Microfinance in SAARC Countries:Sharing Lessons and Way Forward

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Microfinance in SAARC Countries
Overview Report 2010

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About the Conference

The Regional Conference on “Microfinance in SAARC Countries: Sharing Lessons and Way Forward” was held from 30 November to 1 December 2010 at Kathmandu in Nepal with the vision to look forward and to point out the right directions of microfinance for the future.

The conference was jointly organized by the Institute of Microfinance (InM) of Bangladesh and Rural Microfinance Development Centre (RMDC) of Nepal in cooperation with the SAARC Secretariat.

The conference was aimed at disseminating the findings of the InM study on ‘State of Microfinance in South Asia’ among the stakeholders in microfinance sector throughout the SAARC region.

The focus of the project was to outline the evolution in microfinance in the region, its success stories, obstacles faced by it, lessons learned, emerging challenges and future directions.

More than two hundred twenty (220) participants from the SAARC member countries took part in the two-day long conference, where they shared their experiences and discussed the challenges. The participants also chalked the future of microfinance in the SAARC region.

The inaugural session of the conference was chaired by Dr. Wahiduddin Mahmud, Chairman, Institute of Microfinance (InM), former Advisor to the Caretaker Government of Bangladesh and Member of the UN Committee for Development Policy (UN CDP).

Honorable Finance Minister of Nepal Mr. Surendra Pandey inaugurated the conference as the Chief Guest.

The Secretary General of SAARC H.E. Dr. Sheel Kant Sharma and the Governor of Nepal Rastra Bank Dr. Yuba Raj Khatiwada were present as Guests of Honor.

The Secretary General of SAARC H.E. Dr. Sheel Kant

Sharma launched the Overview Report 2010 entitled ‘Microfinance in SAARC Countries’.

While addressing the inaugural session, the Chief Guest and Honorable Finance Minister of Nepal Mr. Surendra Pandey lauded the progress of Bangladesh in the microfinance sector and urged Nepalese to utilize the experience of Bangladesh. He said, “Bangladesh is globally considered as the pioneer in the field of microfinance”. “I urge Nepali delegates to take the maximum benefit from Bangladesh’s rich experience”, he added.

While delivering his remark on the occasion, Mr. Shankar Man Shrestha, CEO of RMDC, Nepal, stressed on the fact that microfinance, if used properly and effectively, can bring meaningful changes in the lives of poor and destitute. Region’s economy can’t move ahead without improving the lives of the millions of poor.

He said access to finance to poor people has increased manifold with the tremendous progress and achievements in the field of microfinance in the decade of 2000 across the

SAARC region.

Lauding the success of MFIs, Mr. Shrestha said, MFIs had been able to maintain very good recovery rate of over 98 percent and were on the way to achieving self-sufficiency in the next 2-3 years and financial sufficiency in 5-6 years.

On the occasion, he read out the message for the conference from Nobel Peace Laureate Muhammad Yunus, the pioneer of microfinance.

While giving opening remarks, Dr. Md. Mosleh Uddin Sadeque, Interim Executive Director, InM, Bangladesh stressed on the need to forge collective effort among MFIs of SAARC region to overcome the existing challenges to the sector.

“We have gathered here for common learning through our experiences and share innovative ideas to deal with the challenges seen in the sector and seek practical point for departure”, said Dr. Sadeque. Stating the fact that SAARC region is the home to MFIs, he also urged the policy makers to facilitate the sector in reducing poverty in SAARC countries.

Dr. Yuba Raj Khatiwada, Governor of Nepal Rastra Bank, the central bank of Nepal, stressed on the need for holistic mobilization of MFIs in micro-insurance targeting the poor people, in addition to the financial use of MFIs. “It is challenging and necessary that integrating programs of microfinance sector with government agencies for the repackaging of government initiated programs in crucial sectors such as education, health and infrastructure”, said Dr. Khatiwada.

He also opined that growth of MFIs should not be limited but they should be properly regulated through effective regulations for their sustainability. Lauding the proliferation of MFIs in the SAARC region, Dr. Khatiwada opined that replication of MFI programs should be customized and fine-tuned.

