Nepal's banking industry leads the region in female representation but significant barriers remain in having more women in leadership roles: IFC Report

With 46 per cent female representation in its entry-level workforce, the banking industry in Nepal is ahead of other countries in South Asia in achieving gender parity. However, only 23 per cent of senior management roles are held by women, according to a new IFC report that examines gender diversity at six leading banks in Nepal.

The study—among the first of its kind in the region— identifies opportunities that can enable more women to advance to senior roles in the banking industry in South Asia.

This multi-country study, Women’s Advancement in Banking in Emerging South Asian Countries, focuses on commercial banks in Bangladesh, Nepal, and Sri Lanka, where women constitute 30 per cent of the banking sector’s workforce compared to the global average of 52 per cent, the report reads, underlining how several barriers—inequitable hiring, inadequate professional development, lack of fair evaluations, sociocultural constraints, and others—curtail women’s career growth prospects across the region.

“Diversity, equity, and inclusion are central to IFC’s work values," IFC country manager for Nepal, Bangladesh, and Bhutan Martin Holtmann said, adding that through nuanced, data-driven insights emerging from this new report, it is hoped to deepen the industry discourse around steps that need to be taken to improve the status of women in the banking workforce across South Asia.

In Nepal, women hold 42 per cent of all positions in surveyed commercial banks. Comparable figures for  Sri Lanka and Bangladesh are at 38 per cent and 18 per cent respectively. In senior management roles, women hold 23 per cent of executive positions in Nepali banks, compared to 20 per cent in Sri Lanka and 12 per cent in Bangladesh, the report adds.

Past studies have shown that commercial banks that have 15 per cent or more women in senior manager or higher roles, command up to 33 per cent higher return on equity than banks that do not. A growing body of evidence further links an increase in women’s representation in organizations to better performance on business metrics.

Accordingly, IFC's key findings and recommendations intended to help industry actors—executive managers in commercial banks, policymakers, industry bodies, and investors—direct their efforts to boost women’s representation in leadership in the banking industry.

The report recommends targeted efforts in four areas by banks and industry actors. These include establishing clear organisational commitments for gender diversity, the support system for women to reach leadership positions, policy changes to ensure workplace safety, and initiatives to support women's professional development and work-life balance.

“Nepal has a strong legal framework to promote women’s economic participation in the country. And these provisions are more comprehensive than other countries in South Asia,” said Holtmann. “While these progressive policies have allowed Nepal to be a leader in the region, more needs to be done to increase the number of women in leadership positions and to reach gender parity.”

IFC’s $56 million loan to Global IME Bank in February 2024 earmarked 25 per cent towards supporting women-owned small and medium enterprises (SMEs). Additionally, IFC investment in various banking and financial sector clients such as NMB Bank, Sanima Bank, and Siddhartha Bank  have been able to provide economic opportunities, and financial services to SMEs including those led by women.

IFC helps businesses in poorest countries fight Pandemic with $4 billion in Covid-19 financing

 IFC’s pandemic response is focused on reaching the most vulnerable people in developing countries.

Of the $8 billion in IFC Covid-19 fast-track financing approved by the IFC Board in March 2020, $4 billion has been committed to date, of which close to half is expected to benefit people in the poorest countries and fragile states, with the remainder helping to support the fight against Covid-19 across other developing countries and emerging markets.

“Supporting the private sector will be crucial to helping developing countries achieve an inclusive, sustainable and resilient recovery and stem the current rise in extreme poverty,” said World Bank Group president David Malpass. “Our goal with IFC’s fast-track Covid-19 facility is to provide needed liquidity for corporate and financial institution clients, which will provide working capital, support jobs and facilitate trade,” he added.

IFC’s Board in March approved $8 billion in financing to help companies affected by the outbreak. IFC –the largest global development institution focused on the private sector in emerging markets – has since fully deployed the $2 billion allocated under the trade-finance envelope of the fast-track facility. This support is helping client financial institutions keep liquidity flowing to businesses that depend on trade, especially micro, small and medium-sized enterprises (MSMEs), a major source of employment.

“IFC’s fast-track Covid-19 facility was designed to provide immediate liquidity to our financial institutions and real sector clients to preserve jobs and prevent short-term damage,” interim managing director, executive vice president and chief operating officer of IFC Stephanie von Friedeburg said. “By supporting private sector clients and interventions, we are hoping in the longer term to help reignite economic growth, paving the way for a better, more resilient and sustainable future once Covid-19 recedes.”

IFC has committed an additional $2 billion under the facility, benefiting every region in which IFC operates. This financing is being used for a range of purposes, from bolstering healthcare providers to helping the battered tourism sector and keeping viable businesses afloat, thus saving jobs. Another $623 million has been mobilised for these clients from private sector partners.

Additionally, the IDA Private Sector Window (PSW) – a tool developed by the World Bank Group to catalyze private-sector investment in the world’s poorest countries – has provided $281 million in guarantees supporting trade-finance and working-capital loans to small and medium-size enterprises (SMEs) in eligible countries since March.

IFC’s response is part of the World Bank Group’s effort to take broad, fast action to help developing countries strengthen their pandemic response, increase disease monitoring and improve public-health interventions, a press note issued by the IFC reads. “The World Bank Group has the financial capacity to deploy $160 billion over the next 15 months, including a potential $47 billion from IFC in overall support for the private sector.”

Looking ahead, IFC will work with its partners to help restructure and recapitalise viable businesses and set the stage for an inclusive, sustainable and resilient recovery. In August, IFC also launched the $4-billion Global Health Platform, which is helping developing countries expand access to medical supplies such as masks, ventilators, test-kits and, eventually, a Covid-19 vaccine.

Some 4 million jobs added to Nepal’s economy in the past decade: World Bank

 Nepal’s economy added nearly four million jobs over the past decade, and average job quality increased significantly, according to the World Bank’s recent Nepal Jobs Diagnostic report. But continued job creation, especially of wage jobs, is needed to absorb underutilised workers into better-quality, stable, and well-paid jobs. The economic disruption caused by the Covid-19 pandemic – while not addressed in this report – highlights the importance of increasing stable and secure employment in the post-pandemic recovery period.

Nepal’s economy has been gradually shifting from largely subsistence agriculture to more modern industry and services, and this structural transition is bringing better work opportunities for the labour force, it reads, adding that despite great strides, not all job seekers are able to access quality jobs, especially women. “In the last decade, large numbers of men have entered jobs in construction, manufacturing, commerce and transportation, or have migrated abroad. Even though many of these are informal jobs or temporary wage jobs, they are nevertheless more productive and provide improved livelihoods compared to traditional low-productivity farm work.”

Women, on the other hand, have not transitioned in significant numbers. The share of wage work in Nepal jumped from 17 per cent to 24 per cent of total employment between 2008 and 2018, as nearly half of the jobs added since 2008 were wage jobs.

