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Traditionally, agribusinesses in Nepal seek debt financing to fuel their growth, mainly because this was the only form of financing available, and they can offer collateral to secure loans. However, banking and financial institutions (BFIs) have become less willing to lend to the agriculture sector. Low loan utilisation, challenges in recovering debts, long waiting periods for returns, and uncertain outcomes are a few reasons stated by the banks for their reluctance to lend to the sector. They also view lending to agribusinesses or in agriculture as risky due to their limited understanding of how agricultural cycles impact a borrower's working capital, borrowing requirements, and repayment capacity. Even with the central bank’s mandate for banks to allocate 15% of their overall loan portfolio to the agriculture sector by mid-July 2026, the issue of outreach and access to finance for agribusinesses is still a challenge.
Besides the limited access to finance and high-risk perception of BFIs, agribusinesses also lack necessary business management skills including strategic planning, financial management, and marketing. As such, many agribusinesses in Nepal are not investment ready which further impedes potential investment into agribusinesses. As a result, most agribusinesses remain small and are not able to achieve economies of scale which deters their competitiveness. Addressing these challenges and enhancing investment readiness requires support in both demand and supply side of agriculture investments. It is also crucial to facilitate linkages between agribusinesses and financial institutions.
Recognising this need, Swisscontact provides support to agribusinesses to make them investment ready with an understanding of the agriculture sector and its investment landscape. Overall, Swisscontact’s key strategy to facilitate investments in agribusinesses include:
Commercial Agriculture for Smallholders and Agribusiness (CASA), a global flagship programme of FCDO implemented in Malawi, Nepal, Rwanda, and Ethiopia, seeks to drive global investment in agriculture. In Nepal, Swisscontact implements the programme and works towards increasing investment in agribusinesses by providing TA to its partner agribusinesses with high-growth potential through consultants and experts who customise BDS to make agribusinesses investment ready. Through these service providers, the agribusinesses receive support in developing convincing business plans, improving marketing, incorporating digitisation into operations, supply chain management and company valuation and approaching potential investors. Following a gap analysis, these services are delivered in phases (pre-investment and post-investment) to secure growth capital. Through this support, CASA has been able to collectively attract more than GBP 2 million into seven partnered agribusinesses from dairy and vegetable value chain primarily through BFIs and new shareholder equity.
CASA provided TA to Mahila Samudayik Sewa Kendra (MSSK) in Ghorahi, Dang to access funds and construct a new dairy plant and also supported them to improve their production process and marketing of diversified dairy products. The partnership was designed in two phases, where the pre-investment activities focused around leveraging subsidised debt financing to construct the dairy plant and procure necessary equipment. To do so, CASA provided TA through an investment specialist, dairy expert, and a marketing expert to develop a business plan, conduct scoping of potential BFIs, develop structural blueprint of dairy plant, and conduct market research. Upon operationalisation of the dairy plant, CASA provided post-investment support through a dairy technologist for packaging design and a marketing expert to conduct efficient marketing and promotional activities. The dairy (registered under Dudh Sagar Dairy Udhyog) is currently collecting 500 to 700 liter milk per day and is producing and marketing traditional dairy products such as paneer, ghee, and yoghurt.
Similarly, CASA has partnered with several other companies like Paicho Pasal, Nepal Dairy, Sujal Dairy, S.K. Dairy and Safal Krishi Farm to secure investments.
Recently, CASA has partnered with True North Associates Pvt Ltd (TNA), a leading Private Equity Venture Capital (PEVC) firm in Nepal, to facilitate systemic partnerships between agribusinesses and the investor community. The partnership aims to support medium-sized agribusinesses from the agriculture sector to initiate an Initial Public Offering (IPO) journey. This journey will enable these firms to better understand financing options for growth beyond traditional bank debt and explore instruments such as blended finance, green finance, venture debt, bridge funds. PEVC, CASA and TNA expect to secure at least GBP 2 million collectively from the partnered agribusinesses from either IPO, further debt, or equity investments. The partnership will also help position agriculture as an attractive sector for investment and provide industry validation.
The Nepal Agricultural Market Development Programme (NAMDP)- Sahaj, funded by SDC and implemented by Swisscontact in Koshi Province, focuses on supporting investment in small and medium-sized agribusinesses by strengthening the overarching business environment and service providers for the provision of services required by agribusinesses. Besides working to improve the capacity of service providers, Sahaj also runs specific programs, like acceleration and incubation, to directly support investment in agribusinesses.
