Documentos de Académico
Documentos de Profesional
Documentos de Cultura
NEPAL
PACT
Jan P. Maes
October, 2007
TABLE OF CONTENTS
Executive Summary.............................................................................................................i
1. Context ...........................................................................................................................1
1.2. Local context – target area.......................................................................................2
2. Organizational Framework...........................................................................................12
2.1. International Organization.....................................................................................12
2.2. Local organization.................................................................................................16
3. Description of “Very Poor” Target Group....................................................................20
3.2. Socioeconomic conditions.....................................................................................21
4. Poverty Targeting and Assessment...............................................................................24
4.1. Poverty measurement practices..............................................................................24
4.2. Available Poverty Data..........................................................................................24
4.3. Poverty Targeting...................................................................................................25
5. Products and Services...................................................................................................27
5.2. Microenterprise Development Services.................................................................33
5.3. Non-financial Services...........................................................................................34
5.4. Design and Product Development: .......................................................................36
5.5. Implementation Process ........................................................................................42
......................................................................................................................................44
6. Results...........................................................................................................................45
The Women Empowerment Project (WEP) was a USAID funded project that took place
in Nepal from 1998 to 2001, and was carried out by Pact, its NGO partner ECTA, and a
network of local NGOs at the district level.
With 10years’ experience in Nepal, Pact had a long-term commitment in the country to
women’s issues, the promotion of literacy, the growth of democracy and increasing the
economic and social status of vulnerable peoples. Pact began in Nepal managing a
subgrant for World Education to develop Naya Goreto, a national literacy program
funded by USAID. With the opening of Pact’s first office in Nepal in 1988, an expanded
design team helped to further Naya Goreto’s reach. In 1994, Pact received a grant from
USAID to implement an innovative pilot project, Women Reading for Development
(WORD). Working through 1,100 NGOs, WORD reached women in 70 of the country’s
75 districts with remarkable results. Through WORD, over 550,000 women participated
in adult literacy classes and nearly 350,000 Nepali women learned to read at a third grade
level.
While this project proved the role of literacy to be a powerful entry point for working
with women, it did not address the priority needs expressed by women, especially income
generation. Further, Pact recognized that there was a serious shortage of post-literacy
materials geared to rural neoliterate women. At the same time USAID’s research found
that, compared to those who only complete literacy classes, women who furthered their
skills through post-literacy courses had higher self-confidence, more children who
attended school, and increased involvement in collective activities. This evidence,
combined with women’s continuing demand for literacy, their hunger for post-literacy
materials, and the top priority they gave to learning how to increase family incomes,
demanded yet another approach. USAID/Nepal decided to embark on a new strategy that
would promote economic empowerment as the focal point for furthering women’s
literacy skills. In doing so, USAID/Nepal became the only mission in the world to make
women a primary objective of its national strategy. During this same period Pact also
undertook its own research, leading to the development of the first Savings and Credit
series, which was piloted in western Nepal.
Women were mobilized by local NGOs in predominantly rural areas, and either formed
new groups or continued to work together in already existing literacy groups established
during WORD, cooperatives or solidarity groups connected to Nirdhan. While there was
i
no poverty targeting, an independent study established that 45% of the women enrolled
were poor.
Pact’s microfinance approach uses a group lending methodology and stimulates small
business ventures by group members. Its savings-led approach (started as WEP and
continuing to evolve as WORTH in several African countries and Cambodia) helps poor
women establish and operate their own village banks and acquire skills in managing
micro- and small enterprises. The microfinance approach cannot be understood in
isolation from the WEP’s integrated approach to empowering women, which also
includes action-oriented literacy and (through a separate agreement with USAID) a legal
rights awareness training and advocacy program implemented by The Asia Foundation.
All three components are meant to provide women with the tools to take their fate in
their own hands: to read for themselves, to take social action for themselves, and even to
provide their own financial services. In other words, rather than providing (and
institutionalizing) financial services or products, perhaps WEP’s most important service
has been to build the capacity and confidence of the poor, and be a catalyst for illiterate
women to deliver these services (saving and lending) to each other.
WEP uses an approach based on Appreciative Planning and Action (APA), which
encourages women to build on their strengths. In essence, APA invites women to focus
not on the problems they have, but on the opportunities they have to improve their lives
and their community as well as on their previous successes in overcoming obstacles.
These opportunities are translated into an action plan with a commitment to take an
immediate first step.
A third training manual, entitled Village Bank Lending, focused on helping groups
manage their loan fund, set policy, and do the needed bookkeeping. The fourth manual,
Village Bank Entrepreneur, teaches women how to manage their microenterprises.
Building small businesses is a key component of WEP, and women are encouraged to
build businesses on what they already know how to do, gearing their businesses to the
local markets. Many women familiar with subsistence farming choose to grow market
ii
gardens, raise goats or keep chickens, while others near towns engaged in petty trade.
WEP encouraged women to get into high cash turnover businesses so that they would be
able to make their weekly loan installments on time.
While the entire training was self-guided, the role of so-called Empowerment Workers
(EW) was extremely important in terms of providing guidance, additional training, and
technical assistance (especially in bookkeeping) to the groups. Approximately ten groups
based on geographic proximity were being visited twice a month by an Empowerment
Worker (employee of partner NGO paid by the project) to backstop the group’s efforts,
troubleshoot issues as they arose, and mentor group members.
While the project’s original aim was to help each Economic Group transform into a
Village Bank through the self-guided training manuals and mastering the bookkeeping
system, this proved unrealistic even with ample additional training and handholding by
the EWs. The training strategy evolved over time as PACT started to realize that groups
were not able to learn to keep their books just by reading them together, supported by the
bi-weekly visits of the EW. Those groups who were deemed ready and capable to do so,
sent their management committees to an intensive training (3 cycles of three days each)
in leadership and group management, responsible savings and lending, and the village
bank accounting system. By the end of the project funding, 1500 (almost 25 percent) of
the Economic Groups had graduated to Village Banks. In order to qualify as a Village
Bank, the following criteria had to be met:
• Compulsory weekly meeting
• Election of office holders
• Possession of a lockbox with 3 locks
• Implementation of Village Bank accounting system
• Ready to follow sixteen-week loan cycle
After less than two years 110,000 women had learned to read (or: 74,000 women learned
to read and write? How is reading/writing defined?) and had begun saving actively. More
than 30,000 had loans, 55,586 had started micro-enterprises, and 45,467 were meeting
their income targets. WEP women have taken 45,667 collective actions for social
change. After four years the women had increased their initial savings of $720,000 to
more than $2 million in savings, and self-financed loans for $1.5 million to more than
45,000 group members (average loan $33).
