SFCL Model: Problems and Prospects

This paper reviews the current state and potential future implications of Nepal’s farmer-managed Small Farmer Cooperatives (SFCLs). SFCLs are shareholders of the Sana Kisan Bikas Bank that caters to them and other microfinance organizations.

SFCLs have helped in farmers’ income generation, community development and governance improvement. They have focused on:

• Local savings mobilization;
• Women’s participation;
• Income generating activities;
• Counseling despondent poor farmers into becoming active entrepreneurs;
• Introducing supervised credit to landless villagers;
• Bulk borrowing from ADBL and retailing them to farmers, enabling them to invest more into income generating activities.

However, SFLC have failed to attract policy makers’ attention. They also struggle with limited ability to replicate and low recovery rates on ADBL loans. Currently, SFCLs are poised to take over the management of Sana Kisan Bikas Bank. This could be an opportunity to:

• Inspire and institutionally require SFCLs to raise their recovery rates;
• Ensure continuation of ADBN bulk lending facility;
• Qualify existing SFCLs to borrow from regular commercial banks;
• Replicate the SFCLs model across the country.