Microcredit:
digest of externally funded projects

Projects included here are listed by international donor although in the main they are carried out by Chinese institutions, usually involve some degree of Chinese government counterpart funding, and in all cases involve close relationships with local government structures.

Lending to poor communities and households is by no means a new or solely donor-driven phenomenon. In the 1980s the Chinese government experimented with a variety of 'poverty lending' programmes, some directed to small and medium scale enterprises with a view to creating job opportunities, some directed to individual households. Interest on these loans was invariably low, the standard rate being 2.88%.

Repayment rates on household loans were not good, averaging around 40% nationally (with considerable variation between areas.) By 1991 most household poverty lending had ceased. Residual poverty lending tended to amount to cheap credit for industry.

It was around this time that externally funded microcredit schemes first began to experiment with ways to fill gaps left by government provision. A more or less clearly articulated objective of all these schemes was (and still is) to develop a workable model for adoption by the government.

As ever, the vastness of China inhibits any sense that service provision in one, tiny area will have significant impact; what matters is replicability.

In the design and implementation of these projects several critical issues, differences of approach and matters for debate have emerged.

How to ensure that new credit opportunities are properly targeted: available to the poor (and not snapped up by better-off households) whilst at the same time offering the prospect of good repayment rates?

Whether it is enough to provide credit, or whether loans need to be supported by training

packages, improved agricultural extension etc; (and, if so, how much spending on

training, for how long, is genuinely sustainable and/or replicable).

Whether (and how) credit should be tied to social objectives (such as improvement in health or education indicators).? Whether loans should be subsidised. Should the costs of administering the loan, the depreciation of capital owing to inflation and the 'opportunity cost' of not investing the capital elsewhere instead be reflected in commercial (or near commercial) interest charges? Or is it wrong to bank on the poor in this way; should the donor simply bear the costs?

Whether the credit facility need be available only for a limited period-say three to four years-in order to give the poor a 'leg-up' out of poverty; or whether it is more important to aim at setting up an institutional facility that will always be able to offer credit to the poor?

Whether the ideal is to have such schemes adopted by the state, for the sake of maximum replicability and reach, or whether state intervention should be minimised, to ownership maximum beneficiary participation and ownership.

The presentation of this digest is by no means intended to resolve these issues or to imply a vote either way.

AusAID & CARE Australia

A microcredit programme is one of four main components of the Qinghai Community Development Project taking place under the China/Australia Technical Cooperation Programme in 28 townships of Huangzhong, Ledu and Pingan counties in Haidong Prefecture, Qinghai Province. Responsibility for implementing the credit component lies with the Agricultural Bank of China, through its township level business offices.

Aus$2.26 million (US$1.67 million approx) is available for lending on the credit programme. The project is also providing Aus$370,000 (US$274,000) for technical assistance and training to support both the credit programme and village level income generation activities.

The first loans were given out on August 15 of this year. The target number of borrowers is 9,640 across the 28 townships.

Three types of loan are available, tailored to different types of activity. Instalment loans require instalments of capital and interest to be repaid at fortnightly meetings. Term loans require fortnightly interest repayments and repayment of the capital in a lump sum at the end of the period. Combination loans provide a mix of both methods, with the borrower deciding the length of the 'term loan' and 'instalment loan' period.

The maximum loan term is one year. At present, interest on all loans is charged at 12% per annum-slightly higher the current Agricultural Bank rate. The interest rate is variable according to changes in the Bank's base rate and will increase with the size of loans.

Loan sizes will increase with successive loans taken out. For term loans the maximum first loan is Yuan 400 (US$48 approx), the second Y600 and the third Y900. For instalment loans the maximum first loan is Y600 (US$72) , the second Y900 and so on.

By charging higher than usual interest rates and providing only small loans it is expected that better off people in target villages, who already have access to credit through the banking system, will not participate and thus that the programme will benefit the poorest.

