A Comparative Study of Microfinance in Nepal and Bangladesh
The article compares the Grameen Bank model of microfinance practiced in Nepal with that practiced in Bangladesh.
Bangladesh has pioneered microfinance and has consistently applied it with successful results. In Nepal, the status of microfinance is limited and small, although microfinance programs have grown rapidly in the past decade. Nepalese microfinance was originally under exclusive government control, but post-liberalization, the private sector and NGOs have become involved. Nepal too follows the Bangladesh Grameen model of microfinance.
Strategies that have made Bangladeshi microfinance successful include a focus on institution building, an enabling macroeconomic and regulatory environment, population density, ethnic homogeneity and religious patience and a professional apex body for microfinance. Lessons from the success of microfinance in Bangladesh highlight the importance of:
- Enabling environment for microfinance;
- Stable macroeconomic environment;
- Coordinating microfinance with other interventions;
- Donor financial assistance in expanding the capital base of emerging MFIs;
- Government as an enabler, and not a direct provider of microfinance;
- Apex body that has the potential to expand access, develop professional standards and advocate for MFI issues.
