Community-based saving and credit schemes
Coopération Internationale pour le Développement et la Solidarité (CIDSE)
CIDSE is a working group of 16 Catholic development agencies. In 1998, CIDSE celebrated the twentieth anniversary of its work in Viet Nam. Initially CIDSE provided emergency aid and supported national reconstruction programmes. However, political and economic changes in the country have allowed CIDSE to increasingly focus on community-based development.
CIDSE has been supporting projects focusing on community-based primary health care, agricultural extension, integrated pest management (IPM), farmer-managed irrigation, credit and savings and emergency assistance. CIDSE’s main target groups are poor ethnic minorities, farmers and the unemployed with a special focus on women.
In the area of micro-credit, CIDSE has supported projects adapting the Grameen Bank methodology to Viet Nam since 1992 starting in Ho Chi Minh City. Twenty-one credit and savings projects have been supported by CIDSE in nine provinces.
Loans issued by CIDSE range from VND 500,000 (US$ 36) to VND 2,000,000 (US$ 143), with the first loan to be granted not exceeding VND 500,000. Interest rates are kept low at 1,5 per cent per month for sustainability purposes. Groups of 5 persons are formed as basic units of a savings and credit scheme. The members of the group hold regular weekly/monthly meetings to develop and improve their solidarity, mutual understanding and undertake credit and savings as well as social activities. CIDSE does not target loans; it is up to the people to decide on how use the money for the purpose of income generating activities. Besides, CIDSE encourages a "small loan small repayment" policy. Loans need to be repaid through weekly installments that are collected by the group leaders and consist of three components: principal, interest and savings.
CIDSE has been focusing on income generation and self-employment in urban District 1, 3, 8 and 11 in Ho Chi Minh City, as well as, in suburban districts in Binh Chanh, Cu Chi, Hoc Mon and Nha Be. Savings and credit projects are implemented through the People’s Committees of the Subdistricts, i.e. Wards, and other partners. Among them are the City Women’s Union, the Gardeners’ Association, the Institute for Economic Research and the C.E.P. Fund of the Ho Chi Minh City Labour Union. More in general, CIDSE’s programmes are aimed at promoting job creation and productivity through savings and credit schemes and supporting the urban and rural poor in determining and managing their own development process.
An important component of CIDSE’s activities is strengthening the ability of local partners to become self-sufficient in development work by providing them with training and exposure trips. Besides, for group members, CIDSE provides training in small business, simple accounting to improve their income activities and finance management skills.
Environmental Development Action in the Third World (ENDA)
ENDA is an international NGO working in the area of sustainable community development. Its activities are funded by the European Community, the French Government and European NGOs. ENDA has been implementing programmes on slum improvement and urban community development in HCMC and Hue City and recently started to develop projects in Hanoi and Danang in the perspective of creating a network of urban community development at the national level. Besides, ENDA supports ethnic minority communities in the central highland provinces Gialai and Daklak and the coastal provinces Quang Nai and Phu Yen. In the urban context ENDA works at ward level, while with respect to the ethnic minorities ENDA works at village/commune level. The target group of ENDA’s urban programmes consists of poor, marginalized, threatened and disadvantaged communities in bigger cities. Most participants of ENDA’s projects or programmes - that are all developed as a lead-up to environmental improvement (e.g. through promoting the use of handcarts, community-based waste collection, latrine building, road and sewage system repairing etc.) - are women living in slum settlements likely to be reallocated by Central Government policies. All programmes include and encourage awareness raising activities on health, environment, nutrition and family planning, amongst others through television and video applications. Meanwhile, the target group of ENDA’s rural programmes are local indigenous people under threat of the vicious circle of poverty as they are becoming landless due to rapid population growth and land use competition of the migrants.
ENDA adheres to an integrated community development approach and regards savings and credit schemes as a tool to strengthen the communities’ capacities to eventually take the lead in the community development process. In order to achieve this, ENDA supports social workers (trained as facilitators cum motivators to assist community leaders) and local mass organizations (e.g. Financial Institutions, the Labour Union, the Youth Union and the Women Union) as partners in savings and credit programmes. ENDA’s regular collaboration with social workers of the Youth Union and Women Union proves to be very dynamic. At ward level, when dealing with community problems such as income generation and small-scale environmental improvement, ENDA more than often experiences good cooperation of the Ward People’s Committees, even though they are new to the community development approach. However, when addressing sensitive issues such as land and housing planning, larger and newly constructed or improved infrastructure etc., the ward authority should follow and implement policies and regulations imposed by the district and city level. Unfortunately, at these levels the interpretation of national legislation documents and policies is not always transparent, nor applicable to the needs of the poor people, as is the case with providing housing for the evicted people. As a result, a partnership with district and city level authorities is essential but not always easy or efficient.
