Operational and Institutional Obstacles for the Efficacy of Micro
Credit Programs for Poverty Reduction in Rural Vietnam
VLIR Policy Preparing Research
Mission Report first research phase
Vietnam, 20/10/03-19/12/03
Miet Maertens
Policy Research Group, KULeuven
-Mission Report 21st January 2004-
Contents
List of Abbreviations
1. Overview of the Mission
1.1. General
1.2. Selection of case-study areas
1.3. Qualitative data collection
2. Preliminary results
2.1. The credit market in rural Vietnam
2.2. The Case-study regions
3. Planning further research
3.1. Methodology
3.2. Time planning
Annex: Draft Decree for Micro Finance Regulations
www.prgleuven.be
miet_maertens@econ.kuleuven.ac.be
List of Abbreviations
ADB
VBARD
SPB
VWU
VFA
WVI
VBCP
NGO
MOLISA
MFRC
PRA
MARD
MPI
Asian Development Bank
Vietnam Bank for Agriculture and Rural Development
Social Policy Bank
Vietnamese Women’s Union
Vietnam Farmers’ Association
World Vision International
Vietnam-Belgium credit project
Non-governmental organization
Ministry of Labour, War Invalids and Social Affairs
Micro-Finance Resource Center
Participatory Rural Appraisals
Ministry of Agriculture Rural Development
Ministry of Planning and Investment
1
1. Overview of the Mission
1.1. General
To facilitate and implement the research in the villages in Vietnam, a cooperation
with the Micro Finance Resource Center at the National Economics University of
Hanoi was set up. The cooperation was established with Prof. Dao van Hung, the
vice-director of the MFRC. In addition to this cooperation, two research assistants
were contacted for the practical implementation of the research in the North and the
South of Vietnam: Ms. Tran Binh Minh from the MFRC in Hanoi and Dr. Tran Viet
Hoang from the Vietnam National University in Ho Chi Minh City.
To facilitate the research and introduce the research project at the province, district
and commune level, different institutions were visited in Hanoi, including the
Women’s Union, the VBARD, the SPB, PCF, World Vision International, the
Belgium-Vietnam credit project, etc.
Additional secondary information and literature was collected in Hanoi, including
existing reports and impact studies of micro-credit, secondary statistical data and the
draft decree for regulation of micro-finance in Vietnam (see annex to this report).
During the first research phase, two case study areas in the Red River Delta and the
Mekong Delta were selected and a round of quantitative data collection was
implemented in those areas.
1.2. Selection of Case-Study Areas
The initial intention of the research was to focus on two case-study areas, one in the
north and one in the south of Vietnam. Those case-study areas should preferably be
located in the two delta regions –Red River Delta in the north and the Mekong Delta
in the south – in order to make comparison between these two major rice-growing
regions possible.
To facilitate practical implementation of the research, it was chosen to select in each
region 1 province, 1 district in the province and 3 communes within the district as
case-study areas. In the Red River Delta, we focus the research on the district Phu Cu
in Hung Yen province. In the Mekong Delta, the district Cai Be in Tien Giang
province was chosen. Both provinces belong to the poorest provinces in the delta
regions with an average monthly per capita income among the 20% poorest
households of 92,000 VND (5.9 US $) in Hung Yen and 102,800 VND (6.6 US $) in
Tien Giang (GSO, 2000). In addition, the selected districts are the poorest in the
province and both are agricultural areas with a focus on rice and fruit production. The
district Cai Be is located 4 to 5 hours drive south from Ho Chi Minh city and the
district Hung Yen 3 to 4 hours drive south from Hanoi.
2
In both districts, 3 communes were selected for the research as to include a number of
different credit programs:
Table 1: Overview of Case-Study Areas and the Credit Facilities
Credit facilities and projects
Red River Delta (north of Vietnam)
Province
Hung Yen
District
Phu Cu
Communes
Doan Dao
- VBARD & VBSP
- Vietnam – Belgium credit project
- credit project World Vision NGO
Tam Da
- VBARD & VBSP (intercommune branch)
- credit project World Vision NGO
Phan Sao Nam
- VBARD & VBSP
- PCF
- Vietnam – Belgium credit project
Mekong Delta (south of Vietnam)
Province
Tien Giang
District
Cai Be
Communes
An Huu
- VBARD & VBSP (intercommune branch)
- PCF
- Vietnam – Belgian credit project
Tan Thanh
- VBARD & VBSP
- PCF
Thien Tri
- VBARD & VBSP
1.3. Qualitative Data Collection
During the first phase of the research, information was collected from interviews with
key informants and group discussions with borrowers from different credit schemes.
