This March marks Vietnam Bank for Social Policies’ (VBSP) 17th year of development in the role of the government’s sole authorised agency to offer policy credit to the poor.
One destination, full of affection
Policy credit by the Vietnam Bank for Social Policies (VBSP) has brought a facelift to diverse localities across the country. Ha Tinh province in the north-central region is a shining example.
The family of Nguyen Thi Kim in Duc Thuan ward, Hong Linh town has left poverty behind thanks to credit from VBSP’s local branch office. The family has been a beneficiary of VBSP’s policy credit programme for more than 10 years.
Kim’s family has taken up three loans from the bank with the total amount of more than VND101 million ($4,390) to support their three children to continue their university education.
They have repaid VND78 million ($3,390) so far, with about VND30 million ($1,300) left.
Kim shared that without taking policy credit from VBSP, their family could not have escaped poverty. To raise seven children, the family had to make do with one hectare of arable land, one-third of which it then had to return to the local cooperative.
After getting the first loan from VBSP in 2015, Kim’s family has begun raising pigs and chickens, and doing small trade with agricultural tools.
The bank’s loans helped their three daughters to cover tuition fees at universities. After graduation, they are now helping their parents gradually pay off debts and have extra money to support their youngest sister who is currently studying at university. The mature children also helped their parents repair their home.
Pooling our strength to combat poverty
Ha Tinh is one of 63 provinces nationwide that have benefitted from concessionary policy credit sources the government has authorised VBSP to lend to the poor and other policy beneficiaries. This came in the context that Vietnam has grown into a medium-income nation which has led to a reduction in the volume of financial aid from international organisations earmarked for the poor and underprivileged people.
More and more free trade agreements (FTAs) have helped Vietnam integrate more deeply into the world economy, while simultaneously creating challenges and increasing pressure to ensure social wellbeing in the face of the growing threat from the increasing gap in people’s living standards.
Unless support policies are put in place in a timely manner, the gap between the rich and the poor will widen, and needy people might fall farther behind. Well aware of the situation due to having close contact with the poor and other policy beneficiaries, VBSP has launched diverse concessionary credit programmes in time.
Growing from three such programmes in 2003, until now VBSP has executed 22 programmes, as well as many time raised lending amounts to meet essential demand for economic development and combat adversity.
Significantly, during the last ten years (2011-2020), the birth of VBSP’s two credit programmes to lend to near-poverty households and those that just moved out of poverty were considered a breakthrough in sustainable poverty alleviation.
These two programmes, paired with other policy credit programmes applied in the previous years, have brought a sharp reduction in the number of needy households.
For instance, the rate of needy households fell to 5.2 per cent in late 2015 compared to 9.45 per cent in 2010. The danger of local households falling back into poverty has proven high, especially in the North-western, Central Highlands, and South-western regions which are plagued by natural disasters and epidemics and locals have little decent agricultural knowledge.
The deployment of these credit programmes has, therefore, pushed up the poverty reduction cause effectively.
As of January 2020, the bank reported about VND34.692 trillion ($1.5 billion) in total outstanding balance earmarked for the poor and other policy beneficiaries.
Notably, the loan structure has improved significantly, with only 16.7 per cent of VBSP’s total balance taken up by the poor, compared to the 40.4 per cent rate spotted in 2010.
Lending volumes to near-poverty households and those who just moved out of poverty rose sharply, touching 15.4 per cent, equal to VND31.856 trillion ($1.39 billion) and 16.8 per cent, equal to VND34.750 trillion ($1.5 billion), respectively.
As of now, VBSP has posted more than VND209 trillion ($9.1 billion) in total outstanding balance and more than 6.5 million policy credit beneficiaries. This provides a firm bedrock for the bank to make further strides in development, and continues to effectively carry out its role as a bank specifically catering to the poor and those in need, realising the target of not letting anyone fall behind during the country’s development.
