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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 1: Presentations by Delegation Heads

Address by Mr. Bousbong Souvannavong, Governor of the Bank of Lao PDR at the Opening Ceremony of the Seminar

Ladies and Gentlemen, Lao and Foreign Delegates,

First of all, I am pleased to welcome the delegates from Vietnam, the Kingdom of Cambodia, and Myanmar as well as the representatives from the international and governmental organizations, and banks.

Our Party, our Government, our Army and our people as a whole are hard at work in view of obtaining good results for celebrating the 20th anniversary of the Lao People's Democratic Republic which will take place in the very near future. Within this framework, it is my honor to represent the Lao PDR government and the Lao PDR Bank who organized this seminar with the cooperation and assistance of the C.C.L., IRAM and GRET.

This is the first time that the Lao PDR Bank has, with the cooperation of NGOs, organized a seminar on the regional level with the participation of Lao representatives and representatives from neighboring countries such as Vietnam, Cambodia and Myanmar. This seminar will last 3 days, from October 30th to November 1, 1 995.

The goal of this seminar is to exchange experience and learn some lessons about rural credit systems and savings mobilization. A longer-term goal is to help farmers become more autonomous and self-sufficient by means of financial support and to promote the setting-up of capital to increase production and gradually improve the rural population's standard of living.

Honorable Ladies and Gentlemen, I am familiar with and understand the organization of the rural credit and savings system which has been adopted in Vietnam and Cambodia and I think that this system is a potential factor for making farmers autonomous and self-sufficient by allowing them to acquire capital that they will use for production without having to wait for Government subsidies or foreign aid.

In Lao PDR, we have also organized a rural credit project, since the beginning of the implementation of the New Economic Mechanism, in view of supplying financial services to farmers throughout the country. In June 1993, the Government decided to create the Bank for Agricultural Promotion to supply financial services to farmers. A representative from the Bank for Agricultural Promotion will give you more details concerning these activities.

Therefore, during this seminar, I hope that the defecates will have the opportunity to hear some reports and exchange experiences. This exchange should enable us to obtain specific advice for the implementation of actions in the near future.

I would like to take this opportunity to wish the seminar success in this relaxed atmosphere. I would also like to wish all the Lao and foreign delegates good health and outstanding results in their research and exchange.

I now declare this seminar officially open...Thank you.

Summary of presentation by Mr. Tea Eav Ho, Director of the Committee of Decentralized and Rural Credit of Cambodia

A quick review of Cambodia's geography and recent history will make it easier to understand the development of rural credit in Cambodia:

Cambodia is a country covering 180,000 square kilometers, neighboring Laos, Vietnam and Thailand. It has a population of approximately 10 million.

The country was left weak and drained by several years of war. All the infrastructures were destroyed, the human resources reduced and the State institutions had become fragile. The Paris Agreements of October 31, 1991 brought about peace and led to the organization of free, democratic elections in May 1993 and the formation of the current royal government. These past two years of peace have enabled the government to work in a favorable environment with the support of International Organizations.

This recovery can be seen in the inflation rate that dropped from 123.3% in 1993 to 18% in 1994 and is expected to be about 10% in 1995. Private investments surpassed 2 billion after a law concerning the investment code was passed in August 1994. Public investments for the rehabilitation of the country's infrastructures went from 30 million dollars in 1993 to 125 million in 1994. In spite of these efforts and this recovery, Cambodia is still a poor country. The yearly income per person is $240. Eighty-five percent of the population lives in rural areas, hence the government's priority to emphasize rural development. With the support of International Organizations, Cambodia has set up its National Programme for Recovery.

Once again a State in its own right after its recognition by the International Organizations, to ensure its development, Cambodia must develop its human resources. It must ensure its budgetary balance, economic and financial stability and develop its economic infrastructure.

As far as rural credit is concerned, Cambodia counts on NGOs and International Organizations for development since currently only 2.5% of the population has access to credit. It turns out that these operators have very different concepts of work. To harmonize rural development and give the government a means of operating, the Credit Committee for Rural Development CCRD) was created, financed by the Caisse Francaise de Developpement (French Development Bank- CFD) and the UNDP.