Borrowers must be part of a credit/savings group in their village. The groups will be from 4 to 7 people, and will provide mutual guarantees on each other's loans. If one person is in arrears on a loan, the other group members will be ineligible for further loans. The group guarantee avoids the usual bank requirement for guarantors or collateral.

The programme also includes a savings element, encouraging participants to deposit savings with the Agricultural Bank.

The Qinghai Community Development Programme will last until June 1998, and also includes infrastructure construction (rural roads and drinking water supplies) agricultural extension and training.

The credit fund, which itself receives interest at the usual Agricultural Bank rate for demand deposits, is a grant from AusAID (Australian Agency for International Development) and will continue beyond 1998 for as long as funds remain.

CARE Australia has provided NGO support as a partner in the management of the Qinghai project.

In Du'an County, Guangxi, CARE is also implementing a three year income generation project for impoverished women, working through the local Women's Federation. The project is funded by AusAID and includes a revolving loan fund for 800 women who are receiving training in animal husbandry. Grants are available to an additional 500 women receiving training in growing fruit trees.

The size of loans and repayment period depends on whether women choose training in raising chickens, pigs or goats. Loans for chicken raising are generally around Y200, enough to buy a batch of 21 chicks, and are repayable in a lump sum at the end of one year. For pigs and goats, loans are in the range Y400 -- Y500, enough to buy four animals, and repayable after two years (pigs) or three years (goats). Interest is charged at a rate of between one and two per cent.

Training is the project's primary focus, the aim being "to assist the Du'an women to improve their technical competence in income generating areas with which they have some experience but also to encourage the women to share new skills acquired" according to CARE Project Director Jan Hastings.

In Guangxi province CARE has completed a prefeasibility study for a microcredit scheme for poverty stricken women, with help form the Hechi Prefectural Women's Federation and the Chinese Academy of Social Sciences Rural Development Institute.

Qinghai Community Development Project:
Tim Zachernuk, Australian Team Leader,
c/o DOFTEC, Haidong,
Qinghai. Tel: +86 (972) 612842
Fax: 612076
Email: qcdp@mimi.cnc.ac.cn

CARE Australia:
Jan Hastings, GPO Box 2014, Canberra ACT 2601
Tel +61 (6) 257 4022
Fax: 257 1938
Email: careaus@spirit.com.aus

CIDA

A five year Xinjiang Women's Income Generating Project with credit and training components has been approved by the Canadian International Development Agency and will begin as soon as a Canadian executing agency has been appointed to work in partnership with the local Department of Foreign Trade and External Cooperation.

The basic methodology will be to foster women's solidarity groups of 25-30 women, to provide a forum for training, collective loan guarantee and a degree of fund self management.

It is expected to form 422 women's groups, consisting of 10,555 women in 288 villages, and that each woman will go through four loan cycles.

The project aims to target "the poorest of the economically active:" ie, it "will not attempt to address the needs of those households chronically dependent on social welfare".

Loans will be made to individuals for investment in activities of their own choosing. (The project may suggest a 'menu' of possibilities).

Initially, loans will be for six months, at interest rate of 12% per annum. Groups will have the option of levying an additional 4% p.a. "social emergency fee." Loan repayment schedules will be according to individual contract.

Group members are also required to deposit minimum savings of Yuan 10 per month (US$1.20 approx).

Once economic activities have been identified by individuals in the group, technical training will be arranged. In addition to this and training in business and financial management, it is also planned to provide training sessions in issues such as mother and child health care and group confidence raising.

The total revolving loan fund will amount to C$2.175 million (US$1.6 approx).

The project will begin in Hetian municipal area, followed by Hetian County and Pishan County. A fourth site remains to be selected.

Evangelische Zenstralstelle fur Enwicklungshilfe

In 1994 the German NGO Evangelische Zentralstelle fr Entwicklungshilfe (EZE- Protestant Association for Cooperation in Development) made a grant of DM 880,000 (US$ 580,000 approx) to the Rural Development Institute of the People's University for a project in Neiqiu County, Hebei, carried out in partnership with the local County Cooperative Union.