The key informants were the Women’s Union and staff of different credit institutions
and programs (VBARD, VBSP, PCF, Vietnam-Belgium Credit Project, World Vision
International) at the provincial, district and commune level. The issues addressed
during these semi-structured interviews included the credit mechanism, the
application procedure, the repayment performance, the outreach of the credit scheme,
institutional organization, future development, limitations for expansion, etc. At the
commune level, also People’s Committee, the Women’s Union and/or Farmers’
Association were visited to introduce the research and collect some general socioeconomic information for each commune.
In total, 16 groups of borrowers were questioned in the 6 communes. The number of
people participating in the group discussion varied from 4 to 12 people. During the
group discussions, it was possible to obtain an overview of the different sources of
credit and the credit history of the participants. In addition, we inquired about the
income-generating activities of the people, their credit needs, the purpose of the
current loans, investment in agriculture and off-farm business, their land holdings,
their wealth position, etc. Also the credit mechanism, the application procedure and
the reasons for joining a specific credit program were discussed. Further discussion
3
topics varied from group to group, according to the composition of the group and the
daily activities of the participants. Discussion topics included: agricultural cultivation
and livestock rearing, marketing of agricultural produce, land rental, seasonality and
income shocks, consumption smoothing and risk-coping strategies, etc. During the
discussions, some visual methods and PRA-tools were used; mainly drawing of
diagrams and construction of seasonal calendars.
Table 2: Overview of the number of focus group interviews
Commune
Doan Dao
Group discussion with borrowers from:
- VBSP
- Vietnam-Belgium credit project
- World Vision
Group size
(8)
(6)
(5)
Tam Da
- VBSP
- VBARD
- World Vision
(7)
(6)
(7)
Phan Sao Nam
- VBSP
- Vietnam-Belgium credit project
(5)
(5)
An Huu
- VBSP
- VBARD
- Vietnam-Belgium credit project
(4)
(12)
(11)
Tan Thanh
- VBSP
- VBARD
- PCF
(7)
(10)
(6)
Thien Tri
- VBSP
- VBARD
(4)
(5)
2. Preliminary Assessment and Results
2.1. The rural credit market in Vietnam
Before the renovation policy of 1986, the State Bank of Vietnam was the sole actor in
the credit market in Vietnam, serving as central bank as well as commercial bank.
Under this system, the credit needs of rural communes, cooperatives and state farms,
were handled by credit cooperatives that were managed by local’s People Committee
in association with the SBV. Rural credit needs existed but they occurred more at the
cooperative level rather than the household level since cooperatives were the units of
production, managing also financial problems. The renovation policy or Doi Moi of
1986, introduced the household as unit of agricultural production and launched a set
of economic reforms, including liberalization of the financial sector. The commercial
responsibilities of the SBV were taken over by two state-owned commercial banks:
the Agricultural Development Bank and the Commercial Bank of Vietnam. However,
these only served state-owned enterprises and neglected the needs of farmers and rural
households. This resulted in a growth of credit cooperatives who enlarged their funds
by offering very high interest rates on savings. However, the break up of the
collective production system lead to default loan repayments to the credit
cooperatives and the system collapsed in 1990-1991. As a response, the government
mandated the Agricultural Development Bank (that changed into the Vietnam Bank
for Agriculture and Rural Development – VBARD) to provide credit directly to rural
4
households. In the beginning the VBARD focused on wealthier rural households that
could provide collateral but they gradually expanded their credit activities. The
VBARD currently has a network of 1568 branches; one in every province, every
district and intercommune branches covering nearly all communes in the country.
According the figures compiled by the Asian Development Bank and the State Bank
of Vietnam, the VBARD reached 5 million rural household in 2001, which is 42 % of
all rural households (table 3).
