Paper

How to Establish Linkages of Community Organizations and SACCOS with Microfinance Institutions, Protecting Rights of Clients over Assets

Developing linkages between MFIs and grassroots-level institutions for greater outreach
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This paper examines the impact of the Poverty Alleviation Fund (PAF) on community organizations (COs) in Nepal.

Incidence of poverty and attempts to reduce it are disproportionate in Nepal. The PAF has adopted a demand-led, community-based approach to poverty alleviation where targeted communities are given the authority to prepare, implement and manage their sub-projects. The study finds that:

  • PAF has covered 334,000 poor household members of the 25 poorest districts, where 11,500 COs are operating;
  • Over 50 multipurpose cooperatives are registered and functional, and 100 COs have established networks of their own;
  • Several COs are likely to integrate into cooperatives;
  • COs are managing revolving funds and carrying out income generating activities in 25 poor districts of the country.

COs will be appropriate clients for microfinance providers, from the lending point of view. This is because COs have subsidized funds to balance the actual interest rate and discourage unrest in rural areas. They can minimize the social cost of the MFI, and their members are trained in microfinance best practices to help clients.

About this Publication

By Shrestha, R.
Published