The Expanding Financial Frontiers Challenge Fund is a challenge fund for the financial sector targeted at boosting agriculture/ agriculture value chain finance in Nepal. The challenge fund was publicly announced on the 24^th of January 2016 and officially launched on the 17^th of February 2016, under UNCDF’s UNNATI - Access to Finance (A2F) project.

Honourable Governor, Dr. Chiranjibi Nepal of Nepal Rastra Bank (NRB), Her Excellency Ms. Kirsten Geelan, Ambassador of Denmark to Nepal, and Mr. Renaud Meyer, Country Director of United Nations Development Programme (UNDP) in Nepal jointly inaugurated the launching ceremony.  

The UNNATI- A2F project aims to support financial service providers to more effectively serve the agriculture value chain actors with appropriate financial products and enable smallholder farmers and micro, small and medium enterprises to invest in their value chain activities, leading to the sustained improvement in the competitiveness of the selected value chains.

The total amount of the challenge fund is US$1.7 million, which seeks to provide matching grants through a competitive bidding process to two windows. The first window is expanding and/or scaling up products and services, where expansion of financial services are promoted to a maximum number of clients through upscaling existing products and services. The second funding window focuses on supporting financial institutions to roll out innovative products for agriculture/ agriculture value chain financing (i.e., leasing, insurance and warehouse receipts), as well as branchless banking expansions (including through agent networks, e-wallet and mobile financial transactions).

Each project, to be funded under this challenge fund, will range between $50,000 to $400,000 (depending on the project proposal received) in which applicants also need to share costs ranging from 30 percent to 80 percent.  The challenge fund will target projects with a potential to be replicated throughout Nepal, which also adds value, meets market demands and fulfils market gaps. The challenge fund will pay special attention to reducing discrimination towards women and traditionally marginalized groups.

matching grants through a competitive bidding process to two windows. The first window is expanding and/or scaling up products and services, where expansion of financial services are promoted to a maximum number of clients through upscaling existing products and services. The second funding window focuses on supporting financial institutions to roll out innovative products for agriculture/ agriculture value chain financing (i.e., leasing, insurance and warehouse receipts), as well as branchless banking expansions (including through agent networks, e-wallet and mobile financial transactions).

Each project, to be funded under this challenge fund, will range between $50,000 to $400,000 (depending on the project proposal received) in which applicants also need to share costs ranging from 30 percent to 80 percent.  The challenge fund will target projects with a potential to be replicated throughout Nepal, which also adds value, meets market demands and fulfils market gaps. The challenge fund will pay special attention to reducing discrimination towards women and traditionally marginalized groups.

During the ceremony, Governor of NRB, Dr. Nepal highlighted the need for financial inclusion in Nepal and the priority of the financial sector actors to go rural. He further added NRB’s commitment to financial inclusion in Nepal. He acknowledged the challenge fund mechanism to be an opportunity for the financial sector to try out innovative projects with high risk. He further cautioned against the use of the challenge fund as simple top up grants to do business as usual and instead leverage the funding for innovation and technology.

Her Excellency, Danish Ambassador to Nepal, Ms. Geelan emphasized the Government of Denmark’s commitment to inclusive growth in Nepal, particularly in the agricultural sector. She further hoped that the fund would help bring forward new and innovative products that will benefit poor households, women, marginalised groups and micro and small enterprises in rural areas. She announced that UNNATI will soon open a similar funding window directed at agriculture-based private entrepreneurs, where they can seek assistance for various innovative initiatives with “Bankable Projects.”  UNDP Country Director, Mr. Meyer, highlighted the mechanism’s clear link and contribution to Sustainable Development Goals (SDGs), especially in achieving SDGs 1, 8 and 9. He further emphasised that this fund should be maximized and leveraged by Nepalese banks and financial institutions as it offsets the cost/risk of investment associated with new, more inclusive business models that are both profit-making and at the same time help market systems contribute in reducing poverty.                                                       

The deadline for receiving the Expression of Interests (EoI) from financial and non-financial institutions in Nepal for this first round is Thursday, 31 March 2016.