Pact had gained significant experience in obtaining this type of scale. In fact, its previous
program in Nepal, WORD, was 4 times bigger in terms of number of program
participants, and operated in almost every district of Nepal. As a result, Pact Nepal
already had a huge network of local NGO partners, it was very familiar with the
subgranting process, and it already had developed ample (literacy-related) training
manuals for the Nepal context. Program costs were extremely low and calculated at $42
per program participant. On average, there were 10 groups and 120-250 group members
per Empowerment Worker. As a savings-led self-managed village bank model, WEP is
easily replicable in different country contexts, as has been demonstrated through
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WORTH, which is now in operation in several African countries and Cambodia.
However, certain factors tend to determine the degree of success:
• There is a need to have available a strong and extensive network of local NGOs or
other organizations (in Kenya, for example, the Salvation Army has an extensive
church community-based network to build upon).
• The program works especially well in near-urban and relatively densely populated
rural areas, but would become significantly more expensive in remote rural areas.
• The self-guided manuals are especially effective for semi-literate groups (more so
then illiterate groups).
Strengths
One of the strongest elements of the WEP model is the rapid fashion by which it invests
women with the capacity to start, manage and grow self-sustaining village banks. Using a
savings-led approach taps into local sources to fuel the growth of each group’s loan fund,
rather than depending on constant infusions of external capital. Literacy and training in
bank management enables members to operate their village bank, rather than relying
upon a cadre of outsiders to make decisions. Knowledge sharing between WEP groups
and the presence of Empowerment Workers provides a constant source of technical
assistance, support and dissemination of best practices. Women having to rely on
themselves and their own resources also has the advantage of imparting self-confidence.
Often the group also provides a valuable source of support beyond the program itself – it
is a real solidarity group for members.
Weaknesses
Challenges include:
a) need for the group to identify four individuals two of whom provide the bookkeeping
services that the group needs to run as a village bank. This can be a challenge if all or
virtually all of the members of the group begin the program illiterate.
b) becoming literate takes time which not all women want to give to this.
c) while the women can and do generate profits in their operations (individual enterprises
and village banks), the delivery system from the implementer does not produce income to
cover delivery costs – the women collect their own interest, not the implementer.
d) the accounting system tends to be complicated and relies on forms. If groups don’t
have forms readily available, they often move away from using the system.
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1. Context
1.1. Country Socioeconomic and Poverty Data
1
1.2. Local context – target area
1.2.1. Briefly describe local socioeconomic conditions
1.2.1.1. Geographic reference of location and size of population
WEP started out in 21 of Nepal’s 75 districts in Southern Nepal: these include 19 (all
but one, Dang) districts in the Terai as well as Surkhet and Ilam (Hill districts).
Almost the entire target area is rural and densely populated.
The Terai is the most densely populated region of Nepal (254 persons per square
kilometer, versus 125 for country); this population density has almost doubled in the
last two decades as a result of the north-south movement of the population and
immigration. The Terai belt accounts for almost 60 per cent of Nepal’s population.
2
1.2.1.2. Local population characteristics:
3
The most important mineral resources exploited are limestone for cement, clay, garnet,
magnetite, and talc.
1.2.1.4. For rural areas only: most important crops and livestock activities, water
supply (irrigation, rain fed), seasons and number of harvests, land availability,
ownership patterns and contracts.
Rice is the most important cereal crop. Rice-based cropping systems, with wheat or
maize as a secondary crop, are predominant. Fluctuation in rice production is very
common because of changes in rainfall. Other food crops include wheat, millet, and
barley, but their contribution to the agricultural sector is small. Increased production
of cash crops--used as input to new industries--dominated in the early 1970s.
Sugarcane and tobacco also showed considerable increases in production from the
1970s to the l980s. Potatoes and oilseed production had shown moderate growth since
1980.
Cash crops include sugarcane, potatoes, linseed, jute, and tobacco. Sugarcane, jute,
and tobacco are the major raw materials for Nepal's own industries. Tropical and
subtropical fruits are also grown, and vegetable-growing in kitchen gardens is
practiced as well.
Fish culture is a relatively new practice and is being gradually integrated as a new
component in existing crop-livestock mixed farming system. Small-scale fish culture
is largely concentrated in the Terai.
In order to assess the current situation, the Ministry of Agriculture undertook a crop
and food supply survey in October 2006 with the support of the Food and Agriculture
Organization of the United Nations (FAO) and the World Food Programme. This
assessment revealed that over 900 000 people affected by drought, floods, and
landslides across 27 districts required urgent humanitarian support. To address the
issue of food security and malnutrition, a coordinated response plan was developed
between the Ministry of Agriculture and the different humanitarian partners in the
framework of this Common Appeal for Transition Support.
4
In 1996, the Maoist rebels launched their ‘People's War’ against the Nepalese
government, with demands for a communist republic, new constitution and an end to
the constitutional monarchy. This resulted in more than 14,000 deaths, displaced
200,000 and created serious obstacles to development work, including the
implementation of WEP by PACT.
1.2.2.2. Policies aimed to integrate the very poor, such as anti-discrimination and
affirmative action laws.
Despite the anti-discrimination provisions contained in the 1990 Constitution, caste
discrimination remains ingrained in Hindu-dominated Nepalese society. Caste
discrimination constitutes a form of racism in which people are categorically relegated
to subordinate social positions, and are denied equal access to social, economic,
political and legal resources. Wealth and power are disproportionately distributed to
favour higher castes, restricting social mobility and the possibility of intergenerational
change, because caste is based on lines of descent.
