Rural Finance in Conflict Environments: Experiences from Nepal's Small-Farmer Cooperatives Limited (SFCL)

This paper describes how the Small Farmer Cooperatives Limited (SFCLs) of Nepal has reacted to the conflict in the country. It aims to draw lessons for other microfinance organizations operating in conflict situations around the world.

The paper describes:

• The conflict between Maoist rebels and the ruling elite;
• The history of SFCL.

It finds that:

• The conflict has mainly affected:
  • The poor people;
  • Government-owned rural banks and MFIs.
• Community-owned cooperatives have survived fairly well;
• MFIs with active members, capable leaders and sound practices can even grow during the conflict;
• Promoting good practices, women empowerment and social inclusion will help MFIs to resolve internal and external conflicts;
• Cooperative federations help their members to cope with the conflict.

It concludes by presenting the following goals for the future:

• Building capacities of SFCLs and their federations by:
  • Providing training in the areas of loan appraisal, product development, internal controls, business planning, etc.;
  • Developing a good leaders-members relationship.
• Raising conflict sensitivity by:
  • Including it as a subject in normal training or advisory services;
  • Providing leadership training in the areas of managing internal conflicts and dealing with external aggressors;
  • Training SFCL managers in the importance of corporate social responsibility, women empowerment and social inclusion.
• Creating a socially responsible SFCL movement that actively contributes to transforming conflict and building peace.