Nepal : Rural Enterprise Financing Project

Sovereign Project | 53144-001

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 Name
Rural Enterprise Financing Project
Project Number
53144-001
Country / Economy
  • Nepal
Project Status
Active
Project Type / Modality of Assistance
  • Loan
  • Technical Assistance
Source of Funding / Amount
Loan 3856-NEP: Rural Enterprise Financing Project
Source Amount
Concessional ordinary capital resources lending US$ 50.00 million
TA 9853-NEP: Capacity Development for Rural Enterprise Financing
Source Amount
Technical Assistance Special Fund US$ 500,000.00
Financial Sector Development Partnership Special Fund US$ 250,000.00
Operational Priorities
  • OP1: Addressing remaining poverty and reducing inequalities
  • OP2: Accelerating progress in gender equality
  • OP6: Strengthening governance and institutional capacity
Sector / Subsector
  • Finance / Inclusive finance - Small and medium enterprise finance and leasing

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.

Impact

Employment-oriented economic activities increased (14th Three-Year Development Plan, FY2017 - FY2019)a

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.

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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.

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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.

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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.

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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

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

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.

Contact

Responsible ADB Officer
Panday, Anjan
Responsible ADB Department
Sectors Group
Responsible ADB Division
Finance Sector Office (SG-FIN)
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

Funding

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
  Total (Amount in US$ million)
Project Cost 50.00
ADB 50.00
Counterpart 0.00
Cofinancing 0.00
Loan Utilization
  Date ADB Others Net Percentage
Cumulative Contract Awards 06 Jun 2024 40.00 0.00 80%
Cumulative Disbursements 06 Jun 2024 40.00 0.00 80%

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
ADB Cofinancing Counterpart Total
Gov Beneficiaries Project Sponsor Others
750,000.00 0.00 0.00 0.00 0.00 0.00 750,000.00
Cumulative Disbursements
Date Amount
06 Jun 2024 398,740.51

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.

The Access to Information Policy (AIP) recognizes that transparency and accountability are essential to development effectiveness. It establishes the disclosure requirements for documents and information ADB produces or requires to be produced.

The Accountability Mechanism provides a forum where people adversely affected by ADB-assisted projects can voice and seek solutions to their problems and report alleged noncompliance of ADB's operational policies and procedures.

In preparing any country program or strategy, financing any project, or by making any designation of, or reference to, a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

Title Document Type Document Date
Rural Enterprise Financing Project: Small Farmers Agriculture Cooperatives Audited Project Financial Statements (17 July 2022-16 July 2023) Audited Project Financial Statements Jan 2024
Rural Enterprise Financing Project: Audited Project Financial Statements (17 July 2022-16 July 2023) Audited Project Financial Statements Jan 2024
Rural Enterprise Financing Project: Audited Project Financial Statements (16 July 2021-16 July 2022) Audited Project Financial Statements Jan 2023
Rural Enterprise Financing Project: Small Farmers Agriculture Cooperatives Audited Project Financial Statements (16 July 2021-16 July 2022) Audited Project Financial Statements Jan 2023
Rural Enterprise Financing Project: Audited Project Financial Statements (16 July 2020-15 July 2021) Audited Project Financial Statements Feb 2022
Rural Enterprise Financing Project: Small Farmers Agriculture Cooperatives Audited Project Financial Statements (16 July 2020-15 July 2021) Audited Project Financial Statements Jan 2022
Rural Enterprise Financing Project: Updated Project Administration Manual Project/Program Administration Manual Sep 2021
Amendment to the Project Agreement for Loan 3856-NEP: Rural Enteprise Financing Project Project/Program Agreements Sep 2021
Loan Agreement (Ordinary Operations [Concessional]) for Loan 3856-NEP: Rural Enterprise Financing Project Loan Agreement (Ordinary Resources) Dec 2019
Project Agreement for Loan 3856-NEP: Rural Enterprise Financing Project Project/Program Agreements Dec 2019
Rural Enterprise Financing Project: Project Administration Manual Project/Program Administration Manual Oct 2019
Rural Enterprise Financing Project: Technical Assistance Report Technical Assistance Reports Oct 2019
Rural Enterprise Financing Project: Gender Action Plan Gender Action Plans Oct 2019
Rural Enterprise Financing Project: Report and Recommendation of the President Reports and Recommendations of the President Oct 2019
Rural Enterprise Financing Project: Procurement Plan Procurement Plans Sep 2019
Rural Enterprise Financing Project: Initial Poverty and Social Analysis Initial Poverty and Social Analysis May 2019

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

None currently available.


Related Publications

None currently available.


The Access to Information Policy (AIP) establishes the disclosure requirements for documents and information ADB produces or requires to be produced in its operations to facilitate stakeholder participation in ADB's decision-making. For more information, refer to the Safeguard Policy Statement, Operations Manual F1, and Operations Manual L3.

Requests for information may also be directed to the InfoUnit.

  • 12 Nov 2019 | News Release

    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 Enterprise Development Specialist Individual - Consulting Closed
Agribusiness Finance Specialist Individual - Consulting Closed
Project Implementation Unit Coordinator Individual - Consulting Closed

Contracts Awarded

No contracts awarded for this project were found

Procurement Plan

Title Document Type Document Date
Rural Enterprise Financing Project: Procurement Plan Procurement Plans Sep 2019