IMPROVEMENT LIVELIHOODS SITUATIONS OF DISADVANTAGED COMMUNITIES THROUGH ACCESS TO FINANCE
One of the major components of UKaid Sakchyam Access to Finance Programme (Sakchyam) is to work with Nepal’s Microfinance Institutions (MFIs) to make financial products and services affordable, available and accessible to the disadvantaged populations of the country. Millions of Nepalese still lack basic access to finance, especially in Karnali and Province 5 & 7 due to difficult topography and lack of physical infrastructure. In the face of these challenges, Sakchyam has worked closely with MFIs to resolve the problem of the lack of formal financial institutions and financial inclusion – focusing on areas of branch expansion, product and service development, alternative delivery channels, capacity building and financial literacy. Most interventions are set in priority districts where better financial services have the potential to empower rural communities by making them financially independent.
The problem of topography and lack of institutional infrastructure extends beyond the difficulty of providing financial services – it means people are unaware of the possibilities of these services in the first place. In Rolpa, most young men opt for foreign employment and 74 percent of girls get married as adolescents making them financially reliant on their families. In families where agriculture is the main source of income (about 93 percent households) in Salyan, only about 20 percent households had agricultural credit. This means that there are limited financial services available, in which most do not cater for the needs of the rural population. Furthermore, in all of the districts VLBS aimed to open its branches, the population served per branch is much higher than the national average of 8,960, highlighting the need for more branches in these areas.
To effectively address the existing problems, the Sakchyam and VLBS partnership intended to both financially educate the population of these regions (mainly poor and disadvantaged people – particularly the Dalits, Janajati, Women and other Minorities) and then provide the services necessary to unleash their full potential. To make the people financially literate, mobile and FM radio programmes were used.
As an extension of the first project, VLBS opened four branches in the remote location to expand access to financial services as part of its second project with Sakchyam. These branches are expected to help low-income clients in rural area to access required financial services and start entrepreneurial activity. As of September 2018, VLBS has,