Social Solidarity Economy in Nepal: Perpectives and Practices
A selected case studies of Fair Trade, Cooperative, Micro Finance and Community Forestry
"I did something that challenged the banking world. Conventional banks look for the rich; we look for absolutely poor. All people are entrepreneurs, but many don't have the opportunity to find that out." -- Muhammad Yunus, Grameen Bank, Bangladesh
Nepal in Brief
Nepal is a small landlocked country with the total area of 147,181 Km; geographically divided into three regions – Himalayan region, Mountainous region and the Tarai region. More than 83 percent of the country's land is rugged terrain while the rest 17 percent is plain land.
Poverty measured in economic terms is high and other quality of life indicators paint challenging pictures. About 38% of the population leave under poverty line with income of $1 a day. The per capita income is less than US $250. Total population is 25 million, with the growth rate of 2.1 percent. The life expectancy at birth is 62.1 years. Adult literacy rate is 48.6. Social indicators are low even by the South Asian Standards. There are disparities across income/consumptions between urban and rural areas within areas and across socio-ethic groups.
The GDP growth is less than 3 percent and largely contributed by service, tourism and financial sectors. Though around 80 percent of the total population still depends on agriculture, it contributes less than 38% in GDP.
After the restoration of multiparty democracy in 1990, Nepal adopted outward oriented economic policies to promote trade and investment for rapid economic growth. In early 90, there were some positive outcomes were measured however in totality, these measures failed to bring sustained economic development. The 10th Five Year Plan of the government failed to achieve its goals in improving GDP, employment and economic and social development.
Solidarity Economy gives forms and substance to people's aspiration for new, alternative economic order that places more value on people, the community and the environment rather than on profit. The stakeholders organize and manage their system of production, exchange of goods and services, finance and consumption on the basis of a community of interest rather than on the vested interest of a few.
Solidarity based economic practices is not an absolute new economic model rather, it is the oldest economic model that we have forgotten over the years. In Nepalese context SSE can be traced in various forms of economic and socio-cultural lives of people.
Sharing values, working together for mutual benefit and strengthening the group are not a new economic approach to Nepal and Nepalese. Among various ethnic groups, SSE is the basis of their group dynamics and social and economic integration. A social event can be an economic opportunity that is shared among various sub ethnic groups. Marriages, Festivals such as "Dashai & Tihar" are some of the major social event, which provides economic opportunities to various ethnic groups. Traditional skills and professions are divided among various ethnic groups and one social event brings all of them together socially and economically. From potters to painters and priests, everyone get a role and economic opportunities in these social events.
Moreover, many ethnic groups have their own social order for economic activities. Different forms of economic cooperation among the members of the community evolved. Here are some of the examples practised in Nepal:
“Parma Pratha” – This traditional form of cooperation among the farmers for sharing water irrigation, planting, cultivation and other agro related works. People volunteer reciprocally for other families.
“Dhikuti” – This system is still in practice among “Thakali” community in remote mountains in “Mustang”. People collect food and other necessities and given to very poor families of the villages.
“Bheja” – Practiced among “Magar” community, where community members collect food and money and give to families especially in events such as marriage, accidents and deaths.
“Guthi” – It is the traditional cooperative still in practiced from centuries. These cooperatives are created for various social and economic activities. Specially, among the Newar community, it has been practiced. All the members contribute some money. The members meet once a year with a ritual. They keep the minute of finance as well as other social activities performed during the year. These “Guthies” are created to run and maintain temples, social events/ rituals, festivals etc. The main source of income to run these “Guthies” are agriculture as members donate lands for these “Guthies” and earning of which is used to run the social/ economic events.
Khokana Oil Mills Cooperative – a perfect cooperative
Since 13th century mustard oil mill cooperatives called “Guthi” in “Khokana” town near Lalitpur District of Nepal have been running as a perfect model of present day cooperatives. There are four mills and each has members of 150 to 200 families. They run the oil mill in rotation basis and have to pay levy to the mill about half litre of oil, which is collected and later, sold to generate income for the mill. The earning of these levies is used for maintaining the mills, running social events, and lending to members when necessary. They keep annual accounting and have to present in annual meeting.
Not only these traditional mills in Khokana but also other traditional oil mills around Kathmandu have been operating in cooperative system such as oil mill in “Layakusha”, “Nhusal”, “Dadisha”, “Chasha”, “Falchasha” near by Kathmandu Durbar Square are still running with “Guthi” system.
Ritual v/s Economy
Many of these traditional practices of economic solidarity remained as social rituals unable to grow as sustained economic models in today’s market led economy. There are some inherited as well as posed problems that caused these economic practices remained as social events and cultures.
It failed to grow as economic model rather than it turn to social/ cultural rituals. The members heavily involved themselves in social ritual, which outcaste economic aspect. One can take the example of “Khokana” oil mills, which stopped producing oils, and members changed the profession, but they are still keeping the ritual of celebration and feasts once associated with economic aspect of the cooperative. Another reason, these mills failed is lack of cooperation among the members and some members started high tech oil mills, which are efficient and more productive. The traditional mills failed to compete without any serious business thinking. Lack of maintenance and preservation some of historic mills now at the edge of destruction.
Another reason is the State never recognized these models as economic models and never addressed into policy matters. Over 250 years of “Shah” and 104 years of “Rana” Regime, many ethnic groups many of these traditional forms of social economic solidarity had fade away as the State failed to recognize them into the policy.
