Story of "Micro-entrepreneurs"

 

With loans of just a few of hundred thousand dong, “micro-entrepreneurs” achieved annual turnovers of VND4-5 billion. Still, with the memory of many years hunger and poverty in mind, Ms Tran Thi Su (Dong Nai) opens her heart, “Our family left Thanh Hoa to settle in Dong Nai ten years ago. At first, we just relied on forest growing but then floods swept away everything. Without land or a house until 2003, we were then granted a loan of VND500,000 by Dariu fund (Switzerland). That modest loan saved our family. With five hectares of land, we grew vegetables and crops, harvesting two and a half crops annually, selling more than 30 tonnes of farm products. Thanks to hard work and savings, we managed to pay back the debt and were not only able to bring up the children, but sent them to school as well. In 2006, we earned VND75 million and this year, up to VND125 million.”

 

In Ms Phan Thi Luong’s case (Tuan Chinh Commune, Vinh Tuong, Vinh Phuc Province), starting with VND10 million borrowed from the commune’s credit fund, she has now managed to lead a comfortable life and set up an aquarium farm. “There were times that I thought impossible to overcome,” she says. “My husband passed away in 2005. Before we had been able to recover from his death, floods swept through Vinh Tuong and washed away our hundreds of millions of dong. Worse still, my son working abroad in Malaysia had an accident and hundreds of millions of dong had to be spent for his treatment.” Eventually, thank God, this hard-working and dynamic woman managed to overcome all those seemingly impossible hurdles. Thanks to a small loan from the Social Policy Bank combined with ten hectares of land in hand, her farm has developed continuously, bringing profit, attracting hundreds of local labourers, and achieving annual turnover of billions of dong.

 

Ms Tran Thi Su and Phan Thi Luong are just two among 60 “micro-entrepreneurs” attending “Vietnam Micro-entrepreneurs 2007 Forum.” Mr Charly Madan, General Director of Citibank Vietnam reveals that this forum aims at the poor with determination to get rich, overcome poverty from small projects and encourages other poor to start doing business to escape poverty.

 

 

A Dariu fund’s official tells us honestly that granting loans to the poor is very risky. They are so poor that they have nothing to put up as security for their loans. Ms Su’s case serves as a good example. She had no arable land and no house. Once lending her money, officials of the fund could not know where she was to ask for the money back. Quite a few times, they granted loans based only on the recipients determination to change their lives. “Their fates are already like gamble matches. We resort to gambling like them!”

 

Ms Le Thi Lan, an official working for the women’s association of Hong Thai Commune, Dong Trieu, Quang Ninh Province, says that years ago, many families in the commune used to face extreme difficulties in buying food, clothes and sending their children to school. Some organizations such as Vietnam Action Aid came to Dong Trieu, implementing the Saving – Credit programme. The programme, however, required savings prior to loans granted and only allowed the poorest to approach the programme.

“Strangely enough, how could such poor people hardly having enough to eat manage to have savings? They already lacked capital to do business, how could they manage to have savings three months in advance? The interest rate was even higher than that offered by banks. But they required no mortgages so we resorted to their requirements. Starting with the empty fund, after six years of hard work, as of 2007, the saving amount of 783 families reaches VND3.5 billion, turnover of up to VND6 billion. This is wholly attributed to citizens’ awareness. Saving helps them know how to set plans for business, not to simply rely on hunger eradication and poverty alleviation funds and still be obsessed with hunger in the end,” Ms Lan explained. 

 

Lives of entrepreneurs “escaping poverty” can be told in long stories, but in summing up such stories, one can see the early stages of a microfinance sector in Vietnam.

 

Though the concept of microfinance is nothing new in the world, it is still a new idea and is experiencing fragmented development in Vietnam. Mr Truong Ngoc Anh, Deputy Director of Banks and Non-banks Department (State Bank of Vietnam) says that microfinance services offer small credit sums to families with the determination to change their poor lives. To benefit from such services, poor people at the time of asking for loans are supposed to have a monthly income of less than VND200,000 (in rural areas) and VND260,000 (in urban areas).

Mr Anh reveals that statistics collected from 60 mountainous communes show that the number of poor families getting loans from the semi-official sector account for 43 percent, compared to 30 percent from Agriculture Bank and 27 percent from Bank for Social Policies. Vietnam still has 16 percent of the population in poverty. There are many other families struggling with poverty without being able to approach “life-changing” loans. This is a very big limit of microfinance, analysed Mr Anh.

 

Contributing to these limits is the fact that microfinance institutions still seem to be passive in outlining business plans and helping poor families control their fund, as well as its profitability, to have a basis for disbursement plan. Furthermore, despite the government’s issuance of Decree 165 with a commitment to letting the microfinance sector develop, there has not been a guiding circular until now. It is not known how much longer the poor will have to wait.  

 

If economic conditions of Vietnam are taken into account (low income, 90 percent of enterprises being small-sized), microfinance is really a crucial element for the stable development of the whole society. If microfinance plans are well implemented, it is strongly believed that many, many more poor people will become “micro-entrepreneurs” in the future.