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close this bookFinancial Systems for Rural Development (GRET)
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View the documentAppendix 1: Presentations by Delegation Heads
View the documentAppendix 2: Summaries of NGO Presentations

Appendix 2: Summaries of NGO Presentations

Summary of Mrs Cosico's Presentation on Consortium Credit Activities in Lao PDR

The CONSORTIUM Revolving Fund Program was started in 1994 and is especially for women living in repatriate 16) and neighboring 117) villages. Its goal is to increase their resources by helping them develop income generating activities by providing easy access to low interest rate loans, technical skills training, and assistance in finding suitable markets.

Membership in the revolving fund program is open to all village women, subject to certain conditions. They must:

- be recognized in the village as being honest and hardworking,

- know how to set up and run a small business

- accept the revolving fund guidelines, promise to repay their loan if they leave the village.

Loan requirements

Loans are given out for the sole purpose of engaging in small-scale income generating activities. In each village, the village women themselves decide on the maximum loan amount, not to exceed Consortium's limit of 20,000 kip/person.

Loans may be used to purchase plantstock or livestock, animal feed or fertilizer, and equipment necessary to start up a business. The most frequent activities are chicken and pig raising especially in the areas where the women do not have any knowledge of crafts.

Revolving Fund Administration

The loan applicant has to submit a file explaining the intended use of the loan and a feasibility study of her project. The Screening Committee considers the merits of each application and selects the applicants. Technical training is given to the loan applicants to help them in their activity. Approved applicants have to demonstrate real intent to start their business before loans are given out. For example, women borrowing money to purchase livestock have to construct the required animal shelters first. Within the first few weeks after loan receipt, Screening Committee members make sure that the business has gotten off to a good start. If within six weeks nothing has started, the applicant is requested to return the loan.

Depending on the business activity, loans can be repaid after 6 months (short term) or 12 months (long term) with the possibility of a 3 month extension. Interest rates are agreed upon by the women themselves with CONSORTIUM setting the minimum at 4% per year and maximum at 10%. Repayments are collected by the Village Revolving Fund Committee (VRFC). Penalties for late payments are set by the same committee and adapted on a case by case basis.


The Steering Committee is composed of representatives from Consortium, the Lao Women's Union District Office and the Social Welfare District Office as well as a Chairperson and a VRFC adviser. Its role is to review and approve loan applications. It monitors the progress of the business activities monthly and ensures the proper administration of the revolving fund.

The Village Revolving Fund Committee includes a Chairperson, a Treasurer and an Auditor elected by the village women. The village headman usually acts as Adviser. This committee is responsible for initial screening of loan applications.

Implementation phases:

Phase I. CONSORTIUM teaches the Steering Committee to manage the revolving fund.

Phase II: starts when the first loans are repaid. This is taken care of by the VRFC while CONSORTIUM and the district officials only act as advisers. If loans are not being repaid well, CONSORTIUM has the right to withdraw the remaining funds for disbursement to another village.

Phase III. If repayments are being made regularly, the village has free rein of the fund management. The VRFC in agreement with the villagers can amend the revolving fund guidelines to include personal loans or to assist with community projects. At this stage, CONSORTIUM and the district officials only visit occasionally to monitor the project's progress.

Summary of Mr Jan van der Lee's Presentation on ZOA Credit Activities

ZOA has three credit projects: one in Luang Namtha started in 1993, another in Xieng Khouang province in eastern Laos that started in 1995, and a third in Vientiane municipality that puts more emphasis on training.

ZOA's operational procedure relies on local initiative. The idea must come from the villages. A survey is conducted, making it possible to check the need for credit. Discussions between the ZOA officers and the villagers define the possibilities of granting credit, the terms of the workplan, the preparation of repayment schedules, etc. ZOA imposes technical terms before the loans are granted (for example, a shelter for animals. If the farmer agrees to ZOA's terms, the loan is granted, otherwise, no credit is given.

The district teams, alongside the farmers, are in charge of managing the revolving fund. In order for a group to have another loan, the first one has to be totally repaid. The amount of credit ranges from 15,000 to 20,000 kips ($1 = 925 kips). The maximum loan is $100. The interest rate of the revolving fund is 30%. Repayment terms depend on the regions.

Currently, 30 families are benefiting from the project and we hope to have 800 for an $80,000 budget. As far as the quality of repayments are concerned, it is hard to evaluate since the project is just beginning its repayment phase. In Luang Prabang, the repayment rate is 95% for last year's project.

What lessons can be learned from this experience?

- Groups are good formulas for stimulating farmers and creating a kind of synergy.

- It is important to organize training or discussions to explain the system's mechanisms clearly before disbursing the loans.

- The first cycle should be flexible so it can be adapted to village politics.

- Monthly repayments should be promoted.

- A year-and-a half is too long for a loan.

- It is better to encourage savings when possible.

- Kip devaluation reduced the volume of available funds.

- Credit cannot solve all problems.

- Loans cannot be granted to all the farmers. It is important to identify the leaders of the community and rely on them for supporting these recommendations.

- Granting credit in certain communities appears to be difficult because there are too many inequalities. Refugees are too used to donations, which is a mentality not compatible with loans.

Summary of Mr Saroeun's Presentation on ACLEDA’s Activities in Cambodia

ACLEDA (Association of Cambodian Local Economic Development Agencies) is a Khmer NGO, established in January 1993, with the support of the UNDP and the International Labor Organization (ILO) and recognized by the Cambodian authorities. It also receives aid from the government of the Netherlands, the European Union and the Caisse Francaise de Developpement (French Development BankCFD), etc. It is autonomous and has a staff of 80 spread out in eight provinces and the capital.

