Nepal : Rural Enterprise Financing Project
The project will promote and finance commercial agribusiness enterprises collective owned by small farmers (collective enterprises) and individual small enterprises (individual enterprises) through Small Farmers Development Bank (SFDB), an apex development bank owned by Small Farmers Agriculture Cooperatives (SFACs). SFDB provides wholesale loans to SFACs; then SFACs relend to their small famer members. Under the project, SFACs will relend the loan proceeds to their members' collective enterprises and individual enterprises.
Project Details
-
Project Officer
Panday, Anjan
South Asia Department
Request for information -
Country/Economy
Nepal -
Sector
- Finance
| Project Name | Rural Enterprise Financing Project | ||||||||||
| Project Number | 53144-001 | ||||||||||
| Country / Economy | Nepal |
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| Project Status | Active | ||||||||||
| Project Type / Modality of Assistance | Loan Technical Assistance |
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| Source of Funding / Amount |
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| Operational Priorities | OP1: Addressing remaining poverty and reducing inequalities OP2: Accelerating progress in gender equality OP6: Strengthening governance and institutional capacity |
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| Sector / Subsector | Finance / Inclusive finance - Small and medium enterprise finance and leasing |
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| Gender | Gender equity theme | ||||||||||
| Description | The project will promote and finance commercial agribusiness enterprises collective owned by small farmers (collective enterprises) and individual small enterprises (individual enterprises) through Small Farmers Development Bank (SFDB), an apex development bank owned by Small Farmers Agriculture Cooperatives (SFACs). SFDB provides wholesale loans to SFACs; then SFACs relend to their small famer members. Under the project, SFACs will relend the loan proceeds to their members' collective enterprises and individual enterprises. | ||||||||||
| Project Rationale and Linkage to Country/Regional Strategy | Rural poverty in Nepal is associated with (i) low productivity and limited return in the agriculture sector, and (ii) limited rural off-farm employment opportunities. Low productivity and limited return in the agriculture sector are attributed to (a) small and fragmented landholdings; (b) limited technology application; and (c) limited agriculture commercialization. Ineffective government policies and programs as well as underdeveloped rural infrastructure and limited access further hamper rural poverty reduction. To reduce rural poverty, it is necessary to transform the current subsistence nature of agriculture activities into value-added commercial activities. Such transformation will require external assistances including capacity building, business facilitation, financing and possibly, risk-sharing such as guarantees. The project will facilitate small farmers' commercialization with financial intermediation along with value chain development support. |
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| Impact | Employment-oriented economic activities increased (14th Three-Year Development Plan, FY2017 - FY2019)a |
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| Project Outcome | |
|---|---|
| Description of Outcome | Small farmers' engagement in rural enterprises increased |
| Progress Toward Outcome | 96 rural enterprises promoted by individual small farmers financed out of which 63% (60) are women. 12 collective enterprises promoted by SFAC financed. Total 21,604 rural farmers engaged in enterprise activities. Total direct employment generation is 1,239 out of which 49% (604) are women. 12 collective enterprises having 30,884 small farmers shareholders financed, of which 81% (25,124) are women shareholders. Total direct employment generation is 865 out of which 49% (424) are women. 478 small farmers engaged in individual enterprises out of which 49% (233) are women. Total direct employment generation is 374 out of which 48% (180) are women. |
| Implementation Progress | |
| Description of Project Outputs | Collective enterprises developed and financed Individual enterprises promoted and financed Rural enterprise financing capacity enhanced |
| Status of Implementation Progress (Outputs, Activities, and Issues) | Q1 2022: 274 individual enterprises received business plan development support out of which 205 [75%] are women led enterprises. ------------------------------------------------------------------ Q4 2021: 145 individual enterprises received business plan development support (96 [66%] are women led enterprises). Q1 2022: 274 small farmers engaged in individual enterprises financed out of which 75% (205) are women enterprises. ----------------------------------------------------------------- Q42021: 136 small farmers engaged in individual enterprises financed out of which 67% (91) are women enterprises. Rural enterprise unit established at HO. Rural enterprise focal unit (person) established in 11 area offices. Collective enterprise financing policy and guidelines prepared and adopted. Individual enterprise financing policy and guidelines prepared and adopted Q1 2022: 19 SFACs developed skills for collective enterprise financing. ------------------------------------------------------------------ Q4 2021: 16 SFACs developed skills for collective enterprise financing Q1 2022: 119 SFACs developed skills on individual enterprise financing out of which 54 (45%) of SFACs are women SFACs. ------------------------------------------------------------------ Q4 2021: 71 SFACs developed skills on individual enterprise financing (45% of SFACs are women SFACs). 16 collective enterprises received business plan development support. 13 collective enterprises having 32,740 small farmer shareholders financed, of which 82% (26,980) are women shareholders. |
