Microfinance helps rural women start businesses

July 09, 2020 - 10:30
With a loan of VNĐ4 million (US$172) for 100 weeks, Luyến and her husband opened a jute bag making workshop – a goal that they had had for years but were unable to realise due to a lack of finance.


Nguyển Thị Luyến (central), owner of a jute bag making establishment in Yên Phong District, Bắc Ninh Province tells her business to Germany ambassador to Việt Nam Guido Erpo Hildner (second from left) during his visit to her workshop last week. — Photo Courtesy of TYM

BẮC NINH — Nguyễn Thị Luyến, 49 years old, of Yên Phong District in the northern province of Bắc Ninh was among first borrowers from Tình thương One Member Limited Liability Microfinance Institution (TYM) in her hometown when the institution opened its branch in 2008.

With a loan of VNĐ4 million (US$172) for 100 weeks, Luyến and her husband opened a jute bag making workshop – a goal that they had had for years but were unable to realise due to a lack of finance.

Since then, every week, she visited the TYM branch to make a principal payment of VNĐ40,000 and interest of VNĐ9,600. After repaying the first loan, she applied for and received more loans. Luyến is now eligible to borrow VNĐ50 million, the maximum loan TYM offers members.

Luyến said that before 2008, she and her husband mostly earned a living from farming.

“We worked hard but what we earned was just enough to feed our family and send our children to school,” she said, adding that when they or their children got sick, they had to borrow money from their relatives for medicine.

“At that time, we did not have any savings to start a business,” she said.

After receiving the modest loan from TYM in 2008, Luyến’s family invested in their business to make jute bags.

“With capital in our hands, we still faced other difficulties, particular in balancing costs, labour costs, finding consumers, meeting market demands and taking care of our children,” she said.

“As a solution for such problems, my husband was responsible for delivering products to customers and instructing workers while I was responsible for paperwork, receiving orders and buying input materials,” Luyến said.

“When my husband delivered products to buyers, he would get their feedback and then adjust our products to meet their tastes,” Luyến said.

Luyến’s business improved and she provided jute bags to neighbouring communes of Trung Dủng, Nghĩa Thọ, Văn Môn and other districts like Từ Sơn, Tiên Du and then, to other provinces like Bắc Giang and Hà Nội also.

The family workshop was expanded, creating jobs for all members of the family and other local residents.

Now, she employs regular 15 workers and six seasonal workers with an average monthly salary of VNĐ3 million ($130).

“Thanks to accessing to TYM’s loans, we can be proactive in our trade and production,” she said, adding that with TYM’s mechanism that allows amortisation encouraged borrowers to work harder.

In 2014, Luyến was recognised as an outstanding microfinance client with a sustainable production model under a programme funded by Citi Foundation.

TYM originated from the Tình Thương fund launched by the Việt Nam Women’s Union in 1992 to aid the Government’s hunger elimination and poverty reduction programme while improving women’s status within and outside the home.

TYM provides loans or microfinance for low-income people, many of them poor and vulnerable women. TYM also helps to collect its members' savings which are sent daily, weekly or monthly and can be withdrawn at any time. Last year, it received more than VNĐ1.6 trillion ($69 million) in savings.

According to TYM, between 1992 and 2019, it had handed out more than 1.3 million loans worth VNĐ14 trillion ($604.5 million) to nearly 170,000 clients. The repayment rate of the loans is 99.99 per cent, according to TYM.

Visiting Luyến’s workshop last week, German ambassador to Việt Nam Guido Hildner said Vietnamese women played important roles in their families and society.

Nguyễn Thị Luyến (left) borrowed loans to start a business on making jute bags since 2008. — Photo Courtesy of TYM

“The women need multifaceted assistances to improve their abilities, particularly financial assistance for economic activities,” he said, adding that microfinance was an effective channel for women, especially those in rural or remote disadvantaged areas, to access financial services.

For years, German’s Federal Ministry of Economic Co-operation and Development, Savings Banks Foundation for International Co-operation have helped the Việt Nam Women’s Association and TYM with microfinance activities.

Under a regional project strengthening regional microfinance networks in former Indochina and Myanmar, German helped TYM provide financial education classes for women, improve the institutional ability of the organisation through digitalisation, increase staff ability as well as expand co-operation among microfinance institutions in the region.

The ambassador said he hoped such assistance was helpful for Vietnamese women.

Going with the ambassador to visit two TYM clients in Bắc Ninh Province, Vice Head of Việt Nam Women’s Association Đỗ Thị Thu Thảo said that TYM had increased its ability and became the first official microfinance institution in Việt Nam.

Last year, TYM was recognised as one of the top 10 financial institutions in the world with best practices in increasing the resilience of communities vulnerable to the effects of climate change under the framework of the European Microfinance Award 2019 'Strengthening Resilience to Climate Change' (EMA 2019).

The award was organised by the European Microfinance Platform (e-MFP), the Luxembourg Ministry of Foreign and European Affairs, and the Inclusive Finance Network Luxembourg (InFiNe.lu), in co-operation with the European Investment Bank (EIB).

TYM offers tailor-made products and services, for example, loans are provided without collateral requirements, loans are disbursed quickly and require simple procedures.

Loans' sizes are small for poor women. Clients can open savings accounts with minimal capital.

Among TYM’s clients, 120,000 women have escaped from poverty and 7,000 women have become micro-entrepreneurs. — VNS