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Addressing Poverty Alleviation: Entrepreneurship Development and Linkage Economic Enterprise
IntroductionRugged physical terrain, weak infrastructure base, inaccessibility and low purchasing power are claimed to be some of the attributes of development problems in Nepal. However, the movement of the labour forces, raw materials and agricultural and traditional products from the rural areas to the urban areas show that social and economic transactions take place even in difficult physical conditions. Certainly, more could be achieved from such transactions by the local people and economy. They stand to benefit from the existing as well as the emerging social economic transactions to improve local livelihoods, local economies and thus contribute to the poverty alleviation. Locational advantages existing in different areas can provide local economies with enormous incentives, increase the purchasing power of both the rural and urban communities and strengthen the local and internal economy if the potential inherent in rural-urban linkages are capitalized on. ApproachThe urban economies have potential for high growth if they can perform the role of producer of goods and services required by rural as well as urban economies and that of provider of markets and marketing services for the rural outputs based upon their locational advantages. Ample opportunities exist for strengthening and expanding the urban and rural economies for poverty alleviation. The scope for enterprise to grow is limited unless they are connected to larger outside markets. Thus, strengthening local as well as regional level linkages to promote and expand economic activities is the major operational strategy of RUPP for promoting economic development and sharing its benefit to help the people escape widespread poverty. Therefore, RUPP aims to forge these links in various ways:
Entrepreneurship Development and Enterprise Management Process ProcessThe members of the TLO in partner municipalities and RMCs are mobilised to form self managed enterprises to engage in economic activities that help improve rural and urban production systems and enhance overall trading system by taking advantages of local opportunities. Also, the TLO members belonging to traditional tribes, occupational groups and artisans within the Programme area are trained and organized into enterprises to link their skills to produce intermediary goods or directly provide their skills/labour to existing manufacturing units which directly addresses the poverty of those disadvantaged groups. The idea is basically directed towards creating enabling environment for the poor and disadvantaged people both in urban area and Rural Market Centres to undertake economic initiatives based upon rural-urban linkages to improve their livelihood Entrepreneurship development and enterprise creation at the community level are integrated processes that follow different stages. The communities are mobilised through the TLOs for the preparation of Enterprise Development Plans (EDPs) by interested members of the TLOs. The mobilization further leads to motivate them by improving their skills for identifying business opportunities and thereafter setting up of economic enterprises. The TLO members are further encouraged to initiate community savings. As the TLO matures through the Programme inputs such as information, enhancement of social capital formation, empowerment, skill development and technology transfer, RUPP embarks on enterprise development within the TLO.
The mobilized community then approaches the Programme in a small group generally ranging from five or more to undertake their selected enterprises as suggested by EDP prepared by TLOs. Enterprises out of these are selected for maturation process depending upon the initial investigation and feasibility. For maturation, the potential groups are provided with enterprise management training in order to equip them with necessary level of basic knowledge about business practice. After the maturation process they receive a maturation certificate and then they are entitled for the credit support from the Programme. So far a total of 5,165 enterprises have been selected after much scrutiny from the enterprises that TLO members showed interest to form. The selected enterprises then went through the maturation process comprising of management and skill enhancement training, Enterprises supported by RUPP are predominantly linkage oriented. Most of the enterprises deal in vegetable and fruit trading, livestock trading, food processing, handicraft trading, herbs trading, milk collection and selling. These wide range of micro linkage enterprises in the form of group enterprises have developed in the Tole levels to arrange for marketing of goods and provide goods and services have substantially increased the level of income and raised the living standards of the urban poor. This way RUPP has been able to incorporate hard-core poor and disadvantaged people to make arrangements for the optimum use of local economic opportunities in the urban markets and create a better organized forms of delivery of urban goods and services required to enhance rural production systems and vice versa.
The NumbersA total of 5,165 linkage enterprises have been established through the social mobilization process. These enterprises have been provided with a credit support of NRs. 110 million. In their formation particular attention were paid to women and members of disadvantaged groups to encourage their participation in market based income generation activities and facilitate wider sharing of economic benefits. A total of 18,000 people from such target groups have benefited from these enterprises.
