Kon Tum, June 26, 2006.
Dang Ngoc Quang
1. Introduction
It is known that for change to happen, human energy needs to be mobilised in a sufficient amount. Human energy exists in many forms; some examples are financial resources, social capital, and human capital. Often, for change to be sustainable and effective, several types of human energy have to be mobilised. This paper is to describe and analyse experience of the Rural Development Services Centre, a Vietnamese non-governmental organisations (VNGOs), in mobilising human energy to make microfinance services available to the poor women in Phu Tho, a Northern rural province of Vietnam. The paper shows that as a development agency, in case of micro-finance services, an NGO needs to mobilise multiple sources of human energy, of which important are financial capital, social and human capital. The paper shows how these energy sources interlinked with one another in making the lasting change.
2. The context
In 1995, RDSC was introduced to Phuong Mao, a poorest and ethnic minority commune in Thanh Thuy District of Phu Tho province. The commune was identified in a ranking exercise in a participatory rural appraisal (PRA), where the officers from the local government and mass organisations took part.
In the commune, there are approx 3000 people living in 600 families, of whom 75% are Muong ethnic minority. Farmers of Phuong Mao make their living by planting rice, rearing small livestock, like pigs, and poultry. They also have some income from eucalyptus crops, which are harvested every 10 years. Large livestock, or ruminants, such as cattle or buffaloes are raised for traction powers.
Among the RDSC staff, there was a strong believe that as an NGO, the pilot project should be implemented in the poorest and most challenging community, than the development concepts can be utilised by other (better-off) communities. At that time, RDSC was an organisation with one three-year experienced founding person and four young fresh graduates.
Coming to the commune, in a five day PRA, RDSC found the community had been encountered with a number of problems. As an indication of deep and wide spread poverty, in the community there were more than 60% of families living with more than 3-month food shortage. To cope with food insecurities, the common choice of the villagers is cutting the forest in nearby hills for sale. The situation had been getting worse, as the villagers reported that with every coming year, it took them further and longer to reach the forest, where they could harvest the sufficient amount of wood for selling to exchange for an adequate amount of food.
There, the children suffered from serious malnutrition with more than 45% children under five malnourished. RDSC doctors of medicine identified that child malnutrition was caused by the lack of food in their families, and also of the inadequate feeding practice, especially the traditional practice of not using the first milk, and the poor diet of feeding mother.
The PRA found that small livestock, like pigs, and poultry were critical safety boats for villagers in their food shortage. These animals cold be sold, even small and immature, to trade for maize, cassava or rice. However, the health of these animals was not well protected. There were two paravets in the commune serving 10 villages, where 600 households inhabited. The paravets were not well equipped with needed instruments and medication for effective diagnose and treatment of animal diseases. The incidents of lost of animals because of their diseases and epidemic were high.
RDSC found another strategy the villagers used to cope with food insecurity that was borrowing. The poor borrow money to buy food, and to buy seeds and fertilisers. They pay as high interest as 8-12% a month. A number of families had no food left at the harvest time because the crop harvested was collected by the creditors for repayment. The government owned rural bank gave credit only to those who were wealthy and collateral-based, leaving the poor to the mercy of the usurious money lenders.
3. Mobilising Human Energy for Micro-finance Services
To realised social change, human energy needs to be mobilised. Like light in a laser beam can meld down metal, when put in a focus and in synergy, human energy can make a sustaining difference. Human energy exists in different forms (Daniel Taylor, 2006), which one can identify and put in action for producing social change.
Organisation as a form of human energy
To deliver effectively micro-finances services in large scale, a women’s organisation is needed to make the credit available right in villages, to reduce the cost of transactions for the borrowers, and to provide technical and social support to the members of the WCC.
For women in villages there is only one women’s organisation, namely the Women’s Union (WU) that exists and functions under the guidance of the government. Being a political instrument of the governing party, WU functions to offer ideological together with health, child care, and family planning education for women. For poor women, this activity is not attractive, as their higher priority is put on income generation to meet their need for daily food. In 1995, RDSC survey showed that some 30% of adult women were active members of the WU; amongst them, almost there were none women from poor families.