The project aims to convert rocky, sloping land to productive use for 1,200 families in 11 villages in poor, mountainous areas, where average holding of fertile land was previously only 0.4 mu (0.027 hectares) per capita, resulting in severe grain deficits.

Slopes of soft rock are blasted and terraced. The soil becomes immediately cultivable and is planted with chestnut trees, intercropped with beans, potatoes and ground nuts.

Beneficiary households will each gain 2 mu (0.14 hectares) of productive land. After six years, when the first chestnut crop is harvested, they will be expected to repay input costs equivalent to Yuan 500 ($60) per mu at 1994 prices, taking account of inflation but without interest. The repayments will be used to extend the project to a further 45 villages in the area.

In exceptional circumstances -- for example, where sickness, disability or death have aggravated a household's poverty-a cow may also be provided on credit; repayment consisting in the transfer of a calf to another household within three years.

According to Professor Yan Ruizhen of the People's University the terracing methodology has so far proceeded smoothly: 300,000 chestnut trees have been planted, and bean and potato crops are already being harvested and marketed.

EZE has also given DM 100,000 (US$66,000 approx) towards a two year demonstration project started in August 1995 by the Beijing Agricultural University Centre for Integrated Agricultural Development (CIAD) in four villages in Yanqing, Beijing municipality.

According to CIAD the project has begun with the 50 poorest farmers in the villages, and is largely defined and managed by the farmers themselves. Half of the funding is set aside for loans to buy livestock, and the remainder for training, consultancy and support services.

Repayment is in kind, with farmers being expected to supply neighbours with animal young once their own stock has expanded. In this way, according to Dr. Li Xiaoyun of CIAD, farmers are "utilising indigenous management skills rather than modern monetary methods".

CIAD is exploring project possibilities with Caritas International in Sichuan, and with the German NGO Misereor in Ningxia, and both may include credit components.

Professor Yan Ruizhen,
People's University Rural Development Institute,
Beijing 100872
tel +86 (10) 6251 2636,
fax 6251 2636

Dr. Li Xiaoyun,
Centre for Integrated Agricultural Development,
Beijing Agricultural University,
Beijing 100094
tel +86 (10) 6258 2337,
fax 6258 5866
Email: xiaoyun@public.bta.net.cn

EZE,
Mittelstrasse 37, D-53175 Bonn
Tel 0228 6 1010
E mail: GEOD;EZE(Geo Mail)

Ford Foundation-Grameen Trust-Canada Fund

In 1994 the Rural Development Institute of the Chinese Academy of Social Sciences (RDI-CASS) initiated China's first sustained emulation of the Bangladesh Grameen Bank microcredit model in a project financed by grants from the Ford Foundation (US$110,000) and the Canada Fund (Yuan 50,000; - US$6,000 approx).

After a year of operation the Grameen Trust agreed a loan of US$50,000 to the original project site, and year later loaned a further $350,000 as the project developed to other sited.

Principal features of the model are that money is loaned at near commercial rates of interest to households belonging to small, mutual support associations or cooperatives and that, shortly after receiving the loan, borrowers start to repay in regular instalments.

The first project site was established in Yixian County, Hebei, in May 1994. With the support of local government and under the guidance of the RDI-CASS Project Group, participants formed voluntary, self-management groups of five households with responsibility for mutual support and supervision. Members must consent to a means test, to ensure that only poor households are targeted.

Every six groups of five households comprise a centre which holds regular meetings, disburses loans and collects repayments and savings.

Loans are disbursed sequentially: the first two borrowers must start to repay before the next two can take out loans. Once loans are repaid in full and on time members are eligible for repeat loans.

As of June, 1996, 745 households from two townships in Yixian had formed 145 groups organised into 18 centres. Some 85% of beneficiary households were represented by women.

A total of Yuan 1,078,100 ($130,000 approx) had been disbursed in loans, and Y446,160 ($53,750) recovered.