Its job is to define a rural credit policy for the government, suggest a legal framework {as there are no regulations concerning the setting of interest rates, the creation of institutions, etc.), develop training, assist and coordinate the operators who work in this field and find ways and means of increasing the capital of the credit made available to the population. This job is done in collaboration with technical operators. At present, the funds being used for credit come solely from International Organizations and NGOs; the goal is to mobilize private investments on a long-term basis. Cambodia does not always want to count on this aid, hence the need to institutionalize the structures and to try to mobilize the country's internal savings or resources

This is a general outline of rural credit in Cambodia.

Presentation by Mr. Cam Hieu Kien, Vice-Director of the Vietnam Bank for Agriculture

Ladies and Gentlemen,

The Vietnam Bank for Agriculture is a state owned commercial bank. It has 53 agencies in the provinces, approximately 500 in the districts and over 1200 offices in the communities. Its banking activity especially targets agriculture, forestry and fishing.

Since 1991, the management of this bank has followed the rules of the market by applying an interest rate that must enable it to create equity by taking into account inflation which swings between 10 and 14% per year.

From 1991 to 1994, the government guided the policy of the Vietnam Bank for Agriculture as follows:

- block the repayment of unpaid loans prior to 1991, which represents approximately 1500 billion dongs

- enable the BAV to have larger margins by decreasing the taxes collected by the State. This is an advantage in comparison to the other state owned commercial banks.

- the capital of the BAV was brought by the National Bank at an interest rate lower than that granted to the other banks so as to enable it to have more resources for its future operations.

Given these advantages, the BAV brought together conditions favorable for carrying out credit operations successfully and rapidly achieving transformations of investment modes.

Before 1990, loans to the private sector only represented 65 million dongs out of 1500 billion. Currently, following transformations of the investment modes, the loans made to the private sector represent 70% of the total amount of credit operations. Out of the 10 million families in rural areas in Vietnam, 5 million have already benefited from credit operations.

The government has different ways of helping the farmers:

- Agricultural development projects, training of farmers in modern agricultural techniques, breeding and fishing ( shrimp breeding, fish farming, etc.).

- Distribution, for long periods, of land and forest to farmers to make them settle and motivate their agricultural activity.

- Forest development projects, reforestation operations of land left fallow and still untouched mountainous areas. The State supplies seeds and plants, as well as a salary to those who reforest. The State also grants loans at 0% or a reduced rote.

- Exploration policy of new economic fields. The State subsidizes people who farm new land as well as the construction of infrastructures ( roads, electric plants, irrigation systems, schools, hospitals, drilling, etc.) by granting tax exemptions on farm products for 3- to 7- year periods.

- Policy of rescheduling loan payments for farmers having been victims of natural disasters.

The Vietnamese government is also carrying out several major projects |coffee, sugar cane, mulberry trees, silkworm breeding, etc.) These projects are financed by the State budget and bank loans. The goal is to build an economic network backed by modern technology in cooperation with the State industrial sector which should allow the State and the farmers to improve their incomes.

As far as nomadic ethnic groups are concerned, the Government's policy is to invest in the setting up of small irrigation systems, assign new land, build schools, infirmaries and water reservoirs to influence settlement. The government is committed to purchasing rice from farmers at the market price and supervising the cost of feed for animals.

I would like to explain all the projects carried out by the government with the Vietnam Bank for Agriculture and the farmers so that you will be able to clearly understand that the conditions are very favorable for the development of the BAV and why we wanted to develop credit activities quickly. For credit, we divided the "private" families from the rural regions into two categories:

- Category 1 includes families who make their living from farming, fishing and forest activities. The bank conducted a survey to determine, based on the family's production capacities and standard of living, the possible size of the loan. For families who want to borrow less than 1 million dongs (approximately US $96), no guarantee was required. We distributed a credit passbook to each family that contains some administrative information (i.d. card number of the family head, his/her photograph) certified by the local (community) authority. Each time the family wants to borrow money, it must bring its passbook accompanied by a written request. The BAV generally grants a loan rapidly. If a family from this category requests a loan between 1 and 10 million dongs ($US 960), it must simply justify the use of the funds in compliance with the goal mentioned when the credit was subscribed. The bank later controls the use of the funds. If the loan is over 10 million dongs, the family has to offer guarantees.

- Category 2 includes families whose activity is commercial or non-agricultural.