In 1995, as part of the ‘Hunger Eradication and Poverty Reduction’ strategy of the
government, a new funding institution, the Bank for the Poor, was set up as a
complementary section to VBARD. The objective of the Bank for the Poor was to
provide credit to the rural poor at subsidies interest rates. In 2003, the Bank for the
Poor became the Social Policy Bank – SPB and separated from VBARD. The SPB
currently has provincial and district level branches but no commune branches and the
SPB-loans are still being managed by the VBARD staff. According to the figures in
table 3, the VBSP reaches about one fifth of all rural households.
Next to VBARD and SPB, the network of People’s Credit Funds, constitute a third
actor in the rural credit market in Vietnam. This a network of cooperatives owned by
its members and organized in a Central Credit Fund, owned by the member PCF and
the SBV. This network was established in 1993 and incorporated the few credit
cooperatives that were still functioning after the collapse of credit cooperatives in
1990-1991. The PCF network is much less wide-spread than the VBARD and SPB
with 888 local PCF and 720,000 borrowers.
Table 3: The outreach of different credit institutions in Vietnam for 2001
Credit
institution
Average
loan size
(VND)
Total
number of
borrowers
Number % of total % of rural
of poor* borrowers hh reached
borrowers
poor
VBARD
6,450,000 5,000,000 2,350,000
47 %
42 %
SPB
2,000,000 2,571,000 1,250,000
48 %
21 %
PCF
3,400,000
720,000
400,000
55 %
6%
Semi-formal 1,547,000
120,000
??
??
1%
sector
Source: Asian Development Bank and State Bank of Vietnam, TA no 3741-VIE
% of
poor rural
hh
reached
35 %
19 %
6%
??
* A poor households is defined according to the MOLISA criteria of having an income of less than
1,000,000 VND per month. At the commune level, lists of poor households are compiled and revised
by the Hunger and Poverty Reduction Committee.
The VBARD, SPB and PCF are the tree main formal credit institutions in rural
Vietnam. The first two operate under the Law on Credit and Financial Institutions
while the latter operates under the Law on Cooperatives. The VBARD and PCF are
commercial, self-reliant institutions with autonomous financial management while the
SPB relies on external funds and subsidies. Next to these institutions, there exists a
whole range of credit projects funded by donor organizations, including multilateral
organizations, bilateral cooperation, and international NGO’s. Also Vietnamese mass
organizations (mainly Women’s Union and Farmers Association) and ministries
(MARD, MOLISA, MPI..) have there own credit projects. All these credit projects
fall outside the Law on Credit Institutions and there is no comprehensive framework
that regulates this so-called semi-formal credit sector. In order to provide an
5
inspection mechanism, establish laws and regulations on the mobilization of savings,
and further regulate this semi-formal sector the SBV in cooperation with the ADB is
currently working an a decree for micro-finance institutions (The draft of the decree is
provided in annex to this report).
The financial services offered by the formal and the semi-formal sector are diverse.
The VBARD offers short term –6 months to 2 years– credit at a monthly interest rate
of 1 % and medium to long term credit at an interest rate of 1.5% per month. The
average loan-size for the VBARD is 6.4 million VND (table 3) and in fact they
provide loans of up to 1 billion VND to individual households. Only for loans above
10 million, collateral is required and they are working towards new regulations of
providing up to 30 million VND without collateral. The SPB offers short term –
usually one year– credit at a subsidized interest rate of 0.5 % per month and without
the need for collateral. The maximum loan size has been increased from 7 million to
10 million VND and on average loans are 2 million VND. The PCF network provides
short term loans at an interest rate of 1.7 % per month and usually requires collateral
on all types of loans. The semi-formal sector constitutes a variety of credit projects
that are usually small and geographically concentrated. Different credit projects have
their own model and methods. Donors have different objectives and that is often
reflected in the way they implement micro-credit programs. Some donors (e.g. many
NGO’s) see micro-credit as a means to reach other development goals (e.g. technical
progress, income diversification, prevention of child labor, etc.) or even purely as
charity. For others, micro-credit is an end or a development goal in itself. Some
micro-credit projects are implemented as ‘business’ with a focus on reaching financial
sustainability in the long term while others focus on reaching the poorest
As indicated in table 3, it is estimated that the semi-formal sector as a whole reached
in 2001 about 120 million households, representing 1 % or the rural households. As
mentioned before, VBARD, SPB and PCF reach about 47 %, 21 % and 6% of the
rural households, respectively. It is clear that the rural credit market in Vietnam is
dominated by the VBARD. However, next to the wide of outreach also the depth of
poverty outreach of credit programs should be discussed. Although the VBARD does
not explicitly target the rural poor in particular while the SPB clearly does (or should),
the share of poor households among their borrowers is about half for both institutions.
