Doubt cast on regulation of Nepalese co-op growth programme

'Due to poor monitoring, many co-operatives landed in trouble in the past'

Officials have warned that plans to use co-ops to drive economic growth in Nepal are suffering from a lack of government oversight, it has been reported.

The country has set the goal of 8.5% growth and in last month’s budget, ministers from the ruling Nepal Communist Party offered the co-op sector – which they see as one of three pillars of the national economy – a role in manufacturing, tourism, energy, housing, education, health and farm modernisation.

Subsidies for the sector in the budget include funding packages to boost farm productivity through machinery imports and the pooling of land resources.

Keshab Prasad Badal, chair of the National Cooperative Federation of Nepal, welcomed the budget. “This can also help in poverty alleviation at the grassroots level if the co-operatives are mobilised properly.”

But officials warn that poor monitoring at regional level means co-ops don’t always put government investment to good use.

Nepal was federalised in 2008 after the ousting of its royalist government, and a new Co-operative Act was put in place, with oversight of the sector devolved to provincial and local authorities.

This has led to inconsistencies in regulation, the Kathmandu Post has reported, with provincial authorities devising their own legal measures for the co-op sector.

The paper says Anjana Thami, of Nishan Uddhyami Mahila Savings and Credit Cooperative, Dhankuta, has warned this lack of uniformity, coupled to inadequate manpower in local government, has thrown the proper functioning of co-ops in doubt.

“Even the grants provided through co-operatives under the prime minister’s agriculture modernisation project have not been utilised properly,” he said.

Central government regulators are also understaffed, the report adds. Government registrar for the sector, Tok Raj Pandey, told a meeting of the Cooperative Journalists Society Nepal that the department lacked chartered accountants to assess the financial reports of co-ops.

“Due to poor monitoring, many co-operatives landed in trouble in the past. If the situation persists, the sector in which the budget has put so much hope will face a severe problem in the future,” he said.

To tackle the problem, the Department of Cooperatives will now work the central bank and the different levels of government to jointly supervise co-ops with annual transactions of more than Rs500m (£3.5m).

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