A small microfinance outfit in northern Vietnam is making a huge impact on the local community.
Since the establishment of Dien Bien Province’s Village Savings and Loan Association (VSLA), located in Hua Na, the ethnic Thai women who live in this remote and impoverished area have had reliable access to much-needed lines of credit.
According to VnExpress, the Women’s Union of Thanh Nua Commune set up the first VSLA bank in 2012 to provide loans to ethnic minority women. Today, the commune has 21 groups with about 25 shareholders each.
In Hua Na Village, the women technically run the bank.
Because many of the shareholders are women who did not attend school and whose lives revolve around family and farming, meetings at the bank are simple. Members meet on the seventh and 24th of every month. During meetings, each member is required to buy one to five shares, valued at VND50,000 apiece (US$2.2), and must keep her own account book to record her number of shares. Members can also contribute VND2,000 to an emergency fund maintained by the bank.
After buying new shares, those who need to borrow money for various household purchases – to buy new pigs, pay their children’s school fees or cover emergencies like hospital bills – will ask to borrow credit and discuss their plans openly with the group in place of a formal loan application.
Other shareholders then vote on whether to accept the proposal or not. Because the women understand each other’s responsibilities in managing their household finances, there are rarely any objections.
All loans must be paid back by the end of the year and all the proceeds are divided up among shareholders. The profits allow some members to buy assets, while others reinvest for the following year.
Even though many Vietnamese borrow from close relatives or friends, microfinance programs like VSLA provide reliable access to credit for numerous households in remote areas where there are few, if any, formal banking institutions.
At the same time, VSLA engages women, who are traditionally managers of their family expenses but whose roles are not formally recognized, in a more formal banking system, giving them the power to take control of their household’s finances in a more official manner.
[Video via VnExpress]
