ENTERPRISE DEVELOPMENT AND DIGITALIZATION OF MICROFINANCE SERVICES
UKaid Sakchyam Access to Finance Programme (Sakchyam) is committed to connecting the rural poor, disadvantaged groups (DAGs), and women to formal financial products and services in order to enable them with choices to save, borrow, invest, and earn. While enhancing access to finance for people living in remote and inaccessible regions is an urgent need, efficiency and sustainability of doing so are critical. Sakchyam believes a paradigm shift is needed in the microfinance sector with the adoption of new technology, helping it achieve organisational efficiency and expand its outreach in a more self-sustainable manner.
In recent years, as number of microfinance institutions (MFIs) has sprouted in Nepal, they are also reaching new geographical areas and a new set of clients. MFIs have been struggling to find client with adequate skills to start/run a business and as a result it has been difficult to maintain the utilisation of loan. MFIs now need to focus in providing/linking skill training to their clients. Due to inadequate skills, loan offered by MFIs are either spent in unproductive activities or the use of loan has not generate optimum revenue which a skilled entrepreneur could earn. This has alerted MFIs to provide or link with skill training with the loan availed by their clients.
In an effort to provide skills-based training to MFI clients, Nerude Laghubitta Bikas Bank (Nerude) has partnered with Sakchyam to launch “Enterprise Development Service (EDS) Sakchyam Loan” to its clients. EDS is a unique feature which Nerude plans to initiate where support is provided to the under-privileged population to lift them out of poverty. Through this partnership, in order to provide EDS training services, Nerude will issue coupons with loans to utilize training services and the value of the coupon without interest is paid to Nerude with the loan instalment. They are planning to start sustainable EDS service in seven districts of Nepal – Jhapa, Illam, Sunsari, Sarlahi, Rupandehi, Kapilvastu and Arghakhanchi. Nerude will adapt/replicate a successful EDS program that Berendina Microfinance, a MFI based in Sri Lanka, has been successfully implementing in Sri Lanka. This service is expected to help Nerude clients excel in micro-enterprises and agriculture.
Similarly, Nerude also plans to equip their loan officers with tablets to automate their manual transactions. It will help increase efficiency of clients while reducing the possible human errors while conducting centre meetings. These tablets will also help Nerude in delivering financial literacy. Taking an innovative approach to delivering financial education, with Sakchyam’s support, Nerude has introduce Buzz Nerude – a mobile platform set in a vehicle to disseminate messages in different places. Moreover, Nerude also plans to introduce mobile banking system to notify its clients on the financial transactions.
Nerude aims to reach more than 3,400 clients with EDS Sakchyam Loan over a 3-year project period. During the project period, Nerude will also establish three new branches in Rupandehi, Kapilvastu and Arghakhanchi with the support of Sakchyam. In addition, Nerude will also serve other beneficiaries through different non-financial services. Nerdue plans to reach more than 29,000 beneficiaries via new and revised financial literacy program.
As of December 2018, Nerude Microfinance has,
- For the first time in Nepal, introduced “Buzz Nerude” – a mobile platform set in a vehicle to disseminate FL messages.
- Disbursed over NPR 72.5 million in loans to more than 500 clients
- Launched EDS activity with the technical support of Berendina Microfinance, a pioneer of EDS activity in Sri Lanka.
- Launched Tablet Banking in three branches.