Credit funds to beneficiaries funded by ENDA are refundable with a monthly interest rate of 2 per cent to foster the community’s involvement. Besides, these funds can be used in a flexible way: either on a short-term basis (contributing to direct economic improvement) or a long-term basis (benefiting community infrastructure and housing schemes). The registration and accounting system is kept as simple as possible. ENDA’s most recent programme is called the Local Initiative Support Programme, a revolving fund of US$ 2,500/each to be used for supporting any sustainable development purpose suggested by the community. This program has been put into operation since early 1999. Moreover, ENDA and the People’s Committee of District 2 have developed a Housing Credit System that is supposed to benefit 200 low-income families on a long-term basis (approximately 10 years) through voluntary relocation of their houses financed with maintained capital stemming from interest earnings on loans allocated. However, long-term loans appear to scare poor people off because of the higher amounts of money and interest rates involved. As they mostly prefer small short-term loans ENDA decided to adapt the approach and turn it into a step-by-step saving system and get people used to the positive effects of longer term loans. In the meantime, ENDA has circulated the project proposal for funding to different donors.
Tiet Kiem Mua Xuan - Spring Saving Group
Tiet Kiem Mua Xuan saving group is located in the Triangle Community (Ward 3, District 11) of My Tho City, a suburb of HCMC. The Triangle Community was formed in the early 1990s when district 11 authorities demolished community houses on a cemetery and transformed it into a new real estate site. The poor families living on the cemetery grounds were relocated to a small triangular plot of land behind the new housing estate. However, many families did not have the financial means to build new houses and quickly sold their new plots of land to better-off families, causing fragmentation within the community. The Tiet Kiem Mua Xuan savings and credit programme started in February 1994 after a small group of women from the Triangle Community participated in a training visit (organized by the Youth Association of HCMC with financial support of ENDA) to successful credit and saving schemes in neighbouring slum communities.
The Spring Saving Group is composed of 3 different groups, mostly consisting of women, some older men and even children, each chaired by an elected committee of three group leaders: a money-keeper, an accountant and a manager. The groups hold monthly public meetings to review the group’s financial activities as well as applications for loans. The latter are granted based on the availability of funds and the financial need of the applicants, taking into account that daily saving should amount to at least 500 Dong. Loan rates are determined by the group members (totaling 228 at present) according to a calculation of repayment days converting the interest rate (3 per cent per month) into the number of days in which the loan should be repaid and specifying the daily amount of the loan. Loans issued range from VND 100,000 (US$ 8) to VND 5,000,000 (US$ 400) and saving amounts depend on people’s capacity and whatever they can contribute. The main characteristic that distinguishes the Spring Saving Programme from other credit programmes in HCMC is its autonomy. Group management is extremely flexible and varies across the group according to the needs and capabilities of each group member. Repayment schedules (daily, weekly or monthly) are chosen by borrowers and depend on their individual financial circumstances.
In 5 years time, the Spring Saving Group has been quite successful in sustaining its programme turning the Triangle Community into a fairly rich community consisting of two ‘main’ roads and offering group members lots of possibilities to do business. The main activities that have evolved over the years as a result of the saving and credit scheme are related to small businesses and trade, including amongst others breakfast and fruit selling stalls and a construction material and stone furniture factory. Besides an increased average family income of group members, their living circumstances have improved as well, due to constructive cooperation with local authorities willing to provide community services (water, electricity etc.) the Triangle Community can afford to pay for. Amongst the group members there is also increased solidarity, trust and confidence to share good and bad experiences. Currently, the Spring Saving Group is trying to combine its efforts with family health care and environment programmes organized by local mass organizations. Another challenge expressed by the saving group is to start saving on a more long-term basis, e.g. for the construction of houses. The saving group would welcome any advise in this matter on how to go about it and how to convince their members to participate in longer term loans and saving schemes. In this respect, the Spring Saving Group is eager to welcome other saving groups and exchange experiences in order to learn from each other.