| Geographical Location | Nation-wide |
| Safeguard Categories | |
|---|---|
| Environment | FI |
| Involuntary Resettlement | FI-C |
| Indigenous Peoples | FI |
| Summary of Environmental and Social Aspects | |
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| Environmental Aspects | The project's environmental due diligence found SFDB financed subprojects are category C. However, not to exclude the potential of category B subprojects, the implementation of ESMS is made mandatory under the project. For category B subprojects, an initial environmental examination including environmental management plan is required. |
| Involuntary Resettlement | The project will finance only subprojects that does not trigger any involuntary resettlement. |
| Indigenous Peoples | The project can have positive impacts for indigenous peoples (IP) by providing them access to finance. If IP is triggered, SFDB will follow ESMS and ADB's requirement for IPs. |
| Stakeholder Communication, Participation, and Consultation | |
| During Project Design | |
| During Project Implementation | ADB will disseminate information about this project and its outcome through publications, presentations, and on its website. ADB will also communicate with project's internal stakeholders through written documents. |
| Business Opportunities | |
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| Consulting Services | The nature of procurement involved under the subprojects shall be simple commodities that can be either procured directly or based on best commercial practices. SFDB has completed two projects with ADB and has reasonable capacity to implement such projects, accordingly, the procurement is categorized as B. Procurement by rural enterprises, if any, will be in accordance with the established private sector or commercial practices acceptable to ADB, as required in ADB's Procurement Policy (2017, as amended from time to time), Procurement Regulations for ADB Borrowers (2017, as amended from time to time), and Staff Instructions ADB Administrated Consulting Services. |
| Procurement | The nature of procurement involved under the subprojects shall be simple commodities that can be either procured directly or based on best commercial practices. SFDB has completed two projects with ADB and has reasonable capacity to implement such projects, accordingly, the procurement is categorized as B. Procurement by rural enterprises, if any, will be in accordance with the established private sector or commercial practices acceptable to ADB, as required in ADB's Procurement Policy (2017, as amended from time to time), Procurement Regulations for ADB Borrowers (2017, as amended from time to time), and Staff Instructions ADB Administrated Consulting Services. |
| Responsible ADB Officer | Panday, Anjan |
| Responsible ADB Department | South Asia Department |
| Responsible ADB Division | Nepal Resident Mission |
| Executing Agencies |
Ministry of Finance |
| Timetable | |
|---|---|
| Concept Clearance | 29 May 2019 |
| Fact Finding | 09 Jun 2019 to 15 Jun 2019 |
| MRM | 07 Aug 2019 |
| Approval | 11 Nov 2019 |
| Last Review Mission | - |
| Last PDS Update | 04 Jul 2022 |
Loan 3856-NEP
| Milestones | |||||
|---|---|---|---|---|---|
| Approval | Signing Date | Effectivity Date | Closing | ||
| Original | Revised | Actual | |||
| 11 Nov 2019 | 10 Dec 2019 | 03 Jun 2020 | 30 Jun 2025 | - | - |
| Financing Plan | Loan Utilization | ||||
|---|---|---|---|---|---|
| Total (Amount in US$ million) | Date | ADB | Others | Net Percentage | |
| Project Cost | 50.00 | Cumulative Contract Awards | |||
| ADB | 50.00 | 27 Apr 2023 | 28.50 | 0.00 | 57% |
| Counterpart | 0.00 | Cumulative Disbursements | |||
| Cofinancing | 0.00 | 27 Apr 2023 | 28.50 | 0.00 | 57% |
TA 9853-NEP
| Milestones | |||||
|---|---|---|---|---|---|
| Approval | Signing Date | Effectivity Date | Closing | ||
| Original | Revised | Actual | |||
| 11 Nov 2019 | 04 Dec 2019 | 04 Dec 2019 | 31 Dec 2024 | - | - |
| Financing Plan/TA Utilization | Cumulative Disbursements | |||||||
|---|---|---|---|---|---|---|---|---|
| ADB | Cofinancing | Counterpart | Total | Date | Amount | |||
| Gov | Beneficiaries | Project Sponsor | Others | |||||
| 750,000.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 750,000.00 | 27 Apr 2023 | 289,715.63 |
Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.
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Safeguard Documents See also: Safeguards
Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.
None currently available.
Evaluation Documents See also: Independent Evaluation
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Related Publications
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ADB Project to Promote Rural Entrepreneurship in Nepal
ADB has approved a $50 million loan for a project that will improve the livelihoods and increase incomes of small farmers in Nepal by helping them in the financing, development, and operations of rural enterprises.
Tenders
| Tender Title | Type | Status | Posting Date | Deadline |
|---|---|---|---|---|
| Gender Specialist | Individual - Consulting | Closed | ||
| Environment and Social Safeguards Specialist | Individual - Consulting | Closed | ||
| Agribusiness Finance Specialist | Individual - Consulting | Closed | ||
| Project Implementation Unit Coordinator | Individual - Consulting | Closed | ||
| Agribusiness Enterprise Development Specialist | Individual - Consulting | Closed |
Contracts Awarded
Procurement Plan
| Title | Document Type | Document Date |
|---|---|---|
| Rural Enterprise Financing Project: Procurement Plan | Procurement Plans | Sep 2019 |