Challenge Fund Launch with Banks and Remittance Agencies

On 13th May, 2019 UKaid Skills for Employment Programme (सीप) in collaboration with Nepal Bankers’ Association (NBA), organized a Challenge Fund (CF) Launch for Banks and Financial Institutions (BFIs) and Remittance Agencies with focus on presenting the Programme’s additionality through co-investment and partnership in initiatives aimed at finding solutions in the form of loans, savings, investment and other financial products to address identified market failures in migration. During the launch, UKaid सीप also outlined its approach through co-investment partnerships, using a CF. A moderated round table discussion to discuss the role and opportunities for BFIs and Remittance Agencies for innovation and co-investment in financial products was also organized during the launch which discussed on possible demand driven financial products for migration management to promote economic transformation of the country.

In his opening remarks Mr. Anukool Bhatnagar, Vice-President NBA and Managing Director/CEO of Nepal SBI Bank Ltd., highlighted the importance and timely role of BFIs and Remittance Agencies to cater to migrants and their families, to increase remittance through formal channel and tap that remittance into productive uses. Similarly, Mr. Nathanael Bevan, Deputy Head of Office, DFID Nepal, focused on the role of UKaid in Financial Sector Development in Nepal to support increase in income, formal borrowing and productive investment. He also emphasized the need to strengthen migration system to benefit women and increase access to financial instruments to facilitate them. He remarked on the need to reduce the instance of remittance from informal sources and reduce informal borrowings.

In their presentation, Mr. Giuseppe Savino, Migration and Development Partnership Advisor and Mr. Saurab Man Shrestha, Migration and Remittance Specialist, also gave an overview of the importance of optimizing migration for development of Nepal. Mr. Shrestha presented the overview of the background research, stakeholder meetings, surveys that the Programme conducted during the inception phase to identify the market failures in migration system, while Mr. Savino discussed the opportunities for BFIs and Remittance Agencies to address the identified market failures to optimize migration through innovative financial products and sustainable business models. He focused on how identified market failures and challenges, such as – high cost of migration due to monopoly, high cost of borrowing due to informal lending, remittance spent on consumption, and remittance through informal channel – are in line with BFIs and Remittance Agencies’ roles and opportunities for co-investment.

During the launch, a panel of distinguished individuals from BFIs and Remittance Agencies was formed for a round table discussion. The discussion focused on role of BFIs and innovative and scaled up solutions to harness benefit from migration. The panel comprised of Mr. Ajay B Shah, CEO, Laxmi Bank, Mr. Anukool Bhatnagar, Managing Director, Nepal SBI Bank, Mr. Sugen Shakya, Assistant Manager, Prabhu Bank, Mr. Nirmal Dahal, Team Leader UKaid Sakchyam, Access to Finance Programme, and Mr. Suman Pokharel, CEO, IME Limited, and was moderated by Mr. Baljit Vohra, Team Leader of UKaid सीप and Mr. Savino.

Following were the themes of roundtable discussion: demand for financial products, constraints faced by BFIs and Remittance Agencies to cater the needs of migrants, role of technology for better financial management, market-led solutions to address the identified market failures, and building on leveraging financial innovations in the market.

Mr. Baljit Vohra, concluded the round table discussion with reflection on discussions, need for innovation, discussion with potential partners on UKaid सीप entry point, and next steps.