Microfinance schemes have become an increasingly sought helping hand for less well-off populations in both urban and rural areas as the country reels under double-digit inflation, experts say.
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| Son Thi So Ri, 42, a member of the Khmer ethnic minority in the Mekong Delta's Vinh Long Province, overcame poverty thanks to microfinance. She has borrowed VND10 million (US$476) from the Dariu Foundation, a microfinance institution in Viet Nam. |
The role of around 60 microfinance institutions in Viet Nam has become even more crucial for the poor at a time when interest rates in the main banking system soar at around 25 per cent per annum and loans are very difficult to access.
Several households with low incomes in HCM City and the country's Southeastern and Cuu Long (Mekong) Delta provinces including Dong Nai, Vinh Long, Long An and Tien Giang have been able to overcome poverty and better their living standards thanks to microcredit services.
Institutions offering these services have played a part in Viet Nam's recognised success in poverty alleviation, experts say.
Nguyen Van Hanh, director of the Switzerland-based Dariu Foundation, said more than 90 per cent of women who borrowed money from his microfinance institution have been able to overcome poverty.
"All clients who have participated in the programme now are people not living below the poverty line. Several have even become wealthy," he said, adding that 90 per cent of poor people could not access formal bank services because they don't have property to mortgage.
As prices soar and access to formal credit from mainstream banks becomes more difficult, demand for microcredit has grown sharply.
During the first five months of this year, the number of new clients at Dariu increased by 25 per cent compared with the same period last year, and the number of loans of more than VND6 million (US$285) has also increased to 47 per cent, Hanh said, adding, "It's partly due to the current inflation."
The non-profit organisation charges an interest rates of 0.03 per cent each month, which has not been changed since 2007, in contrast to formal banks, where it has risen steadily.
Since it began official operations in 2007, over 15,500 poor households in the said provinces have become clients, more than 90 per cent of these have successfully climbed out of poverty and activated voluntary savings accounts.
The Capital Aid Fund for Employment of the Poor (CEP), which operates in almost every corner of HCM City and surrounding provinces, has been a lifeline for poverty – stricken migrants.
A non-profit microfinance institution run by the Labour Confederation of HCM City has expanded to 25 branches that last year served 30,000 poor families.
However, this expansion has not been sufficient to meet demand of people migrating to the city in search of employment. As of December last year, the organisation had served 164,400 active clients.
Ha Thi Hai, 50, who has been a Dariu Foundation client in Vinh Long Province's Tan Phu District for eight months, said the loans had helped her expand business despite inflationary pressures.
(Source: VNS)
