Shabda Gyawali's Blog

Source: Myrepublica  "The government has prepared a draft of the new Agriculture Enterprises Promotion Act that among other, envisages to pave the way for contract or lease farming and promises incentives to insurance companies to sell farm insurance policies. The draft prepared by the Ministry of Agriculture Development (MoAD) in association with the Agro Enterprise Center (AEC) of the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) will soon be circulated among local stakeholders in the different development regions for feedback, said a senior government official. Keeping in view the large swaths of land being left fallow by landlords, the government came up with the legal provisions to make sure that proper use of cultivable land through contract and leasing system is introduced in the country. “Though we have large tracks of land abandoned without farming across the country by landlords, we are still dependent on imports...

Pvt sector calls for apt farm policy | National | Business | ekantipur.com

Taking m-commerce to the next level | National | Business | ekantipur.com Company I am following in Financial Inclusion.... 

VCs are no competition threat to existing banks .. they complement each another .................VCs can use banks for deal origination and to provide there investee companies with  working capital loan ..... Reasons how VCs will help Banks...... Help prop up bad loans  VCs have hands on management in their  investee companies,therefore will  help bank to reduce write-off risks... Source: Dalberg research and analysis

So ..so ...  finally after 20 years of economic liberalization,Nepali government has realize that existing policy for private sector development sucks and it need to be revamped ....The Government has started consultation with    private sector umbrella bodies (FNCCI &CNI) to brain storm on ideas  on what kind of private sector development policy  will create long term sustainable economic growth...Employment data from early 1990s to 2010 suggests that it is  not the large scale  industries that help create more jobs and social harmony , but it the SMEs ......... If government objective is to create a sustainable economy  than development of entrepreneurial eco- system  and growth in SMEs should be the focus of  the new private sector development policy............................. Here are two suggestion fo...

Here is a summary of  challenges faced by social entrepreneurs in India.I think Nepali social enterprises are also facing similar challenges    Barriers Challenges Some Solutions Access to finance Refers to the financial barriers related to the lack of equity, debt, and working capital for start-up social enterprises and non financial barriers, such as a lack of financial literacy. -provision of Blended Capital (mix of equity and grant funding) -Angel financing or royalty -based debt - awareness among HNIs on the potential to invest in social enterprises Access to Talent Lack of finance to pay market rate salaries is the main cause of this challenge, with the consequence that these businesses are unable to hire or retain qualified and experienced staff. - Fellowship programs exist to provide emerging talent for impact investors. ...

Mobile Banking - Nimbus,Finaccess join hands to provide banking to unbanked. click here to read Agribusiness- IFC helps poultry farmers  Hydro power- SN power donwn size Nepali operation  Manufacturing-    Kansai Nerolac Paints  is in the process of finalizing its 68% stake in one of the leading paint manufacturers in Nepal, Nepal Shalimar http://articles.economictimes.indiatimes.com/2012-06-20/news/32335726_1_hm-bharuka-kansai-nerolac-paints-knpl

Mega Bank, a class A commercial bank in Nepal announced last month that it is going to observe 'SME Bank Year' this current fiscal year. According to the CEO of the Bank - they plan to lend Rs 2.5 billion to SMEs by the end of this fiscal year............  In an  interview  the CEO of  the bank said - "Remittance — the country’s economic lifeline — should be linked to SMEs"  ..  Mobilizing remittances into SMEs will support sustainble economic growth of the country    So  here is an idea on how to link SMEs to Remittances ...............we can learn that from Sri Lanka  "   IFC is using  unique model to help Sri Lanka's Commercial Bank of Ceylon mobilize long-term financing through the securitization of remittances and export proceeds it receives to boost the bank’s SME portfolio.......Worker remittances are systematically important for Commercial Ba...

I think current state of impact investing is creating more income inequality in developing  country like Nepal........My conclusion was influenced by two things I read over the weekend Why Nations Fail- the main thesis of the book is that some Nations are poor because   institutions are   "Extractive," serving only a small elite that takes income from everyone else. Government of Nepal hikes  minimum  foreign direct investment  to USD 55K ............................................................................................................................................................. Last time I checked, the objective of impact investment was to invest in scale-able social enterprises and  SMEs. But if you  look at ground reality things are completely different. To ensure there fund economics work,impact investors both social first or finance first ...

Here is an excellent report from India's Planning Commission  on  strategies to create  vibrant  entrepreneurial eco-system .....Must read for our policy makers and advisers....  Click here to read this report 

I often get asked what are the different exit options  for private equity/venture fund  operating in Nepal since the IPO  route will be a tough sell. .................In a recent interview,Head of Leopard Capital  nicely explained various exit options for PEs  in countries similar to Nepal Front Running Liquidity " We use different strategies. There’s no cookie cutter approach. One thing we look at is the unusual interest that multi-nationals have in accessing new emerging markets like Cambodia, where there’s still not a lot of brand awareness yet. The population is very young, so it is a tantalizing market to multi-nationals whose home countries are stagnating. Pioneer investors like Leopard can front-run the multi-nationals by creating new businesses they will want to acquire later.."  CASH FLOW Trick "A second one is using the business’ cash flow to provide our returns, usually through high-yield debt, e...

This is why private equity investors are very skeptical while investing in frontier market like Nepal...... This article has spot-on identified  issues related to corporate hygiene................ " The first gaping imbalance in the emerging markets private equity equation was the accuracy timeliness, and transparency of financial and operating information provided to investors, and the willingness of managers to subject themselves to some degree of accountability to outsiders. Even in the best of circumstances, relationships between investors and the managers of their portfolio companies are complex and often contentious, but the absence of sound corporate governance practice has sharply accentuated that tension. Nowhere does this issue become more problematic than with family owned firms. Although widespread in all countries, family ownership tends to be even more prevalent in developing countries. T...

The government needs to encourage and create an environment where pension funds, insurance companies are drawn into investing in alternative investment asset class (AIAC) like seed, venture capital, and private equity funds.  Institutional investments in AIAC will improve access to risk capital needs of startup and scaling-up companies; which will translates into more job creation in productive sectors and sustainable economic growth.  At present most of the heavy weight institutional investors like Citizen Investment Trust, Army Welfare Fund and insurance companies are routing their majority of their investments through banks rather than investing directly in a company or through private equity fund. Due to the lack of investment avenues like AIAC, institutional investors, particularly insurance companies are facing sever asset liability maturity mismatch. Exploring opportunities in AIAC in one hand will allow institutional investors to diversify their investment risk away...

 Those of us who are trying to bring in international private equity investment in Nepal assert that despite huge opportunities in Nepal, foreign investors are still reluctant to invest here  mainly because of the numerous  perceived risks.Here are few highlights of an excellent paper ( Hydropower Financing Options for  Nepal: Assessing the Prospect of Private Equity Investment)  on what needs  to be done to bring in private equity capital in Nepali Hydro power sector "The high risk perception of the hydropower investment in the Nepalese socio-political environment is not likely to attract a particular private equity firm to individually undertake such huge burden of risk. The government of Nepal (GoN) can initiate cross over funds where  numerous private equity companies can invest  into this fund for the construction of the  hydropower plant. ...