Community Managed Revolving Fund

This paper describes the Community Development Fund (CDF), a component of Nepal’s Village Development Program (VDP).

The VDP promotes self governance through formation of community organizations (COs) and CDFs. CDF aims to:

• Provide institutional guidance to COs and facilitate their activities;
• Increase COs' access to resources and help them effectively manage community works;
• Empower disadvantaged people, the very poor and women to access services;
• Assist in increasing people's access to development/ financial services and facilities flow at local level.

As a result of CDF, communities have taken ownership of the revolving fund. Members have been empowered to access community infrastructure, savings mobilization, technology transfer and entrepreneurial development skills. Locally deployed staff have been more effective in loan recovery and communities can now voice their needs through self governing institutions.

To further expand microfinance outreach in Nepal, the author argues that there is a need to:

• Allow COs to offer attractive incentives to microfinance practitioners to build inclusive financial systems;
• Link microfinance components with basic services to build stable communities;
• Review the best performing model of financial services.