“The shift toward wage employment signals a fundamental change in Nepal’s economic development and is similar to patterns seen around the world,” World Bank Lead Economist and main author of the report Dr Elizabeth Ruppert Bulmer said, adding that as economies diversify their production activities and increase scale economies, employment becomes more specialized and more productive, and jobs are increasingly based in firms rather than self-employment, and pay more. “Urbanisation amplifies these effects by concentrating economic activities while increasing the variety of products and services.”

Evidence from a combination of data sources – national labour force surveys from 1998, 2008 and 2018, the 2018 Economic Census, and a 2019 survey of 900 SMEs across 6 districts – points to a number of constraints to achieving better labour market outcomes in Nepal. “One key impediment is Nepal’s dramatic topography, which makes access to wage jobs and to product markets costly,” the report reads, adding that most jobs are informal and concentrate in relatively low productivity sectors, while most firms are micro-sized with one or two employees, and target small local markets rather than exporting or connecting to regional or global value chains. “In addition to credit constraints, many SMEs cite tax regulations, high taxes, scarce skills, and bureaucratic inefficiencies as obstacles to growth and therefore job creation.”

Gendered social norms have limited female labor mobility and work opportunities, reflected by the fact that most women remain in unpaid work. Three-quarters of new jobs taken up by women between 2008 and 2018 were in non-wage self-employment or unpaid family work, much of which was farm work. Occupational segregation and social norms contribute to the large earnings gap between men and women, according to the report.

In order to improve job outcomes in Nepal, the report recommends policies focusing on fostering SME productivity and growth; improving the business environment and labor market policies; increasing the individual, family, and economy-wide benefits of international migration; and preparing and connecting women and youth to better jobs, including entrepreneurship.

“While the report does not address the shocks from Covid-19 experienced by Nepal’s economy and its people, it underscores the imminent priority for Nepal to save livelihoods of the most vulnerable workers, including those in subsistence agriculture and urban and rural informal day laborers or self-employed workers who lost their income sources,” World Bank country director for Maldives, Nepal and Sri Lanka Faris Hadad-Zervos, said, adding that the government of Nepal has already initiated programmes including the Youth Employment Transformation Initiative Project to address the immediate labour market challenges, and it is hoped that this analysis will further guide policy interventions to improve job outcomes as part of Nepal’s resilient recovery efforts from the crisis.

Central bank lowers refinancing loan limit

The central bank has reduced the maximum limit of refinancing loans that businesses can take from refinancing facility through banks and financial institutions (BFIs) to Rs 50 million per individual, and per business.
Issuing a ‘Refinancing Guidelines’ today, the central bank lowered the maximum limit of refinancing facility to businesses and individuals from Rs 500 million to Rs 50 million to ensure that more businesses have access to the subsidised loan facility. More the businesses get this facility to cope with the impact of coronavirus pandemic, faster the economy can bounce back, according to the central bank. “The businesses and individuals can now borrow Rs 50 million refinancing loans from BFIs at low interest rate of up to five per cent.”
The provision that compels every bank branch to release at least five subsidised loans and bring down the limit of such loan to borrowers will help more borrowers to access the refinancing loan facility, the guidelines reads, adding that the businesses can get up to Rs 200 million refinancing loan at five per cent interest rate from the central bank’s refinancing fund.
Earlier, the central bank had prepared a draft of the Refinancing Guidelines and brought down the limit of refinancing loan for individual and businesses to Rs 100 million. But the central bank – after the Monetary Policy for the current fiscal year – has further reduced the limit to Rs 50 million to ensure access to maximum number of businesses and people. “Refinancing loan that businesses acquire from BFIs and central bank will have maximum maturity period of one year with no renewal condition,” it reads.
The BFIs should give Covid -affected businesses top priority, when issuing such loans, while people with low income and those from marginalised sections should be given priority, the guidelines further reads, adding that small and medium enterprises (SMEs), industries that use domestic raw materials and those contributing to substitute import should also be considered eligible for such loans.
The central bank can float up to Rs 200 billion refinancing loan in the market as per necessity. Likewise, some 70 per cent resources of the refinancing fund will be mobilised through BFIs, though central bank itself had been mobilising refinancing fund.
The new provision, however, bars firms with return on equity (RoE) of more than 20 per cent annually from such refinancing loan facility. Industries related to tobacco and liquor are also barred from such refinancing loan facility from the central bank and BFIs.

IFC’s $25 million support to NMB Bank to boost green financing and access to credit

The International Finance Corporation (IFC) – a member of the World Bank Group – is providing a $25 million loan to NMB Bank to boost financing for green projects and small and medium enterprises (SMEs).
The investment is expected to help expand NMB’s SME portfolio to over $1 billion by 2025, creating up to 50,000 jobs over the next five years, according to a press note issued by IFC. SMEs have been a key engine of growth in Nepal, contributing 20 per cent of GDP and creating over 60 per cent of jobs in the country. The project is expected to see a doubling in the amount of loans available for SMEs from NMB, creating more jobs in the economy.
The loan marks IFC’s first climate focused lending to a financial institution in Nepal, incorporating the internationally recognised green loan principles. Overall the support for green financing, excluding hydro financing, is expected to contribute towards reducing CO2 emissions in the country. IFC expects the project will also build up NMB’s capacity to identify and evaluate green lending opportunities and increase access to green financing in Nepal over the next five years – trebling the amount of loans available for ‘going green’.
“NMB is focused on financing of sustainable projects in the real sector in alignment with the Government of Nepal's growth plans,” NMB Bank chief executive officer Sunil KC said, adding that the bank’s investments comprise of a balanced mix of real sector exposures which includes hydro power, agriculture, microfinance, infrastructure, tourism, SMEs and green projects that are key drivers of economic growth and sustainability. “In the current Covid -19 scenario, the new investment from IFC adds considerable value in helping us significantly increase our current portfolio and widen the scope for investment in sustainable and green projects.”
Additionally, access to climate finance is limited in Nepal, which is expected to face a further setback due to the reduction in the flow of credit, in the wake of the impacts of the Covid-19 pandemic.
“This investment is supporting SMEs and Nepal’s sustainable development during this economic downtown,” IFC country manager for Nepal, Bangladesh and Bhutan Wendy Werner said, adding that IFC believes in the tremendous opportunity for green growth through mobilising the private sector. “The project will help boost access to finance for small and medium sized enterprises, which have been highly affected by the impacts of the pandemic.”
SMEs will contribute to Nepal’s recovery in the aftermath of the pandemic.
Based on the government commitment to the Paris Climate Agreement, IFC estimates the country’s has climate-smart investment opportunities of $46 billion by 2030. IFC’s own Climate Implementation Plan of April 2016 has an overall target of scaling up climate investments to reach 28 per cent of IFC’s annual financing and catalysing $13 billion in private sector capital annually by 2020. “IFC has invested in NMB since 2015 through a Global Trade Finance Programme (GTFP) facility and in 2018, IFC extended a working capital solution (WCS) loan.”
Since 1956, IFC has invested over $150 million in Nepal in the country’s priority sectors. By the end of June 2020, IFC’s committed portfolio in Nepal is expected to be approximately $500 million – a significant increase from previous year – where it stood at $75 million.

