Lack of clear business information is hampering economic growth among rural enterprises in Nepal. Private sector development lead Rabindra Singh explains how UK aid-funded helpdesks are taking the pain out of paperwork – for the benefit of all stakeholders.
Miss Sabitri Shrestha faces a similar challenge to many entrepreneurs in Nepal: the information gap is starving her business of oxygen. She has farmed vegetables near Bidur in the Nuwakot district for many years – but always on an informal basis. When she decided to upgrade to modern growing tunnels in order to make her business more commercial, she saw the need to apply for an agricultural loan from a local bank.
This meant registering her business, which might also make her eligible for government subsidies. But how? The bureaucratic system in Nepal makes it hard for small business owners – and women in particular – to cut a path through the red tape.
There’s no lack of entrepreneurial spirit in rural Nepal. However, business information is in short supply. This ‘information gap’ causes severe problems for Micro-, Small- and Medium-sized Enterprises (MSMEs) and government agencies alike. Business owners who want to join the mainstream economy find the official channels too complex to navigate. For the government, this disconnect is also a headache, as they lose important tax revenue. The result is that economic growth is inhibited, while remote and female entrepreneurs are further marginalised.
The UK aid-funded Purnima programme is helping Nepal to rebuild its economy after the 2015 earthquake – and stimulating the small business market is at the top of our agenda. We recently launched an innovative network of MSME helpdesks to help close the information gap. Our helpdesks are a one-stop shop for all business information, whether banking and loan products, the registration process, taxation or government schemes for small businesses.
It’s all about making business easier. The dedicated staff give MSMEs the information they need to both survive and thrive on the open market. For example, the helpdesk in Nuwakot walked Miss Sabitri Shrestha through the relevant documentation, saving her a day trip to the nearest government office and the potential hassle of bureaucracy.
“Our helpdesk provides information on enterprise registration and renewal, audit and taxation, and loan products and procedures for banks and financial institutions,” explained Chakrapani Timalsina one of our district enterprise development officers in Nuwakot district. “In addition, we provide relevant forms and help applicants to prepare necessary documents. We also link MSMEs to service providers such as microfinance banks as well as to government agencies, and then we follow up with all stakeholders to speed up the process.”
In the first six months, we installed three helpdesks and supported more than 500 MSMEs. Although initially targeted at the construction sector, MSMEs from different sectors are crowding in, as the reputation of the service has grown. The helpdesks are proving especially popular with female entrepreneurs. Indeed, almost half of the applicants are female – a disproportionate ratio given the overwhelming majority of male business owners in the construction industry. The feedback we get is that women feel intimidated about visiting government departments. By contrast, they find the helpdesks extremely welcoming (two of the three centres are run by female officers) and proactive to their needs.
Miss Bhagirathi Pandey runs a false ceiling business at Battar, also in Nuwakot. “I am the proud owner of an enterprise because of the helpdesk,” she said. “It was only by learning about the government schemes for female entrepreneurs, that I was ready to register my business. The helpdesk also helped me to get loan from the bank to expand my business. I tell every other female entrepreneur I meet to visit the helpdesk.”
Bridge of confidence
There is very little education about business in Nepal, and even less exposure to information. The state mechanisms simply don’t exist to push out the necessary information on media channels. There are language barriers too, fuelling the perception among rural, marginalised communities that they are not welcome in government offices. We have created a bridge of confidence, built with information.
A lot of MSMEs come to us through word of mouth, but there are also radio campaigns, marketing pamphlets and holding boards, as well as targeted meetings with relevant stakeholders. The Purnima programme is sharing some of the documentation costs for applying to government agencies, with a view to charging a nominal fee in the longer-term. In addition, we provide a toll-free hotline, as well as a mobile hot desk that travels to remote municipalities once a month, delivering services to some of the most marginalised business communities.
Clear signs of sustainability
The fact we are an independent advisor, with no financial incentive, is another benefit, explains Samikchya Adhikari, a helpdesk officer in Nuwakot district. “We present a list of applicable microfinance providers, and talk the MSMEs through the different features and offers. It’s then up to them to choose. If we do help an MSME to gain a loan, we’ll also show them how to keep records and other basic business management skills.”
“It’s a rewarding job, because we can see how much of a difference our work is making,” added Sanjeeb Tamang, district helpdesk official in Dhading district. “Services like this didn’t exist in the district before. Our work is also acknowledged and appreciated by the local government and district authorities, because documents arrive accurate and complete. They are more responsive to us, so we can save time for everybody involved.”
Demand is rapidly increasing. We supported the Chamber of Commerce and Industries (CCI) in the project districts to establish the helpdesks. The CCI are keen to continue the helpdesk support beyond the project period, as it is helping them to reach to larger number of entrepreneurs and increase their members. The local governments are interested too. We have started providing the mobile helpdesk service at Rural Municipalities level in collaboration with the local governments.
The big story, from my perspective, is that our helpdesks have innovated business practices and found ways to reach remote and especially female entrepreneurs, which were previously underserved. We can already see early signs of behaviour change among entrepreneurs who are being more open to registering businesses and paying taxes. The figures are a very pleasant surprise. Our projections point to growth in demand of this service. We are helping the CCI with a robust business case for sustainably delivering this service to the local businesses. That’s exciting.