Girls are less valued in Nepali culture than boys. They receive less medical care and
education, and chauvinistic attitudes preclude vital opportunities. Female literacy and
female foeticide rates are alarming. Girls are married early, despite the government’s
official minimum age requirements. Women often face domestic violence and
harassment, with no legal recourse, as paternalism and gender discrimination is deeply
entrenched in society. Many laws are explicitly biased against women, especially
those regarding property, citizenship and marriage.
5
evicting them. As a result many of them do not have written agreements with the
landowners.
The status of women has been defined in terms of their marital status, and right to
ancestral property is fragile, temporary and imperfect. A daughter is not entitled to her
paternal property, simply because once married her status will change. Women must
return her paternal property after marriage.
Bonded laborers are either from the Tharu indigenous community (kamaiya) or they
are dalits. Although the Government prohibited the Kamiaya system through an Act in
Parliament in 2002, up to 20,000 kamaiya still have not been released and continue
working as bonded laborers.
1.2.2.5. Other
N/A
6
1.2.3. Brief profile of microfinance environment
1.2.3.1. List microfinance institutions (other than subject of case study) and other
financial institutions/services accessible by the poor.
Community-based models exist as well, such as the Savings and Credit Cooperative
Societies (SCCS). They tend to serve a well-off population but also the poor, with a
stronger emphasis on the disadvantaged in the case of organisations established by
development programs. They can be linked to commercial banks, an approach taken
by the Banking with the Poor Program implemented by the Rastriya Banijya Bank
(RBB). Despite the institutional challenges and necessary methodological adjustments
to be made, RBB has lent directly to self-help groups under this program.
The Village Bank model is also used in Nepal, with the Women Empowerment
Program, the subject of this case study.
Microfinance providers using the Grameen methodology will typically offer general
loans, seasonal loans, specific loans (sanitation, housing) and the loans issued from the
group fund. Savings products are generally the compulsory group fund savings, and
any additional personal, voluntary savings. In recent years, several leading
microfinance providers have started to move away from the traditional Grameen
model, to focus on new practices for Nepal, such as a streamlining of operations, the
introduction of customer friendly products, and a strong emphasis on institution and
staff capacity building. New products have also been offered to clients by several
organizations, such as microinsurance covering risks related to health, life and
livestock.
Savings and Credit Cooperative Societies (SCCS) provide a wide range of savings and
loan products to their members. They commonly require compulsory savings, but also
offer individual or group saving products, deposits, and festival and educational
savings services. Loans provided by SCCS have a minimum term of 3 months and can
7
be extended for more than 18 months, covering specific purposes, such as agriculture,
microenterprise, housing, or, in some cases, emergency or social reasons.
Lastly, it is estimated that there are about 20,000 active NGOs in the country. All of
them have some sort of saving-credit program operating through community groups.
There is an estimated 17.6 million people in Nepal lacking access to financial services.
The recent conflict in Nepal had a negative impact on the access of the Nepali
population to financial services, especially in rural areas. In fact, most financial
institutions were reticent to operate in rural areas due to the current Maoist insurgency
in Nepal. The most affected commercial banks had reduced the size of their rural
network, already downscaled by cost-savings measures.
The majority of the targeted credit programs have been unable to directly cater to the
needs of the bottom 20 percent households because the poor lack other resources and
knowledge to benefit from the saving-credit programs.
Deepening the outreach in targeting the poorest is still a difficult task in Nepal.
Moreover, the political context and the recent insurgency did not provide the ideal
conditions for microfinance methodologies to be the most efficient, given the
additional costs related to the insecurity situation in rural areas.
The central bank, Nepal Rastra Bank (NRB) imposes ‘priority sector’ lending to
commercial banks, which entails lending a certain percentage of their deposit liability
to deprived population, including the usual microfinance clients. The ratio of priority
sector lending over time has increased from 5% to 12% in which 0.25 to 3% must be
invested in the ‘deprived’ sector, which aims at targeting the hardcore poor.
Commercial banks can choose to lend the required amount to end clients directly, or
disburse it through loan or equity in other microfinance institutions. Because of the
creation of new wholesale funds and the liberalisation of the financial system, NRB
has recently decided to phase out its priority credit policy by 2007, with decreased
ratio of 6% in 2004, and 2% in 2006. However, the 3% deprived sector requirement
will stay in place, and include microfinance.
8
1.2.3.5. Existing MF/MED initiatives (other than case study) aimed at the very poor.
Two initiatives are particularly worth mentioning, as they are described in two other
case studies:
- Save the Children and Nirdhan Utthan Bank have worked together since 1997 to
increase access to financial services for poor women and other vulnerable groups
in rural Nepal. With institutional capacity building and technical assistance from
Save the Children, Nirdhan has successfully re-engineered its methodology and
introduced flexible new products to reach those in remote areas with little or no
assets. These innovations have driven Nirdhan’s growth from 3,000 clients to
over 70,000 clients, making it Nepal’s leading women-focused microfinance
institution.
- ILO has partnered with multipurpose NGOs in Banke District to develop and
deliver a package of services designed to rehabilitate bonded laborers (mainly
former Kamaiyas) that have been officially released. With most partners, the
project is small part of the NGO’s overall activities, but one that has attracted a
significant amount of attention and support from the NGO’s senior management.
In addition to microfinance services, the integrated approach includes social
empowerment, education, skill training and health services.
9
1.2.4. Poverty
1.2.4.1. Existing Poverty data and geographic areas of the country where extreme
poverty is most concentrated.
The Nepal Living Standards Survey (NLSS) was conducted in 1996 and again in
2003-4.
Central Bureau of Statistics conducted Nepal Living Standard Survey over all Nepal in
1996 with introduction of ultra poor. The survey was comprehensive and also micro
nature. The survey measured 42.0% as national average of poverty incidence in 1996
out of which the poor was 24.9% and the ultra poor was 17.1 % regarding the defined
poverty line.
