Small loans propel Vietnamese women to prosperity
HO CHI MINH CITY - For years, Nguyen Thi Hoi of the Hop Hoa
Commune in the northern province of Vinh Phuc would brace herself for
the lean months when she and her husband and child would barely have
enough to eat.
But then she heard of a scheme in which small loans were being granted
to women interested in putting together their own businesses. Hoi went to
the local Women's Union to apply for one. A week later, she got a loan
of 500,000 dong (around US$34.50), which she used to build an
orchard and start a pig-breeding business. These days, Hoi's businesses
are thriving, and her family no longer worries about when they will have
their next meal.
Hoi says, "Project officials taught me what to do, providing me technical
assistance. The breeding business developed fairly well and after one
year I was able to pay back the loan so that the Credit Project could
lend it to others."
Hoi in fact has also been busy helping other women in her commune -
one of the poorest in Vinh Phuc - make use of microloans to improve
their lives. But the Vietnamese-Belgian Credit Project (VBCP) that has
made entrepreneurs out of the Hop Hoa women is just one of the many
microcredit funds now changing lives across Vietnam.
These funds differ from each other by scope and organization. But they
all operate under a same principle - teaching poor rural women to
manage money effectively, and through it, raising the quality of their lives.
Previous research has shown that women have higher repayment rates
than men. At the same time, project proponents apparently also took
note that women often have little access to loans because they lack the
needed collateral or have no assets such as land to their name.
Observers now say such microlending projects aimed at women have
proven to be far more effective than government rural assistance funds,
many of which have been wasted by corrupt officials. In truth, a dozen
high-ranking officials at the general department of mountainous minorities
affairs have already been sent to jail for embezzling state assistance
funds. In contrast, the microcredit schemes have only had minor hitches,
and this partly because persuading women belonging to nomadic tribes to
start their own businesses is not easy.
"They didn't know what to do with the loan, and are afraid of not being
able to repay it," says Non Put, a loan pioneer in the Kak Glei District in
the Central Highland province of Kontum. But Put says she is a living
example of how even a female member of an ethnic minority can be
successful in business.
With 1 million dong ($69) of credit obtained from the local women's
association, she decided to breed livestock. Within six months, Put
managed to pay back her debt plus interest. She is now helping 20 other
ethnic women get started in their own businesses, teaching them how to
make use of the soft loan, track their investments, and monitor their
payments.
"Nearly 99 percent of borrowers have been able to refund the monthly
interest," says Non Put. "If an individual faces particular difficulties in
repaying the interest of her loan, the other members of the group are
usually willing to help her."
To be sure, one of the key factors in the success of the microcredit
schemes is the support - moral and otherwise - given by the women to
each other. Usually, the loan associations stipulate that someone seeking
credit be part of a group that would not only guide each member through
the process, but would also see to it that the loan is paid.
In the case of the VBCP, for instance, the loans are under the
management of the local Women Union and are extended to group of 10
women who live near each other and are willing to support one another.
Group members attend compulsory training courses before the loans are
extended. Each group also selects a leader who is then especially trained
to manage the group.
Nguyen Thi Hoi, who was chosen to lead her group, recalls, "I
[attended] a short-term training course on basic accounting, and here I
am, conducting monthly meetings."
The group adheres to fixed schedules for the disbursement and collection
of loans, repayment, interest and savings. "We also use the monthly
meetings to share information and exchange experiences," says Hoi.
Vo Thi Nguyen, who belongs to Hoi's group, attests that the set-up
works. A widow with two children, she had been hard-pressed to make
ends meet until Hoi recommended her to be part of the credit project.
Nguyen spent her $69 loan on a pig-breeding project. "I learned the
technique from other women in the group, and managed to raise the
number of pigs each year," she says proudly. Today, Nguyen can afford
to send her children to school, and even has extra money to buy new
furnishings for her home.
The VBCP project is actually four years old now and in its second
phase. Its first phase lasted from 1997-2000 and involved $1.8 million.
Its microlending scheme was implemented in seven provinces - Ha Nam,
Nam Dinh, Vinh Phuc, Phu Tho in the north, Thua Thien Hue, Kon Tum
in the center, and Tien Giang in the south.
All seven provinces succeeded in developing a suitable credit model with
a monthly repay rate of 99.99 percent. Even in the provinces of Thua
Thien Hue and Tien Giang, where borrowers were affected severely by
the floods of 1999 and 2000, loans were successfully repaid.
Encouraged, the developers of the VBCP decided to go on with the
second phase, to be implemented in 10 other provinces - Hung Yen, Hai
Phong, Tuyen Quang in the north, Quang Tri, Quang Binh, Quang
Nam-Danang in the center, and Binh Thuan and Dong Nai in the south.
This time around, the total credit available is about $4.3 million. Project
proponents also report other slight changes in store.
Says VBCP coordinator Tran Duc: "At this stage, we will focus more on
improving the quality of project staff at the local level." Group leaders will
attend short-term training courses on managing the loans via computer,
tracking the borrowers' investments and their fields of investment so as to
have necessary guidance.
Meanwhile, other microcredit schemes are reaping success stories. In the
Mekong River Delta province of Tra Vinh, the local Women's Union at
the Phuong Thanh Commune has cobbled together a total of 67 savings
and credit funds from a capital of 270 million dong ($18,620) raised
from its members. Some 430 poor women there have received soft loans
of up to 1 million dong to set up small businesses.
"We invest the money in producing handicrafts, using coconuts that are
handy in the region," says Vo Thi Sen, a 32-year-old mother of two,
whose business efforts have enabled her to build a thatched house and
buy a Honda motorcycle.
By Tran Dinh Thanh Lam - Asia Times - June 9, 2001.
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