Microfinance Services and Poverty Level of Rural Farmers of Syangja District of Nepal

Poverty is associated with income and its distribution, which remains the core concern even today.As the data of Economy Survey 2015/2016 done by Ministry of Finance shows, that, the number of people living below poverty line has dropped to 21.6 percent in 2016 AD from 42 percent of 1995 AD. Microfinance is a form of monetary development that has first and foremost focused on alleviating poverty through giving financial services to the poor. The study was conducted with aim to identify the contribution of microfinance services to reduce the status of poverty level of rural farmers of Syangja district of Nepal. The study had used the standard poverty score card developed to measure the poverty in Nepal. The score card has ten simple questions; each question has option of response having with different score. As the national standard of Nepal, out of 100 score, who can earn more than 59 is known as non-poor whereas from the international standards it needs more than 64 to be non-poor. The result shows that Out of 385 respondents, 140 (36.4%) were found poor and 245 (63.3%) were non-poor on the national level standard of poverty. 190 (49.4%) were found poor and 195 (50.63%) were non-poor on the international level standard of poverty. The data of poverty line is significantly higher than the national level. Therefore, there was need of serious concern form the concerned authority of Nepal government to address the poverty issue of Syangja district.


Introduction
Poverty is associated with income and its distribution, which remains the core concern even today. As the data of Economy Survey 2015/2016 done by Ministry of Finance shows that, the number of people living below poverty line has dropped to 21.6 percent in 2016 AD from 42 percent of 1995 AD (Ministry of Finance, 2016, p. 109). Poverty is not specific. It is a pervasive issue and in order to alleviate poverty in the world all industrialized as well as developing countries have already taken so many initiatives. Poverty alleviation is very massive and broad issue that encompasses government policies, education, health care, rural substructure, employment prospects, provision of credit and financial services (Pollinger & Cordero, 2007;Alderman, 2002, p.

Chandra Prasad Dhakal and Govind Nepal
32 398). Because in this technologically advanced era the farmers must have knowledge of crop variety, weather, fertilizer etc. to maximize production and profits. Rural infrastructure is necessary to carriage the products to main agricultural markets. Provision of credit and financial services is one of the key approaches to poverty reduction that increases the confidence of poor to take initiative to start new microenterprises in developing countries. Therefore, the features of the policy have strong potential to alleviate poverty from any poor country (Banerjee, Duflo, Glennerster, & R., 2009;Dufko, 2000, p. 397). Many international donor agencies' first agenda is to alleviate poverty. Many projects are being operated under the bilateral and unilateral contracts with other countries. Poverty reduction is the main planning instrument in improvement and there are a number of poverty reduction strategies. It is not possible to address all strategies separately in this limited study. However, this study identifies microfinance for rural agriculture as an important strategy for poverty reduction in the rural agricultural sector (Ravallion, 2007;Bardhan & Mookherjee, 2006, p. 321). Furthermore, the focus here is on the role of microfinance services in poverty reduction in the rural agricultural sectors of Nepal.
Microfinance is a form of monetary development that has first and foremost focused on alleviating poverty through giving financial services to the poor (Akanji, 2002). Microfinance is a development tool that grants or provides financial services and products such as very small loans, savings, micro leasing, micro-insurance and money transfer to assist the very or exceptionally poor in expanding or establishing their businesses (Robinson, 2003).
Rural credit in Nepal began in 1956 with the opening of Credit cooperatives in Chitwan Valley to provide loans to the re-settlers coming from different parts of the country (Shrestha, 2009, p. 11 (Shrestha, 2009, p. 11).
After the reinstallation of common democracy in 1990, the government appointed a seven-member National Cooperative Consultation Committee (NCCC). It also set up a National Cooperative Development Board (NCDB) constituted of 11 members to provide policy directives to the cooperatives. Similarly, the government endorsed a new Cooperative Act in 1992 to ease promotion and development of cooperatives as a vehicle for economic development in the pastoral areas. The government also underscored the role of cooperatives for outspreading credit facilities and other services to the rural people in its Eight National Plan.
The main objective of microfinance service is to provide the financial services to poor people, particularly from rural areas may help farmers to access new technologies and high yield varieties for agriculture production.
Provision of financial services and products has trickle-down effects on the poor's livelihood. Microfinance for agriculture has the potential to address all factors, which are linked to poverty reduction, e.g. improved health, better education, better agricultural practices and employment opportunities (Komives, Halpern, Foster, & Wodon, 2005). Rural microfinance products in many parts of the world are already launching innovative products especially premeditated to rural needs and poverty reduction.

