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Creating Income and Livelihood Opportunities for the Rural Poor  

Creating Income and Livelihood Opportunities for the Rural Poor  

Micro Finance &
Crop Insurance

Smallholder farmers in Nepal produce a variety of crops, livestock, horticultural, and specialty products for both subsistence and for sale to earn income. Most smallholders lack access to formal finance including standard finance from financial institutions or microfinance from Microfinance Institutions (MFIs). This lack of access to finance means smallholders are unable to invest in quality inputs and technologies that will enable them to produce higher yields, higher returns, and reduce risk. Climate Change is increasing risks from erratic rainfall, drought, and increased problems from disease and pests making it more.

Microfinance institutions are not well developed in Nepal, particularly in the hills and remote communities, and the local banking sector does not provide loans to small farmers due to their lack of collateral and high transaction costs. Inthis regard iDE Nepal has been working in partnership with Banks and MFI’s to link smallholders in Commercial Pockets to access finance since 2013. iDE has worked several years with banks and facilitated development of a new board approved financial product known as a Business Correspondent (BC) Model. This model enables bank to make wholesale loans to collection centres (the business correspondent) and for the collection centre to manage non-collateral microfinance loans to member farmers

Smallholders farmers has been utilizing this loan in to purchase quality inputs including resilient seed, drip, safe Integrated Pest Management (IPM) products including pheromone lures and bio-agents, and other technologies. Access to finance is a key to reduce risk in vegetable farming and to develop sustainable commercial pockets.

iDE Nepal has realised that not only do smallholder farmers need microfinance services to purchase quality inputs in order to increase returns; they also require crop insurance to reduce risks in vegetable farming and develop the commercial pocket. 

iDE has piloted a Crop Insurance Programme with Nepal Agricultural Development Bank Limited (ADBL) for resilience building by facilitating coordination with Collection Centres, Community Business Facilitator (CBFs), and actors in agro-supply chains during the ICAA project in 2012 to 2016, Anukulan project from 2018 and 2019 and NTFS program in 2018 and 2019. The ADBL crop insurance scheme has helped a lot to raise the confidence among vegetable and cereals farmers, in project areas districts. However, many others are still unaware about the importance of this approach. 

Developing Collection Center Financial Services with Muktinath Bikash Bank