The Aadhyanta Accelerator Program (AAP), a collaborative effort between Aadhyanta Fund Management (AFM) and Sahaj, is the first ever business acceleration program in Koshi Province that provides BDS to growth oriented agribusinesses. The program supported growth oriented SMEs and start-ups to accelerate their growth trajectory by providing them with training, mentorship, and TA in areas like business planning, marketing, and financial management. Through market research and networking, AAP helped these agribusinesses explore new markets and distribution channels, both domestically and internationally, and were also introduced to new technologies and best practices that help improve productivity and competitiveness. Programs like AAP are crucial in introducing innovative ideas and implementing structural changes for better entrepreneurial capabilities.
The AAP also helped facilitate connections with investors and financial institutions, making it easier for agribusinesses to access the capital that is required to grow their businesses. An investors’ meet was organised in Biratnagar, Koshi Province, in September 2023 by Sahaj and AFM, which marked the conclusion of the eight-month-long business acceleration program, where eight ambitious agribusinesses presented their business prospects to potential investors. Global Equity Fund, NIMB Ace Capital Limited, Himalayan Capital Limited, and Reliable Ventures Limited showed considerable interest in investing in these agribusinesses when they were approached with the investment memorandum along with a few other PEVCs. The agribusinesses were then paired with a mentor, who were able to offer guidance tailored to the specific risks and goals of the agribusinesses. This mentorship aspect played a vital role in nurturing the participating SMEs, further enhancing their chances of success.
At the conclusion of the program, five businesses secured initial investment commitments exceeding NPR 200 million from the Global Equity Fund and AFM. Out of the five businesses, Birat Feed Mill is moving forward with the investment. They secured a total investment of NPR 120 million from AFM, NIBL Ace Capital Limited, and Global Equity Fund Limited. As of February 2024, the due diligence process had reached its final stage, and the investment will be made based on milestones after establishing a new board for the fund managers. Post-investment support will be provided by the private equity players to derisk the NPR 120 million investment and thereby increasing the potential for success of the invested capital and the agribusiness.
However, not all agribusinesses can access funding from alternate sources such as PEVCs. Accessing credit from financial institutions remains the primary and only option for agribusinesses to inject capital into their businesses. However, most agribusinesses lack the capacity and knowhow to meet the investment requirements of banks.
To address this challenge, NAMDP partnered with two BDS providers based in Kathmandu and incentivised them to open their branch offices in the Koshi Province by facilitating linkages with local governments and district chambers to identify potential agribusinesses to uptake their services. The BDS providers have been assisting agribusinesses to access credit from financial institutions. Both service providers are now providing demand-driven legal and compliance services such as registration and audit. They also provide fee-based services such as business plan development and financial projections that have resulted in loan uptakes for agribusinesses.
Small businesses struggle to allocate time and resources to search for relevant BDS. This often leads to inappropriate or inadequate information gathering and support or missed opportunities. Likewise, when search processes are difficult or are competing with business priorities, enterprises are less inclined to engage with BDS providers.
Swisscontact's Step Up project helps to overcome this by supporting BDS providers in promoting their services to enterprises. Often, enterprises are unaware of the availability of these BDS providers and the services they offer, Step Up bridges the gap between enterprises and these service providers, including BFIs, facilitating access to crucial support.
Swisscontact achieves this through multistakeholder interaction programs where the enterprises, service providers, and financial institutions are brought together to interact with each other to find effective solutions. Through the interaction program, BDS providers promote their services to the enterprises attending. The interaction also provided a platform for the enterprises to discuss their difficulties in obtaining investment for their businesses, while the banks educated them about the prerequisites for being investment ready. BDS providers then facilitated the process of making the enterprises investment-ready while helping them prepare the documents required by the banking institutions. A total of 6 businesses have recently received loans from the BFIs, among which 3 are women-led businesses.
Likewise in 2023, the Step Up project, in collaboration with the Chamber of Industries Morang (CIM), established an angel investor’s network in Biratnagar, Koshi Province. The network provides a platform for entrepreneurs and businesses who are in need of an investment to pitch their business ideas while connecting them with potential investors.
Swisscontact plays a pivotal role in both the demand and supply side of investments for agribusinesses. We focus on investment readiness and investment facilitation, ensuring that agribusinesses are well prepared to attract investment and that the investment process is streamlined for their growth. By providing essential business development services, facilitating interaction programs between agribusinesses and financial institutions, and assisting agribusinesses post-investment, Swisscontact supports businesses to thrive in the market and contribute to the growth of the agricultural sector.