The poverty line is set to the rupees per person a normal household will need to buy a
normal basket of food that contains 2124 kcal per day, plus normal additional
spending for a poor household. The poverty line varies between regions depending on
local prices. In rural Eastern Terai the poverty line is 6,000 rupees, which for a six-
person household means 3,000 rupees per month. A normal wage in Kathmandu for
casual workers is now in the range of 100-200 rupees, and in rural Terai it is in the
range of 50-120 rupees. As casual laborers do not work every day, a poor household
will need at least two working members, who are employed large parts of the year to
cross the poverty line.
1.2.4.2. Does the target area fall within these extreme poor regions?
The Women Empowerment Program targeted all but one of the Terai districts. Poverty
data by district are not available.
1.2.4.3. If known, what is the proportion of population in the target area living below
$1-a-day and/or within bottom 50% of people living below the national poverty line?
The most recent Nepal Living Standards Survey (NLSS) was conducted in 2003-4,
and found that 31% of the total population was living below the poverty line, with a
slightly higher figure, 35%, for the rural population. The poverty headcount rates in
Rural West Terai and Rural East Terai were 38% and 25% respectively.
10
1.2.4.4. Main determinants of poverty.
Overall, people who tend to remain poor are households of agricultural wage earners,
those who are landless or have small land holdings, those with illiterate household
heads, and those living in large households (with seven or more members).
In terms of different caste and ethnic groups, Hill and Terai Dalits represent the
poorest segment of the population, despite a decline in poverty -- from 58% to 46%.
Especially in Eastern Terai there still seems to exist feudal principal-agent
relationships between the landlords and the landless workers, where landlords offer
take-it-or-leave-it contracts to the laborers, that is, contracts where the working hours
and the corresponding payments make the laborers only marginally better off than
with their outside option. This means that the landlords get the entire extra surplus that
is produced by hiring laborers
Incidence of poverty by farm group is presented in table 4. The per capita income cut
off point to distinguish poor from non-poor is Rs 2584 for the Terai. Percentage of
poor households by farm size and region is presented in table below. Poverty is very
much concentrated among small landholders.
11
2. Organizational Framework
2.1. International Organization
2.1.1. Name and type of the organization (INGO, multilateral agency, foundation, other)
Pact is an independent non-profit corporation registered in Washington, DC. Pact is a
networked global organization that builds the capacity of local leaders and organizations
to meet pressing social needs in dozens of countries around the world.
Pact's mission is to help build strong communities globally that provide people with an
opportunity to earn a dignified living, raise healthy families, and participate in
democratic life. Pact achieves this by strengthening the capacity of grassroots
organizations, coalitions and networks and by forging linkages among government,
business and the citizen sectors to achieve social, economic and environmental justice.
By the early 1980s Pact had begun directly assisting local NGOs and support
organizations with small institutional development grants and in 1985 opened its
membership to local NGOs. In 1992 Pact dissolved its membership, revised its
bylaws, and established itself as an independent, nonprofit corporation registered in
the District of Columbia.
Since then Pact’s annual operating budget has grown from some $3 million to $40
million in FY 2004. Likewise its program reach has expanded with Pact currently
implementing 61 field projects in 15 countries in Asia, Africa and Latin America and
additional activities in 32 countries under two large global grant-making programs.
Most of these programs focus on providing grants management and/or general
capacity building services to NGOs and NGO networks in six program areas:
12
democracy and governance, HIV/AIDS, livelihoods, natural resource management,
peace building, and equity empowerment of vulnerable groups.
13
broaden their impact and affect change. Through the assessment and planning process,
organizations recognize their own potential and are able to make informed decisions
for themselves about how best to address the challenges they face.
Financial services
Pact is known for its excellence in grants management and financial operations and
markets these services to a range of program managers in both PVO and donor
organizations around the world. Over the last three years Pact has managed over 3000
subgrants in its program portfolio totaling more than $41 million in USAID funds.
14
2.1.3.2. Specialized in MF/MED or multisectoral
Pact does not specialize in one single approach in microfinance or microenterprise
development, but instead has built up expertise and capacity in various models of MF
and MED, as well as in non-economic development areas.
15
2.2. Local organization
PACT/Nepal’s country office worked with a variety of local organizations to train and
monitor the village banks. In total 240 Nepali organizations were recruited, trained and
enlisted as WEP partners, mostly small NGOs and CBOs.1
PACT/Nepal also collaborated with the Asia Foundation, which was in charge of legal
rights training and advocacy components of the project.
An important partner in the Women's Empowerment Program has been Education,
Curriculum, and Training Associates (ECTA), a Nepal-based non-governmental
organization, which played a key role in creating the program's innovative curriculum
and training field staff. ECTA, which means "unity" in Nepali, was founded in 1997 with
a goal of promoting rural development strategies and programs that can be done at low
cost by village groups without extensive outside aid.
The following sections focus on Pact’s partner NGOs that implemented the WEP
program in the field.
16
2.2.2.2. Brief history
N/A
2.2.2.3. Objectives
Many of the local NGO/CBO partners are engaged in community mobilization on a
range of issues, such as irrigation, forest management, farming and health.
Literacy volunteers received ½ day of training – and were not paid by Pact; they were
literate members of the groups themselves who helped guide their fellow group
members through the WEP self-guided training manuals.
The EWs were trained by Pact Nepal and their job description included biweekly visits
to each of the ten groups that each was serving, attend the training sessions and
provide coaching to the adult learners. They also administered the baseline and follow-
up literacy tests. They also undertook the MIS, or Results Survey, every 6 months,
beginning in June 1999 until June 2001. They were paid $27/month.
17
There were no incentives for reaching out to very poor clients. NGOs were free to
mobilize communities within their usual target areas. Each NGO received the same
amount of financial assistance, based on the number of groups they assisted.
2.2.2.9. Governance
The financial services (savings and lending) are managed by the members of the
village banks themselves. They received training to do so, and each group elected its
own management committee.