In co-operation with WU, RDSC staffs went to villages and formed women groups of 15 to 20 persons. A function a group performs is micro-finance services. The groups meet monthly on agreed date to collect loan payments in one tenth instalments, and to collect payment for the holding shares, as well as to collect voluntary savings. The groups also discuss and approve new loan applications from members.
The groups also functions as a social forum. The groups discuss a number of issues raised by its members, such as how to deal with animal or crop diseases, what to do and one’s child is sick. The groups offer mutual and collective assistance to its members, for instance the groups assist some members who are short of food, or family members are sick or hospitalised. This mutual assistance increases the security for the poor, while continuing the traditional social security system.
The RDSC’s partner, the CWU makes use of this forum to reach the poorest women in offering its health , birth control and child care education programmes. It is quite common for the CWU to integrate its education sessions with the WCC’s groups meetings to save time for women. Membership of the CWU has been improving in size and quality. The CWU after five years of working with WCC covers 80% of adult women, and more and more women pay membership fees.
Being in groups women have been learning to identify their problems and collective actions to as solutions to those problems. Women longer keep silence in meetings where the villagers meet and discuss community issues, but offer their analysis and ideas for problem solving. As their capacity improved and demonstrated, normally when the WCC, three years old, members of the WCC often are proposed and elected as community representatives in Commune People’s Councils- a body that approves and supervise the implementation of the commune socio-economic development plan.
It takes time for women to appreciate the values of being together. At the start, women, especially those who came from the poor, thought coming to a meeting was a big investment in time, that they did not want to waste or risk. The groups leaders at times had to spend lots of time to call women to their meetings. With time and with the success of micro-investments using micro-credit of the WCC, women in villagers found the groups are important for them. In an evaluation in 1999, 85% of respondents from the members said that being part of a group is the most important purpose of joining WCC, while the needs for credit ranked only second.
Financial capital as an form of human energy
To be able to offer micro-finance services to women, financial capital is needed. It appears that this resource can be mobilised from the community, even from its poorest members, if appropriate mechanism is devised.
A way of mobilisation is membership share to be made by instalments. RDSC and Commune Women’s Union discussed and agreed with members about making holders’ share. At the start of the programme in 1996, each share was VND100,000 (approx US7.00) for membership. As for many poor families, this is a big sum, the women could pay in monthly instalments of VND10,000. The members were expected to complete paying share in a year.
To assist the Women’s Credit Co-operatives (WCC) to give loans to its members, RDSC deposited a matching fund, which is an amount double to the capital deposited by members until it reach a ceiling of VND 50million (or US3,300). This matching was mobilised by RDSC from an international NGO donor.
To raise more fund for its operations to meet the need for larger amount of loans (up to VND2million), in a congress the WCC has made decision to increase the amount of share up to VND 150,000. Another way to mobilise finance for its lending portfolio is to mobilise voluntary savings from members. This amount take up 25% of WCC’s active lending fund. The savers earn an interest of 5% per month, while the WCC lends out at an monthly interest rate of 1.2% to cover its costs.
After ten years, the WCC in Phuong Mao commune has accumulated an operational capital of VND350million. After ten years, the WCC in Phuong Mao commune has accumulated an operational capital of VND350million. With its small loans available right in a village and conveniently repaid by small monthly instalments, the WCC offers micro-finance service to 60% of the villagers, all women, in the commune, including all poor families.
Linkages as a form of human energy
To be sustainable and effective, RDSC and CWU has supported the WCC to develop its linkages to existing government services in credit and agricultural extension. Both resources are key to villagers, especially the poor, in their development at the household level. RDSC’s micro-finance programme increases the poor's capacity to access better these public services.
An important linkage of the WCC is its relation to the formal banks. In villages of Vietnam, there are two formals banks that are owned by the government. The Vietnam Bank for Agriculture and Rural Development offer large credit based on physical collateral. The other bank is the Vietnam Bank for Social Policy (formerly, the Vietnam Bank for the Poor), which offer small credit for the poor using group as social collateral.