The maximum first loan was Y1,000 ($120), the second Y1,500 and the third Y2,000. Interest on all loans is charged at 8% per annum nominal rate, the effective rate being about 16%.

RDI-CASS calculates that most loans, mainly used for animal breeding and marketing, brought returns to the borrowers of between 0.5 and 1 times higher than the value of the loan.

Last year project sites were also established in Yucheng and Nanzhao counties, Henan.

In Yucheng all the member households are represented by women; in Nanzhao, 80% of them.

By June, 1996, 525 households had formed 105 groups (17 centres) in Yucheng; and 225 households had formed 41 groups (7 centres) in Nanzhao. A total of US$83,800 had been disbursed in loans, with repayments of $24,800. So far there had been no defaulting on repayment schedules, and group members had deposited a total of $8,726 in savings.

In 1996 a further project site was established in Danqing County, Shaanxi.

Each site is expected to become sustainable at the end of the third year of full operation, with between 1500 and 2000 member households.

Professor Du Xiaoshan,
Institute of Rural Development,
Chinese Academy of Social Sciences,
5 Jianguomen Dajie Beijing 100732
Tel +86 (10) 6513 8133
Fax 6532 5495

GTZ

As reported in CDB2, GTZ, the implementing agency of German bilateral technical assistance, is developing a poverty alleviation programme in Malipo and Jinping counties, Yunnan, and is considering the inclusion of a microcredit component, but the programme is still in the design stage.

Dr Korinna Hana-Richter,
CECAT Room 711, 55 Nongzhan Beilu, Beijing 100036
Tel: +86 (10) 6419 1494,
Fax 6419 1496

Heifer Project International

Since 1984 Heifer Project International has provided livestock, training and related services to farm families in three provinces. There are 13 active projects in Sichuan, where the local partner is the Sichuan Animal Husbandry Bureau, one in Jiangsu and two in Xinjiang Autonomous Region. A total of 11,000 households have been supplied with more than 560,000 animals, including cattle, yak, sheep, goats, pigs, rabbits and poultry. Training in livestock production technology has been given to more than 80,000 people.

In some cases, notably cattle and poultry, farmers make cash repayments over a period of 1-3 years. But in most cases farmers pass on offspring of the animals received from the project to other needy families through the project holder units.

The annual budget for all HPI projects in China is approximately US$160,000.

Professor Pu Jiabi and Ms Fu Changxin,
Heifer Project International
c/o Sichuan Animal Husbandry Bureau,
4 Wuhouci St., Chengdu 610041
Tel +86 (28) 5581294, Fax 5581135

Oxfam Hong Kong

Oxfam's integrated development programmes in Luquan and Lancang counties in Yunnan, Weining County in Guizhou and Bama County in Guangxi, all involve microcredit components.

Since 1992, when the first loans were made in Luquan and Weining, a total of Yuan 2,060,000 (US$ 250,000 approx) has been disbursed to 5,780 households.

Loans range from Y60 to Y600 ($7 -- $70) and are made to support investment in agriculture and animal husbandry. Suitable candidates are first identified by county level project staff. To qualify, households must be suffering a grain deficit, have an annual per capita income of less than Y120 - Y280 (depending on the area), and be prepared where appropriate to try new farming techniques and learn new skills. Borrowers using loans to diversify are given comprehensive technical support and training.

The repayment period is from six months to 3 years depending on the use to which the loan is put: agriculture generally shows a quicker return than stockraising. Interest is charged at between two and three per cent per annum, in line with the minimum rates usually adopted in Chinese government poverty reduction lending.

Repayments are now being deposited in "recovered loan funds" for re-investment in the communities where the original loan was made. As of this year, in Luquan and Lancang, a pilot programme is using the recovered loan fund for group, rather than individual loans, and exploring ways to transfer management of the funds to the community.

