Kalpana Khanal, GPI

Lack of Financial Aid Hampers Craft Sales for Nepalese Entrepreneurs


Article Highlights

Entrepreneur Sumitra Chaudhari, 32, started her own craft company in Nepal that employs 25 women.  

There are an estimated 30,000 female entrepreneurs in Nepal.

KATHMANDU, NEPAL – Clad in yellow, Shila Nepali, 43, arranges her handmade tea mats, table mats and floor mats among the 300 stalls lined up in the heart of Kathmandu, Nepal’s capital. She says she traveled by bus to this craft exhibition from Jajarkot, a district 320 kilometers (200 miles) west of Kathmandu.

She struggled to become a successful entrepreneur where she lives because of economic hardship, geographical remoteness and scarcity of local skilled labor, she says. So she took the long trip to Kathmandu to sell her crafts, which she makes from natural fibers, including stalks of banana plants, maize, turmeric, paddy and wheat. 

“Facing different kinds of challenges to become an enterprenuer, I have come to this state,” Nepali says.

She launched her craft career in 2007 when she participated in a free training for new entrepreneurs offered by the Federation of Woman Entrepreneurs Associations of Nepal, a nonprofit organization that financially aids female entrepreneurs.

“When I learnt about running a business, including its choice of place and the reason for it, I felt inspired and encouraged,” Nepali says.

After, Nepali took a three-month free training to learn how to spin cotton. A local branch of the Ministry of Industry's Department of Cottage and Small Industries, which promotes productivity among these industries, offered the training.

The branch provided her with a single weaving machine, which she repaid in installments. She then started her fiber craft business, Koseli.

Nepali also started a marketing business with a government loan of 50,000 Nepalese rupees ($575). She sells the products handmade by other local female entrepreneurs in national exhibitions.

“Acquiring [a] loan and paying it back in time has enhanced my creditworthiness for subsequent loans to expand the business,” Nepali says. “I took the handicrafts produced by our local women to different exhibitions being organized all over Nepal.”

She has won two awards for her crafts and her stall since 2007, she says. She has also participated in international fairs in countries such as South Korea.

“Trainings and achievements have made me courageous and determined,” Nepali says.

Female entrepreneurs in Nepal face many challenges, especially a lack of financial support. Government entrepreneurial programs provide free training and equipment to women, but budgetary constraints prevent continued support. Nongovernmental organizations also offer free training, but high membership fees make it difficult for them to take advantage of the organizations’ marketing assistance. Some female entrepreneurs use their new skills to invest in other craftswomen and to sell their goods. Meanwhile, the government plans to disburse more funding and introduce tax breaks for female entrepreneurs.

Cottage industries use specific skills or local raw materials related to national tradition, art and culture, according to The Industrial Enterprises Act 1992. Small industries are worth up to 30 million rupees ($345).

There are 3,100 female entrepreneurs in the Kathmandu Valley, according to a 2012 survey by the Federation of Woman Entrepreneurs Associations of Nepal.

The number of female entrepreneurs is increasing, says Renu Sthapit, one of the federation’s vice presidents. But accurate numbers are not available, says Rita Bhandary, another vice president with the federation.

There are an estimated 30,000 female entrepreneurs in Nepal’s 75 districts, according to data compiled from 1994 to 2012, says Suchitra Rai, section officer for the Department of Cottage and Small Industries.

Female entrepreneurs face many difficulties in selling their crafts, including language barriers, frequent and unpredictable strikes and long distances to exhibitions. But the biggest hurdle for female entrepreneurs is obtaining financial assistance.

Sumitra Chaudhari, 32, a craftswoman from Banke, a district in western Nepal near the Indian border, says that female entrepreneurs have craft skills. But because they can speak only their native languages, they do not know how to sell their goods in domestic and international markets.

Nepali says that explaining her products to customers in English greatly aids her. She learned English when her husband worked as a domestic helper at an American’s house.

Unpredictable one- or two-day strikes create an additional challenge for female entrepreneurs, Sthapit says.

“The frequent strikes in Nepal have also adversely affected their business,” she says.

Moreover, the remote locations where female entrepreneurs live make it difficult for them to acquire raw materials, communicate with buyers and sell their products, Chaudhari says. Craft exhibitions take place mostly in cities, and the remote and rural areas where some artisans live receive few visitors and buyers.

But most importantly, many female entrepreneurs lack the money to cover everyday needs let alone to launch their craft own businesses, Bhandary says.

“When a woman advocates women’s rights during the day but has to beg money from her husband at home to buy household essentials, she feels utterly disgraced,” Bhandary says.

In order to combat these difficulties, Nepal’s government and nongovernmental organizations offer free training, some funding and marketing assistance to female entrepreneurs.

