A Decade of Pro Poor Institution Building in Nepal - Innovations and Lessons Learned from the Small Farmer Cooperatives Ltd. (SFCLs) (Working Paper No. 6)

This paper attempts to outline the lessons learnt and the most significant innovations that emerged from the Small Farmers Cooperatives Ltd. (SFCL) system, one of the leading microfinance delivery models in Nepal over the last decade.

The author suggests the following three necessary prerequisites for any successful microfinance program:

• A systems approach;
• Vision;
• Peoples' ownership.

The paper highlights the following four innovations that have emerged from SFCL system:

• A three tiered structure comprising of:
  • Small farmer groups;
  • Inter-groups;
  • Main committees.
• Farmer to farmer replication for creating new microfinance institutions;
• Sana Kisan Bikas Bank, a bank for and by the people;
• Federations for providing non-financial support services.

The paper also presents certain lessons learned from the SFCL and suggests that:

• Multipurpose can work;
• Big is beautiful;
• Cold money (external bank refinance) can serve to quickly scale up;
• Government can be an effective and efficient partner.

The paper concludes by summarizing the impact that the SFCL program has had at the household level, reiterating the lessons covered earlier in the form of ten points to remember.