Oxfam HK SW China Office,
Box 128 Dou Fu Ying Post Office,
Kunming 650034, Yunnan
Tel +86 (871) 415 2189, Fax 415 0599
Email: igc:oxfamhk@igc.apc.org

Trickle-Up Program

As reported in CDB2 "Initiatives in the Rural Environment": The Trickle Up Program's basic methodology is to provide US$100 grants to in two instalments to families or groups to start or expand small businesses. The first instalment is paid on receipt of a satisfactory business plan; the second on receipt of a business report.

Since 1988 about 800 businesses have started in China through this process in Hebei, Heilongjiang, Shandong, Yunnan and Guizhou provinces.

In the Caohai Nature Reserve, Weining County, Guizhou, Trickle Up has developed a joint programme with the International Crane Foundation and local environment protection authorities to provide livelihoods for people living of the fringes of protected areas for endangered species.

In a new initiative, beneficiaries from Trickle Up grants there are being encouraged to save through Community Trust Funds.

Each $25 which a Trickle Up business invests in the fund is matched by $100 from the Crane Foundation and a local contribution from the Guizhou Environment Protection Agency. Six such funds have now been set up to act as community banks.

Huang Mingjie,
Guizhou Province Environment Protection Bureau,
Tel +86 (851) 582 8423, Fax 581 3414

Ashok Gurung, Trickle Up Program,
54 Riverside Drive, New York NY 10024
Tel: +1 (212) 362 7958, Fax: 678 3593

UNDP/IFAD

In 1994 UNDP began a Poverty Alleviation Programme which involves multi sectoral demonstration projects in Yunnan, Sichuan, Tibet and Gansu. Microcredit components are operational in Malipo and Jinping counties of Yunnan, (with parallel funding from the UN International Fund for Agricultural Development), and Yilong county in Sichuan. Credit schemes are also planned for four counties of Xigatse Prefecture, Tibet, whilst in Gansu the main emphasis is water harvesting.

The schemes follow Grameen Bank methodology, aiming at group guarantees of loans, near commercial interest rates, a repayment schedule that starts very soon after the loan is made, and obligatory group savings.

After baseline surveys identified, in each county, 1,000 needy households without access to other sources of credit, these households are formed into groups of around 20, with elected leaders. Disbursement of loans takes place sequentially: two households receive their loans first, and only after they have started their repayments can the next two receive loans.

The first loans were disbursed in April 1996. To date, in Malipo approximately Yuan 60,000 (US$7,230) has been disbursed; in Jinping, Y50,000 ($6,020) and in Yilong Y120,000 ($14,460). So far the loans have been in the range Y300 - Y1,000, and have mainly been invested in chemical fertilizers, cash crop seeds, pesticides, plastic sheeting, livestock and animal feeds.

The nominal rate of interest is 8%, the effective rate approximately 16%.

In Yunnan the county level Project Implementation Office, comprising officials from relevant departments, has delegated responsibility for the microfinance element to township level Rural Cooperative Foundations. In Sichuan, responsibility has been delegated to a county level NGO, the Yilong Rural Development Association, created for this purpose. In both provinces China Communtiy Corps workers are the active community promoters, helping to form credit group and supervise the use of loans.

Trine Lund-Jensen or Ge Youli, UNDP,
2 Liangmahe Nanlu Beijing 100600
Tel +86 (10) 6532 3731 Fax 6532 2567,
Email: trine.lund-jensen@undp.org

UNFPA

From 1990 to 1995, UNFPA provided US$9.66 million for an ongoing revolving fund project, executed by the UN Food and Agriculture Organisation in partnership with the Ministry of Foreign Trade CICETE department and local Womens Federation branches. The project is continuing in 38 counties of 11 provinces and autonomous regions: Xinjiang, Qinghai, Gansu, Ningxia, Inner Mongolia, Guizhou, Hubei, Shanxi, Anhui, Shaanxi, Hainan.

