Introduced by the then finance minister Baburam Bhattarai, Youth and Small Entrepreneur Self Employment Fund is being monitored by the Ministry of Finance. The initial plan was to provide financial assistance to the youth through banks, such as the Agriculture Development Bank, Rastriya Banijya Bank and Nepal Bank. Provided the outline of the business the applicants brought forward were feasible, financial assistance was to be granted at zero collateral and pay back within three years scheme.[break]
Samjhana Wagle, Public Relations Officer at the Youth and Small Entrepreneur Self Employment Fund Secretariat, explains, “The banks found it difficult to monitor and manage the process by themselves. They didn’t have the reach in many districts, so it was difficult to give proper attention to the program. So we decided to bring in cooperatives; it’s easier for them to evaluate the procedure at the local level.”
The cooperatives applying to be part of the program have to present an evaluation of their company and show at least two years of profit. The money is given to them at 7% interest rate. A cooperative is eligible for Rs 5 million of loan per annum, paid in three parts starting with 30% of the amount at the beginning. If the program seems to be running efficiently, another 30% is given to the cooperative and another 40% is lent towards the end.
There are around 557 cooperatives operating in 75 districts in the country. There are 20 cooperatives in Surkhet District, 16 in Dhading and 18 in Kavre. In Kathmandu District, some 300 cooperatives have applied for the program.
Local cooperatives at the district level process the business plans and applicants and loan the amount. The process takes about a month.
An 18 years old, whether educated or not, can apply for the loan and so can a 50 years old person with a business plan. One of the main criteria is that the applicant should be unemployed. Starting from Rs 5,000, a loan up to Rs 200,000 is available, to be repaid within three years at 12% interest to the cooperatives. The interest has to be paid on a monthly basis, while the principal has to be paid back in three installments in three years. Those who manage to repay the entire amount within three years can get back 60% of the interest amount, which means that they will have received the loan only at 4.8% interest rate.
“All kinds of business plans are eligible to apply for the fund, though we encourage agricultural entrepreneurship. There’ve been business plans for gemstones and online media, too. As long as they have sufficient skills to do something, anyone can apply for the fund,” says Wagle.
Wagle asks, “Why should one go to the Gulf countries when they can work here and help build the country’s economy?” She admits that there were some teething problems and the political situation wasn’t exactly helpful, either. But the past year has seen a great improvement, she says.
Binod Kumar Guragain, Executive Director, also agrees to the statement. “There’ve been many small positive stories. This program is helping many young people to do something on their own,” he says.
A volunteer from Rukum District, Parshuram Khatri, was at the office of the Youth and Small Entrepreneur Self Employment Fund to present the report of the program. There are seven cooperatives under the program in Rukum, and the Agriculture Development Bank also lends money to the aspirants. The cooperatives have lent 47 candidates Rs 7.9 million in the past year and 95 people borrowed the sum of Rs 10 million from the bank.
“Applicants come with agricultural business models concerning vegetable and fruit farming, animal rearing and production of herbs. They also want to open cosmetic shops, small restaurants and produce herbal soaps out of chiure (butter nut). What’s new in Rukum is the farming of rosemary in Khalanga on 60 ropanis of land.
A group of 11 people have also come together to start their cattle rearing business. They’ve received Rs 800,000 on loan and have bought 13 Jersey and Holstein cows.
Makhmali Mahila Samuha of Seri Gaun in Khalanga has also started a vegetable farming business with the loan of Rs 400,000. Their plan is to sell fresh vegetables in the market,” says Khatri.
Khatri comes to Kathmandu around three times a year to present reports. Though a monthly report is supposed to be submitted at the office, volunteers like Khatri only manage to do it a few times in a year. A monthly salary of Rs 15,000 does not enable them to make monthly visits to the capital.
District Coordination and Monitoring Committee have been formed for every district. Comprising a coordinator (a representative from the Chamber of Commerce), two members (from a cooperative or a bank and a Section Officer of the District Administration Office) and member secretary (a volunteer of the program), the team works to ensure the proper functioning of the program. The volunteer regularly monitors the applicants’ progress and also brings those who default at payment to justice.
The program has had to field off accusations in the past of giving loans to only political party cadres. Denying this, Wagle says that it would have been impossible to manage the fund this long had that been the case. “As long as there’s a concrete plan and some skills to back it, everyone can apply for the fund,” she insists.
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