Figure 9. Providers of financial services

2.2.8 Providers of financial services

Respondents used multiple sources of finance rather than just one provider. About 96% of the respondents availed of financial services from the banks. The second top provider of financial services was non-bank financial institutions at 66% followed by moneylenders at 50%. Main users of moneylenders were respondents from the construction and manufacturing sectors. These were usually “ uick” loans to address temporary cash flow problems due to delayed payments, unexpected influx of orders or projects.

Figure 9. Providers of financial services

Venture capital was used mainly by respondents from the manufacturing and construction sectors. Microfinance institutions (MFIs), on the other hand, were utilized mainly by agribusinesses and a few from the manufacturing and tourism sectors. None of the respondents from the ICT and construction sectors were clients of MFIs. Although MFIs have higher coverage across the country, their loan size is too low for many of the small and medium enterprises.

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Economic Profile of Focus Provinces

3 Economic profile of focus provinces

This section provides the economic profile of the focus provinces, geographic distribution and density of enterprises.

Key takeaways

The three focus provinces contributed 32% of the GDP. Province 2 and Lumbini had a 14% share each while Karnali contributed 4%, which is the lowest among the seven provinces.

Agriculture and forestry is the main contributor to GDP in Province 2, Lumbini and Karnali followed by wholesale and retail trade and education

Province 2 has a sub-tropical to tropical climate and the most fertile plain area are suitable for agriculture, especially for growing major cereal, oilseed, and pulse crops and commercial tropical and sub-tropical fruits and vegetables.

The eight districts of Province 2 are linked with the Indian Territory.

Wide disparity in per capita income among the eight districts in Province 2 indicates that that the economic benefits of the high output and gross value added are concentrated in just a few areas.

Lumbini has both temperate and tropical climates as well as irrigation facilities. The major crops are paddy, mustard, wheat, maize, sugarcane, vegetables, potato, lentils and cotton. Lumbini is self-sufficient in milk, cereal crops and pulses.

Lumbini has a special economic zone (SEZ). Locators in industrial estates can lease an industrial shed or warehouse.

Prior to the Covid-19 crisis, Lumbini had an average of 1.5 million visitors per year with about 75% of domestic tourists. It is one of the major pilgrimage destinations.

Karnali is the poorest province and is developmentally challenged because of complex topography and limited road connectivity. The province has the highest level of multidimensional poverty index.

Karnali is a producer of fruits like apples, oranges, pomegranate and walnut which are traded fresh all over the country. Maize