WEP had EWs, Trainers, Lead Trainers, and Regional Supervisors. All of these
people were circulating among groups to monitor progress and support learning.
Groups themselves were responsible for preventing and handling corruption.
2.2.3.2. Description of main target group (if not the very poor).
N/A
18
2.2.5.2. Partnerships
Some local NGO partners also implement local development programs in partnership
with district authorities and other INGOs such as CARE, PLAN, etc.
19
3. Description of “Very Poor” Target Group
3.1.1. Gender
100% women
3.1.2. Age
N/A
3.1.5. Ethnicity
Not different from overall population in same area.
3.1.8. Literacy
Most women were illiterate before entering the program. Still, 36% of the women did
pass the baseline literacy test, which is largely due to the fact that a significant number of
the WEP savings groups already existed as literacy groups in Pact’s previous WORD
program.
3.1.9. Education
N/A, except about 39,000 of the 125,000 women in the program could already read and
write at at least a third grade level.
20
3.2. Socioeconomic conditions
3.2.1. Refugee or IDP status
None
3.2.2.1. Underemployment
3.2.2.2. Income Sources
3.2.2.3. Land ownership
3.2.2.4. Asset ownership
3.2.2.5. Income level
The following data are obtained from external evaluation by Jeffrey Ashe in 2001.
This report distinguished between the poor (45%), the emerging poor (35%) and the
better-off (20%) reached by WEP.
The poor often rent their homes or live with relatives, and their per capita income is
less than $75 annually. They are much more likely to speak a language other than
Nepali as their first language and to belong to an indigenous or mixed caste group.
63% percent of the poor had never been to school and only 13% had as much as eight
years of schooling. The schooling most received was not enough to significantly
increase their ability to read, which was little higher after completing the WEP literacy
curriculum when compared to those who had never gone to school. Half of the poor
surveyed were able to feed their family on what they grew for more than seven months
last year. A quarter restricted the number of meals they ate for part of the year and,
when they could not meet their needs for food, worked as agricultural laborers, left the
area to find work or sold their meager possessions. There are three other factors that
reflect the difficult circumstances of poor women – they are more likely to be widows
(4% compared to 1% among the better off); heads of household (22% compared to
9%); and to have only one economically active adult per child. In the better off
households the ratio is 1.6 economically active adults per child. This puts a heavier
burden on poor adults to provide for their children, as well as forcing the children into
working roles earlier in life. The poor have on average less than 5 of a list of 20
household items (representative for Nepali households), of which only one was a high
value item. That the poor are struggling to meet their most basic needs is reflected in
the answer to this question: “How did you use the income from your business?” The
poor answered food, clothing and school expenses; while the better off mentioned
school expenses, saving, investing in the business and buying items for the household.
While the poor are surviving, the better off are investing in the future.
The emerging poor own on average 10 items on the list of 20 (compared to 5 for the
poor), and of these, 2.4 are on the high value list. The emerging poor generally own
their homes, have enough land to produce what they need to eat for the year (three-
quarters of the group are self-sufficient regarding food, compared to only half of the
poor). The per capita income of the emerging poor may reach $160 per year,
considerably less than the Nepali average of $210 per year but still double that of the
21
poor. 41% of the emerging poor had never been to school, while a third had as much
as eight years of schooling.
The better-off own on average 13.3 items on the list of 20, and of these 4.5 are high
value items. The better off own their homes, often located in cities and larger towns.
86% say they have enough land to produce all they need; virtually all speak Nepali
and more than 80% are high caste Brahmins and Chetris. Per capita income is often
above the $210 average for the country. The better off are, not surprisingly, the best
educated group, with only 17% having never having gone to school and close to 60%
with eight years or more of education.
22
borrowing money from the village lender, selling assets, or borrowing from the
cooperative and informal savings groups (ROSCA). Ex ante, women were saving money
as a means of risk preparation and investing in their homes, children's education as well
as purchasing productive assets.
23
4. Poverty Targeting and Assessment
4.1. Poverty measurement practices
4.1.1. Poverty data collection
4.1.1.1. Which poverty indicators are collected?
None
4.2.2. Poverty data from a recent poverty and/or impact assessment study
The following data are obtained from external evaluation by Jeffrey Ashe in 2001. This
report distinguished between the poor (45%), the emerging poor (35%) and the better-off
(20%) reached by WEP. See section 3.2.2. for a qualitative description of these poverty
categories. Jeff Ashe also produced this table:
24
ECONOMIC LEVEL OF GROUP Village Economic Coop/ Weighted
MEMBERS Bank Group MFI average
Staff perceive village is:
4.2.3. Poverty Data obtained through use of USAID certified poverty tool
N/A
4.2.3.1. Which USAID certified poverty tool was used? Which poverty criterion was
used: $1 a day or bottom 50% below poverty line?
N/A
4.2.3.2. Provide details on poverty assessment exercise: time conducted, sample size
and selection.
N/A
4.2.3.3. Poverty results: proportion of very poor clients versus poor clients.
N/A
26
5. Products and Services
WEP has a three-pronged approach to empowering women: 1) action-oriented literacy; 2)
legal rights awareness training and advocacy; and 3) microfinance and microenterprise
training. All three components are meant to provide women with the tools to take their
fate in their own hands: to read for themselves, to take social action for themselves, and
even to provide their own financial services. In other words, rather than providing (and
institutionalizing) financial services or products, perhaps WEP’s most important service
has been to build the capacity and confidence of poor, illiterate women to deliver these
services (saving and lending) to each other.
WEP uses an approach based on Appreciative Planning and Action (APA), based on
appreciative inquiry, which encourages women to build on their strengths. In essence,
appreciative inquiry invites women to focus not on the problems they have, but on the
opportunities they have to improve their lives and their community as well as on their
previous successes in overcoming obstacles. These opportunities are translated into an
action plan with a commitment to take an immediate first step.