Equity share on the part of entrepreneurs is considered an important aspect of credit support for the development of linkage enterprises. The cumulative equity share from the economic enterprises supported by RUPP has been more than NRs. 110 million so far which is about 54 percent of the total project costs of the enterprises. The amount of equity on any enterprise varies widely. This variation is due to the poor financial conditions of entrepreneurs as the credit fund is made available to socially deprived but committed individuals. Also, the Programme does not force for a fixed equity verses loan ratio. The main idea behind the equity sharing by the entrepreneurs is to develop a feeling of commitment and ownership and share the risks among the entrepreneurs.
Repayments and SustainabilityEconomic enterprises make repayments of their loans based on a prefixed schedule prepared mutually which is determined according to the nature and profitability of the enterprise. Such repayments of the credit provided from RUPP to the linkage enterprises have reached NRs. 101 million, which is about 92 percent of the total credit disbursement. These repayment amounts are deposited into "Market development Fund (MDF)", which has been established at each partner municipality to ensure financial sustainability of RUPP activities after it phases-out. With the sustained flow of repayments the total MDF amount keeps on increasing, which is used later for reinvestment by the municipality. Additional funds from other sources are also mobilised to be added into it to implement and expand
Gender DimensionGender desegregated picture of the enterprise development is very encouraging. Almost 52% of all the entrepreneurs are women. RUPP has been able to involve women not only as members but many of them are actively running the enterprise as a focal person. The economic mobility has empowered these women and has made them aware of other activities going on in the TLO. They now have started to attend the monthly meetings of the TLO regularly and participate actively in the preparation of Tole Development Plans.
Rural Labour LinkageApproach
Rural Labour Linkage (RLL) is an innovative concept that is well integrated in the process of strengthening rural urban linkage in the selected market zones. The Programme supports the underprivileged groups of society under this activity. The effort organizes the traditional tribes, occupational groups and artisans of both rural and urban areas into enterprises and links their skills to produce final/intermediary goods or directly provide their skills to existing manufacturing units which facilitate rural urban flow of goods in larger scale. ProcessInitially, a base line survey of the Programme areas are carried out to identify poor and disadvantaged communities with skilled and unskilled workers/labourers to undertake entrepreneurial development activities which are also kept in RUPPMAIN software. The SOs then conducts surveys to identify manufacturing establishments and wholesalers/retailers to which forward linkages could be created by sourcing necessary inputs from the occupational groups. The CasesRural Labour Linkage component of RUPP has helped the traditional tribes, occupational groups and artisans to organize into enterprise and link the use of their skills. A total of 312 such enterprises have been formed in the twelve market zones with a credit support of NRs. 4.5 million from the Programme. Such enterprise groups are provided with continuous training to upgrade the skills of the entrepreneurs to enable them to add value to their services. These enterprises are helping people from the disadvantaged groups to make a living by using their occupational skills and also are proving to be a major supplier of the intermediate goods to the manufacturing establishments, wholesalers and retailers.
Technology Transfer The Need The Need
Technology transfer refers to modification or upgrading of existing technology through training or providing financial assistance for prototype unit to enhance the business and skill and disseminate it to surrounding communities. While doing so, RUPP also considers environmental mitigation as well as employment creation. It has been observed that many enterprises are still continuing with traditional way of making products while introduction of a small technology can help them reap higher benefit with the same involvement. The Programme is helping acquire new technology to different enterprise groups. The ProcessThe need for technology is identified during the community mobilization period and the Enterprise Development Plan preparation in the TLOs. NGOs, private sector organizations and professionals have been identified for the transfer of technologies. The emphasis of the technology transfer is on the poor producers and processors. The technology transfer could be in the form of training, procurement of hardware and provision of loan for the procurement of equipment or observation visits, etc. Transfer of technology also works as a demonstration for other community members of that area. There are several successful examples where larger community are motivated and started up a similar enterprise out of that demonstration effect.The Support
Content covers all the important basic aspects that are crucial to run any small-scale enterprise. The participants are well exposed to issues like group dynamics, leadership quality, co-ordination and linkage, principal of business and marketing, business based on rural urban linkage, simple accounting procedure and environmental implications. Very practical examples are cited while discussing different issues in the training. EMT is compulsory in the process of entrepreneurship development and enterprise creation. Successful participation in the training allows all the selected enterprise groups to get maturity certificate, which guarantee the preparedness of groups to undertake the selected enterprises. Altogether 8,923 entrepreneurs have received the enterprise management training of which 4,014 were men and 4,909 were women.
