Shabda Gyawali's Blog

DoC plans co-op subsidy guidelines | National | Business | ekantipur.com Government decided to provided seed money to run co-operative run by the low-income and disadvantage population. Can this we considered impact investing ? " The programme has targeted the poor from underprivileged communities like Haliya, Kamaiya, Dom and Musahar. It has also targeted promotiung cooperatives operated by low-income people like rickshaw pullers and single women." .............................................................................................................................................. Related news from India - "   A venture capital fund, dedicated to promoting Dalit entrepreneurs, has been registered by market regulator Sebi, paving the way for creation of a corpus to support businesses owned by people from the Scheduled Castes." click here to read more 

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...

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...

IFC  provided Buddha Air  a loan of $6.1 million.Interest rate for the  loan is 4.19% . On going interest rate of  a loan taken from Nepali commercial banks is about 12%. Click here to read more Just yesterday,I was reading a news paper article with a title- 28% fall in banks credit flow to the private sector. Humm....It makes me wonder if IFC is "crowding in" or crowding out "  private sector ? Buddha Air  already controls 43% of the domestic airline market ...Monopoly anyone??

In recent years board range of organisations has shown interest in adopting impact investing model to  investing in the low income countries . List includes but not limited to investment banks, sovereign wealth funds, and endowments, philanthropic foundations and, international development organization. Traditionally, inflow of foreign capital (not including remittances) in developing countries like Nepal  has taken   place in the form of investment designed to maximize financial returns, while no intentional consideration of social impacts or foreign aid structured to maximize social return, while no expectations for monetary returns. Impact investing provides a platform to blend capital from both foreign aid and foreign investments to support entrepreneurship culture in the developing world. Impact investor operates in the missing middle and fills the capital gap above micro-financing and below institutional financing. They structure there their investment ve...

Another type of foreign investment ………………….. Foreign Direct Investment (FDI) can bring great advantage to the host country. It fuels economic growth, help reduce poverty, create employment opportunities and assist building physical infrastructures. With the same intention, the Government has decided to observe 2012-2013 as Nepal Investment Year and has setup Nepal Investment Board to spur and facilitate foreign investments in the country. To attract foreign investments, NIB is launching promotional events like road shows in countries like India, UK and USA. NIB is targeting foreign firms that have the resources to investment in mega projects in sectors like energy, tourism, infrastructure development and commercial agriculture. Dr.BRB led cabinet has also passed Investment Board Act ,which ensures to facilitate investment above RS 25 billion through single window policy. A population of 28 million, rising per capita income (mainly due to remittances), demographic dividend, under...

For the past couple of weeks,I have been helping an impact investing fund to write its investment prospectus.I have been doing quit a lot of research on the  potential of  Nepali bottom of the pyramid market  particularly in the sectors like internet connectivity,healthcare,water and sanitation, culture ,education and  education ....... Despite lot of potential,current market is very fragmented and due to the difficultly  of geographic  terrains, managing distributions channels is  challenging .... It is  inevitable for both  domestic and international investors  to  be successfully in Nepal without addressing the  hurdles like achieving economies of scale, weak distributions channels,consistent quality of the product and weak infrastructure   like roads,energy,internet .... to add to that  very idea of entrepren...

Very excited to learn about one of the very few Impact investing funds operating in Nepal............... If you are a  social entrepreneur working in Nepal  and  looking for external financing - The Dolma Development fund is interested in   going over your business plan .....    " The Dolma Development Fund was founded in 2003 as a non-profit impact investor, education sponsor and development advisor. Our mission is to use commercially sustainable methods where possible to alleviate poverty in remote areas, currently in Nepal and Ethiopia. We provide both financing and advice to local projects and businesses that have a positive social and environmental impact in their DNA, and we reinvest any returns into education and other support for our partner communities. In this way our capital is essentially  recycled  and used multiple times for good."  source: click here to read  http://www.dolmafund.org/...

A New Approach to Funding Social Enterprises - click here to read more ( must read more aspiring impact investors ) Firms with benefits - click more to read

Kudos to Mr. Radesh Pant for accepting the career denting challenge of heading the Nepal Investment Board (NIB). I hope under his leadership,NIB will lure in lots of much needed FDI in the country. Mr Pant knows it well that he is going to face significant domestic challenges like militant labour, extortion, local opposition, arbitrary government policies, red tape, corruption, power cuts, bandas etc . I am confident that he and his team is competent enough to acclimatize/ face these never ending domestic challenges .In my opinion, in the coming year,the bigger concern for NIB will be the uncertainly in the global macro economic situation.......................... "According to a 2010 Central Bureau of Statistics survey, there were 1,897 firms operating with foreign investment from 139 countries. India had the largest investment in Nepal with 393 companies, followed by China with 179, Japan 132, South Korea 94, UK 94, Germany 61 and Switzerland 27." click here to read more N...