Some 70% of the donor money was used to set up revolving credit funds, the remainder was spent on the formation of women's groups, skills training, literacy programmes and a small amount of training equipment.

In the first phase, loans were made to village or township level enterprises in areas such as processing agricultural products. Loans covered no more than 30% of the start up capital of these businesses, and were repayable over 3 years. Typical loans supported, eg, processing of noodles from potatoes, thus providing a market for local farmers. By the end of 1995 a total of 9,279 women entrepreneurs and employees had benefitted directly from the loans, and approximately 150,000 households were deemed to have benefitted indirectly, as suppliers of raw materials.

Repayments were used to set up women's groups to manage revolving funds making loans to individual members. By the end of 1995, 1,751 groups had been set up with a total of 49,804 members, and the project is continuing to expand.

Loans from the women's groups revolving funds are typically in the range Yuan 200 -- Yuan 2,000 (US$24 -- $240 approx), repayable over three years, to support agricultural production, stock raising and small scale agricultural processing.

Loans are allocated and repayments collected by the groups themselves. The groups are set up and given subsequent support, including the organisation of skills training, by project offices, usually administered by the Women's Federation. Project offices answer to county level 'leading groups' comprising representatives of the Women's Federation, and county family planning, health and education departments.

No interest is charged on the loans. However, beneficiaries are required to pay five per cent of the amount they borrow into a social development fund administered by the project office and used for, eg, training, equipping village clinics and supplying contraceptives.

Wang Xingen, CICETE,
18 Bei San Huan Zhong Lu,
Beijing 100011
Tel +86 (10) 6519 7709, Fax 6519 7903

UNICEF

For its 1996 - 2000 programme cycle UNICEF, in partnership with MOFTEC, has adjusted its Social Development Programme for Poor Areas (SDPPA) which be implemented in 24 newly selected counties.

Training and microcredit facilities for women are key elements of the programme, along with "strengthening capacity in inter-sectoral planning and budgeting for social services."

Participating counties and townships are asked to set their own social development objectives using a number of social indicators suggested by UNICEF-eg, a certain percentage reduction in infant and mortality rates and percentage increase in school enrolment rates for girl children.

Women forming groups to participate in the credit scheme are also asked to pledge "eight commitments" embracing hygiene and health behaviour as well as financial management.

To qualify for loans, women must join a small group of between three and five (non related) women. Between six and eight small groups together form a large group at village level. The groups help individuals develop proposals for a loan and take joint responsibility for repayment.

Before women are eligible for loans they must make regular savings, of however small an amount, for not less than four months. This is intended as a confidence building measure, and also as a test of commitment.

The maximum amount of first loans will be Y1,000 ($120), with a phased repayment schedule beginning as early as possible. Loan charges of 9.6% per annum (0.8% per month) will be levied, in line with a strong project commitment to provide "no hidden subsidies".

Two thirds of the loan charges will be paid into a social development fund account in the name of the village-level large group, to be used at the group's discretion for social projects.

The remaining one third of the loan charges will be paid back into the revolving fund as a maintenance fee to help offset depletion of capital from inflation and risks.

UNICEF has allocated US$ 7.8 million over five years to the women's group and microcredit components, of which $267,600 per project county will be grants to establish microcredit funds. Project counties are providing counterpart funding by way of township project salaries etc, but will also be asked to match the UNICEF grants for the revolving funds, either by using local resources or by negotiating with provincial level poverty alleviation offices to allocate government poverty alleviation funds to this project.

Counties initially designated for involvement in the project are: Anhui province: Chanfeng, Yeuxi and Shucheng. Gansu: Yongjing, Yongdeng and Tianzhu. Guizhou: Danzhai, Huanping and Shibing. Heilongjiang: Suibin. Henan: Tongbai. Hubei: Zigui. Inner Mongolia: Wushen. Shaanxi: Linyou. Sichuan: Maoxian, Meigu and Fengjie. Tibet: Dingjie, Qiongjie and Suxian. Xinjiang: Barkol and Qiemo. Yunnan: Lijiang and Longling.

