At a seminar on â€œDevelopment of rural financing institutions and cooperativesâ€ organised in the capital city the other day, some South Asian experts called upon the financial institutions and agencies to strengthen rural financing to reduce poverty in South Asia. During the programme discourse they admitted that there has been very nominal investment in agriculture despite the engagement of more than 60 per cent of the people of the region in this sector. This, they opined, was because the financial services are largely urban-centric. As a result, a large rural population has been denied access to formal financial services. Agriculture sector has thus lagged behind in contributing to capital formation in comparison to other sectors. Given such realities facing the farming poor in the region, it is more than clear why despite sustained efforts to reduce poverty, the sub-continent still records one of the highest levels of rural poverty.
This is unfortunate for a country like Nepal where there is a high level of dependency on agriculture for livelihood. In this context, rural financing is naturally very important and the government should pay immediate attention to this issue. Rural financing is crucial in poverty alleviation because it seeks to enhance access to credit for the rural people. The main aim behind this concept is to make available the required funds for various income-generating projects like setting up small-scale industries, horticulture promotion, livestock development, etc. for the rural folks. Towards this end, it is also urgent to formulate a national micro-finance policy, which would not only ensure better management and facilitate rural financing, but also stimulate activities geared to better transportation and such other instruments capable of helping the disadvantaged rural communities.
Rise in the growth rate is directly related to the level of prosperity of the rural poor in Nepal. All relevant public as well as private organisations have to go out of their ways to design and implement policies and action plans that can extricate the rural mass from the vicious circle of poverty. For one, rural financing can definitely play a vital role in upgrading the socio-economic status of the village folks. All efforts must thus be directed towards making financial services more accessible to the needy.