Nepali Times

When Manmaya Budathoki decided to seek loans from a local cooperative to switch to tea after generations of subsistence farming, she had to take a lot of ridicule.

“Back then cooperatives weren’t as common or popular as they are now,” explains the 55-year-old farmer from Phikkal of Illam district. “Women were forced to take loans in the name of male relatives.”

Today, Budathoki’s prosperity helped change her neighbours’ perspective towards cooperatives and encouraged many to follow suit. She is involved with Mahila Srijana Multipurpose Cooperative (MSMC) which now has 534 members. Established in 2000, MSMC is one of the first women’s cooperative to open in the district.

“Our main aim is to make everyone self sufficient and thus we encourage women to build a business to sustain their families,” says Mukta Devi Thapa of Mahila Srijana. The cooperative has been providing small loans of up to Rs 50,000 to members to be paid within a year.

Cooperatives such as MSMC have become a major source of lending in places like Illam where a substantial number of farmers don’t have access to regular banking services, or have to depend on loan sharks.

Although the government’s 1990 deprived sector lending policy requires that banks allocate between 1.5 to 3 per cent of their loans to under-developed areas of the country, more than half of the commercial banks have not complied and prefer to pay the fines for non-compliance.

Bank branches in Phikkal remain out of reach for the farmers since they don’t have the collateral that commercial lenders demand. The National Living Standard Survey shows that cooperative loans increased from three per cent in 1996 to 14 per cent in 2011, while borrowing from formal financial institutions only recorded a four per cent growth.

Besides savings and loans, member-run cooperatives such as Mahila Srijana also provide skill development trainings to its members. Kebal Kumari Parajuli (pic, above), 28, says her confidence has increased after attending such training and made her more assertive in her community.

Nepal’s cooperatives have also acted as catalysts to empower women through income generation. More than half the 22,000 cooperatives in the country are managed by women’s groups. Out of all the cooperatives that faced closure in Ilam, not one was run by women.

However, cooperatives remain largely unorganised and the Cooperatives Act doesn’t have proper monitoring which has led to the misuse of the ‘cooperative’ tag.

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Cooperating with cooperatives

Even though the first cooperative was set up in Nepal in 1957, it is only lately that the model has taken off. There are now nearly 7,300 agriculture cooperatives all over rural Nepal involved in micro-credit, agriculture extension support, and help with marketing produce.

Deposit collection in cooperatives all over Nepal has reached Rs 19.45 billion with almost three million members. The nationwide network of mostly self-managed microfinance institutions has promoted income generating activities in areas which are out of reach of commercial banking. These grassroots groups have invested in agriculture, dairy, education, and even local infrastructure projects. They not just perform basic saving and lending functions, but also exercise surveillance over members’ use of credit to prevent possible delinquency.

“This is Nepal’s little-known success story of small entrepreneurs who are helping themselves and doing much better economically and socially,” says Keshav Badal, Chairman of the National Cooperative Federation of Nepal. “But cooperatives need proper regulation and monitoring to make them more productive and organised.”

The Small Farmer Agriculture Cooperative has now expanded its network with 350 new cooperatives across Nepal which have more than 70 per cent women members. In 2001, the cooperative took shape of a development bank its core focus is still empowering farmers and bringing investment in agriculture.

“There is a lot of prospect in agriculture in Nepal, but we need to move from traditional to modern farming practice to ensure greater productivity,” says Jalan Kumar Sharma of the Small Famers Development Bank.

Bhrikuti Rai

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