Shabda Gyawali's Blog

In an effort to democratize access to finance, Nepal Rastra Bank has decided to give interest free loans to those banks and financial institutions ( BFIs ) that open a physical branch in 22 remote districts of Nepal. Incentivize banks to expand in the hinterland is definitely a strong catalyst for financial inclusiveness of thousands of unbanked rural population. However, despite having numerous incentives, opportunities and policies like “deprived sector lending” in place banks are often reluctant to penetrate the uncharted territories. This reluctance is primary derived due to high per customer transaction cost, political risk and lack of human capital. Increasing cost of fund, due to the slowdown in realty sector and poaching of depositors of one bank by other, will also contribute to make BFIs hesitant to add new non banking assets in their balance sheet. Rather than encouraging the BFIs to setup a “brick and mortar” physical bank branch in the remote area, Rastra Bank s...

Source: Myrepublica " According to the survey, there are 32,326 medium scale industries in operation across the country, whose contribution to Gross Domestic Production is 6 percent." Read More

The article “ Sanitation in National budget” in myrepublica clearly shows how lack of investment on sanitation facilities retards economic and social development of the country . Despite chalking myriad of sanitation related policies, progress made by the government to achieve these goals has been very gloomy. Story about government incompetency and huge public infrastructures deficit is not just limited to Nepal, numerous developing countries faces the same challenges. Growing number of private sector, especially in African nations are seeing lack of basic sanitation facilities as a huge investment opportunity. For example, In Kenya,less than 50 percent of population has access to basic sanitation services. Existing public toilets are inaccessible or are overcrowded, unhygienic and and lack privacy . A company called Ecotact , based in Nairobi ,Kenya saw lack of access to basic sanitation facilities as an opportunity to generate social value as well ...

International Finance Corporation (IFC) is partnering with DFID to help the Government of Nepal to ease regulatory constraint and red tapes for allowing more private sector investments in Nepal. This is a very encouraging news for the private sector in Nepal,however, a report release in October of 2010 by IFC shows that access to finance is the key constraint for private enterprises in the developing countries . With the growing popularity of social entrepreneurship and impact investing (JP Morgan recently classified it as an asset class).IFC should facilitate equity investment in Nepali SME ventures ......... IFC should support the Government of Nepal to chalk polices and acts that will draw international impact investors, patient capital and venture capitalist .... IFC invested micro equity ventures are making remarkable difference in India.Successful business model should be replicated in Nepal. IFC should support ( financially and technically) private sector to create business i...

" In a report to be released on December 6th, the International Fund for Agricultural Development (IFAD), another UN agency, says higher prices could give farmers, particularly in poor countries, a boost; earning more cash from their produce should spur farmers to lay out more capital on things like irrigation." Keep Reading

" THERE is a lot of financial aid sloshing around inside the European Union. But there will soon be less of it flowing out. At the G8 summit in Gleneagles in 2005, when the rich world made heroic pledges to tackle poverty in Africa, EU members promised to raise aid budgets to 0.56% of GNP by 2010 and 0.7% by 2015. But most countries will miss this year’s target. And with austerity biting, the 2015 goal looks hopelessly ambitious."-The Economist Keep Reading

An article was published in my Republica claiming the " For India, it will any day make much more sense to purchase electricity for its industries and households located in Bihar and Uttar Pradesh states from us (Nepal) than supplying them with power from, say, its plants located in the far-flung North Eastern region. " . The next line says " The cost of bringing power from there to these states ( Bihar and UP) would easily be way higher than availing it from Nepal. Additionally, opting for hydro power instead of coal (on which India is primarily dependent on now) as far as possible would also give our neighbor something to boast about in a world where environment protection and clean energy are two hot issues." Paragraphs above reminds me of a company called "HUSK Power System".Based in Bihar ,Husk Power System generates clean, safe and efficient electricity at affordable rates in some of India’s most remote communities. HPS is currently serving s...

"Two plastic boulders roll into the compound and flies scatter. The dirt piles up, and the women who cut and scoop disappear behind it. "Buyers from India come every month. Otherwise we use the hundi system. There are similar kabadas in India as well, but we Nepalis sell cheaper, of course." With this he brought in a sample of white, foamy cotton spun from the mills in India, using the plastic he sells. "These you can use for jackets, blankets, mattresses—everything."" Click here to read Great investment opportunity for people interested in "Impact investment" asset class...... This business is addressing environment and unemployment issues Local retail stores have profit margin of Rs5 for every Kilo gram of recyclable cotton sold.( higher then selling a KG of rice) Value addition/making jackets and blanket out of plastic could be done in Nepal Indian Businesses coming to Kathmandu to buy trash and transporting it all the way to I...