Ms. Ng Shui Mang, UNICEF,
12, Sanlitun Lu, Beijing
Tel +86 (10) 6532 3131, Fax 6532 3107

UN World Food Programme/IFAD

Last year saw the start in Guyuan Prefecture, Ningxia, of a US$930,000 WFP funded scheme to give women with incomes below the poverty line credit to invest in income generation. By 1999 loans ranging from Y500 to Y1000 ($60 to $120 approx) will be made to an anticipated 25,000 women. Loans are for one year and interest is charged at 8.64% In Xinyang Prefecture, Henan, the Chinese government is funding a similar scheme from savings made as a result of receiving WFP food aid and so not having to provide relief grain to impoverished households in the project area. This project will disburse up to Y5 million ($602,000) over four years (1995-99) in loans ranging from Y1,000 to Y2,000 ($120 to $240) to an anticipated 15,160 women. Loans are for one year, but interest is charged at the standard government poverty alleviation rate of 2.88%.

Next year a joint WFP-IFAD (UN International Fund for Agricultural Development) project will start in Waxian and Nanchong prefectures of Sichuan. IFAD will provide $19.6 million over ten years for a microcredit component which envisages making loans up to Y2,000 ($240) to 220,000 households with a per capita income of less than Y245 ($30). and grain production of less than 138 kgs. Loans will be for one to two years, and it is expected that interest will be charged at 12.06% p.a. Part of the funding will be reserved for women's income generation projects.

The following year, 1998, will see the start of another WFP-IFAD joint project in Haidong Prefecture, Qinghai. IFAD funding of $5.16 is expected, over ten years, to provide loans of up to Y2,000 to some 47,000 households with a per capita of less than Y330 and suffering a grain defecit. Part of the funding will, again, be reserved for investment in women's income generation.

Chris Czerwinski, WFP,
2 Liangmahe Nanlu, Beijing 100600,
Tel: +86 (10) 6532 3731, Fax 6532 4802
Email: wfp@iuol.cn.net

World Bank

The World Bank and Chinese government are considering the inclusion of a microcredit component in the projected US$270 million Qinba Mountains Poverty Reduction Project (see report in CDB2) but this is still in the design stage.

Mike Goldberg, CGAP,
World Bank,
1818 H Street NW,
Washington DC 20433,
Tel: +1 (202) 458 4067, Fax 522 1561

World Vision International

In 1994 World Vision's China office initiated a microcredit scheme as a major component of an integrated development project in Nayong County, Guizhou.

Some 350 households have borrowed from separate revolving funds for animal husbandry and agriculture, established with WV grants of Yuan 214,000 (US$26,000 approx) and Yuan 48,000 ($5,800) respectively. The funds are jointly managed by WV and Development Fund Committees comprising villagers elected by their peers during community meetings.

The average size of loans is Y600 from the husbandry fund, repayable after one year, and Y250 from the agriculture fund, repayable after six months. General eligibility criteria- poverty plus willingness to participate in other elements of the integrated programme, by, eg, contributing labour to drinking water supply schemes or sending girl children to school- were agreed by villagers in a community meeting.

In two of the project villages, two complete cycles of borrowing and repayment have been completed, with more than 95% repayment rates.

During the first cycle no interest was charged. During the second cycle, interest was charged at 5% per annum, at the behest of the Development Fund Committees.

The project has been complemented by the setting up of village level veterinary and agricultural extensions system, with villagers receiving training from county technicians, since WV believes that back up training is critical to the success of credit schemes.

World Vision is at present carrying out integrated development programmes, all of which now involve a credit component, in Puding County, Guizhou; Tongxin County, Ningxia, Duan County and Nandan County, Guangxi, and Yuanyang County, Yunnan.

Hazel Wong, World Vision International,
PO Box 74363,
Kowloon Central Post Office,
Hong Kong
Tel +852 5613 1578, Fax 2394 1578