The PCF network is often referred to as ‘credit for the rich’ because of the higher
interest rate and the need to provide collateral. However, the figures in table 3 indicate
the opposite with 55 % of poor households among the PCF borrowers, which would
be a better poverty outreach then both VBARD and SPB. Unfortunately, there exists
no reliable figures on poverty outreach for the semi-formal sector. In addition,
Important questions emerge for the semi-formal sector: should they target those
people who or left out by the formal sector. What
Here something on the importance of mass organizations.
Next to the formal and the semi-formal sector, there is also an informal sector in the
rural credit market in Vietnam. This includes ‘social’ credit from friends, relatives or
neighbors, credit from moneylenders and traders, as well as rotating credit groups
managed by local mass organizations. As there exists no exact figures on the informal
credit sector, it remains unclear how important the informal sector really is
6
2.2. The socio-economic situation in the case-study regions
The two case-study areas that were selected for the research are both agricultural
areas with a focus on rice and fruit production. However, the two regions differ in
many respects. Tien Giang province, situated in the south, has a population density of
678 people / km2 while for Hung Yen province in the north this is almost twice as
much; 1184 people / km2. Both case-study regions are relatively densely populated
and land holdings per households are very small. In the selected communes, the
average agricultural area per households ranges from 0.21 to 0.51 ha per household
with the largest figures in the southern communes (see table 4). However, despite a
lower population density and a larger average agricultural area per household, there
are much more landless households in the case-study region in the south. For
example, in Thien Tri commune, 266 households or 13 % of the households in the
commune have no agricultural land at all. In the northern communes, there are no
landless people and all households have agricultural land according to the size of their
household. This is a result of a series of land reforms with the last Land Law of 1993,
which imposed the equal distribution of agricultural land with long term user rights
for rural households. These land reforms led to a more or less equal land distribution
after the break up of the collective farms in the north of Vietnam. In the south these
land reforms have never effectively been implemented.
Table 4: Demographic characteristics of the 6 surveyed communes
Cai Be district, Tien Giang
Phu Cu district, Hung Yen
Province, South of Vietnam
province, North of Vietnam
An Huu
Tan
Thien Tri
Doan
Tam Da
Phan Sao
Thanh
Dao
Nam
Total population
15,356
9,662
9,742
9,255
5,120
5,200
Number of households
3,603
1,958
2,067
2415
1400
1523
Agricultural area (ha)
1,021
997
1,181
630
300
444
Average agr. area (ha) / hh
0.28
0.51
0.36
0.26
0.21
0.29
Poor and nearly poor hh
??
295
464
770
400
469
(% of total households)
(15 %)
(22 %)
(17 %)
(28 %)
(31 %)
In both case study-areas, poverty still exists and the percentage of poor and nearly
poor (see further) households ranges from 15 to 31% in the surveyed communes. The
access of those poor people to the rural credit market and the impact of small loans on
their livelihood and well-being is an important research issue.