For these families, whatever the amount of the loan, they must sign a contract with the BAV and present collateral. The BAV can grant loans to State businesses such as cooperatives, local bank branches, rural credit unions so that they can disburse credit directly to the farmers. This form of indirect credit represents approximately 20% of the amounts loaned and "relieves" the BAV. This type of operation is limited since the relay structures do not have sufficient guarantees for absorbing more credit operations.

The BAV can also grant loans to recognized, well-known structures or people such as the Women's Federation, a farmers' association, a religious master, an ethnic group's wiseman (respectobility is therefore a form of guarantee). The structure must also hove a certificate from the local authority.

Recently, some groups declined their responsibility by disbanding before the debts of their members were paid.

Since March 1995, the BAV has established credit unions for impoverished farmers. The initial capital was 400 billion dongs. There is a communal committee that determines which families are poor and gives a list to the bank ( the committee is called the Committee for the Fight against Hunger and Poverty). These families can apply for credit up to 2.5 million dongs over a three year period without a guarantee and with an interest rate of 14.5% per year.

Currently in Vietnam, there is a "Bank for the Poor" specialized in credit for the most impoverished but all the existing banking institutions can also offer credit to the poor. This is the case of State-owned commercial banks {such as the Vietnamese Bank of Industry and Trade, the Vietnamese Bank of Investment and Development, the Vietnamese Bank of Foreign Trade), private banks, and the system of credit unions. There is also the work of certain NGOs who are authorized to offer credit to farmers. The leaders in this field are the IFAD and the Programme Fleuve Rouge.

The BAV is in a good position in the field of credit for the poor since it made 95% of its loans to farmers over the past 4 years. They were essentially short-term loans. The BAV has participated actively in agricultural development. In the past, Vietnam was indeed lacking in rice, whereas today it exports more than two million tons a year and is the third exporter worldwide. It also exports coffee and fishing products for over one hundred million US dollars a year.

Vietnam has taken agricultural production seriously since 80% of its population are farmers. The Vietnamese government is continuing the development of its rural and agricultural policy through the construction of the rural financial network which meets the market regulations under State supervision and is in compliance with the socialist way of making the people rich, the country strong and society fair and modern. The model of the rural financial system in Vietnam is made up of the following organizations:

1 - The Vietnam Bank for Agriculture ( the State-owned Commercial Bank)
2 - Rural Banks
3 - People's credit fund
4 - the Bank for the Poor
5 - the Farmers' Subsidy Union (Farmers' Association)

We trust the rural financial system of Vietnam and will actively participate in and carry out the Vietnamese government's agricultural policy victoriously.

Presentation by Mr. Ohn Lwin, Deputy General Manager of the Myanmar Agricultural and Rural Development Bank

Mr. Chairman, Distinguished Guests, Ladies and Gentlemen,

It is a pleasure indeed to have this opportunity to meet so many prominent and distinguished delegates rendering their services for rural development.

First of all, let me introduce myself as U Ohn Lwin, a Deputy General Manager, a delegate who represents Gret/MARDB of Myanmar.

At least some of you know that MARDB is a bank in Myanmar dealing with agricultural credit for rural development. MARDB is a very old state owned bank being the successor to the State Agricultural Bank established in 1953. Headquarters in Yangon, capital of Myanmar, administered by a board of directors appointed ax-officio from relevant ministries. With a countrywide network of 14 regional offices, 169 township branches and 44 agency offices with over 3 thousand banking staff, it covers all agricultural areas spread all over the country.

MARDB's grass-root level organizations are the village banks. A total of 12280 Vbs are formed as the basic units for channeling agricultural credit. Vbs are also autonomous legal entities with over 3 million farmer members.

In July 1990, the new Bank Law was enacted giving our bank a broad mandate to effectively support the development of agricultural, livestock and rural socioeconomic enterprises. The authorized capital of our bank is K 1000 millions. Additional loanable capital is also made available by the Central Bank of Myanmar at a nominal charge. The lending rates and policy are also set by the government upon the proposal of the bank. The loan rates are occasionally defined by the Ministry of Finance and Revenue. We are authorized to provide loans to the state owned agricultural and livestock organizations, cooperatives, village banks, private persons, farmers, entrepreneurs and laborers.

