Nghe An: Directive 40 provides a boost to policy-based credit activities.

A positive shift

Yen Thanh District is considered one of the leading units in Nghe An province in terms of the scale of policy-based credit. Over the past period, the loan capital in Yen Thanh District has continuously grown, increasingly meeting the borrowing needs of the poor and other policy beneficiaries in the area. The structure of capital growth has shifted from central government funds to local funds, especially since the issuance of Directive No. 40-CT/TW dated November 22, 2014.

Leaders of the Social Policy Bank in Yen Thanh district inspect households that have borrowed capital for livestock development. Photo: Thu Huyen.

Mr. Phan Huu Trang, Director of the Social Policy Bank of Yen Thanh District, stated: Implementing Directive No. 40 and the Prime Minister's conclusion on adding the Chairman of the People's Committee at the commune level to the Board of Directors' Representative Committee has elevated policy credit to a new level. To date, in addition to central and provincial budgets, the district and commune budgets have entrusted loans through the Social Policy Bank totaling 3.7 billion VND, an increase of 630 million VND in 2022. The District People's Committee regularly pays attention to supporting the construction of facilities and working equipment; the Social Policy Bank of Yen Thanh District now has a spacious headquarters on a plot of land nearly 3,000 square meters.²With complete and modern equipment and machinery, it meets the requirements for carrying out professional tasks in the area.

In Dien Chau district, the total entrusted local budget capital currently stands at over 11 billion VND, including: 6.378 billion VND from the provincial budget entrusted to the Social Policy Bank; and 4.640 billion VND from the district and commune budgets entrusted to the district's Social Policy Bank.

Trong Phuc Garment Co., Ltd. in Dien Chau district borrowed capital from the Social Policy Bank to pay wages to its workers. Photo: Thu Huyen

Mr. Pham Xuan Sanh, Vice Chairman of the Dien Chau District People's Committee and Head of the Dien Chau District Social Policy Bank's Board of Directors, stated that the significant increase in district and commune budget funds entrusted to the Social Policy Bank demonstrates the local government's strong commitment and decisive involvement in implementing social policy credit programs.

In particular, since the issuance of Directive No. 40, the District People's Committee has allocated nearly 4 billion VND from the budget, and the People's Committees of communes and towns have transferred 840 million VND to the District Social Policy Bank to supplement lending capital, meeting the needs of the poor and other policy beneficiaries in the area, contributing to the achievement of the district's annual goals on rapid and sustainable poverty reduction, job creation, new rural development, and ensuring social security in the area.

Mr. Pham Xuan Sanh - Vice Chairman of the People's Committee of Dien Chau District, Head of the Board of Representatives of the Social Policy Bank of Dien Chau District.

Currently, many localities are paying attention to and effectively implementing Directive 40 and Conclusion No. 06-KL/TW of the Central Party Secretariat, such as Vinh City, Hoang Mai Town, and the districts of Dien Chau, Yen Thanh, Nghi Loc, etc. In particular, many mountainous districts, despite their difficulties, are very interested in policy credit activities, such as Quy Chau, Con Cuong, Tuong Duong, and Ky Son. The active involvement of the political system has ensured that policy credit funds have been invested in 100% of villages and hamlets in the province, creating conditions for the poor and eligible policy beneficiaries to access credit quickly, promptly, and conveniently.

Thanks to funding from the Vietnam Bank for Social Policies, many families in the coastal area of ​​Dien Chau have invested in clean and hygienic water facilities. Photo: Thu Huyen

According to the Provincial Social Policy Bank, the total outstanding loan balance by December 31st is estimated at VND 10,881 billion, an increase of VND 1,211 billion, or 12.52%, achieving 100% of the plan for programs assigned by the Central Government and exceeding the branch's initial target of 4.52%, surpassing the growth target set in the Resolution of the Provincial Social Policy Bank Party Congress for the 2020-2025 term. Loan disbursement in 2022 reached VND 3,291 billion; loan collection is estimated at VND 2,077 billion; and total interest income is estimated at VND 820 billion, exceeding the targets set at the beginning of the year.

In 2022, policy credit funds continued to focus primarily on a number of key programs serving the goals of poverty reduction, job creation, and social security; and policy credit programs under Government Resolution No. 11 on lending to support economic recovery and development after the Covid-19 pandemic. Alongside the growth in outstanding loans under these programs, the quality of policy credit continued to improve, bad debts were tightly controlled and decreased by VND 2.4 billion compared to 2021.

Increase capital to meet borrowing needs.

Adhering closely to the content of Directive No. 40-CT/TW and its implementing documents, local authorities at all levels, entrusted organizations, and the Social Policy Bank have actively participated and closely coordinated in investing capital and supporting the transfer of science and technology. As a result, many economic models have been implemented and yielded high economic efficiency, creating stable income for poor households and policy beneficiaries, attracting labor, and contributing to the restructuring of agricultural production in the area. Thanks to preferential capital through social policy credit programs in recent years, thousands of poor and near-poor households have been able to escape poverty sustainably and rise to prosperity.

In 2022, policy credit funds provided capital to 65,900 poor households and other policy beneficiaries for production, business, and improving their living standards. (Graphic: Huu Quan)

Mr. Nguyen Van Vinh, Deputy Director of the Social Policy Bank of the province, said: Implementing the policy of "diversifying resources to implement social policy credit," along with central government funds, local authorities at all levels have focused on allocating local budget funds to supplement entrusted lending capital; at the same time, they have directed the Social Policy Bank to concentrate on mobilizing idle capital from organizations, individuals, household savings, and savings from poor households and policy beneficiaries through the network of Savings and Loan Groups, with the motto "The State and the people work together."

To date, entrusted capital received locally has reached VND 245.6 billion, accounting for 2.24% of the total, an increase of VND 30 billion compared to the beginning of the year, achieving 120% of the growth target set by the Central Government for 2022; including: Provincial budget VND 175.9 billion; district budget VND 69.7 billion. Financial resources invested in policy credit have continuously increased, basically meeting the capital needs of poor households, near-poor households and other policy beneficiaries in the area.

According to statistics, in 2022, timely funding was provided to 65,900 poor households and other policy beneficiaries to help them with production and business activities and improve their living standards. 23,800 poor and near-poor households escaped poverty thanks to policy credit, making a significant contribution to the successful achievement of poverty reduction goals.

The Con Cuong Social Policy Bank disburses loans in Thach Ngan commune. Photo: Thu Huyen.

However, despite the investment of resources, the actual needs of policy beneficiaries have not been met, especially the capital needed for loans to create and maintain jobs, and for workers to transition to new occupations. Annually, local budget funds have been supplemented by the People's Committees at all levels to entrust the Social Policy Bank with lending to policy beneficiaries, but this accounts for a very low proportion (2.24%) of the total capital (while the national average is over 8%). Some localities have not paid sufficient attention to allocating budget funds to entrust the Social Policy Bank with lending as stipulated in Directive 40-CT/TW.

To continue implementing Directive 40 effectively, specific policies and solutions are needed from the provincial to the grassroots level, creating optimal conditions for the operation of the Social Policy Bank in the area, aiming to deliver preferential credit capital to the right beneficiaries. It is necessary to continue mobilizing maximum resources to supplement policy credit capital linked to restructuring production, economic development, education, vocational training, job creation, and ensuring social security; organizing technical training, education, and technology transfer activities linked to loan activities, helping borrowers use capital effectively.