MICROCAPITAL BRIEF: Asian Development Bank, Small Farmers Development Bank, Nepalese Government Commit $18m for Reconstruction after Earthquakes in Nepal, Including $7m for Microfinance

The Asian Development Bank (ADB), a multilateral development finance institution based in the Philippines; the Small Farmers Development Bank, a wholesale provider of credit to agricultural cooperatives and microfinance institutions (MFIs) in Nepal; and the Nepalese government reportedly approved a financial assistance package of USD 17.8 million for reconstruction, relief and preparedness for future disasters in Nepal following the earthquakes that hit the country in April and May 2015.

ADB has contributed USD 15 million to this financial assistance package, which was funded through its Japan Fund for Poverty Reduction, a grant facility that supports technical assistance and other projects intended to assist “the poorest and most vulnerable groups living in destitution”[3] in developing countries that are also members of ADB. The Small Farmers Development Bank will participate with a grant of USD 1.5 million, and the government of Nepal reportedly will contribute an additional USD 1.3 million.

Of the total financing package, approximately USD 8.1 million is planned for the reconstruction of approximately 14 schools, USD 7 million will be used for microfinance initiatives and USD 1.9 million will be spent on training the populace on disaster preparedness. The microfinance funding is expected to provide microcredit to approximately 12,500 households affected by the earthquakes. The remainder of the funds will be reserved for contingencies.

Mayumi Ozaki, a financial sector specialist with the South Asia department of ADB, said that “destroyed homes, farmland and businesses, and lost livestock and harvests will push at least 700,000 additional Nepalis below the poverty line, many of them in the hard-hit rural central hill and mountain areas where poverty was already high”[3].

As of 2014, ADB reported total assets of USD 33.1 billion. For the relief and reconstruction efforts in Nepal, ADB contributed a disaster-response grant of USD 3 million in May 2015 and an emergency loan of USD 200 million in June 2015. The Small Farmers Development Bank reported total assets of approximately NPR 9 billion (USD 87 million) and loans and advances of approximately NPR 8 billion (USD 78 million) as of March 31, 2014.

By Alíz Crowley, Research Associate

About Asian Development Bank (ADB)

Established in 1966 and headquartered in Manila, the Philippines, the Asian Development Bank (ADB) is a development finance institution that consists of 67 members. ADB has three strategic priorities: to foster inclusive growth, to facilitate regional integration and to ensure environmentally sustainable growth. To accomplish these objectives, ADB uses loans, technical assistance programs, grants, equity investments and guarantees in member countries in the region. As of 2014, ADB reported total assets of USD 33.1 billion.

About Small Farmers Development Bank

The Small Farmers Development Bank is a “microfinance wholesale bank”[2] in Kathmandu, Nepal. The organization was established in 2001 with the aim of providing loans to agricultural cooperatives and microfinance institutions (MFIs) in Nepal. The Small Farmers Development Bank reported total assets of approximately NPR 9 billion (USD 87 million) and loans and advances of approximately NPR 8 billion (USD 78 million) as of March 31, 2014. The organization does not accept deposits.

Sources and Additional Resources

[1] Kathmandu Post, ADB okays $15m aid to help quake-hit districts

[2] Small Farmers Development Bank, Sana Kisan Bikas Bank at Glance 

[3] Asian Development Bank, Japan Fund for Poverty Reduction

[4] Small Farmers Development Bank, Small Farmer Relief Fund, Nepal Earthquake 2015

[5] Small Farmers Development Bank, Publications, Quaterly Reports 2071/072

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