In the financial year 1994-95, seasonal loans for 34 varieties of premonsoon, monsoon and winter crops were disbursed to the tune of K 2781 million for 1.7 million farmer members of Vbs. Short-term 12 to 4 years) and long-term (5 and above) loans were given for purchase of farm implements, draft cattle, bullock carts, water pump sets, power tillers for integrated paddy fish farming also for growing orchards and plantation. Current lending rate to Vbs is 13% and 5% is added for loan made by Vbs to members. Loan rates for each variety of crops, as well as each item of term loans are uniform throughout the country. The recovery rate on seasonal loans is 99.64% and above 100% on due installment of term loans.

All cultivators except defaulters can draw fresh loans and no applications are rejected for

Seasonal loans to farmers are provided through village banks on collective liability and no other collateral is sought. Term-loans to farmers are also channeled through village banks, two personal sureties for medium and long term loans. For Cooperative Society a charge on the asset of the society and related undertakings as well as a guarantee from the Ministry of Cooperative is required as surety. The main criteria for sanctioning a term loan is viability of the borrowers' business and the repaying capacity. The bank grants term loans only with security. The borrowers also have to pledge the cattle, carts and machines bought with loan proceeds.

Keeping with the Governments' priorities, MARDB recently introduced new term loans for the development of border area and national races who are replacing poppy fields with sugar cane, rubber plantation and livestock breeding. A sum of K 69.71 million was issued in Chin

State loan for orchards at interest rate 1% with special fund allotted by the government.

Starting from 1991-92, new types of loans are introduced to livestock breeders for 15 kinds of livestock, integrated paddy fish deep water farming, loans for solar salt production, for cultivation of mulberry to support sericulture, etc. we have disbursed term loans amounting to K 1,735,81 million to 39,270 farmer customers.

To attract the incremental income of farmers with voluntary saving deposit account and to offer emergency loans to farmers and rural populations, a rural saving programme was launched in October 1993. Under this programme, farmers and rural population are encouraged and organized to deposit their surplus income at the bank at 10% interest earning savings accounts. Depositors are allowed to borrow farm development loans up to 4 times of their deposit at 15% rate of interest. MARDB township staffs are also rendering mobile service to rural population countrywide. 0.6 million farmers save their surplus income opening bank accounts at their doorsteps. Up to 31.7.95 1,63 million farmers and rural population had opened saving accounts and deposited K 240,21 million.

After harvest, cultivation loans are recovered regularly and fully. Farm development loans and livestock breeding loans are also fully recovered in due time. As a successful bank, yearly progress in loan disbursement is made comparatively in line with good recovery.

Mr. Chairman, ladies and gentlemen, may I continue explaining about recent development in Myanmar?

As our country moved from the centrally planned economy towards a market oriented economic system, new bank law was promulgated by the government in 1990. The state-owned banks are reconstructed as the Central Bank of Myanmar, the Myanmar Economic Bank, Myanmar Investment and Commercial Bank, the Myanmar Foreign Trade Bank and MARDB Myanmar Agricultural and Rural Development Bank.

Under the new economic policy, other new laws were also passed opening opportunities for foreign and local entrepreneurs to set up joint ventures, private companies and businesses in order to engage in production, manufactures, trade and finance in many fields previously reserved for the state sector only.

In formal institution sector, in addition to MARDB, the state owned Farm Produce Trading now compete with cooperatives and joint venture companies to procure agricultural produce at market prices. They pay farmers cash advances on voluntary sale of standing crops. Private traders also buy standing crops and farm produce directly from growers. Rural people can also borrow money by pledging gold and jewelry at the shops operated by the Small Loan Enterprise in many towns. Some national and foreign investors set up commercial banks, companies and agencies. Farmers, however, continue to bank with MARDB which has been a banker rendering service to them for so many years and still offer loans without collateral and at very competitive interest rates.

Mr. Chairman, ladies and gentlemen, we sincerely hope that the outcome of this regional seminar will surely contribute to establish a suitable and sustainable rural finance system which will effectively support the rural development and the main objective of the GRET, CCL and IRAM will be fulfilled very soon. Also, I would like to express my sincere thanks to all responsible persons for holding this seminar here in Vientiane.

Good day to every one, Thank you very much.

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.

Committees

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

Projects:

- 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.

Administration:

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.

Lobbying

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.

Research

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.