Govt mulls interest subsidy on loans to promote women entrepreneurs

- Post Report, Kathmandu

Apr 18, 2017-

If things go according to plan, women entrepreneurs will soon be offered interest subsidy on loans they acquire to establish, upgrade or expand enterprises.

The Ministry of Industry has proposed that interest subsidy be given on up to Rs1 million of loan acquired by women to set-up or expand businesses, or market products. Such loans, according to the ministry, would be given against guarantee extended by a group of women, meaning no collateral would be required to obtain the credit.

“These facilities, we hope, would promote entrepreneurship among women and create job opportunities,” Industry Minister Nabindra Raj Joshi said, adding, “We will ask the Ministry of Finance to incorporate the programme in the annual budget of the next fiscal year.”

In order to provide the subsidy on interest rate, the ministry is planning to create a fund. The size of the fund, however, is yet to be determined. Officials of the ministry are currently preparing the work procedure for operation of the fund and studying possible impact of such credit facility on job creation.

“We will submit the official proposal to the Ministry of Finance after preparing an implementable work procedure and analysing possible impact on employment generation,” said Joshi. “If we submit such details, chances of including the programme in next fiscal year’s budget will be very high. Also, an in-depth study of that kind will help in smooth implementation of the programme.”

Deputy Prime Minister and Finance Minister Krishna Bahadur Mahara, according to Joshi, is positive about the programme and has assured to include it in the upcoming budget.

The ministry’s programme will primarily target rural women engaged in indigenous businesses like production of allo (Himalayan Nettle) and dhaka products, among other. According to a survey carried out by the ministry, such enterprises can add significant value if they rely on machines and other technology.  “A machine that processes allo costs less than Rs1 million,” said Joshi, who visited various districts to take stock of such enterprises. “These machines, once stalled, significantly raise productivity, and push up income by almost 40 percent.”

The Finance Ministry too had introduced similar programme in the past, but it was a nonstarter due to lack of effective work procedure. The ministry introduced Women Entrepreneurship Development Fund of Rs100 million through the budget of the fiscal year 2011-12 to provide collateral-free loans to women entrepreneurs in a bid to encourage them to start their own businesses.

At least 3,300 women entrepreneurs would have benefited from the programme had it been properly implemented, while a larger number of women would have been encouraged to start their own businesses. But in the absence of proper guidelines and lack of coordination between the Finance and Industry ministries, the programme failed to get underway.

Published: 18-04-2017 08:17

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