APA seeks the root cause of success (not the root cause of failure). This
would involve countering the prevailing negative images that rural
people have of themselves and their communities, their preoccupation
with their poverty, remoteness, and lack of visible modernization. It
would be replaced by seeking instead validation and learning from
what is valued, beautiful, successful, working.
WEP provides no traditional subsidies, but women themselves pay for whatever is
needed: loans for income generation activities, lanterns and even the self-guided WEP
manuals (although at a subsidized cost). WEP worked with newly formed groups as well
as existing ones. For instance, about 25 percent of the groups had already been formed as
27
literacy groups in Pact’s previous WORD project. Another significant proportion of
groups were solidarity groups, who were clients Nirdhan, a Grameen-type microfinance
institution.
A third training manual, entitled Village Bank Lending, focused on helping groups
manage their loan fund, set policy, and do the needed bookkeeping. The fourth manual,
Village Bank Entrepreneur, teaches women how to manage their microenterprises.
Building small businesses is a key component of WEP, and women are encouraged to
build businesses on what they already know how to do, gearing their businesses to the
local markets. Many women familiar with subsistence farming choose to grow market
gardens, raise goats or keep chickens, while others near towns engaged in petty trade.
WEP encouraged women to get into high cash turnover businesses so that they would be
able to make their weekly loan installments on time.
While the entire training was self-guided, the role of so-called Empowerment Workers
(EW) was extremely important in terms of providing guidance, additional training, and
technical assistance (especially in bookkeeping) to the groups. Approximately ten groups
based on geographic proximity were being visited twice a month by an Empowerment
Worker (employee of partner NGO paid by the project) to backstop the group’s efforts,
troubleshoot issues as they arose, and mentor group members. In addition to regular bi-
weekly visits to each group, Empowerment Workers also held periodic mobile workshops
where two representatives of each group in the cluster of ten share experiences with each
other and receive extra training in village banking methodology and financial monitoring
and evaluation. These workshops are called “mobile” because each group in a cluster
takes a turn hosting the meeting.
While the project’s original aim was to help each Economic Group transform into a
Village Bank through the self-guided training manuals and mastering the bookkeeping
system, this proved unrealistic even with ample additional training and handholding by
the EWs. The training strategy evolved over time as PACT started to realize that groups
were not able to learn to keep their books just by reading them together, supported by the
bi-weekly visits of the EW. Those groups who were deemed ready and capable to do so,
28
sent their management committees to an intensive training (3 cycles of three days each)
in leadership and group management, responsible savings and lending, and the village
bank accounting system. By the end of the project funding, 1500 (almost 25 percent) of
the Economic Groups had graduated to Village Banks. In order to qualify as a Village
Bank, the following criteria had to be met:
• Compulsory weekly meeting
• Election of office holders
• Possession of a lockbox with 3 locks
• Implementation of Village Bank accounting system
• Ready to follow sixteen-week loan cycle
When a group begins to save, the amount, which is set by the group, may be as small as
three cents per woman per week. Women are highly motivated to save not only because
they want to put aside resources, but because their savings generate interest when they
are lent out to group members in the form of micro-enterprise loans.
Through the program, women form savings groups, or village banks, comprised of 15 to
35 members (average 21). Contrary to other village banking schemes around the world,
the WEP model is savings- rather than credit-led. Participants contribute their own
savings to a group loan fund and do not have access to external funds. Through these
village banks members are able to access loans ranging in size from $10 to $250,
depending on the size of the group fund and the loan policy adopted by a given group.
WEP’s village bankers meet weekly - at least theoretically -, and every meeting is used
for literacy, management skill-training, or other topics of interest to members. Custody of
cash is handled in lockboxes (of all sizes, materials, colors), secured with three separate
padlocks, each opened by a different key in the possession of the group’s chair person,
secretary, controller, and treasurer. Usually keys are held by all but the treasurer and the
treasurer keeps the box between meetings. Loans are made for a wide variety of uses:
business, personal emergency, schooling, etc. Each village bank is entirely responsible
for collecting, managing, and lending its own savings.
29
5.1. Financial Products
Table 5.1. Microfinance Product Details
Product Features and Policies
5.1.1. microcredit
5.1.1.1. Individual or group product Individual loans (from the group fund)
Flexible loan duration: usually the loan
duration was a multiple of 4 weeks, up to 16
5.1.1.2. Loan terms (maturity, interest
weeks.
rate, interest type, flexibility)
Interest rate = decided by group, but
commonly set at 2% per month
5.1.1.3. Loan source Group’s own accumulated funds
WEP materials strongly recommended that
women take loans only for income-producing
5.1.1.4. Loan use activities, but each group set its own loan
policy and many groups gave loans for
consumption and emergency needs.
5.1.1.5. Loan size (first loan, average
Average loan (2002) = $33 (outstanding)
loan, maximum loan size)
5.1.1.6. Meeting requirement and
Weekly meetings
frequency
5.1.1.7. Mandatory savings requirement
Weekly savings requirement
and amount
5.1.1.8. Collateral requirement No – but often a collateral form signed
5.1.1.9. Other eligibility requirements Meet group’s weekly savings requirement
5.1.1.10. Loan default policy Decided by group
Groups were expected to give loans that
required pay back in weekly installments –
that was the strong recommendation so that
5.1.1.11. Repayment flexibility the money would be worked very hard. In
fact, women did a variety of things,
gravitating to a monthly or end-of-term pay-
back system.
5.1.1.12. Other N/A
5.1.2. microsavings
5.1.2.1. Individual or group Individual savings into group fund
Mandatory savings amount decided by group
5.1.2.2. Savings Type
itself
5.1.2.3. Deposit/collection location Lockbox
5.1.2.4. Deposit frequency, amounts, Weekly (and same amount for each group
flexibility member)
5.1.2.5. Meeting requirement and
Weekly
frequency
5.1.2.6. Savings terms (interest rate, No interest on savings, but each village
minimum deposit, …) member receives interest income from loans.
30
Product Features and Policies
Mandatory Savings cannot be withdrawn.
5.1.2.7. Withdrawal and savings use
Motivation to save and earn interest on funds
policies
driven by access to bigger loans.