At the start of Phuong Mao WCC, in 1995, the government banks refused to give credit to the whole commune as a reaction of some wealthy households who do not respect their rules in repaying loans. The poor families suffered from this they had to turn to high-interest lenders for their credit needs. Poverty was then wide spread in the commune. Poor villagers had no crop left after using the income from the harvest to pay the creditors.
With experience in managing small loans in WCC programme, like the one in Phuong Mao, the poor women proved that they are credit worthy. And the government credit officers returned to the commune. Being members of women’s saving and credit groups, the poor women are ready-for-lending with the "social collateral" that fit to the Bank's requirements for group lending. And the Banks for the Poor are willing to make loans to these groups.
Success in using micro-finance helps the poor to build their physical assets. Over times, many poor families improve their housing, and valuable assets in the form of ruminants, like buffaloes or cattle. Both solid housing and animals can be used a physical collateral to the poor (now a little better off) to access directly the formal source of credit.
While the access to formal credit create for women financial back-up for investment, the access to technologies open new opportunities for women to new income generation activities. RDSC facilitates women’s access to this valuable resource working with district and commune agricultural services.
RDSC facilitates farmers’ access in a way similar to Future Generation Arunachal, which co-operates with government extension officer to assist farmers experimenting with farming on sloping land, intercropping, fish raising as a sustainable income generation. RDSC co-operates with district agriculture extension officers in Phu Tho province to support villagers to pilot with new rice variety, progressive maize planting techniques, edible bamboo-shoots planting etc. The district veterinary service is tapped to provide veterinary training to community paravet groups. In turns the community-based groups work together with the government extension officers function better. The effective transfer of farming technology to villagers and the control of the animal diseases open for the poor and women new opportunities in their income generation activities, and help protecting their investments using micro-finance loans made by the WCC.
Human capital
As seen in Jamkhed, Gadchiroli, or Arunachal in India, the wide networks of village (health or wealth) volunteers are created as a way to mobilise human capital for the change at large scale. In its practice, RDSC has not yet reached that level of scaling, although various forms of human capital is mobilised.
For the delivery of the micro-finance services, many forms of human capital are mobilised from community to support women in investing effectively their micro-loans. Human capital is mobilised when committed group leaders of the women work as volunteers for the groups. Men who have skills or enthusiasm in animal health are called to set up veterinary groups. Talented women formed rice-seed producers groups to make quality and high-yield seeds available in the community. Men and women have been mobilised to produce quality animal seedlings for villagers.
While many women invest their micro-loans in animal production, which is less
dependant on natural conditions, and has more value-added, RDSC assisted the villagers to improve their veterinary systems. With the veterinary system improved in its service quality and accessibly, the lost of the animals in a year decrease from 15% to 3-5%. Healthier animals also have increased the sale weight of the animals, helping the villagers increase their income. The organised veterinary services in a commune often become self-sustaining after two or three years offering their services to the community and get paid for their services. The paravets also offer to their community members advise in animal health and hygiene and feeding.
RDSC also assisted the villagers to organise rice-seed producers groups owned by women to help farmers to have betters access to seeds. These groups are able to experiment locally different varieties and select the best fit one in the locality and multiply for local needs in their and neighbouring communes. Among the villagers the best women who have skills in rice production were nominated and selected by community to form these groups.
4. Conclusion
This review of the process of developing a micro-finance services for poor women in a commune in Thanh Thuy district of Phu Tho Province in the North of Vietnam indicates that for sustainable change, not only “development yeast” (or an NGO) is needed, but human energy in its different forms need to be mobilised and put together. Using this change approach, the WCC is replicated in ten other communes in three districts of two provinces Phu Tho and Quang Binh. The RDSC’s experience shows that in the context of an environment where the government does not co-operates with NGO as a change agent, it is possible to mobilise human energy to support a development initiatives in partnership with a grass-roots mass organisation, such as the CWU. Total hits:
7
-
Last modified:
14/07/2009 01:52:32 PM | 