By Sara Smith
This afternoon I headed north of Hanoi to Bac Giang to meet with VietEd, a relatively new micro-financing fund started in 2010. The target market of the organization is about 60% of the population that make between $10-$40 USD a month. The focus on three major activities: lending, consulting, and creating market chain connections.
The Director and Co-Founder, Mr. Ha Nguyen, explained how they picked this area to target. It seems it was nearly too close to Hanoi being only about 60 km north and thus, passed over for other areas by other lenders. He took me through the application process, which was very impressive and transparent. It outlined the different repayment plans available as well as allowed a loan credit officer to assess the risk based on the application factors.
One of the unique qualities of this loan structure, is that borrowers are put in a group and are responsible for each other. They not only guarantee the other members in the group, but they help remind each other of collection days for repayments. At first, this concept was a bit hard to sell, but the organization has over 300 loans, with only one delinquency in all that time.
We went into the field where I met a woman who invested in ducks. She is now able to sell the eggs as well as the baby ducks in order to make money. I also met with a man who invested in a machine that cuts wood into pieces that can be used for building and other items. He is the only person with this type of machine in the village. I found him very entrepreneurial and strategic.
The man with the machine asked me what type of loan products that we might help finance in the United States. I pulled out the 2013 annual report for the Montana Community Development Corporation which featured a wood craftsman that makes spoons and cooking tools. When the man saw the picture, I could see the lightbulb go off and he became very excited. After he pays off the loan for the machine, he wants to take out another loan to actually purchase wood inventory so he can sell wood products as well.
I also learned the median income of Vietnam has increased so many international organizations have left Vietnam to focus more on other developing countries that might have more need. This has made creating capital for these type of micro-financing products incredibly difficult. Unlike the US, individuals in Vietnam do not participate in social philanthropy. Fundraising is very difficult.