Groups keep their own written records –
5.1.2.8. Record keeping and accounting
passbooks and ledger account
Deposited savings are used as group loan
5.1.2.9. Investment of deposits
fund
5.1.2.10. Other N/A
31
5.1.3. microinsurance
5.1.3.1. Microinsurance Type N/A
5.1.3.2. Group or individual product N/A
5.1.3.3. Term N/A
5.1.3.4. Eligibility requirements N/A
5.1.3.5. Renewal requirements N/A
5.1.3.6. Rejection rate N/A
5.1.3.7. Voluntary or compulsory N/A
5.1.3.8. Product coverage (benefits) N/A
5.1.3.9. Key exclusions N/A
5.1.3.10. Pricing – premiums N/A
5.1.3.11. Pricing – co-payments and N/A
deductibles
5.1.3.12. Pricing – other fees N/A
5.1.4. microgrants
5.1.4.1. Individual or group product N/A
5.1.4.2. Amount (and number of grants) N/A
5.1.4.3. Eligibility requirements N/A
5.1.4.4. Grant use and other conditions N/A
5.1.4.5. Savings requirement or matched N/A
savings arrangement
5.1.4.6. Straight grant, no interest or N/A
partial repayment
5.1.4.7. Other N/A
32
5.2. Microenterprise Development Services
Table 5.2. MED Service Details
Service Types and Features
5.2.1. Training
5.2.1.1. Financial literacy Yes
5.2.1.2. Business planning and
Yes
management
5.2.1.3. Marketing Yes
5.2.1.4. Recordkeeping and
Yes
bookkeeping
5.2.1.5. Skill development Yes – management skill, not technical skill
Yes (by Empowerment Workers and Pact
5.2.1.6. Technical assistance
staff)
Appreciative inquiry, self-training, cascading
5.2.1.7. Training method
ToT model
5.2.1.8. Other? N/A
Participants teach themselves and run their
own programs. They pay a recommended
enrolment fee Rs 10. They also paid a
5.2.1.9. Costs to client minimum of Rs 7 per book – all of which was
kept in the group fund to boost the fund. No
money was collected by NGOs from the
groups.
5.2.2. Business Consultancy and Advisory Services
Group sessions, self-instructional and
5.2.2.1. Individual or group sessions
reinforced by Empowerment Worker
Self-training every week, and EW visits every
5.2.2.2. Frequency
other week
5.2.2.3. Topics Business management
This is probably the strongest outcome of the
work of Empowerment Workers, who help
5.2.2.4. Confidence Building women identify their strengths and provide
them with technical assistance as well as
continuous encouragement.
5.2.2.5. Other N/A
5.2.2.6. Costs to client Periodic travel to nearby villages
5.2.3. Market Linkages
5.2.3.1. Input supply No
5.2.3.2. Marketing Assistance No
5.2.3.3. Market Information No
5.2.3.4. Producer organizations No
5.2.3.5. Business linkage promotion No
5.2.3.6. Quality Control No
5.2.3.7. Other N/A
5.2.3.8. Costs to client N/A
33
Service Types and Features
5.2.4. Other
5.2.4.1. Employment generation No
5.2.4.2. Technology development No
5.3.3. Education
Literacy This is the program entry point
Legal rights Awareness training and action
5.3.5. Other
To encourage women to build on their
Training in Appreciative Planning and strengths and take charge of their own
Action (APA) development, to monitor their efforts
themselves
34
5.3.6. Empowerment and confidence building
As the name of the program implies, women’s empowerment is the overall objective
underlying the three components of the WEP approach: literacy training, legal rights
awareness and advocacy, and increased access to economic opportunities. Improved
literacy increases self-worth and opens up new opportunities. Women are not given any
handouts; they engage in an appreciative inquiry process, facilitated by empowerment
workers, to take control of their lives by saving and increasing their incomes. They do not
depend on an outside institution for these services, and set their own rules for savings and
credit. Women are also encouraged to discuss their circumstances and to take collective
action to make positive changes.
Women’s empowerment in WEP is not a hollow claim based on access to credit for
women, but is at the core of the project’s design. Training manuals focus on
empowerment, and empowerment workers are trained in empowerment exercises, such as
confidence building, understanding empowerment, forming a sisterhood, making
decisions, initiating collective action, eliminating violence against women… Access to
savings and loans is only one part of empowerment.
35
5.4. Design and Product Development:
5.4.1. Program rationale/ theory of change?
One has to keep in mind that women’s empowerment is the overriding objective of
WEP.
5.4.1.1. Main issues and challenges of very poor clients which the organization seeks
to address
The WEP framework takes as its point of departure the World Bank multidimensional
definition of poverty. This goes beyond income poverty to encompass the broader
concerns of poor people: opportunity, security and empowerment. Empowerment is an
explicit part of this framework, defined in terms of voice in decision-making at
different levels.
36
Figure 1: Poverty reduction indicators
INDIVIDUAL FAMILY COMMUNITY
OPPORTUNITY Women’s Household Diversified markets
economic activities livelihoods
Women’s Income Reduced wasteful Removal of alcohol
expenditure on and gambling
male luxuries houses
Freedom and Roads and
mobility infrastructure
Literacy and access Children’s literacy Education facilities
to information and education
SECURITY Women’s savings Food security and Water and
and assets improved nutrition sanitation facilities
Health Improved health Health facilities
Friendships and Social capital Community
support networks cohesion
Freedom from Economic and Civil peace
domestic violence social inclusion
VOICE Transparency in
local government
Political
participation
37
5.4.1.3. How are products and inputs designed to achieve those intended impacts?
The different WEP interventions are seen as both stimulating this empowerment
process (represented by the figure at the centre of the circles), and also having direct
impacts on specific dimensions of women’s poverty, which then have an impact on the
poverty in their families and communities.
