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Microcredit changes the lives of rural women

Update: November, 06/2007 - 00:00

Microcredit changes the lives of rural women


by Tran Thu Van

Tran Thi Hong (right) and a fellow farmworker tend their pigs in Mai Son District, Son La Province. — VNS Photo Doan Tung

HA NOI — Luu Thi Sau would have hardly ever imagined that a tiny loan of VND300,000 (about US$20) could have changed her life so dramatically.

Sau, a resident of Me Linh District in Vinh Phuc Province, is one of the success stories of a microcredit fund established about twelve years ago.

At the time, Sau and her husband, who had no stable job, earned a meagre living from farming. Life was harder since they had three children to care for. But things began to turn around for them when they heard about the Affection Fund, a programme begun in 1992 by the Viet Nam Women’s Union, which makes small loans to rural women to help them set up household businesses.

"With the first loan of VND300,000 (US$2), my husband and I decided to sell pottery. We were gradually able to make ends meet. After paying back the loan, I was able to borrow again, and I was eventually allowed to borrow VND15 million ($950), the highest loan level allowed by the fund," said Sau.

She then shifted to raising hogs and selling chemical fertilisers, businesses which give her family a solid income of VND10 million ($625) a month.

"Though the first loan I borrowed was small, it helped me get out of poverty, a life I used to think I could never escape. Without that beginning, I would not have the life I have today," Sau said.

Since its founding, the Affection Fund has been operational in seven provinces with a mission to improve the status of poor women and their families through credit and savings opportunities, creating favourable conditions for them to participate more fully in society.

As a microcredit institution, the fund makes loans of VND300,000 to VND15 million ($20 to $950) at 1per cent interest per month for terms of 20 weeks (emergency loans), 50 weeks (general loans) and 70 weeks (special loans). To encourage an economical spirit, members of the fund also have to make compulsory savings deposits of VND3,000 ($0.2) per week, receiving interest of 3.6-7.2 per cent annually.

The fund has helped some 30,000 women over the years.

Another microcredit fund in Son La Province’s Mai Son District is operating on the same premise and has offered further evidence of the effectiveness of microcredit as a tool for eradicating poverty.

The Mai Son Fund for Promoting the Development of Women in Mountainous Areas was established in 2003, growing out of the earlier Credit Savings Programme piloted by ActionAid Viet Nam in 1993. With initial capital of VND1.2 billion ($75,000), the fund makes loans to women only, in amounts of VND500,000 (US$32) to VND10 million ($625).

"We want to change the role of women in the family and in society. With the ability to borrow loans and start their own businesses, they can become more confident and assertive," said fund director Vu Thi Khau.

The special feature of the fund is that borrowers don’t need collateral, simply a guarantee from five members of the local women’s union.

Tran Thi Hong, a resident of Hat Lot Township in Mai Son District, testifies to the effectiveness of the fund.

"My husband was a drug addict for five years and died in 2002. I had almost nothing at the time. It was hard for me to borrow from anyone because I had no heirs; I only have two daughters. But the leaders of the women’s union asked the fund to lend me a small amount of money to rebuild my life," said Hong.

Hong’s farm now has 1,000 chickens, 150 pigs (including 14 breeding sows) and a shop selling animals, earning VND9 million ($562) a month. She is also willing to help other women in difficulties by sharing experience and assisting them with livestock.

Entrepreneurship awards

Sau and Hong are both participating this year in the Citigroup Microentrepreneurship Awards Viet Nam 2007, co-organised by the Citigroup Foundation and the Microfinance and Development Centre.

"Microfinance prevails over banking services in poor areas, since banks aim for big profits, but microfinance institutions work mainly for the poor," said centre director Nguyen Bich Vuong. "We hope that these awards will inspire the poor to start their own businesses and publicise best practices in microentrepreneurship. By encouraging the poor to emulate effective models, the programme will facilitate the creation of more sustainable microenterprises."

Le Thi Thuy, director of the Centre for Women and Development and a member of the judging panel for the awards, said, "Microfinance funds are in fact one of the most effective methods for eradicating poverty in developing countries like Viet Nam. Microfinance helps the poor with opportunities to earn new income, start saving, make investments and begin the process of climbing the ladder of economic development." — VNS

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