WTO report looks at trade developments in poorest countries in wake of Covid-19

A new information note published by the global trade regime secretariat looks at how the Covid-19 pandemic has affected the participation of least-developed countries (LDCs) in global trade.
The note stresses that LDCs have seen a significant decline in export earnings due to decreasing demand in key markets, falling commodity prices and a decline in remittances and are likely to be the hardest hit by the crisis due to their limited resources to stimulate growth.
Most LDCs have experienced a significant decline in export earnings since the outbreak of Covid-19. The World Trade Organisation (WTO) report anticipates that the downturn in world trade in 2020 will continue to be particularly severe for LDCs.
LDC exports of textiles and clothing have been badly affected by declining global demand and supply chain disruptions. In addition, LDCs that depend on tourism revenues are being hard hit by the slump in this sector. There are currently 47 LDCs, 36 – including Nepal – of which have become WTO members. The note underscores that the pandemic is undermining the development gains of countries such as Angola, Bangladesh and Vanuatu that are expected to graduate from LDC status in the near future. 
The note also collates the measures that LDCs have taken to combat the pandemic, ranging from strengthening health care systems to providing stimulus packages to export-oriented sectors and liquidity support for small and medium-sized enterprises.
In early May, the LDCs group called on other WTO members to refrain from imposing export prohibitions or restrictions on medical goods and food. They urged governments to facilitate trade in these goods, including by implementing the provisions in the WTO’s Trade Facilitation Agreement.
The report also notes that the international community is seeking to support LDCs’ participation in world trade by providing debt relief and strengthening social sectors.
Among the Covid-19 pandemic’s far-reaching consequences for the global economy, the LDCs face the most daunting challenges. A lack of resources to support an economic rebound is compounded by LDCs’ dependence on a limited range of products exported to a few markets, some of which have been those worst affected by the Covid-19 outbreak. The pandemic threatens to derail hard-won development gains in LDCs, it reads.
The year 2020 started against the backdrop of a subdued trade performance in 2019. The value of LDC exports of goods and services declined by 1.6 per cent in 2019, a greater decline than that of world exports (1.2 per cent). Consequently, the share of LDCs in world exports also registered a marginal decline, falling to 0.91 per cent in 2019. The expected downturn in trade in 2020 is likely to be even more severe for LDCs than at the global level.
The pandemic has accentuated the slump in oil prices seen in 2019. Declining demand, as well as supply disruptions, have weighed significantly on LDC exports, especially exports of textiles and clothing products. LDCs dependent on tourism revenues have seen the sector come to a virtual standstill. As migrant workers from LDCs return from host countries affected by the pandemic, flows of remittances – a critical source of foreign exchange for many countries – have dramatically dried up. All of these factors are predicted to worsen further in the coming months.
The ongoing pandemic may affect the near-term prospects for some countries to graduate from LDC status. Angola and Vanuatu, which are scheduled to graduate soon, and LDCs such as Bangladesh, which are on the path to graduation in the next few years, have been experiencing unavoidable declines in economic growth and export earnings.
The LDCs have called for countries to refrain from export prohibitions and restrictions on medical goods and food, of which many are net importers. Several LDCs have lowered duties on medical goods to ensure their availability at more affordable prices to their citizens.
Since the start of the pandemic, at least two-thirds of LDCs have put in place a variety of lockdown measures. Some LDCs have announced stimulus packages, which have covered export-oriented sectors. They have also strengthened healthcare systems and ensured social relief packages and liquidity support to small and medium-sized enterprises (SMEs).
The international community has announced support measures ranging from debt relief to strengthening social sectors and providing social safety nets for the most vulnerable. Maintaining this momentum, while redoubling coordination efforts, remains vital as the world moves towards economic recovery, the note reads.

Government vows to support SMEs

The government, as usual, promised to support small and medium enterprises (SMEs).
Finance Minister Dr Yuba Raj Khatiwada today assured that there will not be any shortage of budget for small and medium scale enterprises and entrepreneurs.
Inaugurating 17th Handicraft Trade Fair kicked off here today – organised by the Federation of Handicraft Associations of Nepal (FHAN) – he said that the government is planning to provide subsidised loan to handicrafts entrepreneurs to prevent shortfall of investments in cottage and small enterprises. “The small and medium enterprises have a crucial role to drive the country’s economy, and thus they will remain the primary priority of the government while allocating the budget.”
“Every bank has an SME desk,” he said, adding that the government has also directed banks to promote and prioritise issuance of subsidised loans. “The SMEs are a sector with the highest export potential and thus, the government and banks and financial institutions (BFIs) should keep SMEs under due priority.”
But he asked entrepreneurs to come up with proper plans on their production target, potential market before seeking support from BFIs and government. The entrepreneurs should be clear about the nature of subsidy they seek from the government.”
Urging handicraft entrepreneurs to set up handicraft centres across major tourist areas in the country in coordination with the government to promote Visit Nepal Year 2020 (VNY2020) tourism campaign, he asked entrepreneurs to set up a few such centres inside and around Dasharath Stadium also targeting the flow of foreigners during the South Asian Games that starts in Kathmandu from Saturday.
The exhibition is showcasing a wide range of handmade products including metal craft, pauva painting, thangka painting, outfits made of pashmina, dhaka and allo fibers, and handmade paper, and wood products – produced across the country.
The five-day fair has altogether 200 stalls including seven pavilions, according to the federation. “India, Sri Lanka, Bangladesh and Pakistan are participating at the fair,” according to a press note issued by the FHAN.

