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Ultra-poor Graduation and Microfinance in Nepal
Category: Microcredit | By SDR, 25-Mar-2019 | Viewed 423  Comments 0 | Source Mr. Achyut Hari Aryal

Ultra-poor Graduation through innovative microfinance approach in Nepal


Mr. Achyut Hari Aryal

Post Savings - Livestock
Although Microfinance has helped improve financial inclusion around the world it has done a poor job reaching the very poorest.  The reason is simple; there is no profit to be made for those who do not need loans and need to start saving before they borrow at least for a year or two. If microfinance is to have a role in ending extreme poverty, the first of the Sustainable Development Goals, MFIs must learn how to serve this population. There are close to one billion people worldwide who suffer from extreme poverty; of these approximately half are the ultra poor. 

Nirdhan Utthan Bank (Nirdhan) Nepal's largest microfinance institution has agreed to test a unique approach to include the extreme and ultra poor into its mainstream saving and lending activities. Nirdhan NGO (Nirdhan's non-profit affiliate) will organize and train groups made up of exclusively of the ultra-poor who live in the poorest region of Nepal. The first step is to create develop the habit of regular savings in their groups. Even the very poorest can save a few cents a day.  630_952335092.jpg
Hirdhan Bank - Nepal
Once the members of these ultra-poor groups demonstrate that they can save and manage their groups adequately, they will receive an asset, typically livestock such as goats or chickens. From the income derived from selling milk and eggs and selling the offspring they will be managing an income generating activity. As they begin to prosper and save more and need loans to expand their businesses they will "graduate" from the ultra poor initiative and join Nirdhan's mainstream saving and lending initiatives. Nirdhan's NGO staff will provide the necessary training and support to these groups until they can operate independently. Nirdhan's already established saving and lending groups will also mentor the ultra poor groups. 

The approach sketched out here was successfully tested in Bangladesh under the leadership of Achyut Hari Aryal. Mr. Aryal who is Nepali will be the lead consultant to the  Nirdhan's initiative. The promise of this early version in Nepal is that if the pilot project is as successful as it was in Bangladesh it will be replicated throughout Nirdhan's extensive network of branch offices and later to MFIs around the country. 

Ground breaking pilot projects such as this one cost money. Nirdhan has generously offered to invest a portion of its profits in the ultra poor pilot project but additional funding from the local Rotary Chapters and Rotary International are required to underwrite the costs of training groups as well as the costs of documentation, workshops to teach the model to others and the time of some consultants. 

The challenge is to financially include the very poorest through taking greater risks and prioritizing high impact over financial return. 630_862423525.jpg
Host Rotary Club in Nepal

One local Rotary Club called Jawalakhel Rotary Club (RC) District 3292 has kindly consented to be the host of this project. 

The total project cost is USD $150,000 to cover approximately 2,000 households.

The local RC also agreed to contribute to this novel project no less than USD $1,000 as per Rotary rule. Similarly, Nirdhan is putting over USD $20,000 toward local staff and other staff related cost. Therefore, there is funding gap of ($150,000 - $21,000) USD $129,000 which Nirdhan and the local Rotary Club are looking for, through an International Rotary Club Partner and The Rotary Foundation. 
Post Savings - Livestock

Further Information:
Mr. Achyut Hari Aryal


(Editor's Note:) RAGM is pleased to host this and other requests for Microfinance assistance. If you have such a request please contact our RAGM President Mr. Jim Louttit


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