HÀ NỘI — "With simple borrowing conditions, no need for collateral and the chance to receive capital right at home, microfinance is seen as an effective tool to enhance women’s confidence, promote their participation in business activities, increase income and escape poverty.

"That, in turn, lifts their status in the family and society," said deputy governor of the State Bank of Việt Nam (SBV) Nguyễn Kim Anh at a conference held in Hà Nội on Tuesday.

Microfinance in Việt Nam has long been known as an important component of the financial system and one of the most effective tools for poverty alleviation. The main customers of microfinance are low-income people and vulnerable groups in society, especially women, according to Anh.

According to statistics, in recent years, the poverty rate has fallen from 9.88 per cent in 2015 to 6.7 per cent in 2017, coupled with a sharp increase in income for households at all income levels.

However, the deputy governor pointed out some of the remaining shortcomings in microfinance in Việt Nam, such as fragmented operations and un-diversified products and services. The performance indicators and financial framework of microfinance institutions are not strong. In particular, the legal framework is still not comprehensive and consistent.

Phạm Xuân Hòe, deputy director of the Banking Strategy Institute under the SBV said that lenders should not only provide a source of capital for the poor but also need to provide directions, consultancy on production and business models.

 "We should be giving poor people the needed fishing-rods, teaching them how to fish and then training them on how to sell the fish,” Hòe added.

Trần Thanh Long, director of the Banking Academy - Phú Yên branch, said that financial resources, social capital and human capital were the three most basic needs of the low-income customers. "Financial education plays a very important role in developing quality human capital," he said.

According to Long, personal financial education will help improve the efficiency of loan utilisation, ensure the safety of loan capital, and help people detect and prevent wrongdoing by finance intermediaries.

In Việt Nam today, financial education programmes have been implemented, but many programmes are not oriented to the needs of customers who require loans but receive only basic knowledge of the products of organisations or banks.

From the current situation, Long proposed that women need to be trained on microfinance before borrowing capital to use the loans effectively. On the other hand, it is necessary to develop a team of qualified trainers and appropriate curricula in microfinance as well as training materials tailored to each client.

“Moreover, a long-term personal financial education training strategy is essential as well,” Long said. — VNS