SMEs relying on ancestral property for investment

A report revealed that the Small and Medium Enterprises (SMEs) predominantly rely on ancestral property for initial investments.
The SMEs are largely dependent on the ancestral property of their proprietors for the initial investment to start their businesses, revealed a study ‘SMEs Financing in Nepal’ released by the central bank. “The SMEs on an average get 33 per cent of their initial capital from the ancestral property of their proprietors,” reads the report that highlights the hardship for the entrepreneurs, who want to start SMEs in the lack of ancestral property or savings. “Despite implementation of various facilities, refinancing, concessional loan and credit guarantee schemes to promote SMEs financing, they have not been able to mobilise financial resources.”
“Difficult process, high interest rate and lack of collaterals to take loan are some of the problems that the SMEs have been facing,” the report reads, adding that the SMEs find it easier to obtain loans from cooperatives despite higher interest rates. “The SMEs have been paying interest rates as high as 18 per cent per annum.”
SMEs find it easier to obtain loans from cooperatives despite high interest rates, according to the report that shows that SMEs have been paying in an average 12.51 per cent of interest rates to BFIs in addition to one per cent of service charge.
“While majority of the SMEs have to wait for an average of 38 days to receive a loan, many firms from Karnali province are compelled to wait for a year,” according to the report that revealed that the SMEs operating in Province 3, including Kathmandu Valley, which is the most accessible area, had to wait for 240 days to receive a loan. “But in an average, it takes 38 days for a SME for the loan processing in bank. There are 275,433 SMEs registered across the country as of the end of fiscal year 2017-18.”
Likewise, over reliance on house and land collateral, lack of long-term lending, unstable, and high interest rates and low banking capacity are also some other factors that have held many SMEs to tap bank credit for the investment, according to the study report that revealed some 26 per cent of initial capital is sourced from the saving of the income of the proprietors, whereas 16 per cent is financed from bank and financial institutions (BFIs). “Other sources of investment include informal borrowing (8 per cent), remittance income (7 per cent), loans from cooperatives (6 per cent) and venture capital (0.5 per cent) but neither of any SMEs are mobilising capital by issuing its shares.
The report also reflects the interventions of the government have not become effective yet, and most of them are not even aware about the refinancing facility for SMEs. The government has introduced a number of schemes including subsidised interest loans to SMEs. However, the efforts to channelise financial resources to the SMEs have largely failed, according to the findings of the report.
Bank loans – a major source of financing in business sectors – to the SMEs is also very low, the study report indicates, adding that nearly 50 per cent of SMEs have borrowed from BFIs. “As of mid-July 2019, the outstanding credits of BFIs to SMEs excluding agriculture, energy and tourism sectors stand at 3.26 per cent.”
According to the report, some 85.9 per cent of SMEs were approved of loans after showing land and houses as collateral. “SMEs receiving loan on movable assets accounts for only 6.4 per cent while 1.3 per cent were loans using machines and equipment as collateral,” it reads, adding that only 19.2 per cent of small industries have access to subsidised loans.
The report has also recommended coordination between various policies and programmes scattered over various agencies like the Industry Ministry central bank and other institutions.

UN forum spotlights digital trade facilitation measures to boost sustainable progress in Asia-Pacific

The 9th Asia-Pacific Trade Facilitation Forum (APTFF) closed in New Delhi, India today with a strong focus on how digital and sustainable trade facilitation measures and practices can bring prosperity for the region.
Organised by the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) and the Asian Development Bank (ADB), in collaboration with the Ministry of Commerce, India and Confederation of Indian Industry, the Forum discussed results of a new Global Survey on the progress made by countries in implementing trade facilitation measures and how to address remaining challenges in this area.
Developed economies aside, the 2019 UN Survey results confirm leadership of several Asian developing countries in digital trade facilitation implementation, notably Republic of Korea and China in East Asia; Singapore, Malaysia and Thailand in South East Asia; Azerbaijan and the Russian Federation in North and Central Asia; and India in South Asia. All 46 Asia-Pacific countries in the Survey made significant progress in making trade easier and more transparent over the past two years, with countries in North and Central Asia, in particular Kazakhstan, making most progress. Cambodia was the best performing among the least developed country (LDC) included in the Survey. Pacific Small Island Developing States are lagging behind as they face particularly difficult implementation constraints.
Over 270 participants from more than 30 countries at the biennial Forum shared experiences and perspectives on different aspects of trade facilitation for sustainable development, including trade finance, cross-border ecommerce, paperless trade and innovative applications of emerging technologies.
“Amidst global trade tensions, regional cooperation to cut red tape and automate trade procedures is more important than ever,” said UN under-secretary general and executive secretary of ESCAP Armida Salsiah Alisjahbana in her opening remarks. “Making trade easier and faster at lower costs by expanding cross-border trade digitalization and the simplification of international trade procedures, will help all firms in the Asia-Pacific region, particularly Small and Medium Enterprises (SMEs),” she added.
At the opening, India’s Minister of Commerce and Industry and Railways Piyush Goyal highlighted that India is working proactively to introduce a plethora of reforms including digitisation of trade procedures as well as ensuring improvements in the trading environment with reduced turnaround time and transaction costs.
The joint Asia-Pacific Trade Facilitation Report 2019 launched by ESCAP and ADB at the Forum noted that aiming for full digital implementation of the WTO Trade Facilitation Agreement (TFA) and enabling seamless electronic exchange of trade data across-border could cut transaction costs for the region by nearly 17 per cent. To accelerate progress in this area, all countries were encouraged to complete their accession to the Framework Agreement on Facilitation of Cross-border Paperless Trade in Asia and the Pacific.
The ESCAP-ADB report also highlighted the need to strengthen linkages between trade facilitation and trade finance, with financial technologies such as blockchain and artificial intelligence to be used to enhance the efficiency and availability of trade finance, especially for SMEs in the region.
“There is an enormous untapped potential in the rapidly evolving digital technologies,” ADB vice-president for Knowledge Management and Sustainable Development Bambang Susantono said, adding that emerging new technologies can help address long-standing issues of high transaction and processing costs, while mitigating the huge trade finance gap.
Going forward, the Forum noted the importance of better addressing the needs of SMEs and other more vulnerable groups such as women and those working in the agricultural sector, noting that only very few countries in the region have customized trade facilitation measures to support these groups so far.
Three initiatives were awarded APTFF Trade Facilitation Innovation Awards this year. The International Plant Protection Convention was awarded for its work on the Generic ePhyto National System (GeNS), PSA International Ltd and Global eTrade Services (GeTS) for enhancing digital connectivity for China-ASEAN trade, and Tuticorin CFS Association for its CoDEx: Container Digital Exchange.
ESCAP and IBM also signed an MoU on the sidelines of the Forum to conduct studies on how frontier technologies can be harnessed to make trade more sustainable and inclusive. This includes collaboration on TINA, a new online decision-support tool for trade negotiators from developing countries.