Objective of the Research
The study was conducted with an aim to identify the contribution of microfinance services to reduce the status of the poverty level of rural farmers of Syangja district of Nepal.

Conceptual Framework of this Research
The study had adopted the following conceptual idea to measure the relationship between the microfinance

Chandra Prasad Dhakal and Govind Nepal
33 activities and its impact on poverty reduction. The conceptual framework shows that the basic characteristics of microfinance that can determine the level of financial status (saving and credit) of microfinance. As the ideology of microfinance, its main focuses on the improvement of the socio-economic status of community people. It supports in the field of agriculture, education, business promotion. Through the different economic activities, it finally contributes to poverty reduction. This study had adopted the poverty scorecard for Nepal to measure the level of poverty of small farmers. The above conceptual framework shows the core service areas of microfinance, which finally affects the poverty reduction.

Materials & Method
The study had adopted the following methodology to conduct the study: • Data collection tools: The study had used the standard poverty score card developed to measure the poverty in Nepal. The score card has ten simple questions; each question has an option of the response having with the different score.
• Data analysis plan: As the national standard of Nepal, out of 100 scores, who can earn more than 59 is known as non-poor whereas from the international standards it needs more than 64 to be non-poor.

Result & Discussion
MFI schemes were initiated to meet different objectives. The most commonly mentioned objectives include poverty alleviation and improved living standards, offering to finance to the poor, women's empowerment, and the development of the business sector as a means of achieving high standards and reducing market failure.
Empirical evidence and surveys give mixed results on the performance of MFIs. In some cases, tragedy stories have been reported, yet there have been success stories. In other cases, the reasons for failures or successes have not been well documented. Thus, this sub-section reports the results of the study area on the role of MFIs to reduce poverty.
The study has used a simple poverty scorecard developed for Nepal to collect the primary data from the field.
The scorecard uses ten simple indicators that field workers can easily collect data and scores can be computed by hand in the field. The simple povertyscorecard is a practical way for pro-poor programs in Nepal to measure poverty rate to track changes in poverty rates over time and to target services.

Number of household members of12-years-old or younger
Dependent members of that family directly affect income and expenditures of any household. During this survey, demographic data of a number of dependent members i.e. 12 years old or younger members of the household from the study area were collected.

2. Number of children ages 5 to 12 attend school
Education to the children of any family is another important factor of a level of measuring poverty level of that household.

Chandra Prasad Dhakal and Govind Nepal
35      Table 4 shows the results of literacy rate of female head of surveyed households. To measure the literacy rate of those female heads they were asked whether they could read a letter or not. In the results, 0.00 indicates that they cannot read a letter, 5.00 indicates that there is no female head and 8.00 indicates that they can read a letter.

Female head/spouse know how to read a letter
Thus, results were such that out of 385 respondents, 68 (17.7%) female head could not read a letter. 14 (3.6%)

Chandra Prasad Dhakal and Govind Nepal
36 surveyed households had no female head. However, 303 (78.7%) female heads could read a letter. It shows that better economic status promotes to education.   Another factor of measuring economic status of households is the type of toilet they use. Table 6 shows the result of the type of toilets they use. Out of 385 respondents, 21 (5.5%) respondents reported that they did not have the toilet. However, 364 (94.5%) respondents reported that they had either non-flush or flush toilet. It also proves that they have better economic status. Type of stoves used in household for cooking is another factor to measure the economic status of any family.   reported that they owned two or more such types of media players. It showed that majority of them owned media players. Availability of means of transportation is another factor to measure economic status of any household.

Household own any bicycles, motorcycles/scooters, motor cars, etc
Respondents were asked whether they owned any bicycle, motorcycle, scooter or motorcar. Out of 385 respondents, 314 (81.6%) reported that they did not own any sort of means of transportation and only 71 (18.4%) reported that they owned such type of means of transportation.  Table 10 shows the data of household survey from study area on whether they own television or deck at home.

