Accelerate disbursement of capital from the Cooperative Development Support Fund

The “key” to cooperative development

In 2021, Thang Loi Handicraft Cooperative in Tho Thanh Commune, Yen Thanh District was established. The cooperative specializes in producing products from wood, bamboo, rattan, straw, and thatch, with veteran Tang Tien Huynh - who has many years of experience in the field of rattan and bamboo weaving - as Chairman of the Board of Directors and Director.

In the early days of its establishment, when it had not yet had access to bank loans, it had to mobilize external capital with high and unstable interest rates. Therefore, the cooperative operated at a low level, and production and business encountered many difficulties.

“Without proactive capital sources, we always hope to access loans from banks and support programs to boldly invest in sustainable and stable long-term production and business development,” Mr. Huynh shared.

In early 2023, through contact with officials of the Yen Thanh District Social Policy Bank at the transaction point in the commune, the cooperative was guided to borrow capital, Mr. Huynh built a project proposal to invest in machinery and factories to produce and consume OCOP products. In March 2023, Thang Loi Handicraft Cooperative was able to borrow capital from the Nghe An Provincial Cooperative Development Support Fund entrusted through the Yen Thanh District Social Policy Bank with an amount of 500 million VND.

Since receiving preferential capital, the cooperative has invested in expanding 200m2 of factory and warehouse, equipped with 1 more modern high-tech machine, worth more than 260 million VND, rented 2 booths to display products, invested in wood materials, etc. to serve production and business. From a modest production, up to now, the cooperative has stabilized production, product quality has been constantly improved, and has been trusted and supported by customers. The cooperative's revenue has increased from 900 million VND to 1.116 billion VND/month, and the income of workers has increased from 3.5 million VND/month to 5.5 million VND/month. The cooperative has maintained and created stable jobs for 20 workers and more than 600 seasonal workers, especially female workers, contributing to the goal of hunger eradication, poverty reduction, economic development and limiting social evils in the locality.

Similarly, also from the entrusted loan capital of the Social Policy Bank, Nghi Trung Agricultural Service Cooperative (Nghi Loc) has invested in production and business effectively.

Taking us to visit the melon production model, Mr. Dinh Quang Hoang - Director of the cooperative said: The cooperative was established in 2015, including 11 members, the main activities are growing and trading agricultural materials, with a charter capital of 1.2 billion VND.

This fertile land of hamlet 9 was previously used for growing crops but the efficiency was not high, so people abandoned it. After learning from the experience in the South and receiving attention from local authorities and relevant agencies, in 2018, we decided to invest more than 3 billion VND to grow fruit trees according to the first greenhouse model of the district. That year, we planted 2,000 m2 of melons, then expanded to 4,000 m2. Not stopping at growing melons, in 2021, we started experimenting with growing 1,000 m2 of grapes, now increasing to nearly 4,000 m2 of black grapes and peonies.

Sharing about the investment cost for the production model, the Director of Nghi Trung Agricultural Service Cooperative said: In addition to the capital contributed by shareholders, the district and provincial budgets supported more than 500 million VND. In December 2020, the cooperative received a preferential loan of 500 million VND from the Social Policy Bank (according to the Trust Contract between the Provincial Social Policy Bank and the Nghe An Provincial Cooperative Development Support Fund) to build a greenhouse and irrigation system. We have currently paid 200 million VND of this loan.

Currently, a 2,000 m2 melon garden is being tended to in preparation for harvest and workers are cleaning another garden in preparation for planting to serve the upcoming Lunar New Year market. According to calculations, melons are grown 3 times a year, harvesting nearly 50 tons of melons/year, earning a profit of about 1.2 billion VND, the product is mainly consumed in Hanoi.

For grapes, there are two crops each year: Spring - Summer and Fall - Winter (the most effective crop is Spring - Summer), this is the third year of harvest. This grape variety grown under the VietGAP program is very popular, consumed in the garden, currently sold at 150,000 VND/kg.

There are still many difficulties

Implementing the trust contract between Nghe An Provincial Social Policy Bank and Nghe An Provincial Cooperative Development Support Fund, in the past time, Nghe An Provincial Social Policy Bank has coordinated well with Nghe An Provincial Cooperative Development Support Fund in disseminating information and regulations on borrowing to cooperatives and the Cooperative Union in the area; at the same time, coordinated in appraising projects requesting loans and implementing lending steps in accordance with the lending regulations of Nghe An Provincial Cooperative Development Support Fund. The capital has contributed to strengthening the collective economic role of cooperatives according to the orientation of the Party and the State.

According to the aggregated data, the total capital source that the Provincial Social Policy Bank has received from the Nghe An Provincial Cooperative Development Support Fund is 7.5 billion VND. To date, nearly 5 billion VND has been disbursed to 10 cooperatives that have borrowed capital; after some cooperatives have gradually repaid their debts, the outstanding debt as of October 31, 2023 is nearly 4 billion VND. In reality, the number of cooperatives and cooperative unions proactively accessing regular capital sources is not much.

Sharing about the reasons for low lending results, many opinions from the Social Policy Bank of the districts said that most cooperatives have a need for loans but face difficulties in mortgage assets, some cases do not have a clear production and business plan or are not convincing about feasibility and efficiency.

In general, the legal capacity and management capacity of many cooperatives are still limited, especially the organization of accounting and financial reporting are not guaranteed... Meanwhile, according to the lending regulations of the Nghe An Province Cooperative Development Support Fund, currently only loans are provided to cooperatives and cooperative unions, while members and employees of cooperatives have not yet had access to this source of capital.

Currently, the demand for loans of cooperatives is very large, but the fund's capital can only meet a small part of the total demand for loans of cooperatives. Therefore, the bank, together with the Management Board of the Nghe An Province Cooperative Development Support Fund, needs to promptly advise competent authorities to supplement the fund's charter capital, and at the same time, continue to amend and supplement the lending regulations in accordance with current practical conditions. Thereby, meeting the borrowing needs of cooperatives and cooperative members, helping the collective economic sector develop sustainably, contributing to hunger eradication, poverty reduction, and new rural construction in the locality.

In order to create more favorable conditions for cooperatives to access and supplement preferential capital sources for production and business activities, in the immediate future, the Social Policy Bank branch together with the Provincial Cooperative Development Support Fund will continue to strengthen policy communication, and coordinate to provide maximum support to cooperatives and Cooperative Unions in building, establishing records and loan procedures.

Mr. Hoang Son Lam - Deputy Director of the Social Policy Bank branch said