Over eighty percent of Nepal’s population live in rural areas. Inadequate income generating opportunities in these areas have been a major cause of widespread poverty and outflow of productive workforce abroad. With aims to cater the needs of socially excluded groups living below the poverty lines by promoting off-farm employment, the Government of Nepal (GoN) and the UNDP started implementing Micro Enterprise Development Program (MEDEP) in 1998. Since then, it has evolved as a model of entrepreneurship development with potentials of lifting thousands of people out of poverty. Targeting the rural poor, women and disadvantaged groups, with successful three phases, MEDEP now is on its fourth phase. On its fourth phase, MEDPA is gradually taking over MEDEP’s role of creating and sustaining entrepreneurs. In turn, MEDEP is more focused towards capacity building of government, line agencies and private organizations for the sustainable delivery of Micro-Enterprise Development services (MED). MEDEP's role will be in developing enabling environment and building institutional capacity of the Ministry of Industry and other partners for the sustainable delivery of MED services thereby contributing for reducing poverty through transferring entrepreneurship development knowledge and skills; creating, promoting, and sustaining micro-enterprises, and generating self-employment and employment opportunities to the rural poor.
MEDEP, jointly implemented by UNDP and Ministry of Industry, Nepal Government is currently funded by Australian Department of Foreign Affairs and Trade (DFAT). MEDEP is creating systems, structures and enabling environment for sustainable development of micro enterprise sector by:
- Supporting the Government of Nepal to implement MEDPA program;
- Building the capacity of the government and the private sector including NGOs (MED service providers) to sustainably deliver Micro Enterprise Development;
- Strengthening the capacity of micro-entrepreneurs associations to sustainably provide members with a number of business development services such as access to markets; access to finance; improved technologies and advocacy.
MEDEP continually works to support uplifting rural poor by motivating them to engage in enterprises. To do so, MEDEP:
- Provides skill and business training and other support, especially for women and poor and disadvantaged people to set up micro-enterprises;
- Assists to establish business support services and representative organizations for micro-entrepreneurs; and
- Works with the government to improve policy environment.
MEDEP’s technical support has led the government to replicate the MEDEP model as Micro Enterprise Development for Poverty Alleviation (MEDPA). The government has been implementing MEDPA since 2010. Currently in 69 districts, the GoN aims to expand it to all 75 districts by 2018. The Cabinet has endorsed MEDPA operational guidelines which lays out a plan for overtaking and expanding MEDEP. To do so, the government will contribute 25% of the total budget (NRS. 4.1 billion) from the government’s Core Fund with a commitment of 67% from the donors and development partners (DFAT/UNDP) and 8% from local bodies. With these resources, the government aims to create 73,000 new micro-entrepreneurs and supporting 60,000 micro entrepreneurs for scale up.
For sustainable development of micro enterprises in Nepal, MEDEP facilitated the approval of a number of national level policy and guidelines. In 2013, the government endorsed MEDPA Five Years Strategic Plan (2070/71 – 2074/75), MEDPA Operational Guidelines and MEDEP Phase IV (2013/14 – 2017/18) document. In 2010 the government endorsed Industrial Policy which identifies Micro Enterprise Development as one of the important pillars of country's economic development. The government has also finalized the Industrial Enterprise Bill which proposes various concessions to micro enterprise sector and tabled in the parliament.
MEDEP's importance to achieving the MDGs
- Reduces poverty and hunger (MDG 1) by increasing the incomes of poor rural households.
- Promotes gender equality and empowers women (MDG 3). Sixteen of the 36 district micro-entrepreneurs' group associations and 7 of the 37 business development service providing organizations promoted by the project are headed by women. Most of the project's new women entrepreneurs have a strengthened role in household decision-making.
- Improves school attendance and the health of women and children as women's incomes go mainly on better food, clothing, and education for their kids and to pay for health care (MDGs 2, 4, and 5).
- Promotes environmental sustainability (MDG 7) by working with forest users' groups for the sustainable harvesting of forest products and by promoting environment-friendly enterprises.