INAFI Nepal was initiated as the country chapter of INAFI International in July 2003 to create conceptual clarity, enhance the managerial capacity and to expand quality outreach and sustainability of MFIs in Nepal. INAFI Nepal registered itself as a Nepali NGO in 2006 under the Society Registration Act, 2034, and hence, also works as an autonomous NGO of Nepal.
INAFI Nepal follows a multi-stakeholder approach by involving different types of Microfinance Institutions as its members. INAFI Nepal has as its members Savings and Credit Cooperatives, Financial Intermediary NGOs, NGOs with saving components, and microfinance development banks.
The poor and disadvantaged groups have improved their livelihood through the provision of affordable and socially responsible financial services that contribute to the building of the local and national economy.
To contribute to the efforts of poverty alleviation through the development of microfinance services that are efficient and well managed, and to empower the disadvantaged groups, particularly women. The creation of such an environment will enable the poor to take control of their lives leading to the sustainability of both the microfinance institutions and the clients without compromising social development objectives.
The Alternative Paradigm
INAFI aims to enhance the microfinance service delivery system to make finance for the poor appropriate, affordable, and accessible. This is the alternative paradigm embraced by all INAFI country chapters, and if forms the cornerstone of all of INAFI Nepal’s activities.
Products and services of microfinance providers are generally designed in a top-down approach rather than involving community participation. INAFI Nepal promotes demand-driven product development to increase efficiency and effectiveness of financial products to the poor. Access to credit by itself may do little to ease the vulnerabilities that the poor face. The poor are faced with risks and vulnerabilities that are often very contextual. Therefore, an inclusive participatory method should be used to determine additional support, such as micro insurance products, that the poor might need to make real transformation in their lives.
INAFI Nepal also recognizes that financial products alone may not be enough to break the poverty cycle. Financial products must be coupled with appropriate services, such as business trainings, to assist the poor in using finance to their best interest.
Affordability of microfinance refers specifically to the loan payback mandates and mechanisms of microfinance institutions. High interest rates to feed the profit-seeking interest of microfinance service providers defeat the purpose of microfinance. Similarly, inflexible repayment schedules turn clients away from microfinance to seeking loans from usurious money lenders. Interest rates should be made appropriate for the target communities to meet not an economic goal of the microfinance institutions, but a social goal that promotes sustainability of both the institutions and their clients.
Microfinance institutions often get caught up in institutional financial sustainability and, as a result, give second priority to the goal of microfinance—making small loans available for those who lack financial access. The Nepalese microfinance institutions are present predominantly in the urban and Terai regions. Access to finance has barely changed status for the poorest of our population, people from the hills and the mountains, despite the seeming proliferation of microfinance providers. INAFI Nepal aims to work in increasing the access to finance for the poorest communities through knowledge creation and dissemination on increasing the outreach of MFIs in the hills and mountains, and developing products and services most suitable for the poorest communities.