By Claudine Emeott, KF14, Nepal

Over the last several months, the microfinance industry has come under considerable fire. These criticisms largely address reports emerging from the Indian state Andhra Pradesh, where the rapid growth of microfinance led to predatory lending and overindebtedness.

In Nepal, just across the border from India, I find myself contemplating the opposite problem: the slow growth of the microfinance sector in remote mountain areas.

On a clear day in Kathmandu, you can actually see the Himalayas from the city:

When the Smog and Dust Clear: Glimpsing the Himalayas from Kathmandu

While these mountains — the highest in the world — seem so close from this vantage point, in reality they are quite far because we have to account for both horizontal and vertical distances as well as poor road networks and frequent landslides that make travel difficult.

The Langtang Range, which is directly north of Kathmandu, is only a six-hour bus ride from the city, but villages cling to mountain sides at approximately 13,000 feet in elevation. And this mountain area, compared to others, is relatively accessible. Many people from the far northeast or northwest corners of Nepal describe their journeys to their home villages like so: “Well, first you take a bus for two days. And then you walk for five more.” Let’s not forget that the five-day walk is primarily UPHILL.

It is no wonder, then, that microfinance players in Nepal struggle to penetrate these remote mountain regions. A 2007 World Bank report, “Access to Finance in Nepal,” lays out statistics that overwhelmingly reinforce the uneven geographic distribution of financial services. The Terai, which encompasses the southernmost band of Nepal, is home to 48% of the country’s population, which collects 72% of the country’s microfinance loans. The Hills, in the middle of the country, include 44% of the population and receive 22% of microfinance loans. The Mountains rank last, with 7% of Nepal’s population and only 0.02% of microfinance loans.

Commercial bank branches are not financially feasible in villages at altitudes of at least 4,000 meters and with rugged topography. The harsh reality to this truth, though, is that these same barriers to financial institutions also make for the most challenging economic conditions in the country. Although financial NGOs and cooperatives have attempted to fill in the gaps that banks cannot, the numbers above tell a compelling story: some of Nepal’s poorest people do not have access to finance.

The landscape of microfinance in Nepal may be changing soon, though. One of Nepal’s commercial banks is finalizing a microfinance subsidiary, and it aims to use its competitive edge in technology to reach remote mountain areas. This bank was the first to introduce mobile banking in 2009, and only two banks have followed suit since, so mobile banking is still a nascent concept in Nepal. That said, there is real potential for mobile banking to dramatically change the supply of microfinance in Nepal, which has a wide-reaching 3G network. In 2009, after all, 3G service came to Mount Everest. That alone gives me high hopes for this trend.

Claudine Emeott is a Kiva Fellow serving with BPW Patan in Nepal. She has an obsession with the Himalayas and in another life fancies herself a mountaineer. Want to help women entrepreneurs in Nepal? Join the BPW Patan Lending Team to make a difference in this small but beautiful mountain country.


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Claudine is the Portfolio Manager for Kiva's strategic initiatives in targeted sectors, including water and sanitation, clean energy, agriculture, and higher education. Claudine joins Kiva after working in Nepal for a year, beginning with a Kiva Fellowship and concluding with consulting assignments for the Asian Development Bank and multiple microfinance entities. Prior to her year in Nepal, Claudine worked at a Chicago-based consulting firm, where she conducted financial and economic modeling, performed due diligence, and developed implementation strategies for urban development projects in underinvested communities throughout the Midwest. With more than seven years of experience in economic development, Claudine has worked on a range of projects both in the U.S. and abroad. Her sector expertise includes access to finance, affordable housing, and public-private partnerships, and her regional expertise centers on China and Nepal. Claudine holds a B.A. in East Asian Studies from Harvard College and a Master's in City Planning from MIT.
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