Samagra Bikash Sewa Kendra organized an Interaction program on “Socio- Economic Rights of Marginalised people and Micro Finance and Cooperative” on March 24, 2017. The main objective of this interaction program was to analyze whether Microfinance and Cooperatives’ objective of social and economic right enhancement of marginalized people has been fulfilled or not. The program further aimed on identifying the policy related challenges that have been obstructing socio economic right fulfillment of marginalized people and finding a way out to overcome those challenges. Hon. Keshav Badal, Member of Finance Committee of Parliamentarian Committee and President of National Cooperative Federation, Hon. Rameshwar Fuyal, Parliamentary Committee member, Mr. Narayan Prasad Gyawali, Deputy Registrar of Department of Cooperative, Mr. Dev Kumar Dhakal, Director of Microfinance Promotion and Supervision Department, Nepal Rastra Bank, Dr. Harihar Acharya, C.E.O of Centre for Micro Finance, Mr. Ram Chandra Ojha, C.E.O of Rural MicroFinance Development Centre Limited , Ms. Shova Mishra, AGM of Chhimek Lagubitta Bikash Bank and borrowers (who are also social family members) from Lamjung, Gorkha, Udaypur, Siraha and Kathmandu were present on the program.
Despite an easy access to finance provided by Microfinance and cooperatives to marginalized and low income people, inadequate training on entrepreneurship and financial literacy to borrowers and mismatch between borrowers’ income and repayment schedule has brought up many problems lately. Problems like domestic violence, group conflict, migration and suicide are some to name a few. “(Sarkini) BK- Hiletaksar,Lamjung gave up her life as she was unable to repay the loan that she took from a Microfinance” said ChijaMaya Majakoti of Lamjung. Similarly, ReelMaya Pariyar burst in tears as she was explaining how she was affected by Microfinance. “I am president of group formed by Microfinance. One of the borrower left village after taking loan in which I was a guarantee. Though he left the village, I have to pay his installment. The loan officers came to my home and took all my livestock to compensate the loan amount. I even sold my valuables to make the payment” said Majakoti.
Mr. Surya Nepal, Resource person for Samagra presented recent challenges faced by Microfinance companies and Cooperatives as shown by preliminary findings of ongoing research carried out by Samagra. He pointed out multiple financing, unhealthy competition, farmers unfriendly repayment schedule, hidden cost of loan, financial illiteracy and lack of entrepreneurial training as major problems and drew attention of regulators, borrowers, microfinance and cooperatives towards these issues. Parliamentarian Keshav Badal pointed out financial illiteracy of borrowers as a root cause of all the problems. “There are many success stories of Microfinance and Coo-operatives. With the help of loan made by Microfinance and Cooperatives, many women have transformed themselves into entrepreneurs. However, we see some negative impact in a society which can be linked to lack of entrepreneurship training and financial illiteracy. Financial literacy and entrepreneurship training should be campaign of all Microfinance and Cooperatives “said Dr. Acharya.
“Recently I attended Microfinance Summit organized by Centre for Microfinance where I heard all success stories from their clients. Today, I got an opportunity to listen to contrasting experience from clients themselves. This is happening because of lack of entrepreneurship and financial literacy training to borrowers. Who is responsible for such training? Do cooperatives and microfinance have adequate human resource to provide such training? Or is it the responsibility of government? However, I agree that repayment schedule is not farmers’ friendly which needs to be taken into serious account and needs policy revision” said Dev Kumar Dhakal.
Borrowers haphazardly invest the loan without analyzing the income generating factors. Some of them start their venture without prior training. As a result, both the investment and venture do not generate expected income. Pressurized to make installment and interest payment, borrowers rely on multiple financing to fulfill their obligation. This way they enter into vicious circle of loan. The only solution to this problem is financial literacy and entrepreneurship training. These two must be a pre-requisite before making loan to any borrower and must be included as policy of Microfinance and Cooperatives.