NATIONAL
DEVELOPMENT
COMMUNITY
DEVELOPMENT
Roads and
productive Water and
infrastructure sanitation
facilities
FAMILY
POVERTY
REDUCTION Food security Health
Expanding and Improved
and improved facilities
diversified family
markets nutrition
livelihoods
Power to:
Building assets, Improved
Loans incomes and health
Women' capacities Women's
economic Sustainable savings-based micro-finance
savings
Business training activities organisations
WOMEN'S
OPPORTUNITY Freedom and EMPOWERMENT Friendships
mobility and support SECURITY
Power within: networks
Literacy training Literacy and Confidence Social capital Mutual aid and
and self-respect Freedom from
access to social
Children's/ information violence
insurance
Education girls'
facilities education
VOICE
38
5.4.2. Concept development
5.4.2.1. Client Survey Demand/Needs assessment
No formal needs assessment was undertaken. But Pact Nepal had learned from the
literacy groups that had been established nationwide in Nepal through a previous Pact
program, WORD, that almost all groups wanted savings and enhanced income
generating activities. Many had already set up a small savings fund on their own
initiative.
5.4.2.3. Self-assessment
N/A
It was clear from the WORD project that women were interested in safe savings. WEP
opted for mandatory fixed savings, rather than voluntary savings, because the
accounting system had to be kept simple enough for everyone to understand. The
WEP implementation team thought that if voluntary savings were introduced early on,
this would be very complicated for women. In fact, evidence from WORTH in Africa
showed that this is not the case.
39
the books upright. However, only 6-8 weeks later, both trained and non-trained groups
had progressed to almost the same level. The non-trained groups somehow managed to
understand how to use the books by themselves and did fine.
When new training materials are first introduced to WORTH groups, the pilot testing is
more comprehensive and women are surveyed to obtain feedback, and observers in the
groups provide their feedback as well.
5.4.5. Rollout
One of the great achievements of WEP is that it managed to reach more than 125,000
women and trained more than 6,500 groups, within 2 1/2 years. Few, if any, microfinance
programs reach such large scale in such a short time period.
Given this enormous scale, which was required under the USAID funding, the ‘rollout’ of
the program started. PACT signed the agreement with USAID in December 1997 and
began to sign subgrants with NGOs in the fall of 1998, after extensive planning and
materials development took place. Real fieldwork began to roll out in early 1999. Once
the bulk of the groups had started the first training manual, the remaining manuals were
still being developed and translated.
One of the most significant changes to the service (process) of WEP resulted from the
realization that despite the literacy training, the village bank accounting system remained
very challenging for the majority of WEP participants. In order to graduate to Village
Banks, the management committees of each group had to undergo additional intensive
training to use the village banking accounting. Within WORTH all groups become
Village Bank, thanks in part to this change.
40
• Which aspects of the savings and loan procedures continue, which are changed
and why?
• Which of the governance and leadership norms continue, which are changed and
why?
• Has literacy been continued or ceased, why and what have been the effects?
• Has the business training been continued in any form?
• Have the rights and social action discussions been continued in any form?
• What are the implications for future WEP core programming?
41
5.5. Implementation Process
5.5.1. Process
42
“mobile” because each group in a cluster takes a turn hosting the meeting. WEP
Coordinators on the Pact staff oversee the work of Empowerment Workers and help plan
trainings and facilitate knowledge sharing among groups. Due to involvement of local
NGOs in the implementation process, when the project is over many NGOs continue to
be involved with their groups and assist in organizing networking and training
opportunities.
Workshops bring the Empowerment Workers and group leaders together, providing an
important forum for problem solving, sharing, and interaction. The ties formed sustain
the individual groups and create dynamic networks for social action. This is an explicit
component of WORTH which is not always found in many microfinance programs,
particularly those operated using financial sustainability as the sole or main signifier of
success. In addition to the workshops, success stories about women’s businesses and
social actions are also included in newsletters and disseminated.
These stories provide an ongoing source of energy that helps groups, NGOs, and WEP
staff overcome obstacles and turn problems into learning opportunities.
5.5.2. Logistics
Logistics was an enormous issue. For Pact this was one of the most complex programs
overall. To achieve scale so quickly, a fairly hierarchical network was set up: headquarter
office in Kathmandu (25 staff) in charge of contract management, training, procurement,
M&E; three regional offices (Central, East and West Terai), with each a regional
supervisor, a total cadre of 100 lead trainers, who trained the 840 Empowerment
Workers, recruited by the NGOs.
Each regional office possessed a vehicle; the regional supervisors had a motorcycle, and
the trainers had a bicycle or used public transportation.
One especially challenging task was to have all training manuals printed and distributed.
Training of the EWs had to be designed and implemented via the supervisors and lead
trainers.
Lots of unforeseen developments took place. Contracts with some local partner NGOs
were ended for various reasons. Monitoring and evaluation was an enormous task.
44
6. Results
In less than two years 110,000 women have learned to read and all WEP women began
saving actively. More than 30,000 have loans, 55,586 have started micro-enterprises, and
45,467 are meeting their income targets. WEP women have taken 45,667 collective
actions for social change. WEP uses an approach based on Appreciative Planning and
Action (APA) that encourages women to build on their strengths. It provides no
traditional subsidies (e.g., seed loans, subsidized interest rates, lanterns, books)-women
provide whatever is needed (including enrollment fees and the cost of books). WEP is
100% demand-driven - women set their own priorities and run their own programs.
Simplified study materials eliminate the need for facilitators - the women teach
themselves or recruit their own literacy volunteers if needed.
In its first two and a half years the program had mobilized more than $2 million in
savings and retained earnings, it has self-financed loans for $1.5 million to more than
45,000 group members (average loan $33), and 74,000 women have learned to read and
write.
6.2. Impact
6.2.1. Poverty Impact
N/A
45
One measure of client satisfaction is dropout. Compared to lending programs worldwide,
dropout is relatively low. A study at the end of the project found that 8% had left the
group over the previous six months. When a woman leaves a group, often to get married
and move to another village, another local woman generally replaces her.
46
On average, there are 10 groups and 200-250 group members per Empowerment
Worker.
6.3.2.1. Other?
47