Microfinance in Nepal: Determinants of Viability, Sustainability and Outreach among Grameen, NGO and Cooperative Microfinance Institutions

This paper discusses microfinance in Nepal, its features, effects, and the differences in performance among the Grameen Bank, non-government organizations (NGOs) and cooperative microfinance institutions (MFIs).

It presents an overview of the country and discusses:

• Macroeconomic performance;
• Poverty incidence;
• Poverty alleviation programs, their outreach and financial viability;
• The outreach of financial institutions for the poor, such as:
  • The Small Farmers Cooperatives Limited (SFCL),
  • Grameen replicators;
• Policy and regulatory framework, describing:
  • The overall policy environment,
  • Poverty alleviation policies,
  • Financial policy and regulatory framework.

The paper assesses the following MFIs as indicative case studies:

• Two pioneering Grameen replicators;
• Two NGOs;
• Two cooperatives.

It then examines these institutions in terms of outreach, financial viability and sustainability, resource mobilization and policy framework and concludes that:

• Grameen replicators cover a larger geographical area;
• They recruit poor people, mostly women;
• In non-Grameen replicators, men outnumber women;
• Grameen replicators are low in operational and financial self-sufficiency;
• In terms of internal resource mobilization, all the institutions are weak;
• A number of issues needed to be resolved at the policy and regulatory levels.