Varying statistical information on Nepal’s poverty has been made public in less than one year. For example, Nepal Living Standard Survey II, 2003/04 states 31 percent poverty incidence; National Planning Commission estimates 25.4 percent, ADB Outlook 2010 shows the percent of population living on less than $1.25 a day is 55.1 and Multidimensional Poverty Index estimates Nepal’s poverty at 64.7 percent......

Recently,through the online platform idea exchange,I got an opportunity(or rather got lucky) to ask Vineet Rai (CEO,AAvishkar micro equity fund ) about his views on the ongoing Micro finance crisis in India ..................................................................................................................................... Here is his reply: Dear Shabda http://blogs.hbr.org/cs/2010/ 11/indias_microfinance_crisis_ is.html here are my views vineet

Bob Patillo,CEO of GrayGhost Venture (GGV) came to our management class as a guest speaker. It was very interested to learn about the investments GGV has made all over the developing world (especially in India ) Gray Ghost Ventures (GGV) is an impact investment firm dedicated to providing market-based capital solutions to entrepreneurs who are addressing the needs of low-income communities in emerging markets. Depending upon the need and opportunity, we serve as creator and manager, sole funder, lead investor, co-investor, general partner or limited partner in operating companies or investment funds. GGV’s focus areas include: microfinance, social venture investment and affordable private schools. In GGV "First Light Venture -Portfolio " there are couple of projects which I think if replicated in Nepal will have a great impact in the life of the rural population & unquestionably the demand for these kind of ideas and technologies is huge in our...

Cap CEO salaries and allowances to below 5% percent of employees´ pay bill or 0.025% of total assets, whichever is less ( See the Graphs above and crunch some number to figure out,who is making how much money) (number ON GRAPH IN 000) . Vehicle to CEO must not exceed 50% of annual salary and allowances Cap not applicable to banks in trouble, branches of foreign banks, banks having govt. So,Mr Anil k Shah will be the lowest paid CEO? Irony is Nabil Bank CEO will be the highest paid banker in the country .. Reading the headline “Central bank caps CEO perks and benefits” in this news paper ,forced me to revisit an op-ed written in 2009 by Paul Krugman, Noble Laureate in Economics. The op-ed was titled “Making Banking Boring”. In the piece Professor Krugman argues stronger regulation and salary cap in the financial industry could have prevented the ongoing great global financial debacle. He further adds caping compensation will force nation’s best and brightest people to leave t...

Nepal produces 250,000 tons of oranges annually, but only 10 percent of this output reaches the market due to inadequate transportation facilities, poor market access and dismal export performance. Apart from poor transport facilities, ineffective collection, inadequate cold storage facilities, poor market access and low prices have prevented producers from getting the real value of their production... Price of the orange juice in the future market is sky rocking ............... CLICK HERE TO READ

For longevity and sustainability of a development project, it is necessary to respect the locals.To develop a relation in the community representative of the developing agencies need to stay longer Be patient Come back for feed back Dollar Kisans should not view the poor as supplicants,pupils and constituents.instead,rhey neef to treat them as colleagues,teacher,and advisors. CLick here to read

In reality, with decades of hindsight it can be said that the much-maligned Rana feudal Juddha Sumshere as well as the Panchayat system were more serious about taking Nepal down the industrialization path and job creation for its youth. The former’s first industrial exhibition in Nepal in 1938 and his letter to Churchill seeking the Raj’s support for tariff concessions for products to come out of Nepal’s industries are proof enough. The Panchayat under King Mahendra did set up production factories that the Kangress was quick to close down after 1990 in the guise of privatization. By the 1980s, the feudal aspect of the Nepali economy had dwindled to insignificance and the country’s state apparatus had slipped into the hands of the trading class comprador bourgeoisie, a fact that seems to be appreciated, among the current political class, only by the marginal ‘Third Current’ group within the UML. It is also corroborated by the main parties, socialists and communists both, nominating scio...

By teaming up with retail outlets in low-income, often hard-to-reach areas, financial institutions can create value both for themselves and their new customers. Click here to read

http://www.nepalnews.com/main/index.php/news-archive/19-general/10804-saudi-prince-meets-president-expresses-interest-to-invest.html

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