Nepal expects more Chinese investment : NCP chair Dahal

Chairperson of the ruling Nepal Communist Party (NCP) Pushpa Kamal Dahal has urged China to invest in Nepal.
Addressing second Nepal-China Economic and Trade Cooperation Forum 2019 – organised jointly by Embassy of Nepal in China and the Economic Joint Committee of China Commercial Stock Enterprises (EJCCCSE) – chairperson Dahal explained that Nepal boasts an investment-friendly atmosphere following political stability. “Nepal and Nepalis are expecting Chinese government, traders and investors to invest in Nepal as the country is in a campaign of socio-economic transformation,” he said, reiterating Nepal’s stand on One-China policy. “We are committed not to allow Nepali land against China.”
Speaking at the occasion, vice president Nanda Bahadur Pun stressed on the Public-Private Partnership (PPP) model that could help Nepal and China to develop infrastructure in Nepal. “We have adopted a policy of receiving FDI and have prioritised transportation and connectivity in which investors can invest,” he said, adding that Nepal is ready to carry out such projects in PPP model.
The programme also witnessed the chief ministers from seven provinces, leaders of various political parties and entrepreneurs.
The chief ministers, on the occasion, pitched investment prospects of their respective provinces to Chinese investors. Chief ministers of Province 1, Province 3, Gandaki, Province 5, Karnali and Sudurpashchim provinces highlighted possible areas of investments in their respective provinces. They also highlighted projects related to agriculture, tourism, industry and hydropower projects in the provinces.
The chief minister of Province 3 Dor Mani Poudel, on the occasion, said that Nepal has emerged as a developing economy and one of the best countries to invest in. “Nepal encourages FDI both as joint venture operations with Nepali investors or as 100 per cent foreign-owned enterprises and public-private partnership as well,” he said, adding that Investment Board Nepal headed by the Prime Minister himself will facilitate the investors with all the help they need.
Speaking on the occasion, Nepali ambassador to China Leelamani Poudel informed the potential investors that Nepali Embassy has been discussion time and again on issues like policy continuity, simplified and well defined procedures and one-door system, hassle-free investment environment, predictable policy and legal regimes.
Likewise, deputy secretary general at EJCCCSE, Li Xuesong, on the occasion, talked about the possibility of establishing an industrial park in Chitwan. “We will introduce small and medium enterprises (SMEs) to the international business center and open the market of Nepal and South Asia to the world,” he said, adding that establishment of industrial park is a necessity as Nepal’s industrial infrastructure is weak.
On the occasion, industry minister Matrika Prasad Yadav pledged all possible support of the government to projects like establishment of industrial park.
Likewise, tourism minister Yogesh Bhattarai, on the occasion, requested Chinese tourists to make Nepal a preferred destination for their major holidays.
The second edition of the forum has been organised with an aim of increasing Chinese investments in Nepal. Some 50 Chinese investors as well as chief ministers, and ministers participated in the programme. The first edition took place in Beijing in April during President Bidhya Devi Bhandari’s state visit to China.

Responsible business a crucial factor in keeping region on track to achieve the SDGs

Businesses are well-positioned to offer innovative solutions to key sustainable development challenges, particularly in meeting the infrastructure and connectivity needs of rural and urban communities, concluded the annual Asia-Pacific Business Forum (APBF) in Port Moresby, Papua New Guinea today.
Organised by the United Nations Economic and Social Commission for Asia and the Pacific (UN-ESCAP), the government of Papua New Guinea and the Papua New Guinea Investment and Promotion Authority, with the support of the Business Council of Papua New Guinea, the Forum showcased bold, innovative and truly sustainable business solutions in sectors such as infrastructure, green financing, financial inclusion, climate and disaster resilience, as well as trade and investment.
The two-day APBF focused on the theme of ‘Global Goals, Local Opportunities’. Senior policymakers, business leaders and emerging entrepreneurs discussed the roles and responsibilities of businesses to work with the public sector to mitigate the impacts of climate change and support the development of non-urban Pacific communities.
“Connectivity is especially relevant in the Pacific context, where the challenges associated with geographic isolation and remoteness have hindered trade and investment among Pacific island countries and with major international markets. Enhancing connectivity in this subregion demands increased investments in transport networks and ICT infrastructure,” said UN under-secretary-general and executive secretary of ESCAP Armida Salsiah Alisjahbana in her opening remarks.
Alisjahbana called upon public-private sector partnerships to support SME growth and women’s entrepreneurship in the region. “Unlocking the potential of women-owned business represents a powerful opportunity for greater economic growth and leadership in our economies,” she said, adding that a stronger Asia and the Pacific demands novel strategies to overcome entrenched barriers to women owned and led businesses and entrepreneurships.
Prime Minister of Papua New Guinea James Marape, on the occasion, said that the priority is to empower our local business women and men. “We have set a goal of growing our local SME spaces so that 10 per cent to 20 per cent of our citizens are anchored in the SME sectors,” he said, adding that aligned with the focus of the APBF, the key priority sectors for SME growth are agriculture, tourism and marine resources. “We are keen to work with foreign investors to sustainably develop these industries and our SMEs in them.”
“To implement the 17 Sustainable Development Goals by 2030 is not a simple task.”
One condition for success is to engage the private sector well. For businesses to work towards the SDGs, we need platforms such as the Asia-Pacific Business Forum to bring together world business leaders,” the president of the ESCAP Sustainable Business Network (ESBN) George Lam said.

'EU organises round table on women rights'

Nepal has made immense progress in terms of gender equality, according to ambassador, Delegation of the European Union (EU) to Nepal Veronica Cody.
Addressing a half-day discussion on 'Women in Nepal: the Journey To Prosperity' organised – as part of the global 16-day campaign against Gender Based Violence, being implemented in collaboration with the United Nations (UN) –in Kathmandu on Wednesday, Cody lauded the significant steps taken by Nepal in terms of developing inclusive political and economic policies. However, at the same time, she pointed the need to implement the laws and policies in place as there are cases of violence and discrimination against women being reported time and again. She presented the initiative being taken by the EU to advocate for gender equality with the introduction of the 'Gender Champion'. She herself will be taking up the role from January 1, 2019.
Speaker of the House of Representatives Krishna Bahadur Mahara, speaking on the occasion, highlighted that 41 per cent of elected officials at the local level and 32 per cent at provincial and federal levels are women. He also reiterated that the constitution recognises women’s rights as a fundamental right and National Women Commission as a constitutional body. However, he stated that there is still a lot to do to achieve an 'equality-based society'.
Presenting his paper on 'Women for inclusive laws and policies', chairperson of the Committee on Law Krishna Bhakta Pokharel said that the present constitutional and legal frameworks are the most progressive in terms of gender equality till date. The constitution guarantees women’s property rights, reproductive rights and various other social rights. For the first time, Chhaupadi has been criminalised, dowry carries a sentence of 3 to 5 years and rape is now punishable by up to life in prison, he said. However, he accepted that gender bias still prevails when it comes to granting citizenship in the name of the mother. Overall, he expressed optimism that with equal laws now in place, Nepal may be able to achieve an equal society in the next 8 to 10 years.
Likewise, member at the National Human Rights Commission (NHRC) Mohna Ansari Mohna Ansari, speaking on 'Women for effective implementation of the laws and policies' stated that although Nepal's laws have been improved but they still are not enough. "And as long as 51 per cent of Nepali population (women) is not included in mainstream development, the nation cannot achieve prosperity," she said.
Chairperson of Women, Entrepreneurs and Development Committee at the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) Kamala Shrestha, on the occasion, presenting an innovative concept of utilising Information and Communication Technology (ICT) to empower women, especially in the field of e-commerce, said that true empowerment can only come from financial independence and hence, women entrepreneurs must be encouraged, most prominently in the field of Small and Medium Enterprises (SMEs). She also shed light on the problem that women are often not trusted to take up leadership roles and so, the society must be convinced of a woman’s leadership potentials.
Gender and Social Inclusion (GESI) expert Bharati Silwal Giri, on the occasion, presenting a paper on 'Women in the lead in Nepal: Issues, Challenges and Way forward' challenged the notion of women officials elected at various levels. Women have found a place in public sphere but mostly as token positions. Among the mayor and deputy mayor, women have mostly been elected as deputy mayors. And while Nepal does have a woman president, the position is without power and prerogatives. She expressed that woman must be allowed to do constructive work and not merely given posts. She opined that the major hurdle for women empowerment lies in the institutionalised form of patriarchy.
The roundtable discussion was moderated by Rajesh Hamal, who began by commemorating the relevancy of this discussion on the 70th anniversary of the Universal Declaration of Human Rights.
Head of Political, Press and Public Diplomacy Section at the EU Delegation to Nepal Zane Petre thanking all the participants reaffirmed gender equality as a core value of EU and EU’s commitment in gender as a cross cutting issue in its development cooperation with Nepal. She also highlighted EU’s role in both advocacy and practice of gender equality, not just in Nepal but all around the world.

