Unlocking Opportunities: Empowering Financial Inclusion in Rural Nepal

For women in rural areas who continue to face low literacy rates and various gender-based barriers, access to and use of digital financial services is not a small task.

  • Read Time 5 min.

Tika Rawat, a 30-year-old from Shantinagar Rural Municipality in Dang, operates a small grocery shop near her house. Initially, when the Financial Education and Digital Financial Literacy training was introduced in her settlement, she was hesitant to attend it since it required her to close her shop during class hours. However, seeing her neighbors attend the training, she decided to give it a try.

After attending the classes, she recognized the importance of digital finance and began regularly participating in the training sessions. She installed a digital wallet on her mobile and filled out the KYC form. Since then, she has been using the digital wallet for her financial transactions.

Owning a grocery shop, her customers started coming to her for assistance in paying their electricity bills. Tika has been helping them and, in return, receives a portion of their rebate, earning Rs. 15-20 for each bill paid. This service has increased transactions at her small grocery shop significantly due to the additional support of electricity bill payments. Additionally, she plans to expand her financial services through QR code payments.

Tika’s participation in the Digital Financial Literacy program has not only allowed her to adopt digital finance for personal use but has also transformed her shop into a hub for assisting customers with their digital payment needs. This has led to increased business opportunities and growth.

For women in rural areas who continue to face low literacy rates and various gender-based barriers, access to and use of digital financial services is not a small task. Thus, an innovative strategy involving the development of “Women Digital Champions” has been initiated with an aim to reach the vast number of women farmers in remote areas of Nepal, empowering them with increased access to digital financial services such as payment, savings, credit, remittance, insurance, etc.  Story of Tika Rawat is one such example.

Despite 99 percent bank coverage in municipal wards, Nepal Rastra Bank (NRB) reported improved financial access in 2021, primarily favoring men. There was a fivefold increase in mobile banking between 2016 and 2019. According to the UNDP 2020 report, mobile ownership is high in Nepal (>100%), but there exists a digital divide between genders and between rural and urban areas. The rapid adoption and expansion of digital technologies pose a risk of widening the development gap and further marginalizing women groups, especially women farmers. While the gender gap has narrowed in urban areas, the uptake of formal financial services by women in rural areas remains relatively sparse. Financial service uptake in hilly and rural areas is largely driven by microfinance and cooperatives, yet the affordability and suitability of products and services still pose challenges.

In the context of agriculture which sustains the livelihoods of 65 percent of Nepal’s families, 70 percent of the farmers are women. Since 2016, Nepal Rastra Bank (NRB) has actively promoted rural financial inclusion by mandating banks and financial institutions to allocate a certain percentage of their lending portfolio to agriculture. However, these loans predominantly benefit small and medium enterprises and commercial farmers, leaving women farmers underserved.

In such scenario, Women Digital Champions, who are women farmers themselves, have emerged as change agents, educating fellow women farmers on various aspects of financial literacy, digital literacy, and digital financial literacy. Financial literacy covers understanding various financial skills and concepts related to financial services. It equips individuals with the basic skills to manage personal finances effectively in daily life.

In the beginning, WDC receive comprehensive training on financial education, digital literacy, and digital financial literacy. They also undergo training on agency-based women’s empowerment, specifically concentrating on developing women’s confidence in handling finances and managing family dynamics. They acquire knowledge and skills for conducting household dialogue sessions, targeting marginalized and vulnerable households, fostering an enabling environment at home for both men and women to manage their finances effectively. Subsequently, they cascade this knowledge to women farmers in rural areas.

Moreover, WDC serve as role models, visiting homes to teach family members, offering household coaching and mentoring, boosting community confidence through agency-building activities.

The effect of household dialogue can be seen through the life of Pradeshi Kumari Chaudhary, living in the rural area of Dangisharan Rural Municipality, Ward No. 3, Dang. As a skilled labourer, she earned well but spent money casually, causing some family differences. However, after her husband attended a household dialogue, he realized Pradeshi’s busy schedule both at home and as a breadwinner outside. Consequently, he began helping with household chores, aiming to alleviate Pradeshi’s workload upon returning home tired from work.

Initially, a major challenge for women farmers was their lack of trust in digital finance. They were concerned about fraud and had difficulty understanding its workings. However, Women Digital Champions are slowly building their trust. They demonstrate the safety and convenience of using mobile money and bank accounts, enabling more women to access financial services without worries.

Earlier, Binmaya Roka in Thawang-2, Rolpa, managed household chores and farming while her husband handled financial transactions using a smart mobile at their retail shop. Binmaya also used a keypad mobile solely for communication purposes. But post attending agency-based women empowerment sessions, her husband became supportive and purchased a smart mobile worth Rs 14,000 for her. Now, either Binmaya or her husband manages financial transactions at their shop. As a result, her husband has begun supporting with household chores and looking after their child. Meanwhile, Binmaya shares her acquired digital financial knowledge with neighbors, focusing on mobile phone recharges, mobile banking transactions, and earning from these services.

Under the Samunnati Digital Finance project by Practical Action, WDC are being developed in Dang, Rolpa and Rukum East districts of Lumbini Province. Through access to digital finance, women smallholder farmers in these three districts are taking control of their financial futures, breaking barriers, and catalyzing change in their communities. Their journey towards empowerment is not only transforming their lives but also inspiring others to embrace the potential of digital finance. But while celebrating their achievements, it’s crucial to continue supporting and expanding initiatives that foster financial inclusion, gender equality, and empowerment for women farmers across the nation.

To enhance sustainability, wallet companies like IME Pay have enlisted these Women Digital Champions as their digital ambassadors, representing IME Pay commercially at the community level. Additionally, these champions are being hired by cooperatives to provide insurance services for women farmers locally.

Given their cost-effectiveness, accessibility, and time-saving attributes compared to traditional financial services, promoting the adoption of digital financial services is imperative to advance financial inclusion. This is a challenge in Nepal where, according to Nepal Rastra Bank, the state of financial literacy currently stands at only 57.9 percent.

Creating massive awareness among rural women farmers about financial literacy, digital literacy, and digital financial literacy is the foremost step for improving digital access and expanding national financial and digital literacy programs.  This can be achieved through a tailored curriculum that integrates practical mobile banking and secure online transactions. The curriculum should be designed with culturally sensitive, pictorial modules accessible to rural communities. Encouraging financial institutions to create user-friendly, culturally aligned digital products and initiating incentives like cashback or discounts promotes digital transaction adoption among rural women.

Within the Digital Nepal framework, agriculture stands as one of the prominent domains among the eight identified sectors for intervention. Yet, effective implementation of this framework remains a challenge. The digital initiatives outlined in this framework hold the potential to significantly drive digital growth in Nepal if executed properly.

A comprehensive strategy for empowering rural women farmers through financial literacy and digital inclusion is crucial for their economic independence. To achieve this, improving internet connectivity is key. Enhanced internet infrastructure is necessary to ensure the update of digital financial services. This holistic approach aims to bridge the financial literacy and digital divide, fostering empowerment and inclusive economic growth within rural communities.

(Santosh Adhikari and Menila Kharel are affiliated with Practical Action, Nepal.)