Micro credit effective in alleviating poverty

By A Staff Reporter

Lalitpur, Apr. 19: Economists today said micro-credit was an effective tool alleviate poverty and transform society.

"Poverty alleviation is the prime goal of the 10th Five Year Plan," National Planning Commission Vice Chairman Prithvi Raj Ligal said at a one-day seminar on ‘Experience Sharing on Micro-finance Practices in Nepal’. "Micro-finance can be a powerful tool to achieve this goal. We are determined to push ahead micro-finance schemes aggressively in the next five years."

"We should integrate the existing micro-finance providers to go ahead effectively," he added. Ligal said not all micro-finance providers were equally successful and asked the less successful ones to learn from others’ experience. "They should take care to reduce overheads and keep themselves secure."

"Resource won’t be a problem; they can be pooled if necessary," he said.

Earlier, Shankar Man Shrestha, Chief Executive Officer of the Rural Micro-finance Development Centre, said the policy makers had not recognised the importance of micro-finance despite its capacity to build up the national economy. "Micro-finance can raise the working class people into entrepreneurs, but it has yet to get the due recognition," he said.

Shrestha said micro-credit providers worked transparently and provided loans directly to the needy people without collateral. "There is little chance of leakage and corruption in micro-credit programmes."

However, he said that all was not well with micro-finance institutions. "The challenge that lies ahead of us is to strengthen the institutions. For that we need to develop a national vision."

In Nepal, over half a dozen micro-credit institutions has been in operation since the early 1990s. These institutions now serve a total of 223,521 poor households with the total cumulative loan disbursement of Rs. 6.69 billion.

They have made poor women’s access to financial services easier and establishing their control over the financial resources.

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