Micro, Small and Medium-sized Enterprises’ Access to Finance in Nepal

Micro, Small and Medium-sized Enterprises’ Access to Finance in Nepal

Date: 
Monday, September 14, 2020
Type: 
Public information and advocacy materials
Abstract

This study provides a broad overview of the access to finance by micro, small and medium-sized enterprises (MSMEs) in Nepal based on extensive interviews with entrepreneurs, financial institutions, and government officials. The study finds that micro- and small enterprises have the most serious difficulties to access credit, as the typical loans of microfinance institutions are too small, while the minimum amounts of loans offered by commercial banks are too large for their needs. To address this “missing middle problem”, the study proposes a rich set of policy options, ranging from a mandated minimum allocation of banks’ loan portfolios to SMEs, to expanding the scope of the Micro Enterprise Development for Poverty Alleviation (MEDPA) program to cover SMEs as well as micro-enterprises, and expanding financial and business literacy programs for MSME entrepreneurs.

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