By Sudarshan Shrestha, Micro-Enterprise Development Programme 

As the Maoist insurgency lost momentum in 1998, the Nepalese government, in partnership with the United Nations Development Program in Nepal, started an initiative to address the country’s poverty situation. Through collaboration with the Micro Enterprise Development Program (MEDEP), the UNDP and the government of Nepal set out to create rural employment and income generating opportunities for those living below the Nepalese poverty line[1] through engagement in micro-enterprises. Seven years after its inception, having directly addressed the livelihood of more than 150,000 people and continuing to help the peace process in rural Nepal, MEDEP is regarded as the UNDP’s flagship poverty reduction initiative.

Development discourse regarding poverty income is largely focused around micro-credit, and it is often taken for granted that access to micro-credit is enormous effective in leading to business success amongst low-income groups, thereby lifting the weight of poverty[2]. The Micro-enterprise Development Program in Nepal has demonstrated a cutting edge approach to business development amongst low-income groups whose lives have been challenged by low literacy and a lack of resources and economic opportunities. The program’s approach to engaging the poor in business development is through the delivery of a comprehensive enterprise development package. This catalyst approach to enterprise comprises financial and non-financial services and is usually delivered in sequential, need-based timeframes.

Considering poor people’s limited entrepreneurial knowledge and lack of market and product information, the general sequencing of activities and services starts with education in entrepreneurship awareness through hands-on training. The training involves internationally accepted simulation models requiring minimum lectures and text for maximum comprehension. The two entrepreneurship training tools are the Micro-Enterprise Creation and Development (MECD) training and the International Labor Organization’s Start and Improve Your Business (SIYB). The subsequent activities are geared toward analyzing an individual’s skills and facilitate in upgrading skill development opportunities to support an engagement in enterprise. In turn, these tools and education facilitate micro-entrepreneurs’ access to micro-credit, supporting exploration in rural and regional market linkages for micro-entrepreneurs, and providing technology inputs for product development & manufacturing efficiency. Once businesses begin thriving, the model advanced by MEDEP encourages follow-up support and business counseling for business improvement to ensure sustainability of the enterprises.

Because the government of Nepal and the UNDP would like to ensure that the poorest of the nation’s poor and excluded groups are given business opportunities, the identification of potential entrepreneurs is carried out through a screening process using Community Mobilization and Participatory Rural Appraisal to ensure that targeted beneficiaries, despite being poor, are selected for support. The rationale applied to the screening process is that not all people amongst low-income communities have the entrepreneurial skills or interests required to build a viable business.

Sustainability of businesses run by impoverished entrepreneurs cannot be left to the impoverished alone. Hence, the MEDEP business development model advocates that any business engagement intervention targeted toward the poor cannot be seen or carried out in isolation of available material and financial support. Sustainability is dependent on intervention areas that have potential growth corridors, i.e. infrastructures, such as an enterprise’s alignment with roads, accessibility for movement of goods and services and potential linkages. Furthermore, because micro-enterprises are largely dependent on local resources and markets, business engagement interventions are based on resource areas and demographic potentials.

Contrary to a simple “support for need’s sake” approach, the foundations of the business model’s interventions for poor communities are based on the availability of local resources, human capital, and market demand. However, providing these services collectively by a single institution or program at a national level is sometimes difficult at the administrative and implementation level. Therefore, MEDEP has built on the strengths of existing national organizations rather than

setting up entir

ely new institutions. Before 1998, the partners who are connected with the program were providing business development services independently, each trying to achieve output-determined targets such as annual disbursement of micro-credit. MEDEP’s collaborative approach to enterprise development for the poor is not fundamentally groundbreaking, but lends its ingenuity to an innovative approach to partnerships between individual services.

Considering that impoverished communities are more vulnerable to diseases including HIV/AIDS, entrepreneurship and skill development training have awareness-raising components about health and HIV/AIDS. This health awareness component is an essential part of the entrepreneurship development program, ensuring that startup entrepreneurs do not have to direct precious resources and expenditures on health and social stigmatization problems that can be prevented otherwise.

The enterprise development model being promoted through the Micro-enterprise Development Program is an experiment with the potential to reach out to a greater number of impoverished communities. Even during the period of elevated conflict in Nepal, the program was relatively unhindered due to MEDEP’s pro-poor business engagement program. This program reached out to the poorest groups, giving them an opportunity to improve their livelihoods through a holistic and systematic approach to business development. By directly supporting more than 23,000 people to engage in both conventional and non-conventional micro-enterprises, the program has indirectly addressed the livelihoods of approximately 150,000 individuals over the past seven years. By starting enterprises from scratch in their villages, many entrepreneurs have gone on to capture and expand niche markets. In addition, some enterprises started just a few years ago have gone on to establish linkages with large businesses to become part of their production and marketing chains.

Engaging poor communities in business development activity meets the criteria of the Millennium Development Goals. By striving to make business entrepreneurship viable to the poor, the MEDEP model directly addresses extreme poverty (or Goal One of the MDGs). Furthermore, the innovative enterprise development model is being implemented in 21 of the 75 districts in Nepal. Should the model’s scope be expanded, it would unleash the entrepreneurial potential of thousands of poor communities, vastly improving the quality of life in the impoverished areas of Nepal.

The enterprise development model for Nepal (and countless other poverty-stricken countries out of the earshot of the industrial world) speaks volumes on what micro-credit and business instruction can do to a community. Through this model sharpened by the Micro Enterprise Development Program the potential and ability of a discounted market can be both tapped and utilized. This model lends substantial support that effort, dedication, and a little help can go a long way and make an enormous impact.