Kathmandu, November 1:

Despite micro-finance having been touted as one of the best tools to lift poor people’s life out of abject poverty, it is yet to reach the far-western districts of the country.

Micro-finance experts said that weak policy environment has affected smooth and effective enhancement of micro-finance institutions across the country.

They blamed that politicians and bureaucrats have not yet understood the role of micro-finance institutions, which empower poor people and make them financially self-sufficient.

Shankar Man Shrestha, chief of Rural Micro Finance Development Centre (RMDC), talking to journalists commented that despite tremendous potentials for increasing micro-finance services in rural areas for poor people, various impediments have barred the expansion of services.

The government has to immediately provide proper policy back-up and create a sound environment to help reach out to poor people.

If we could enhance micro-finance programmes to a greater number of the rural poor, the number of poverty-stricken population would go down by half by 2015, said Shrestha. He said that a total of 2,100 thousand people are poor who need micro-finance services.

Currently there are over 35 capable micro-finance institutions that provide small loans to poor people even without collateral, said Shrestha. People who used to demand loans for about Rs 100,000 have started demanding millions now, which shows that their capacity have tremendously been improved, he informed.

The loan recovery rate in micro-finance institutions stands at 99 per cent, he said. The micro-finance institutions’ lending has empowered poor people financially and it has enhanced their dignity, he said.

He added that we need visa from Maoists to reach far-western districts of the country. “Given such a situation, we are unable to expand our micro-finance services in these areas.”

As per a Micro Credit Global report, there are more than 3,100 micro-institutions worldwide which have helped 82 million of the poorest people. 84 per cent of these are women.

Micro loans are used for a wide range of business activities including low-tech ventures such as selling milk and eggs, making tortillas, or producing handicrafts, as well as high tech enterprises like selling solar-powered cellular phone time in rural areas without land-line phone services.