Innovations in Nepal's Microfinance Sector and Benefits for Asia: A Review of the Lessons Learned from the Small Farmer Cooperatives Ltd. System
The paper describes innovations that emerged from the Small Farmer Cooperatives Ltd. (SFCL) system in Nepal. It also attempts to draw lessons from the success of SFCL for the rest of Asia.The SFCL network is the largest provider of microfinance services in Nepal next to the Grameen Bank. Studies show that SFCLs have a substantial positive impact on the socio-economic situation of their members. Innovations from SFCLs include:
- SFCL systems approach as a guiding principle;
- Three-tiered structure of SFCLs that ensures good communication and accessibility to members;
- Sana Kisan Bikas Bank as an emerging apex bank to be owned by its clients;
- Farmer-to-farmer replication approach that cuts institution building costs into half;
- Business oriented SFCL federations that provide nonfinancial support services.
Lessons learned from the SFCL system suggest that vision and people's ownership are important success factors for innovation, multi-service cooperatives work under certain conditions, larger cooperatives have advantages over several smaller ones, cold money can serve to quickly scale-up microfinance programs, and government institutions can be effective and efficient partners.