World Bank Group committed to support Nepal’s development goals

World Bank Group’s reiterated its commitment to support Nepal.
Concluding his five-day visit to Nepal, World Bank vice president for South Asia Region Hartwig Schafer today reiterated the World Bank Group’s commitment to support Nepal in its ambitious transition to federalism.
During his meeting with Prime Minister KP Sharma Oli, Schafer congratulated the government’s visionary goal of reaching middle-income country status by 2030, and reaffirmed the World Bank’s commitment to support government priorities to help the country raise additional finance from a broader range of sources.
Likewise, in his meeting with finance minister Dr Yuba Raj Khatiwada he also discussed further support to the federalism transition, as well as the planned International Investors’ Conference in 2019 in support of Nepal’s agenda to crowd in private finance for development.
"With a stable government that has prioritised broad-based reforms and private sector-driven growth, I am positive that Nepal can achieve higher growth rates for the next several years," he said, adding that the World Bank wants to help Nepal mobilise investments from sources that go beyond traditional development finance to sustain higher growth. "We call this approach Maximizing Finance for Development."
Private sector investment will only come if there is a transparent, conducive policy environment,” he said, “Nepal is one of the first countries where we are approaching this in a systematic way with the World Bank, IFC and MIGA coming in and helping to provide a platform for private investments in the energy, technology, and other sectors."
This will also create jobs for more and more Nepalis, which is the need of the hour, he added.
The WB vice president also had a joint field visit with finance minister Khatiwada and energy minister Barsha Man Pun to discuss the potential of tourism, hydropower and private sector investment in the country. The team visited Solukhumbu district and Sankhuwasabha district before seeing houses being rebuilt after the earthquake in the Majhi settlement of Gaikhura in Manthali Municipality, Ramechhap. 
Walking through the houses being rebuilt, Schafer met members of local communities, commending their resilience and efforts to build back better after the earthquake. He also met elected members of parliament and local level representatives. “It is heartening to see the collective effort of so many actors to ensure that people’s homes and lives are rebuilt,” Schafer said, adding, "We must pick up the pace of reconstruction, and also ensure that disaster risk reduction measures are put in place to deal with future contingencies."
The World Bank has provided a credit of $500 million to the government through the Earthquake Housing Reconstruction Project.
In Kathmandu, Schafer also participated in the launch of a joint report of the World Bank Group entitled 'Country Private Sector Diagnostic: Creating Markets in Nepal'. He was a part of the signing of two agreements between the government and World Bank. The agreements, totaling $155.7 million, will be invested in the construction and maintenance of safe, resilient and cost-effective bridges in Nepal, and in improving food security of vulnerable households and communities.
In his first visit to Nepal as the World Bank vice president for South Asia, Schafer also met with opinion leaders, senior government officials and civil society representatives. In engaging with the private sector, he visited Saral Urja Nepal – the investee clients of Business Oxygen (BO2), an IFC SME-Venture Fund – and Incessant Rain Animation Studios, a state-of-the-art animation and visual effects studio.
After his interactions with the team at Incessant Rain, Schafer commented thathe enjoyed the opportunity to visit an enterprise that is nurturing the artistic and creative talents of the Nepalese youth. "With a world class facility that provides services to well- known international clients, organisations like this play an important role in putting Nepal on the map as an outsourcing destination."
Apart from contributing to the economic growth through exports and job creation, it is a pleasure to see a home-grown company that promotes the country’s rich cultural heritage and diversity. "It is the kind of future we want for the private sector in Nepal, and the World Bank is committed to support this vision," he added.

IFC may extend $15m financing to Nepal’s Global IME Bank

The International Finance Corporation (IFC) – a member of the World Bank Group – has proposed to extend a $15 million financing facility to Global IME Bank to support the lender’s programme for small and medium sized enterprises, it said.
The bank is ranked as fifth among commercial banks in Nepal based on its total asset base of Rs 124 billion ($1,151 million) and loan portfolio of Rs 89.7 billion ($833 million) as of April 13, 2018. The bank will prioritise lending to enterprises in tourism, agriculture, micro finance and small and cottage industry sectors. SME financing will cover both daily business operations and capital expenditure. "This project is part of a concerted effort by IFC in the Nepali financial sector to enable local banks to access long term US dollar resources,” as per the disclosure.
Global IME Bank has a network of 129 branches across the country. The Nepal Stock Exchange (Nepse)-listed bank is 51.2 per cent owned by the promoter group while the remaining is held by the public. IME Group, chaired by Chandra Prasad Dhakal, is engaged in a number of sectors including banking and insurance, automobiles, energy, logistics, IT, infrastructure and tourism.
IFC has also proposed a $15 million investment in NMB Bank to support its lending activities in the SME space. IFC has been present in Nepal started since 1956 and is among a handful of organisations financing sectors like agribusiness, transportation and trade finance. In 2015, IFC financed $7 million equity in Business Oxygen (BO2) – a private equity fund in Nepal – followed by a $7.3 million add on investment in the fund.

Global trade finance gap reaches $1.6 trillion, SMEs hardest hit: ADB

The inability of financial institutions to provide $1.6 trillion in support to buyers and sellers of goods across countries resulted in forgone growth and job creation in 2015, according to an Asian Development Bank (ADB) Brief released today.
Developing Asia’s share of the global trade finance gap was $692 billion, including India and the People’s Republic of China.?
In its new study, '2016 Trade Finance Gaps, Growth, and Jobs Survey,' ADB quantifies market gaps for trade finance and explores their impact on growth and jobs through a survey of over 337 banks in 114 countries and 791 firms in 96 countries. The annual survey is now in its fourth year.
"The growth of the trade finance gap in 2015 continues to be a drag on trade, and small- and medium-sized enterprises (SMEs) are the most affected,” said head of ADB’s Trade Finance Programme Steven Beck. "The survey shows that both globally and nationally, regulators and policymakers should increase support for trade finance through smarter banking regulations, more transparent and comprehensive credit ratings systems, and capacity building for local banks," he said, adding that ADB’s Trade Finance Programme stands ready to assist member countries and our client banks in all of these areas.
According to the brief, trade finance gaps persist in part due to the cost and complexity of compliance with banking regulations, with 90 per cent of surveyed banks citing anti-money laundering and know-your-client requirements as impediments to their ability to expand trade finance, especially for small businesses. Basel III banking regulations, which set liquidity requirements for bank finance, are also cited by 77 per cent of respondents as a major barrier to finance new trade.
The report notes small- and medium-sized enterprises (SMEs) face the greatest obstacles in accessing affordable trade financing.
Globally, 57 per cent of trade finance requests by SMEs are rejected, against just 10 per cent for multinational companies. High rejection rates lead many firms to turn to inefficient informal financing.
Financial technology (Fintech) can help bridge the financing gap for businesses left out of trade finance, according to the brief. But awareness of digital finance by small businesses remains low, with 70 per cent of responding companies indicating that they are unfamiliar with these tools. Among firms that were familiar with digital finance, peer-to-peer lending had the strongest uptake rates in developing countries.
Since 2009, ADB’s Trade Finance Programme has supported more than 8,200 SMEs across the region, with about 11,800 transactions valued at over $23.6 billion, in sectors ranging from commodities and capital goods, to medical supplies and consumer goods.
ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, ADB in December 2016 will mark 50 years of development partnership in Asia. It is owned by 67 members, 48 from the region. In 2015, ADB assistance totaled $27.2 billion, including cofinancing of $10.7 billion.