In the surveyed communes in the north, people hold very diversified activity and
income portfolios. Every household cultivates a plot of paddy land and has some
livestock (mostly chicken, ducks and pigs). Some households additionally have a
garden with fruit trees (mostly litchee and longan), have a fishpond or involve in
small trading activities. Also, seasonal migration is common in some communes. Two
rice crops per year are possible on paddy land. Also an intermediate winter crop (e.g.
corn, soybean, potato, etc) is possible but the extent of winter crop cultivation is
limited due to the high labor intensity of those crops. Landholdings are small and rice
cultivation is mainly focused on subsistence. Surplus rice is sold to local traders. Yet,
marketing rice is not always a sign of surpluses. Poorer people often need to sell rice
after harvest to overcome cash flow problems (e.g. to buy inputs for the next harvest
or to fulfill loan repayment duties) which leaves them insufficient stocks and forces
them to buy rice when market prices are higher. Livestock a very important source of
cash income. Litchee and longan production is completely market oriented and is
highly seasonal with production concentrated in July and August. Many households
7
have highly fluctuating income which poses limitations on their investment capacities
and creates a need for consumption smoothing mechanisms. Fluctuating market
prices, spread of pests and diseases (especially with chicken and ducks) and storms
further aggravate this.
The surveyed communes in the south are also rice and fruit production areas.
However, here 3 rice crops per year are possible and rice production is much more
market oriented. Fruit production is more diversified including mango, orange,
pumelo, mandarin, guava, litchee and longan, some of which can be harvested all year
round. People with land holdings, usually have either rice land or fruit gardens and get
the highest share of their income from the land. Due to the possibility of 3 rice crops a
year and the diversity in fruit production, income from agricultural production is less
seasonal. However, fluctuating market prices (especially for fruits), storms and floods
cause many risks for farmers. Livestock production, especially pigs, is also common
in this area. Many landless people involve in pig production, set up very small scale
trading activities or work as agricultural wage worker. Agricultural wage labor is
quite common and there is a demand for daily workers all year round.
The above described differences in land ownership structure, the diversity of income
strategies and the incidence if poverty in the case-study regions might have important
consequences for the credit needs of rural households and the impact of existing credit
schemes.
2.3. Overview of different credit schemes in the case-study areas
In table 5, we give an overview of the different credit schemes in the case study
region, the number of borrowers and the outstanding debt for each scheme. Overall,
the VBARD has the widest outreach. However, in the northern communes the SBP
reaches more or less the same number of households. The PCF reaches about 1 fourth
of the households in two surveyed communes; in another commune they have only
few borrowers while and in the other 3 communes there is no PCF. The VietnamBelgium credit project is present in 3 surveyed communes and its’ outreach ranges
from 7% to 14 % of the households. World Vision International has a credit scheme in
two of the surveyed villages, where they reach 11 % and 14 % of the households.
Table 5: Number of borrowers and outstanding debt for different credit projects in the
6 surveyed communes
Cai Be district, Tien Giang Province,
Phu Cu district, Hung Yen province,
South of Vietnam
North of Vietnam
An Huu
Tan Thanh
Thien Tri
Doan Dao
Tam Da
Phan Sao
Nam
Number of borrowers
(% of rural households reached)
950
1,299
735
672
372
320
VBARD
(26 %)
(66 %)
(35 %)
(28 %)
(26 %)
(21 %)
SPB
241
(6.6 %)
48
(2.5 %)
506
(24 %)
679
(28 %)
293
(21 %)
325
(21 %)
PCF
120
(3.3 %)
470
(24 %)
-
-
-
400
(26 %)
VBCP
240
(6.6 %)
-
-
279
(11 %)
-
216
(14 %)
-
-
-
35
100
-
WVI
8
ROSCA
??
96
(5 %)
Outstanding debt (million VND)
VBARD
9,783
10,668
SPB
467
182
PCF
120
470
VBCP
240
WVI
ROSCA
??
74
(1.4 %)
(7 %)
??
30
(1.2 %)
25
(1.8 %)
??
5,900
1,400
??
4,400
2,100
172
60
20
2,900
1,400
170
47
1,400
1,300
2,500
190
??
In both regions, VBARD and SPB work with credit groups. VBARD also has
individual loans while SPB provides loans only through groups. However, these
groups are not really ‘solidarity groups’ or ‘joint liability’ groups. They apply a
system of individual lending through groups rather than real ‘group lending’. Most
borrowers in these groups agreed that they were not liable for each others’ debt and
mentioned that they would never repay the loan of someone else in the group. In some
groups, there was no clarity on whether future access to credit would be affected by
default repayment of other group members. Default repayment never occurred in most
groups. However, this has to be taken with care as in many cases loans were
rescheduled easily. Many borrowers, especially from SPB, had their loans extended
for another period when they were unable to pay back at the end of the original loan
period.
