NMB Bank

NMB BANK’S SAKCHYAM DAIRY FINANCING TO MILK COOPERATIVES AND FARMERS 

Background

In the mid- and far-western regions of Nepal, there are many milk cooperatives which collect milk from local farmers and supply it to the Dairy Development Corporation (DDC). Different actors in the value chain are milk farmers, milk cooperatives, dairy processor and wholesalers and retailers. There are opportunities for improvement in the current value chain that can contribute toward improving delivery channels and procedures and improve income, livelihoods and opportunities for the rural population.

Challenges

Besides collecting milk from the farmers, the milk cooperatives also provide loans to the farmers (members) to support them in milk producing activities. However, resources (mainly fund) raised from local level is not adequate to meet the growing need of the farmers. Further, these cooperatives also lack institutional capacity to scale up their operation and provide service in an efficient and effective way to a larger community.

Sakchyam’s Intervention

With UKaid Sakchyam Access to Finance’s (Sakchyam’s) support, NMB Bank introduced an innovative ‘Sakchyam Dairy Financing’ to Milk Cooperatives (MC), Micro, Small and Medium Enterprises (MSMEs) and Farmers of Mid and Far-Western region in partnership with the Dairy Development Corporation (DDC). Here the MC, MSMEs and Farmers could receive required financial resources and supply milk to DDC and opened new avenues for all the players of the milk value chain. Building the capacity of MC, Farmers and MSMEs was a key element towards creating opportunities for all stakeholders in the longer run. An SMS-based information sharing module was also developed and designed in coordination with MC and the DDC for query-based solutions to get instant alerts on milk quantity, quality and value of the deposited milk.

Impact

The aim was to support more than 5000 households, more than 50 Milk Cooperatives, and at least 400 MSMEs so that they could enjoy much needed financial services from the bank. The bank had also targeted to disburse NRs. 250 million in loans in the 3-year duration and strengthen capacity of the stakeholders – especially milk cooperatives, local farmers and MSMEs can create opportunities in the value chain. However, the project was closed prematurely, due to the unsatisfactory performance.

As of June 2018, NMB Bank has reached over 1500 beneficiaries, approved 13 Milk Cooperatives to carry out dairy financing services and disbursed loan of NPR 131.8 million.