National sector export strategies and NTM survey on cards

Ministry of Commerce(MoC) and International Trade Centre (ITC), Geneva are working jointly to develop Sector Export Strategy(SES) of 4 products and conduct a large-scale survey on exporters’ experiences with Non-Tariff Measures (NTMs) in Nepal and destination markets. These products have been selected from the Trade Policy 2016 and Nepal Trade Integration Strategy NTIS 2016.
The ITC team accompanied with the focal point Mina Aryal from the ministry and the two navigators Dr Pradyumna Pandey from Ministry of Agriculture Development and Bimal Nepal from Trade and Export Promotion Centre (TEPC) presented the preliminary results of the sector consultations and NTM Business Survey today.
While chairing the programme, officiating secretary of the Ministry of Commerce Toya Narayan Gyawali said that development of Sector Export Strategy and survey on Non-Tariff Measures are in line the trade policy 2016 and these initiatives are instrumental to enhance Nepal trade capacity building and competitive strength which have positive impact in socio-economic prospects of Nepal.
To develop export strategy in a participatory way, 4 stakeholders consultations were already conducted as part of the first phase of the SES design process between June 20 and June 30 in different regions including Jhapa for large cardamom, Ilam for tea, Pokhara for coffee and Kathmandu for handmade paper and paper products. The stakeholder consultations in the districts were managed by the Trade Export Promotion Centre in close coordination with the Ministry of Agriculture Development. Some 120 representatives from various government agencies, private sector and development partners took part in the different consultations.
The consultation meetings presented the stakeholders with an overview of the strategy design process, analysis of the sector specifics, including production, international market dynamics, and markets requirements. It also initiated discussions on the major issues to be addressed as well as define core teams to work for the second phase of the strategy design process. The results of the in-depth participative diagnostic will serve to develop the national export strategies documents and to design detailed plan of actions for the next five years.
The consultation identified some key critical export constraints concerning supplies capacities and the business environment. They also discussed on market entry issues like non-tariff and para-tariff measures' barriers.
The discussions have helped build consensus around the opportunities and challenges of the private sector, as well as the public sector support services. "We have discussed at length our respective constraints to export large cardamom and identify new opportunities to develop our sector," said Nirmal Bhattarai from Large Cardamoms Entrepreneurs Association of Nepal during consultation in Birtamod. "We are looking forward the core team meeting to develop the plan of action with ITC assistance," he added.
Similarly, president of Nepal Handmade Paper Association Mohan Khrishna Manandhar, on the occasion, said the consultation had helped build momentum for concerted action. "The interactions between the various actors of the public and private sectors helped build agreement on common challenges and need for a national sector strategy to develop the handmade paper sector," he added.
The second initiative, the NTM Business Survey has interviewed over 350 Nepali exporters on the difficulties they face with regulatory and procedural obstacles to trade. Initial findings of the survey show that SPS/TBT requirements of destination markets and the related conformity assessment requirements like testing and certification are the main concerns of companies – especially those exporting agricultural products. Lack of adequate testing and certification facilities in Nepal has made exporting difficult for companies due to higher cost and additional time required for testing abroad, the participants noted. The NTM business survey will continue until August with a target of covering 600 companies. The survey results will feed into the SES development process.
The SES document will be a common principle document for public and private sector. Product specific market constraints related to export to India expressed during the consultations were been transmitted to the MoC to incorporate in the agenda of the recent bilateral meetings between Nepal and India at the secretary level," according to focal person and under-secretary at the Ministry of Commerce Mina Aryal.
The SES design process will produce a set of four endorsed, coherent and comprehensive documents that will serve as action-oriented blueprints for enhancing trade performance in each sector.
The ITC is the joint agency of the World Trade Organisation (WTO) and the United Nations (UN). The ITC assists small and medium-sized enterprises (SMEs) in developing and transition economies to become more competitive in global markets, thereby contributing to sustainable economic development within the frameworks of the Aid-for-Trade (AfT) agenda and the Sustainable Development Goals (SDGs).

UN body asks government to strike balance between fiscal and monetary policy to spur productive growth

A UN body has asked the government to strike balance between Fiscal Policy and Monetary Policy to spur productive growth.
Speaking at a function organised to unveil the report of 'Economic and Social Survey of Asia and the Pacific 2016' produced by United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) in Kathmandu today, economic affairs officer at the Macroeconomic Policy and Financing for Development Division of UNESCAP Sudip Ranjan Basu said that the Monetary Policy alone cannot shoulder the growth and that the Fiscal Policy has become more important to boost and redistribute the growth. "Productive growth has been slowing in recent years," he said, adding that quality of labour, access to finance to SMEs, and poor infrastructure are hitting productivity. "Productivity could be increased, if the government manages to strike balance between the Fiscal Policy and the Monetary Policy."
The contrast in Fiscal and Monetary Policy has hampered the economic growth, the UNESCAP report stated, suggesting the government to boost under disbursement of allocated budgets, improve tax administration and compliance, and accelerate reconstruction activities through issuance of reconstruction bond. "The government for maximum utilisation of domestic resources in increasing productivity as the Official Development Assistance (ODA) from rich countries have been drying for various reasons,"
Analysing the findings of the report executive chairperson of the South Asia Watch on Trade, Economics and Environment (SAWTEE) Posh Raj Pandey, said a proactive Fiscal Policy could help speed up spending. "Smart and active Industrial Policy, ensuring investment climate, and social protection for transition class, could help poor out of the poverty line," Pandey said, adding that active and efficient governance is a must to ensure growth.
The report, one of the oldest reports coming from UN agencies, states that some 1.7 million people could be out of poverty, if the agriculture productivity could be increased.
The Asia Pacific report also stated that the region as a whole has experienced considerable slowdown in economic growth and productivity gains in recent years. "The Asia Pacific region's progress on poverty reduction is slowing, inequalities are rising and prospects of decent employment are weakening," it said, adding that productivity and Sustainable Development Goals (SDGs) are closely linked and investing in these goals will increase productivity and help economic growth.
The regional report has projected Nepal to grow by 2.2 per cent in the current fiscal year, which is the lowest in the region. However, the inflation that the report has projected is the highest in the region.
Catastrophic earthquakes in April 2015, subpar monsoon season that resulted in weak agricultural growth and recent strikes and disruptions of trade routes in certain parts of the country have hit the growth in the near term. In the medium-term, the report states, a trade agreement with the USA and also an agreement with India to develop two large-scale hydropower projects could spur growth in the coming fiscal years.