Skill Transfer Initiative Training (STI)
This is another important and specific training organized in a regular basis for potential entrepreuneurs. The Skill Transfer Initiative provides special skill to the members of enterprise group in order to undertake that particular enterprise. Related local resource persons are normally mobilised to conduct such training as necessary. Apart from theoretical know-how, emphasis is placed on practical knowledge dissemination. Different partner municipalities arrange many different kinds of Skill Transfer Initiatives. Some of them are: food processing, bee keeping, incense stick production etc. So far 3,269 people including 977 men and 2,292 women have benefited from it.
Public Private Partnership (PPP)Approach
Municipality's development policies like most other local authorities in Nepal and perhaps elsewhere, have so far relied extensively on the local and central authorities to implement urban services and infrastructure development. The demand however, far exceed the capacity of these agencies to deliver. On the other hand, the private sector has more resources and capability to deliver on a sustainable basis. So far there has not been significant effort to exploit the resource potential of the private sector at the local level. Therefore through PPP, RUPP has initiated the mechanism for building confidence between private and public sector for the provision of urban services. The role of public sector traditionally has been considered to be that of the provider of public facilities. However, it is well recognized that the private sector can play such role in an efficient manner. This required mainstreaming the private sector in development process. The Programme encourages PPP arrangements for establishing public infrastructure, community facilities for urban goods and services on the basis of mutual benefits of the parties involved. Frequent interactions between public and private parties in the activity areas have created awareness and a number of undertakings along these lines have been initiated.PPP Efforts
Public Private Partnership component of the Programme has made conscious efforts to mobilise resources from the private sector for the provision of urban facilities and services to improve links between urban and rural production and consumption systems. |
Mr. Liladhar Sharma of Manabkalyan TLO, in Tribhuwannagar had been running Lila Dairy. As he understood the importance of customer satisfaction, he wanted to produce better quality dairy products. After consultation with the dairy technicians he decided to install a homonizer machine in his dairy. The machine can homonize the milk upto 2 microns whereas normal milk contains fats upto 180-200 microns. In addition the machine homonizes 150-200ltrs of milk every hour. This would help him produce more quality milk everyday. He was very happy when his request for a technology transfer was approved by PDC. The machine cost him Rs.120,087 including transportation and other handling charges. He received a support of Rs.90,000 from the Programme. Today his dairy produces smooth, tasty and easily digestible dairy products including, ice cream, milk, curd, lassi and flavoured milk. The milk for the dairy is collected from surrounding villages including Bijauri and Laxmipur VDCs and sold in the municipality. His is an enterprise, which shows how effectively a technology changes production and quality of any product. 
Built around the concept of creating a common sales outlet for local products, the retail outlet named "Dhankuta Ko Koseli" initiated and supported by RUPP in Dhankuta municipality is growing in its size and effectiveness. The underlying idea behind establishing the outlet is to provide a common platform to sell the products produced by various micro-enterprises/SHOs developed and supported by various development agencies in Dhankuta. Given a scenario where marketing of local products continues to be one of the main issues, this concept of alternative marketing has been tested in Dhankuta and found to be very effective. Ms. Sheela Nepali, a scheduled caste woman supported by RUPP under enterprise development component, runs this outlet. She is very happy and optimistic about the business as this sale outlet is currently being used as a common platform to market local products which gives her good profit and also finds a market for local producers. The linkage is likely to extend beyond Dhankuta as arrangements are also underway to include the products from as far as Tehrathum produced by enterprise supported by MEDEP. This is creating a synergy effect in the efforts put by various development agencies on the front of creation of economic enterprises for poverty alleviation. 
