute to exports and trade. It is how SMEs have become the pillars of development in transitional economies like Nepal.
"Remittance — the country's economic lifeline — should be linked to SMEs," he opines, adding that inward linking will help create entrepreneurs in the country.
The country needs job-creators like Min Bahadur Gurung — the pioneer who started Bhatbhateni Superstore — who has made it big with the help of financial institutions and currently runs six superstores — five in the valley and one in Pokhara — generating employment for around 1,000 youth, and not job-seekers, Shah added. "One Min Bahadur Gurung is not enough to create employment in the country."
The 28th commercial bank of the country — that promises to serve the entire economic pyramid — is determined to create hundreds of Min Bahadur Gurungs.
Investment of more than Rs 100 million in fixed assets is considered a large industry. Industries with fixed assets between Rs 30 million and Rs 100 million are considered medium industries, and investment of up to Rs 30 million in fixed assets are considered small industries, according to the current definition of industrial enterprises in Nepal.
"The bank will lend Rs 500,000 to Rs 50 million under the SME financing scheme," says Shah, adding that every day Mega Bank Nepal has been lending Rs 12.5 million on average to SMEs through its branches. The bank aims to lend Rs 2.5 billion to SMEs by the end of this fiscal year.
Besides financing, the bank is also helping SMEs with branding, market development, and enhancing management capability, which he claims to be a 'Mega model'.
"The entire value chain financing will help reduce the cost of finance for the borrower too," he adds.

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