Effectiveness of preferential credit for near-poor households

(Baonghean) - After Decision No. 15/2003/QD-TTg of the Prime Minister on credit for near-poor households took effect, as of April 30, 2014, in Dien Chau district, 831 near-poor households had borrowed a total of 76 billion VND to invest in business and develop production. This is an important foundation, helping near-poor households have more conditions to develop production and business, gradually rising up to escape poverty sustainably...

Two years ago, Mr. Hoang Van Phuc's household in Dien Ky commune was still considered a poor household in the commune. According to the assessment, the family was able to borrow 7 million VND from the policy bank. However, due to the low loan rate for poor households, there was a time when his family had just escaped poverty and paid off the loan but lacked capital to continue investing, putting the family at risk of falling back into poverty. Right at the time of June 2013, when the preferential credit policy for near-poor households took effect, Mr. Phuc continued to receive a loan of 20 million VND from the district's Social Policy Bank. From this capital, he invested in developing his business. Currently, the family's rental service of canvas, tables, chairs and dishes is operating stably, bringing in a steady income of about 2.2 million VND/month. Mr. Phuc shared: "The timely capital from the loan program for near-poor households helps my family feel secure in production and business. With the same income as the past year, my family is able to pay the principal and interest on time and is sure to escape poverty sustainably."

Disbursement of loans to near-poor households in Dien Bich commune (Dien Chau).

Ms. Chu Thi Lan's family in Hamlet 8 - Dien Thanh Commune was introduced to borrow 8 million VND from the credit program for poor households of the District Social Policy Bank to invest in raising sows and chickens. The investment amount is not large, but with the technical support of local associations, along with hard work, her family gradually had a stable source of income and escaped poverty in 2012. Getting out of the list of poor households is difficult, maintaining it to avoid falling back into poverty is even more difficult. The boundary between poor and near-poor is fragile, sometimes just the difference of a banana patch, a bed of vegetables, a few chickens, a pig. Farming has many risks, from weather, market, disease..., the risk of falling back into poverty is always lurking, making Ms. Lan's family very worried.

Investing to escape poverty certainly requires money, but now she is no longer a poor household, and has no assets, so she does not know how to manage. Therefore, when credit for near-poor households was implemented, it really brought new hope to her family. "Now that we can continue to borrow 30 million VND without having to mortgage assets from the capital source for near-poor households, we no longer feel "lonely", because we have escaped poverty and still receive preferential care from the State and local authorities. With this additional loan, my family will buy another cow, and the remaining capital is planned to rotate to the market to trade small businesses to earn daily meals for 3 children of school age" - Ms. Lan shared.

According to Mr. Phan Dinh Bay - Chairman of the Farmers' Association of Dien Thanh commune: When the credit policy for lending to near-poor households took effect, we reviewed, surveyed, and evaluated publicly and seriously. The whole commune has 266 near-poor households, in 2014 Dien Thanh received 2 billion disbursement, of which 23 members of the Farmers' Association had access to loans with a total amount of 580 million VND; the least household was 10 million VND, the most household was 30 million VND within a period of 36 months. In reality, near-poor households are the ones that need the most loans, because if they do not have capital to maintain production, the risk of falling back into poverty is very high. Therefore, the Government's decision to lend to near-poor households is extremely meaningful. But according to the reflection of many members, the lending interest rate for near-poor households is currently 0.78% per month (9.36% per year), equal to 120% compared to poor households; In the context of the general interest rate decreasing, it is not appropriate and is still a bit high. The government should adjust the lending interest rate for near-poor households to correspond to the lending interest rate for poor households at 0.65%/month...

Dien Chau district currently has 72,321 households, of which 8,438 are poor (accounting for 11.67%) and 18,776 are near-poor (accounting for 25.9%). The district consists of 39 communes and towns, including 6 communes in difficult areas, so people are in great need of capital to develop production, raise livestock, and improve their lives. In recent years, the Dien Chau District Social Policy Bank has focused on prioritizing capital sources to meet people's needs, with 8,398 poor households having received loans, with outstanding loans of 140 billion VND. Poor household capital has helped people have capital to do business, develop household economy, contributing to reducing the annual poverty rate in the area. Now, having additional capital sources for lending to near-poor households has created new resources for many near-poor households to have capital to serve production...

In order to effectively implement the lending program for near-poor households, in recent times, Dien Chau Social Policy Bank has focused on improving the quality of entrusted activities of associations, unions and savings and loan groups; coordinating with local authorities to strengthen supervision of loan evaluation to ensure democracy, objectivity, and correct subjects, meeting the capital needs for production and business of each customer; strengthening inspection and supervision to ensure maintaining credit quality. In addition, continuing to propagate and provide full information on credit policies for near-poor households; providing timely advice so that near-poor households have specific and reasonable plans before deciding to borrow capital, avoiding the situation of trying to borrow according to standards without determining the direction of production, business and debt repayment ability.

Mr. Cao Duc Huan - Director of the Social Policy Bank of Dien Chau district said: "The boundary between escaping poverty and falling back into poverty is often very fragile in reality. Will near-poor households move forward or fall behind without additional resources? From this concern, the near-poor household lending program has been implemented as a solution to open a sustainable way out of poverty for people below the average income threshold. After the credit for near-poor households took effect, the whole district had 841 near-poor households borrowing with a capital of 76 billion VND. It is expected that the need for loans for near-poor households in the whole Dien Chau district is about 500 billion VND. However, in the condition of limited capital resources, it is not possible to fully meet the needs of borrowers, so the evaluation of borrowers is equal, public, and ensures the right subjects. This capital has initially helped near-poor households in the area have production capital, feel secure in doing business and developing the household economy."

Decision No. 15/2013/QD-TTg of the Prime Minister "On credit for near-poor households" effective from April 16, 2013 has become a new driving force in the people's journey to escape poverty sustainably, ensuring the effectiveness of social security work. This policy has opened up opportunities for hundreds of poor households in the district to have capital for production and business, to stabilize their lives, integrate into the community, and contribute to promoting the general socio-economic development of the locality. However, in order for that capital to be effective, job orientation, integration of agricultural and fishery extension programs, and guidance on how to do business for lending households are very important, because many households have capital but do not know what industry to invest in or invest indiscriminately following the trend. Therefore, the active participation of local authorities and sectors in orienting economic practices and converting crop and livestock models to suit each locality is extremely important and meaningful.

Article and photos:Ngoc Anh