Announcement of IDA Approves Credit to Assist Cottage and Small Industries in Nepal on November 25, 1981

J l . .· • . . . .. FOR IMMEDIATE RELEASE . eWorldBank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A.• Telephone: (202) 477-1234 IDA NEWS RELEASE NO. 82/19 Contact: Sundaram Sankaran November 25, 1981 (202) 477-6393 IDA APPROVES CREDIT TO ASSIST COTTAGE AND SMALL INDUSTRIES IN NEPAL Cottage and small industries in Nepal will expand their production and exports with a credit of SOR 5.7 million ($6.S million) from the International Development Association (IDA). Products made by these industries in Nepal--carpets and other wool products, handloom fabrics, metal crafts, and forest-based products--have been found attractive to some foreign markets; exports have been growing at about 35% per year. About one million people are employed, mainly on a part-time basis, in such production. Rural dwellers in the Kathmandu Valley and hills of Nepal are engaged in agriculture for about four months in the year, and thus have time for these industries. They can improve their incomes and help earn foreign exchange if they can make better products and if they have better marketing facilities. The cottage and small industries project is designed to do this • through private initiative but these efforts will be supplemented where needed by the government. Private commercial organizations will be encouraged to expand production and exports. Commercial banks will provide credit for economically and financially viable enterprises. Three banks are participating in the project: the Agricultural Development Bank, the Nepal Bank Limited, and the Rastriya Banijya Bank. A refinance fund will be set up and administered by the Nepal Rastra Bank (central bank) to channel about $4.5 million of the IDA credit through these banks to the cottage and small industries. In addition to the IDA credit, co-financing from the United Nations Development Programme of about $2 million will provide expert services and training for service agencies that will assist the industries with handicraft design, raw material supply, marketing, and export promotion. The IDA credit of SOR 5.7 million to Nepal will be for 50 years, with 10 years of grace; it will be interest-free but will bear a service fee of 3/4 of 1% to cover IDA administrative costs. The credit will be committed when funds are available. NOTE: .IDA crP-nits are denominated in SDRs (Special Drawing Rights), which are v·' · ., the basis of a 11 basket 11 of currencies. The U.S. dollar ,~1valent of the SOR amount of the IDA credit reflects the exchange rates existing at the time of negotiation of the credit . •