Household own any televisions/decks
Out of 385 respondents, 64 (16.6%) reported that they did not own any television or deck. On the other hand, 321 (83.4%) respondents reported that they owned either television or deck.

Poverty likelihood (%), legacy-definition lines
The simple poverty scorecard is an easy-to-use tool that local pro-poor development programs in Nepal can use for targeting, for monitoring their participants' poverty rates, and for tracking changes in participants' poverty rates over time. Field agents visit participants in their homes and ask 10 simple, objective questions to know the poverty status. The poverty likelihood legacy definition lines define the level poverty because of total score obtained from the 10-poverty scorecard. From the below table, the household who can score more than 59 are known as non-poor from the national standard whereas more than 64 scores is needed for the international standard to be non-poor. The below data has reported the poor and non-poor household from both national and international standard.   (50.6%) were found above the poverty line on both national and international level. It proves that microfinance institutions are helping on poverty reduction in Nepal.

National standard of poverty
Country Poverty Analysis (Detailed) Nepal (ADB)draws mainly on the National Living Standards Surveys (NLSS), which was first conducted in 1996, and carried out again in 2004 and 2011.The NLSS estimates the national poverty line following the cost of basic needs approach, which is the expenditure value of local currency required to fulfill both food and non-food basic needs(p. 2).
Using the national poverty line, poverty incidence has been falling at an accelerated pace from 41.8% to 30.9% between 1996 and 2004 and Table 12 shows the results of poor and non-poor based on a national level standard of poverty from the study area. Out of 385 respondents, 140 (36.4%) were found poor and 245 (63.3%) were non-poor on the national level standard of poverty.  farming. Phedikhola is emerging market areas. There are some hotels and other shopping Centre. Mrs. Gurung was searching some self-employment services, but no ideas what to do and no money in her hand also so she was in tension. One day, one of her neighbor who was doing tea shop in market suggested her to do the livestock farming to produce milk for market. There was no adequate milk production as the need of market. Then, she discussed with her family and became ready for business. She went in local Women Group, and in their recommendation, microfinance gave her NPR. 1 Lakh for 2 years then she purchased 2 buffalos and started milk supply in the market. Gradually, she collected 5 buffalos and paid the loan of microfinance also. She became the self-employee. She had improved her economic status and social goodwill also. She was doing her business very honestly. She was providing very original milk so everybody came to her for milk. Customers respected her and living the prestigious life in society. Her husband also came back from India and joined in her business and then they were planning to start goat farming also very soon.

Conclusion
From the study of Microfinance service in Syangja district, it has covered 5 to 58 VDCs during the last 20 years of service in Syangja district.The manager of microfinance reported that 50% to 92% with mean 71.5% customers were benefited from loans facility of microfinance. Basically, microfinance has provided loan for farming, petty trade, and small-scale manufacturing. Microfinance institutions are accepted as the institution of the local community; it is for the local development and contribution for the poor of poor so beneficiaries are very conscious to repay their loan in time with an accepted interest rate.
Microfinance service has discouraged the loan borrowing from the local landlord that has protected from the economic exploitation. With the improvement in economic status; social status of people is also increased; self-confidence and self-esteem are increased. Life style is changed with the use of modern technology to make the day-to-day life easy. The communication and leadership skill of rural farmer was improved; they could raise their voice in front of mass or concerned authority. Microfinance has significantly contributed to improving in access to education, health services, decision-making, and other social involvement. Women are aware on their rights of the decision on household assets. They are also become capable to form the group and its mobilization for the development of the community.
It was found that annual mean income after joining microfinance is increased by 30.23% and expenditure is increased by 31.30% which indicates the improvement in poverty level of rural farmers. The data of poverty line among the beneficiaries of Microfinance of Syanga district is significantly higher than the national level.
Therefore, there was need of serious concern form the concerned authority of Nepal government to address the poverty issue of Syangja district.

Recommendation
 Future research can access the impact of microfinance services on poverty reduction by using the 'Before and after' study design in another region of Nepal.
 There is need of loan management and utilization training to the customers before providing a loan so that they can use the loan in the productive sector for the long-term benefit.