Cycles: on some cases for PSB laons.
Mass orginazations
The two donor-funded micro –credit schemes in the case-study areas, work according
to completely different principles. The VBCP works with credit group and
Tam Da: WU and FA guarantee loan for SPB.
Rosca in Tan thanh: has 31 groups, 346 members and 114 million VND. The figures
in the table are for the credit-saving group.
In the south, there is clear link between land holdings and access to credit. The people
with land have access to VBARD and PCF loans, while those without or too few land
don’t. So, people with land have access to longer term loans and bigger loans. People
without land have access only to small, short term loans.
-
-
Market is highly segmented: VBARD and not Land holdings play an
important role despite the government regulation of providing collateral-free
loans to
Women’s Union in guaranteeing
Rescheduling loans
Credit from moneylenders at high interest rates are more common in the
northern than in the southern case-study communes. In the north, households
9
could more easily access credit from moneylenders since many such lenders
are available. However, the inin the
-
In the northern case-study region, households have credit from many different
sources, while in the southern case-study regions a household usually only has
one source of credit. It is not uncommon for a household in the case-study area
in the north to have credit from the formal and the semi-formal sector and
from moneylenders at the same time. Even cases where people have loans
from the VBARD and the SPB are not rare.
Loan purpose
North: inputs for livestock rearing and animals
South: inputs for agriculture cultivation, if people are landless, also pigs and small
business
They seem to borrow from official sources for the most profitable business or the
most important income sources while they fund other secondary activities with the
income from those activities.
This is security reasons: invest in least risky business?? Use profits, so own capital, or
in the north even moneylender
Fungibility of capital: very difficult to assess the impact of credit.
Preliminary results:
North: people take up credit from several sources
South: only one source.
Demand for credit:
Credit use:
South: farmers buy agricultural inputs
3.2.1. Overview of different credit schemes in the case-study areas
Also, in the two case-study areas, the formal, semi-formal and informal sector of the
rural credit market are present.
Different actors
Terms and conditions of the loans
Credit discipline versus loan flexibility
Group lending and Grameen banking model
Poverty concept, targeting of credit schemes and access for the poor
Overview of the number of borrowers, the outstanding loan size etc for the different
communes.
(concentrate on implementation, institutional questions and access)
10
theory of asymmetric information, moral hazard (new institutional economics) could
also shortly be mentioned here.
3.2.3. Credit, investment, poverty alleviation and economic growth
income shocks: weather related rather than market related, rice price fluctuations very
limited, although rice prices may vary enormously at the world market, the effects for
the rural areas in Vietnam is limited because of the national rice stock agency,
liberalization of the rice market not complete, only competitors but still a lot of
government regulations.
Credit: institutional aspects and implementation: very different from district to district
and north – south comparison.
Economic transition in Vietnam: a lot of state-owned companies and government
intervention: focus on rice and fruits.
Land reform issues: north – south comparison
Poverty and vulnerability: differences north – south: link with land market and credit
Consumption smoothing and risk coping strategies:
Ex ante mechanisms? Ex post mechanisms?
Selling fruits when still on the tree:
Cash flow problems:
Buying and selling rice, leans a loss for the household
The need for seasonal credit with flexible repayment
Selling fruits when still on the trees
Contract production and agreements
Longan harvest, melon production
In anticipation of the opening of a new longan processing company in the
province, people started to convert land to gardens. But this is risky business because
of no return the first years, and less land left for rice production. Food security has
always been very high on the agenda of the local authorities, who still have decision
power in the use of land. In order for people to convert a plot of land from rice
production to garden, they need to ask for permission from local authorities and
provide them with a business plan. Local authorities respond to instructions from
district and provincial level, if government
Capital constraints, land constraints, labour constraints:
South case-study area: relatively high labour-to-land ratio
Hiring labour is very common
North case-study area: relatively low labour-to-land ratio
Only exchange labour
Harvest on contract
Although: labour migration!!!! (lack of labour but migration to other
provinces to work for wages!) Because people don’t know how to increase the
productivity of land; still a lot of potential for increase in land productivity compared
11
to the south, where this is very limited). Land is not considered a high value in the
north.
