Gender and Development

Nepal

Rural Microfinance Project, 1998

Giving Credit to Women:

Women in Nepal are amongst the poorest in the world. The great majority of poor women in Nepal reside in rural areas, where most of their economic activity is focused on subsistence-level farming. Enabling women to develop alternative sources of income generation is therefore an important strategy in fighting poverty and social disadvantage for these women and their families. Unfortunately, poor Nepalese women - who typically lack collateral and often confidence due to very low levels of literacy - are least able to access the credit necessarily to pursue microenterprises and other income generating projects.

Fortunately, NGOs like the famous grameen Bank in Bangladesh, have developed proven savings and credit systems that make available small investment loans to poor women and men. Such loans are not only important to women's economic welfare. There is also evidence from rural women who have developed microenterprises on the basis of microfinance that their social as well as economic status improves as a result. For example, women report that along with a rise in household income, their say in household decision-making also increases. At times, this benefits the next generation as women retain their daughters in school longer and delay their daughters' marriage.

The Rural Microfinance Project in Nepal builds on the success of microfinance stories in Nepal and elsewhere to provide savings and credit facilities to poor rural women.¹ The aim of the project is to enable poor women and - to a lesser extent - poor men to undertake income-generating activities, establish small enterprises or gain remunerative employment. The project recognizes, however, that simply providing women with access to finance is not enough. Women must be empowered, that is, made to believe that they have the skills and capability to establish small businesses. For this reason, the project includes a number of features designed to socially prepare women through social mobilization, group formation and training.

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Project Design:

The primary aim of the Rural Microfinance Project is to improve the socioeconomic status of rural women and to increase employment opportunities and microenterprise development. The project aims to increase the annual per capita income of project beneficiaries from $86 to about $200 by the end of the project. The initial aim is to create about 270,000 jobs in microenterprises established through small loans, with 80 percent of these loans/jobs falling to women. The project areas were selected on the basis of their higher than average family size, poverty and illiteracy. Average land holdings in the project areas is only 0.6 hectares, significantly lower than the national average of 0.96 hectares.

To achieve these ends, the project design includes three components.

1. Social mobilization, skills development and other training of villagers by NGOs.  The project aims to encourage women to form small savings groups and pursue training provided to support for viable farm and off-farm economic activities, including snack preparation, poultry farming, milk sales, vegetable production and marketing, etc. Training in technical skills such as business planning, basic bookkeeping and accounting, as well as marketing support will be provided to group members, and it is estimated that poor rural women will account for between 70 and 80 percent of all group members
2. Institutional strengthening of rural financial services.  This primarily relates to the establishment of the Rural Microfinance Development Centre, the restructure of five existing grameen (rural) banks, the establishment of about 58 new grameen banks and the setting up of around 54 financial intermediation offices. Existing NGO and farmer saving and credit cooperatives already providing banking services in rural areas may also apply to the project as potential implementing agencies. If they qualify, they will also receive training in capacity building and institutional strengthening included in the project
3. Provision of credit to beneficiaries from rural banking services.  A line of credit will be provided to the Rural Microfinance Development Centre, which will on lend to implementing agencies, such as the grameen banks and NGO and farmer saving and credit cooperatives. In total, it is estimated that $2 million dollars in savings will be mobilized in order to finance about 448,000 loans for microentreprises. It is estimated that about 270,000 poor clients will access these financial services, of which 80 percent will be women

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Gender Inclusive Design:

The project recognizes that simply providing women with access to microfinance is not sufficient. Women must gain the confidence as well as the skills and capabilities to manage small loans and establish small businesses. This is not an easy task as in many households women have only limited experience in making financial decisions. Despite the fact that women may contribute as much labor as men and that men often use women as 'a bank' for saving money they decide to hand over, men as a rule decide how earnings are spent. Women also have very limited land ownership and other resources. Consequently, females have little leverage over family resources, much less over resources available for small business development.

There is also sometimes male resistance to women increasing their economic independence. In the Terai, amongst orthodox Hindu communities, men often discourage women from pursuing independent economic activities that take them out of the house or from developing a public life of their own. There are considerable ethnic and regional differences, however. For example, in the hill areas, among the Tamangs, Magars, Gurungs and other Tibeto-Burmese subcultures, men do not overly resist women seeking to enhance their social status through microfinance projects.

For these reasons, the project includes components specifically designed to mobilize women into self-help groups and to raise their awareness of the possibility of receiving training and financial support.

Social Assessment

Extensive initial social assessment of women was conducted, which:

• Consulted with women separately in order to identify
• The needs and capacities of poor female beneficiaries
• The appropriate range of skills, experiences and institutional capacity required of implementing agencies and NGOs

Social Mobilization of Women and Women's Self-Help Groups

• The creation of women's self-help groups
• Social mobilization programs for women's self-help groups wishing to access credit. This is designed to ensure that women have the resources to combat social, economic and cultural barriers to their participation in credit programs
• Where needed, implementing agencies will be provided with additional social preparation and training programs to assist them take into account prevailing social attitudes and the needs of women

Implementation and Monitoring

Other project features designed to ensure women's full participation in the projection include:

• They create about 270,000 jobs in microenterprises established through small loans, with 80 percent of these loans/jobs falling to women
• Gender specific project targets:
1. to reduce the number of poor rural women from 25 percent to 20 percent in the project areas
2. women to account for 80 percent of the 270,000 jobs/loans in microenterprises established through small loans
• Selection criteria for consultants, implementing agencies and NGOs including previous experience with successful microfinance projects and proven capacity to respond to the needs of female beneficiaries
• The engagement of a Social Survey and Gender Specialist to assist with the identification and management of gender issues, including the development of gender monitoring, evaluation and training components, and outreach strategies designed to attract poor rural women to the project
• Gender sensitization training to be provided to project staff and implementing agencies as recommended by the Social Survey and Gender Specialist
• Annual benefit monitoring surveys will provide gender disaggregated data on the performance of implementing agencies, poverty reduction and the empowerment of women using indicators developed under the project. This final benefit monitoring measure is in line with a major aim of the project to increase women's ability to participate in decision-making processes within the household and at the village level