KATHMANDU, MARCH 24
The Koshi Province government has launched the Udaya Guarantee Fund and Udaya Challenge Fund to provide loan guarantees for small and medium enterprises (SMEs) in the region.
These funds aim to mitigate lending risks for banks and financial institutions, enhancing access to capital for SMEs in Koshi Province to foster business growth, innovation, and operational efficiency, according to the Udaya Project.
The launch event in Kathmandu was attended by Damodar Bhandari, Minister of Industry, Commerce, and Supplies, Ram Bahadur Magar, Minister of Economic Affairs and Planning, Koshi Province, and Danielle Meuwly, PhD, Ambassador of Switzerland to Nepal.
Minister Damodar Bhandari, addressing the event as the chief guest, highlighted the critical role of SMEs in Nepal's economic development. He noted that a lack of collateral had hindered SME growth and emphasized that the launch of the Udaya Guarantee and Challenge Funds would set an example for federal and provincial governments across Nepal in supporting small businesses.
Minister Ram Bahadur Magar shared that the funds were the result of persistent efforts, marking the start of a stronger financial support system for SMEs. He expressed confidence that this initiative would help generate income and employment opportunities within Nepal by improving the investment climate in Koshi Province.
Swiss Ambassador Danielle Meuwly lauded the Koshi Province Government's commitment to SME financing, describing the initiative as a model for sustainable economic transformation. She underscored Switzerland's longstanding development partnership with Nepal, stating that the funds would contribute to Nepal's shift from aid-based to trade-based economic growth.
Secretary of the Ministry of Economic Affairs and Planning, Koshi Province, Shankar Nepal, noted that the credit guarantee fund would encourage entrepreneurs to invest confidently. Kovid Dhakal from the project implementation unit added that over 3,000 SMEs are expected to directly benefit from the initiative.
Ramesh Ghimire, CEO of the Deposit and Credit Guarantee Fund (DGGF), explained that the funds would offer partial loan guarantees to partner banks, encouraging them to increase SME lending while minimizing risks.
With a budget of NPR 600 million, the Provincial Credit Guarantee Fund is jointly financed by the Koshi Province Government and Swiss Development Cooperation, with equal contributions of 50% each. This initiative aims to facilitate access to capital for growth-oriented SMEs and encourage banks to invest in the sector, the press release noted.
The Udaya Project was launched under a bilateral agreement between the Government of Nepal and the Government of Switzerland in November 2023. It is implemented by the Ministry of Economic Affairs and Planning, Koshi Province, with financial support from Swiss Development Cooperation and technical collaboration with DAI Global UK. The Project focuses on SME growth, innovation, and capital expansion through consulting, financial support, and access to public initiatives. The first phase (December 2023 – November 2027) will prioritize business development services, technical assistance, risk reduction mechanisms, and a digital information portal.
The total budget for the first phase is Rs 1.149 billion, with 61.7% funded by Swiss Development Cooperation and 38.3% by the Koshi Provincial Government. The Udaya Project is expected to play a pivotal role in fostering entrepreneurship, economic resilience, and financial inclusion in Koshi Province and beyond.