Land rental arrangements? South: borrowing land is very common; tenant provides an
interest free loan to the landlord in return for the use of the land, usually for a period
of one year. (link of credit and land market)
North: fixed rent, but in-kind payment, often borrow land from the commune, very
low rental rates.
Role of moneylenders:
Results with respect to credit:
Overview of the implementation of different credit programs. The number of
borrowers, outstanding loan, loansize ….
Access:
South, more capital constraints, especially landless people, the need for collateral
(even no collateral, but they keep the land certificate at the bank), credit sources for
poor people are quite limited, but if they have credit, there is a very flexible system.
North, no landless people, more access to capital, but financial services are less
tailored for the needs of the farmers (seasonal loans, flexible repayment, loan
extension, …..)
Flexibility of agricultural bank and social policy bank depend very much on the
district and the pressure the district gets from the province.
Also people’s credit fund: in the south and in the north operates differently
Access: also book of the poor. VBSP has extended it’s credit activities to include also
nearly poor people, they are expanding the activities but probably also many poor
people are not reached.
Micro-finance programs: targeted towards whom? Landless poor: strict repayment
makes sense if people invest in small businesses that they can run the whole year
round. But does not make sense for agriculture.
The role of mass organizations at the village level: linkage model, sustainability.
Reduce transaction costs for the bank, translate them into social costs.
Micro-finance:
Loan size.
Impact?
Poverty reduction: some micro-credit schemes might help farmers to get out of
poverty: mention some case-studies farmers, e.g; the individual framers in
But also debt-cycles:
Investment activities:
Main findings:
12
-
solidarity groups not really ‘solidarity’ groups but only ‘transaction’ groups,
joint liability groups.
-
Demand for emergence credit high, especially in the case-study area in the
North, and not covered by formal and semi-formal sector, which
moneylenders, often spiral effects, in which people cannot invest capital as all
profits from . These are not necessarily people who do not have access to
formal credit sources
-
Group system and experience sharing: might have some negative effects, such
as pig cycle thing
-
Dynamics within groups: not observed.
-
Most people are credit rationed, even if access to formal credit sources,
-
Tendency to target away from the poor or the poorest.
-
Much attention is paid towards the family structure, people with enough labor
an hard-working.
-
Income and consumption smoothing is a very important issue.
-
Credit from SPB is not one-time credit as is sometime proposed in the
literature, people do have several cycles.
-
Debth and wide of outreach: SPB,
-
Mass organizations, especially the women’s’ union, their role:
o Information from banks and credit projects to the households
o Cooperating with credit officers in monitoring the loans
o Guaranteer of loans from VBARD and SPB, which has reduced their
costs and is probably one of the factors behind the enormous wide
outreach they have
Issues to further explored with quantitative data already collected and survey data still
to be collected:
-
access to credit and the demand for credit of rural households
-
impact of credit and how the financial system influences this
-
WU and mass organizations
-
Depth of poverty outreach of the formal sector
3. Planning of Further Research in Vietnam
3.1. Methodology
13
The research will continue in a second research stage with a survey of approximately
300 households. This survey will cover issues
This phase will take place in February – March 2004 and consists of a survey of
approximately 300 households – 150 households in each case-study area. In each of
the 6 communes, 2 villages/hamlets will be selected to be included in the survey and a
random sample1 of about 25 households will be drawn for each village. The survey
will be implemented by a team of students and more experienced researcher, a
combination that allows capacity building and gaining experience for local students.
For Hung Yen case-study area (north), the survey team is recruited from the National
Economics University in Hanoi and for Tien Giang case study area (south) the survey
team is recruited from the Vietnam National University Ho Chi Minh City, Economic
Faculty. In January, the questionnaire for the survey will be constructed and discussed
in Leuven and translated by the research assistant at the Micro Finance Resource
Center in Hanoi.
1
If possible, households could be classified based on the poverty classification in the commune and a
stratified random sample could be drawn. However, the selection of households will very likely be
influenced and biased by local authorities.
14