Nepal initiated widespread economic reforms during the early 90s to integrate with the global economy. All macro economic policies have attempted to provide a shift from protectionist to free market or export oriented policies. For some years the policy yields some positive outcome in terms of export growth, growth in GDP, foreign direct investment, privetatization etc. However, it didn’t sustain as country underwent in 12 year civil war, which virtually crashed the economy as well as social order.
More than 80 percent of the total labour force depends upon agriculture which results in 47% underemployed and 4.9% unemployment due to their seasonal work in the farm. The manufacturing industries just contribute about 8% of the GDP. In this situation the development of micro and small enterprises is a viable employment creation alternative, providing jobs for an ever increasing labour force and reducing poverty. Micro and small enterprises (MSEs) are important as it create off farm employment, income generation opportunities. Moreover, it has become a tool for women empowerment as it can provide work to large number of women in rural areas.
Poverty alleviation was the mission of the Tenth Five Year Plan of the government which had four major strategic directions:
Wide spread and sustained economic growth
Social and rural infrastructure development
Internal conflict, lack of proper governance, and implementation of policy the projected growth failed to achieve.
More than a decade long internal conflict didn’t stop many NGOs playing effective roles in their sectors. Successful development interventions have been observed and some of these become a case study to the world community. Micro finance, community forestry, fair trade, cooperative, Dalit movement, “Kamaiya” movements, community based programmes are some of the examples that this documents tries to report as an examples of social solidarity economic movement in Nepal.
Among various SSE models, cooperative movement started earlier than other movements. In 1953, Cooperative Department was established under the Planning Development and Agriculture Ministry and in 1956 then government initiated to established first cooperative “Bakhanpur Credit Cooperative Ltd.” in Chitwan District. From government initiation, “Sajha Sanstha” was established under the “Sajha Sanstha” Act 1963. This cooperative has been involved in transportation, publication, supply of necessity items. After the restoration of multiparty democracy in 1990, new Cooperative Act 1991 came in, which have brought substantial growth in cooperative movement in Nepal. Nepal Federation of Saving and Credit Cooperatives Unions Ltd. established 1988 to bring cooperative movements under one roof. Now it has 175,000 individual members, 502 saving and credit cooperatives spread over 53 districts.
Community Forestry in Rural Livelihoods in Nepal is one of the success stories that have been shared with the global community. With the objectives of livelihood support, sustainable forest management and harvesting, and good governance, The Federation of Community Forestry Users Nepal was established in 1995. At present 1.6 million households have been directly benefiting from the community forestry and able to provide economic subsistence for them with sustainable forest harvesting, forest based micro enterprise development, livelihood programs etc. It contributed US $7.15 annually to the government.
As social inclusion movement there started various movements such as freeing bonded labours, Dalit (lower social caste) movement, women right movement etc. Among these movements Feminist Dalit Organization initiated economic empowerment programmes for Dalit women. It has been providing network to 10,000 members in 30 districts. It focuses on advocacy and awareness, education, economic empowerment etc.
Starting from "Aid for Trade", Fair Trade has grown up in its size, shape and dimension both in Nepal and abroad. Started as income generation programs in 80s, fair trade has established itself as sustainable trading models. Fair Trade Group Nepal as consortium of fair trade organization in Nepal has been advocating, lobbying and promoting fair trade at home and abroad. At present around 35,000 jobs have been created and sales reached US $ 5.55 million.
Importance of SSE in Nepalese Context
The government statistics shows that poverty has reduced from 42 percent to 31 percent over last eight years. It is the result of higher urbanization, remittance from foreign employment of large number of rural population, increase in rate of wages in non-agriculture sector etc. The irony is the gap between rich and poor is increasing. It has been indicated by Gini Co-efficient, which increased from O.34 to O.41 over the period.
Twelve year long civil war is over after a peace deal with Maoist rebels and now Nepal is entering into new era of socio-political and economic change. In this change process, social inclusion, right based approach to development, economic empowerment of marginalized people some of the key issues, which can be addressed with SSE practices.
Mr. Mahabir Pun has been awarded Ramon Magsaysay Award 2007 for Community Leadership by the Ramon Magsaysay Foundation in Manila. He set up internet service in remote villages and now providing communication and other services to thousands of village people. This is one of the examples how social entrepreneurs can change the lives of people. Micro hydro projects, solar energy, bio gas programmes have changed the lives of people in rural areas. Micro Enterprise Development Program of UNDP/Nepal Government have created hundreds of rural enterprises and networked themselves into various cooperatives and groups for collective marketing. Rural access roads/ agriculture roads, irrigation, water and sanitation have been initiated with local community efforts.
The interim government has come up with three year interim development plan, which aimed at creating a base for socio-economic transition towards prosperous, equitable and modern Nepal. Poverty reduction is the key of this plan. In this context, social solidarity economic practices can play a vital role in socio economic transformation of the country. It forecasts 5.5% growth over the period and estimated 3.3% growth in per capita income of people. GDP in agriculture is expected to rise by 3.6% while non agriculture sector will increase by 6.5%.
Private sector is taken as the development partners in development sectors such as electricity, communication, rural energy and road etc. Commercialization of agriculture, promotion of cooperatives, agro-credit will be given priority. In industry and service sector, micro and small enterprise promotion will be initiated. In this policy context, SSE can flourish, what one has to do is identify opportunities in their sector and initiate the programmes.
SSE is an effective tools to reach these policy interventions to grassroots. Organizations working in the field of SSE, be it cooperative or fair trade or micro credit can play a vital role in taking this policy interventions to implement. Identifying local resources such as raw materials, indigenous skill and technology then assess how it could be turn into marketable product and services, which can bring economic opportunities to the communities. Agro processing unit at community level can add value in agriculture product, while working closely with private sector can get the market access.