Coronavirus erodes confidence of women micro-entrepreneurs

Kathmandu, Apr 25

Micro-entrepreneurs across the country are bearing the brunt of the lockdown, enforced since a month ago to save the lives of people from the deadly coronavirus pandemic, as it sent them off work and hit their livelihoods.

According to the experts and stakeholders, most of the micro-entrepreneurs are own-account workers and cater to the immediate market in their locality. But the nationwide shutdown of the business and public activities in the wake of the COVID-19 outbreak has created the risk of causing severe impact on their business and, experts warn, some of them might be out of business if the closure prolonged for another month or two.

Another startling fact is that most of the micro-entrepreneurs are women thus creating another risk of eroding the women empowerment situation and causing the loss in confidence.

"There is a growing confusion about the situation. I am receiving many calls everyday from my colleagues across the country asking about further steps during the time of lockdown," said Kesha Pariyar, Immediate Past Chairperson of National Micro-Entrepreneurs Federation (NMEFEN).

Since most of them are engaged in agriculture, production of food items like pickle and juice and other small businesses, there is a growing risk of damage of products. "Many of the entrepreneurs in micro-business will not be able to pay the rent of their shop or show-room as they are managing it from the income of their venture," said Pariyar.

Prakash Raj Sharma, Chief Executive Office of Laxmi Laghubitta Bittiya Sanstha, said that 61 per cent MFIs loan is mobilised in agriculture sector including animal husbandry, cereals, vegetables and fruits, dairy and poultry.

Other major areas of microenterprise are groceries and handicraft.

"We are aware that there has been no production or supply from the microenterprises after the execution of lockdown. Many clients might face challenge in repaying the loan as their production is stalled and savings is going to consumption," said Sharma.

Chairman of the Centre for Self-Help Development (CSD) Shankar Man Shrestha said that the customers of microfinance would be partially affected by the pandemic. "Businesses like poultry and food processing will be more affected," he said.

Women at the helm

Statistics point to a graver situation. Almost all customers of MFIs are women. Sharma said that of the total MFI members, women comprise almost 99 per cent.

According to the Nepal Rastra Bank, the micro-finance institutions in the country have about 4.6 million customers. The 87 MFIs have mobilised Rs 1.26 trillion in loans of which micro-enterprises and micro-businesses cover Rs 100 billion and Rs 935 billion respectively.

Likewise, the government-run Micro-Enterprise Development for Poverty Alleviation (MEDPA) – formerly known as MEDEP – has created more than 131,000 micro-entrepreneurs by 2018 of which 74 per cent are women.

It has supported more than 36,000 micro-enterprises to graduate to small enterprise and created more than 172,000 employment. Coronavirus might cause severe damage to both the enterprises and employees.

Although the business organisations like the Federation of Nepalese Chambers of Commerce and Industry (FNCCI), Nepal Chamber of Commerce (NCC) and Confederation of Nepalese Industries (CNI) said that the government should address the issues of micro-small-medium enterprises as a whole, the Federation of Nepalese Cottage and Small Industries (FNCSI) said that there was a need for a special consideration of the demand by the women entrepreneurs.

Anjana Tamrakar, Vice-President of the FNCSI, said that there were issues that were unique to the women entrepreneurs which needed special attention. Many women entrepreneurs said that women in business contribute to peace in society and family as well as empowerment of women as they tend to give priority to women in employment.

The United Nations Conference on Trade and Development (UNCTAD) has said that women in business face multiple challenges like limited access to financial resources and external credit, insufficient access to extension services like training, limited access to basic processing and storage and marketing of their products. And, crisis like coronavirus pandemic result in amplifying those challenges thus making the entrepreneurship even harder for women.

Micro-finance scenario (by mid-January 2020)

Title	Detail
Number of MFIs	87
MFI reach (districts)	77
Number of branches	3,803
Number of centres	298,587
Number of groups	1,006,574
Total members	4.57 million
Borrowers	2.8 million
Total loan mobilisation	Rs 1.26 trillion
Micro-enterprise loan	Rs 100 billion
Micro-business loan	Rs 935 billion

Source: Nepal Rastra Bank

Refinancing option

NMFEEN's Pariyar said that alternatives should be created to rescue the micro-entrepreneurs from the crisis. "We are expecting some policy address such as relief or discount in the principal and interest of the loan," she said.

According to her, many micro-entrepreneurs want the local bodies to take steps to support them since their activities are vital to make the local economy vibrant.

Shrestha said that the MFIs should reschedule the repayment. "However, such facility should not be given to all clients. It should be client or project-based and should be given as per the need," he maintained.

He said that the blanket relief policy might benefit the duplicate customers which comprise as much as 30 per cent of total micro-finance clientele.

"The MFIs have reserved fund that can be used in the time of crisis and providing refinancing facility to the micro-entrepreneurs," said Shrestha.

Sharma suggested for the restructuring of the loan mobilised in the micro-enterprise sector. "Refinancing can be an effective solution," he said.

The NRB is looking into the situation. Its Spokesperson Dr Gunakar Bhatta said, "We are assessing the impact of the lockdown on banks and businesses. Since both the channels of demand and supply are distorted, it is difficult to say about the future course now," he said.

According to him, since the pandemic has immediate impact on the confidence of the entrepreneurs, a policy intervention is needed.

"I think that we should also assess the moral hazard as well. The country does not have the capacity of waiving the loans," he said, "Further steps on facilities and relief will be taken in coordination with the government."

Published in The Rising Nepal daily on 26 April 2020.