After years of war that drained the country, many poor and not so poor people started up micro-or small business because they did not require a lot of means in capital,technical know-how or knowledge and it seemed easy to get profits every day to meet their daily requirements.Although some entrepreneurs were succesful many encountered and continue to encounter problems. The goal is to help the poor increase their income and thus participate in the country's economic development. ACLEDA's support to the development of micro- and small-businesses is focussed on training and credit projects.

Target population:

- impoverished people
- women head of households
- widows or widowers with several children
- handicapped people
- demobilized people
- potential entrepreneurs
- entrepreneurs who create more employment opportunities


- identifying business opportunities
- training in management of micro- and small businesses
- helping develop businesses
- granting loans up to $4000
- creating community banks
- making the access to technical advice and credit easier to decrease use of
- money-lenders
- making the access to training easier to improve know-how.


ACLEDA has a General Assembly, a Board of Directors, an Executive Committee and specialized staff for training. The province offices have an administrator, a team leader, and staff skilled in finance and management of micro- and small businesses. Locally, each office has an Advisory Committee that brings together representatives from other competent organizations on the project themes.

ACLEDA in figures:

Financial services for micro- and small-businesses from Feb. 1, 1993-Oct. 1, 1995:

- total number of customers: 7730

- amount of loans per province: from slightly over $50,000 for Takeo to over $350,000 for Siem Repp

- total number of loans: 8981 - women receiving loans: 89% - repayment rate: 96%

Aid to small businesses from Feb. 1, 1993 Oct. 1, 1995.

- total number of customers: 3589
- 68% of trainees are women
- 71 % of loans are granted to women
- 41% of loans used for creating businesses and 59% for growth
- breakdown of loans is as follows:
- 40% for production
- 20% for service s trade
- 23% for agriculture
- total loan amount: slightly under 1.5 million dollars
- average loan amount $630
- repayment rate: 95%

Aid to micro-businesses from dune 1, 1993 Oct. 1, 1995:

- total number of customers: 4191 (including 99% women)
- total loan amount: slightly over $273,000
- repayment rate: 95%

Summary of Mr Stan Dick's Presentation on the Savings-credit Forum Activities in Vietnam

Set up in June 1993, the Hanoi Savings and Credit Forum is comprised of representatives from non-governmental, bi-, and multi-lateral organizations as well as from Vietnamese government institutions and mass organizations. The objectives of this group are to share information, organize meetings to discuss issues related to credit and to influence government and donor/lender policies on rural credit and savings. The Forum's activities include:

Monthly Meetings

A meeting is organized once a month. Generally, a person presents a topic and a discussion follows. Previously discussed topics include:

- establishing shareholder banks owned by the poor,
- determining appropriate repayment schedules,
- macro-economic aspects of credit, savings and investment,
- the process of socioeconomic differentiation in Vietnam,
- land allocation, loss, and debt in Vietnam,
- relevance of the Grameen Bank experience to Vietnam.
- sustainability and institutionalization.

Database Compilation

Forum members finance and contribute data to a project which compiles detailed information about savings and credit projects in Vietnam. It is currently estimated that 70-80% of the projects are in the database. The database includes data on 59 projects for a total loan amount of slightly less than 1.8 million dollars for 67,125 borrowers. The average group size is 10.6 people and nearly 60% of these projects have opened savings.

Training and Information Sharing

Two 1-week training sessions have been organized and held for project officers of savings and credit programs. In addition, round tables have been held to allow project officers to discuss specific issues and share experiences.


The Savings and Credit Forum has been a focus point through which the member organizations could influence government and multi-lateral organization policy regarding rural credit. For example, the organizations gathered to:

- meet representatives from the World Bank, Asian Development Bank, IFAD, etc. to challenge and discuss credit policies,

- compile a group response to an IFAD feasibility study,

- meet with the director of the newly-formed Vietnam 'Bank for the Poor' to inquire as to its structure and policy,

- compile a list of savings and credit principles or lessons learned from the projects.


An annotated bibliography of savings and credit resources, both general and Vietnam-specific has been created. Project reports and evaluations are circulated between member organizations.

What lessons can be learned from NGO experiences in Vietnam?

1. There is an enormous demand for credit and savings programmes in developing countries. An essential requirement of effective programmes is to reach large numbers of borrowers. Programmes that reach only a small number of borrowers will be unable to demonstrate significant impact or cost-effectiveness.

2. The poor are credit-worthy. They repay their loans rather well. Moreover, the poor are not overly sensitive to interest rates; what counts for them is having quick and easy access to credit.

3. To assist the poor, an institution should not require collateral or guarantors.

4. The best way to help the poor is to keep loan size small.

5. It is best to provide small loans to women.

6. Borrowers should decide themselves how to use their credit.

7. Loans are best used when borrowers have experience in the income-generating activity that they want to finance. When introducing a new activity, rely on the community to learn from each other rather than relying exclusively on outside assistance.

8. Lean towards repayment schedules with progressive, frequent installments.

9. Provide borrowers with written contracts and/or passbooks. These will avoid errors.

10. Credit programmes, because they involve cash transfers, are subject to errors and risks. The risk can be minimized by establishing very clear operating guidelines for granting and refusing loans.

11. A credit programme must have professional record keeping and monitoring systems in place to function effectively.

12. A credit programme can and should cover its costs: administrative expenses, a loan loss reserve, etc.

13. Complement credit with savings programmes to help sustain the systems.

14. Establish a system with incentives to encourage timely repayments and sanctions for late payments.

15. Repayment rates should not be below 97%. Below 95%, the problems should be analyzed and taken seriously.

16. In any and all programmes, plan in advance how they should operate in case of natural disasters.

17. Interest rates should be based on market rates. This allows sustainability and avoids the loans going to those who do not need them.

18. For sustainability, programmes should explore links with formal financial institutions.

19. A credit programme is like a muscle - the more it is used, the stronger it is.