Marred by the fiscal austerity and debt deflating initiatives western countries are pivoting their "foreign aid" distributing mechanism. According to a recent article published in the Financial Times , UK will try Sovereign Wealth Fund model to distribute aid in India. Which basically means the United Kingdom's Government will start investing rather then giving "grants" and other kind of free/subsided money to resolve pressing social and environmental challenges in the developing countries.These investments are expected to make financial returns to the UK taxpayers. If this model is successful in India UK government has plans to replicate this investment,rather then aid model to other foreign aid recipient country ...... USAID has also started a similar kind of "impact investing"model.....one of the many initiatives of USAID is its recent partnership with -JPMorgan Chase & Co., the Rockefeller Foundation, Bill & Melinda Gates Foundati...

I personally feel bit frustrated when Nepal is not mentioned or considered as a potential market for Impact Investing activities in glossy impact investing reports .....................For CRYING out load, Nepal is if not the poorest, one of the poorest countries in ASIA........ Our people also have strong entrepreneurial spirit and YES we also believe that it is entrepreneurship and investments not AID that leads to Economic Development ............ Asian Development Bank came out with a report called " Impact Investors in Asia Characteristics and Preferences for Investing in Social Enterprises in Asia and the Pacific" Yes What Nepal is not even mentioned ............................................... Some time it makes me wonder if impact investment is also about " Trophy Investments" and they don't want to take risk ??

In a blog post , Anthony Bugg-Levine and Jed Emerson,the authors of Impact Investing: Transforming How We Make Money While Making a Difference were quoted - " the sector (Impact investing ) has so far existed almost exclusively in the realms of "the ridiculously rich and the ludicrously large." Family offices, private clients, and pension funds are the ones with the large capital to put to work, perhaps more than the impact sector can even handle for a very long time. So what about retail? While opening up the doorway to retail clients may not hold as much sway in terms of volume of investment capital, taking impact investing retail is important for more than sheer capital reasons. As Bugg-Levine and Emerson say, "it is about creating a more integrated relationship between our assets and our values," and it's about transforming what society values and how we organize our resources to achieve these values. If impact investing remains confined to the upper...

just wanted to share these two facts,which I thought was interesting ............................... responsAbility Social Investments AG,one of the world's leading asset managers for social investments that specializes in sectors such as microfinance, SME financing, fair trade and independent media, has invested in Nepal ........ responsAbility has invested in Media Development Loan Fund (MDLF). MDLF gives independent media loan and equity support to media organization in countries where freedom of press is weak. In 2010 ,MDLF provided new funding for two media companies in Nepal − the Jagadamba Press newspaper and the Communication Corner radio broadcaster .......... click here to read more CDC Group plc (‘CDC’), the UK’s development finance institution (DFI), announced a new US$50 million investment in the first-ever equity investment fund to focus on the very poorest parts of India. CDC is an anchor investor in the Pragati Venture and Incubator Fund (‘Pragati’) and has ...

How does it work ? " In 2010, an organisation called Social Finance raised £5 million (about $8 million) by issuing bonds to investors. It handed over the money to the St Giles Trust, which counsels offenders while they are in jail and helps them find work when they get out, reducing recidivism by as much as 40 per cent. The trust will put the money to work at the Peterborough prison in Cambridgeshire. If it fails, investors get nothing. If it cuts recidivism by 7.5 per cent, investors start to see returns. And if it does better, the United Kingdom’s justice ministry will pay more, up to a maximum of 13 per cent. This could be the next big thing in impact investing. Social impact bonds can tackle problems that governments find hard to solve, because elected officials find it harder to fund prevention than cure. David Robinson, a member of the Prime Minister’s Council on Social Action in the United Kingdom puts it thus: “It is difficult to get rid of the ambulance at the bottom of ...

Skeele's enterprise brings job prosperity to families in Nepal by selling fibers from plants grown in the Himalayas to international markets - however, finding funding to scale her operations has been a challenge. The enterprise, she finds, does not fit neatly into the usual healthcare, water, agriculture, housing or hunger sectors. Since most social venture firms do not accept unsolicited proposals, this adds further stress to a stressful search.. .Click here to read more

Bankers have expressed serious concern about the lawmakers’ proposal to amend the proposed Banks and Financial Institution Act (BAFIA), saying that the proposal, if implemented, would lead the banking sector to a disaster.Lawmakers, especially from the UCPN (Maoist), recently made such proposal to the Parliament. Concern Number one : - Bankers’ opposition starts from amendment proposal that seeks to replace the term ‘ economic liberalisation ’ by ‘ self-reliant mixed economic system’ in the preamble of the proposed BAFIA. “Progress achieved so far in the banking sector is due to the economic liberalisation policy,” bankers said at a press meet on Monday. “Are we heading back towards the old controlled system?” asked Nepal Bankers’ Association Vice President Rajan Singh Bhandari. My Take: term it economic liberalisation ’ or ‘ self-reliant mixed economic system, Does it really matter ? No matter what you term your "banking ideology model" in this age of globalization, Ne...