IFC appoints White Lotus as fund manager of Business Oxygen

IFC, a member of the World Bank Group, has appointed White Lotus Centre as fund manager for Business Oxygen, its SME ventures fund in Nepal.
White Lotus will make equity investments in Nepal's high-growth small and medium enterprises (SMEs), helping them achieve their potential and create more jobs.
Business Oxygen is Nepal's first private-equity fund. IFC has committed $7 million to this $14 million sector-agnostic fund. The fund combines risk capital financing with advisory support to help investee small and medium enterprises develop fundamental financial systems, quality-assurance standards, and corporate governance frameworks.
Chairman of White Lotus, Siddhant Raj Pandey, after signing the agreement said, "Despite the challenges posed by this year's earthquake, there is significant potential for SMEs in Nepal. White Lotus will develop a robust portfolio of investee firms that will become a strong contributor to Nepal's commercial growth."
SMEs are a vital component of Nepal's economy. They employ 1.75 million people and account for 22 per cent of the country's GDP. There are an estimated 111,442 operational SMEs, out of which 63 per cent were registered over the last decade.
Improved access to finance is essential for growth of these SMEs. Only 39 per cent of firms in the micro, small, and medium enterprise segment have adequate access to finance, compared to 78 per cent of large enterprises. Business Oxygen is designed to address this challenge.
"Business Oxygen's ability to provide risk capital to SMEs in Nepal provides a vital solution for firms too small or too new for traditional commercial bank financing," said IFC's country manager for Bangladesh, Nepal, and Bhutan Wendy Jo Werner. "The fund is unique because it provides equity and also advisory to catalyze the growth of small businesses."
Similarly, Tracy Washington, SME Ventures' programme manager, on the ocaasion, said that White Lotus will play an important role in developing the private equity sector in Nepal. "We look forward to supporting the team as it demonstrates that new funds, even in challenging markets, can achieve promising results," she added.
Business Oxygen is part of IFC's SME Ventures programme, which supports the creation of risk capital funds in fragile, frontier, and post-conflict markets. With four funds covering six countries, SME Ventures is expanding to new markets where the need for risk capital remains high and potential for growth makes private equity an effective market solution.

World Bank, IMF hold talks for Financial Sector Assessment Programme

At the request of the government and the central bank a joint mission of the International Monetary Fund (IMF) and World Bank (WB) visited Nepal from February 2-16 to conduct an evaluation of the financial system under the Financial Sector Assessment Programme (FSAP).

The programme evaluations are conducted on a regular basis for IMF and World Bank members, and are meant to provide an independent assessment of financial sector stability and development prospects.

In broad terms the programme reviewed and assessed issues related to financial stability, prudential regulation and supervision, risk management, the payments system, debt recovery and the insolvency regime, financial cooperatives, and access to finance—particularly by low income households and SMEs.

Upon completion of its work, the IMF and World Bank teams will prepare reports for their respective executive boards, which will inform the Financial Sector Development Strategy and Technical Assistance from development partners. It is also intended to provide guidance to Nepal on best international practice in financial sector regulation and development.

The mission met with senior officials from Finance Ministry, Nepal Rastra Bank, Insurance Board, Securities Board of Nepal (Sebon), Ministry of Cooperatives, and other related government agencies as well as representatives of the financial sector, industry, and civil society.

Banks will have to publish two different sets of financial statements

Since the country is adopting International Financial Reporting Standards (IFRS) from next fiscal year, banks will have to publish two different sets of financial statements, one according to regulatory authority's prescription and the other according to the international standard.

The banks and financial institutions have to currently provision for loan loss according to the central bank prescribed time frame and percentage but the international standard format focuses on fair value based assessment of collateral instead of current format of time line for loan loss provisioning, according to chartered accountant and member of Accounting Standard Board (ASB) Parakram Sharma.

“The standards will be based mainly on financial principles than on a rule-based system," Sharma added.

Currently, a bank has to provision 25 per cent in three months, 50 per cent in six months, and 100 per cent nine months for expected loan loss.

Though the format is expected to comply with the norms of the concerned regulators also apart from international auditing standards, there could be different need of the regulatory authority, he said, adding that in the US also, the companies publish both sets of financial reporting.

The IFRS is focused on strengthening the accounting system and also bring global harmonisation in the financial reporting that will help gauge the actual financial health of a company. It would be based on general purpose financial statements that measure the various financial components in fair value instead of the timeframe value being implemented now.

As the government is planning to implement the IFRS from the next fiscal year 2014-15, in the first phase, multinational companies and listed State Owned Enterprises (SOEs) with minimum paid up capital of Rs 5 billion – except Banks and Financial Institutions under BAFIA Act, 2006 – will start implementation of the new financial reporting format. In the second phase, in the fiscal year 2015-16, the commercial banks including state owned commercial banks, and all other listed State Owned Enterprises have to implement the new format for financial reporting. Likewise, in the third phase, all other financial institutions, all other SOEs, insurance companies, all the listed companies, and all other corporate bodies/entities not defined as SMEs or entities having borrowing with minimum of Rs 500 million will have to implement from the fiscal year 2016-17. The Small and Medium Enterprises (SMEs) – defined by Accounting Standard Board – will also implement it by the fiscal year 2016-17.

"Though, the government will fully implement new financial reporting standards by 2017, implementation in SMEs should be well thought and planned as only 57 countries have implemented the standard reporting format for SMEs, out of total 122 countries that are using the international format of financial reporting currently," according to auditor General Bhanu Prasad Acharya.

Developed by the International Accounting Standards Board as a system of keeping accounts of companies that would be recognised universally, the IFRS helps bring in foreign investors as the financial reporting standard harmonises globally.

Institute of Chartered Accountants of Nepal (ICAN) and Accounting Standard Board is working jointly in cooperation with the Office of the Auditor General to implement the IFRS as Nepal missed the earlier time frame of implementation.

Though Nepal committed to implement the global standard from 2011, it failed due to various technical reasons.

Currently, Nepal Accounting Standards is in effect. With the aim of implementing the IFRS, the government has been providing training to officials of financial regulating bodies.

But for the international standard financial reporting, the financial statement reporting supply-chain has to be maintained from the preparer, who has to understand requirements of auditor to auditors, regulators and users, said chartered accountant Narendra Bhattarai.