Business Development Service for Sustainable Microfinance
This paper highlights the role of different business development services (BDS), its providers and the mechanisms that need to be developed to promote these services for the sustainable growth of Nepal’s microfinance sector.
Microfinance is generally regarded as an effective tool for poverty reduction. However, its impact on clients and their families will be limited if it is not complemented by BDS. MFIs will face client drop out and reduced loan sizes unless client capacities are enhanced. BDS can help clients to:
- Acquire and upgrade skills to leverage emerging opportunities;
- Obtain processing facilities to tap the market;
- Receive advice about enterprise selection and scaling up;
- Network with other entrepreneurs;
- Receive training in book keeping, inventory and financial management;
- Negotiate with suppliers and customers;
- Receive market information.
However, there are no microfinance-focused BDS institutions in Nepal. BDS could be provided by NGOs affiliated to MFIs, private business houses, poly-technical institutes, accounting firms and marketing cooperatives. MFI networks in Nepal need to carry out research to find out the community’s BDS needs and fulfill them.