While delivering speech on the occasion, Dr. Sheel Kant Sharma, Honorable Secretary General of SAARC, highlighted the growing role of MFIs to uplift the lives of poor people in the task of alleviating poverty in the region. He also expressed readiness to extend cooperation from the SAARC Secretariat for the development of MFIs in the region.

The Chair of the session, Dr. Wahiduddin Mahmud, Chairman of InM, said over 20-30 million borrowers are taking advantage of microfinance in Bangladesh. “We are revolving over USD 3 billion annually in Bangladesh despite the fact that many people are still unaware of microfinance”, said Dr. Mahmud. “MFIs have to concentrate their effort to serve the grass-root level people to bring the millions of poor out of the poverty line in the region”, he added.

The two-day long conference consisted of the individual country report presentation from the representatives of all eight SAARC member countries. At the business session of the conference, eminent practitioners, academicians, stakeholders from various reputed organizations from the SAARC region participated as Keynote Presenters, Discussants and Speakers.

The closing ceremony of the conference was chaired by Mr. Ashoke SJB Rana, Chairman, RMDC of Nepal. Dr. Yuba Raj Khatiwada, Governor, Nepal Rastra Bank was the Chief Guest on the occasion.

Mr. Dasho Daw Tenzin, Governor, Royal Monetary Authority, Bhutan, Dr. Wahiduddin Mahmud, Chairman, Institute of Microfinance (InM), Dr. Md. Mosleh Uddin Sadeque, Interim Executive Director, InM, Bangladesh, Dr. Amanullah (Mak) Khan, International Team Leader, PROSPER-PCU, DFID, Bangladesh and Mr. Shankar Man Shrestha, CEO, RMDC, Nepal also spoke on the occasion.

While speaking on the occasion, Dr. Yuba Raj Khatiwada hailed the role of MFIs in the countries like Nepal and Bangladesh for their contribution to poverty reduction. “Conclusions drawn by the conference are very important”, he said. “The conference dragged the youths to present instead of the popular belief that they are the pillers of future”, Dr. Khatiwada opined.

“Youths are vulnerable, they need to be used in the productive activities by engaging on productive areas, and MFIs can help them encourage in self-employment”. He also said that technology and microfinance can be distributive. “Transfer of technology and microfinance making use of resources can create self-employment”, he

added.
Mr. Ashoke SJB Rana, Chairman, RMDC thanking the participants said the conference has started to begin networking and started sharing their experiences from their respective countries. MFI is a tool to bring the people out of poverty trap, he said, “but MFIs can also be integrated with the government agencies that could bring more results”.

Mr. Shankar Man Shrestha, CEO, RMDC, Nepal, reading out the way forward, thanked all the participants and guests for their active involvement and creative suggestions.

The conference emphasized the cooperation and coordination among MFIs in the entire region along with sensitizing MFIs on risk management, deepening the microfinance services down to the poorest and the destitute, developing second generation of microfinance clienteles by involving the youth, financing unemployed youth in the rural areas, and increasing the use of ICT in MFI programs for transparency and good governance.

To achieve the target, the conference proposed advocacy for conducive policy and regulatory environment, institutional strengthening and capacity building of MFIs by conducting research on key issues and further exploring the feasibility of establishing a Microfinance Bank under the SAARC umbrella.

Micro-insurance should be explored as a possible integral part of the mainstream of microfinance to safeguard the interest of the borrowers.
The conference also raised the need for exchanging the ideas and experiences to materialize the ultimate objective of going towards a poverty free world and to achieve the Millennium Development Goals.

In order to facilitate the interactions among the practitioners and stakeholders, InM and RMDC agreed to initiate a web portal involving the relevant partners in the region with a view to sharing lessons, knowledge, thoughts, ideas, practices and experiences not only from South Asia but also from other places around the world. It also decided that the regional dialogues on the new developments in the sector and experience sharing would be convened in every two years upon consultation with relevant organizations.