The Department of Cottage and Small Industries offers classes in 48 of Nepal’s 75 districts to any interested, literate woman, says Jiba Nath Dahal, the technical officer in the department’s implementation committee. It also connects female entrepreneurs with sources for raw materials, marketing outlets, related organizations and relevant government agencies.

The government also loans equipment to help female entrepreneurs start their businesses, says Krishna Gyawali, the secretary of the Ministry of Industry.

“In the recent times, women are not only trained in skills but also provided with machinery and equipment,” Gyawali says.

But less than 40 percent of Nepal’s rural female population is literate – one of the program’s requirements – according to a 2011 survey by the Central Bureau of Statistics.

The government also has not provided sufficient budgetary allocation to assist the implementation committee, Dahal says.

Nongovernmental organizations also provide training and offer long-term product marketing. But most require women to pay expensive membership fees to market their work.

Chaudhari became an entrepreneur after obtaining a free training from Prakritik Swarup Bikas Kendra, or Natural Forms Development Center, a local nongovernmental organization. In September 2012, right after the training, she and 10 other women contributed 700 rupees ($8) each to start a craft company, Thathi.

Thathi craftswomen use local forest materials and convert them to everyday handmade products, she says. Prakritik Swarup Bikas Kendra markets Thathi products for free, Chaudhari says.

But marketing the products is difficult because most organizations ask for high membership fees.

“Federation of Woman Entrepreneurs Associations of Nepal had asked us to be a member,” Chaudhari says. “But we were obliged to pay 3,000 rupees [$35] for membership. Therefore, we couldn’t register.”

Some female entrepreneurs do not become members of organizations that can market their wares because of the high membership fees and lack of awareness that such an organization exists, Sthapit says. The membership fee to join the federation costs between 3,000 rupees ($35) and 5,000 rupees ($60).

The median income for rural areas is less than 9,500 rupees ($110) per month, with the average household size comprising five people, according to the Central Bureau of Statistics survey.

The federation relies on membership fees and government loans to fund its work, Bhandary says. Insufficient financial support from these areas already reduces the effectiveness of its work.

Meanwhile, some female entrepreneurs use their recent training from the government and nongovernmental organizations to empower other craftswomen by hiring them and finding alternative options to finance their businesses.

Women who receive training and funding from the government or nongovernmental organizations tend to reinvest in other female entrepreneurs, Nepali and Dahal say.

Chaudhari says her company, Thathi, has grown rapidly. The female-only company, which started seven months ago with 11 members, now employs 25 women.

“I feel very happy to teach skills to the economically and socially marginalized women in order to empower them for self-dependence,” Chaudhari says.

Nepali has also used her training to teach, encourage and financially aid female entrepreneurs, she says.

Since 2010, Nepali has established branches of her marketing and craft companies in her birthplace, Jajarko, and has formed a microfinance company with 25 other members, she says. Within two years, the company grew to 112 members.

“I am sharing the skill that I have got with other women to make them financially empowered,” Nepali says.

Nepali finances transportation and marketing by taking a portion of the products’ sale price, she says.

“I take 25 percent of the net earnings as service charges for selling the products,” she says.

This service charge is more affordable for new female entrepreneurs than hefty membership fees, she says.

Extra government funding can help female entrepreneurs succeed, Chaudhari says. If the government assists financially for transportation and product sales at town exhibitions, nongovernmental organizations would not need to implement such high membership fees.

“If the government would make enough budgetary allocation to promote and spread the cottage and small business, it would be a great help for all of us,” Chaudhari says.

To encourage more female entrepreneurs, the Ministry of Industry plans to implement sales tax exemptions and rebates for them, Gyawali says.

“Dialogues are being held with the Ministry of Finance to enforce the provisions,” Gyawali says.

The Ministry of Industry also established the Women Entrepreneurs Development Fund in 2012 to provide training, tools and equipment to female entrepreneurs at a grassroots level.

But because Nepal has a temporary government, the fund is not yet functioning, Gyawali says. The government currently establishes the national budget every quarter and has not yet made allocations to the fund. But he expects the disbursement of the funds during the 2013 to 2014 fiscal year, once Nepal elects a permanent government.

The Federation of Woman Entrepreneurs Associations of Nepal also requested in 2012 that the government provide land in Kathmandu for entrepreneurs’ exhibitions, Bhandary says. 

The government is responding positively to this request, Gyawali says. He also encourages female entrepreneurs to create employment opportunities for other women.

The biggest advocates for the advancement of female entrepreneurs need to be women themselves, Nepali says.

“If you believe in yourself, you can progress in any kind of work,” she says.