Escaping poverty from preferential loans

Over the past years, Phu Giao district’s transaction office of the Bank for Social Policies (VBSP) accompanied people, especially poor, near-poor households and students in the process of accessing preferential loans for economic development and learning. Up to now, the district’s VBSP transaction office has set up 229 savings and loan groups, entrusted loans to 7 policy credit programs through associations and mass organizations.

Efficiency from breeding model

The program for poor households to borrow capital for production and animal husbandry has really brought high efficiency to people in the district. From this capital, many poor households have risen out of poverty. The family of Bui Van Tuan in Vinh Hoa commune is a typical example. Five years ago, he was facilitated by the district’s VBSP transaction office to get VND 50 million in loan to raise goats. With the loan and knowledge in animal husbandry, he has succeeded beyond expectations in developing home based economy. Currently, his family's goat herd always ranges from 40 to 60 breeding animals. Every year, he sells dozens of goats for meat to the market, earning more than VND100 million. He shared: “Without preferential loans, I don't know what my family life is like now. This is a good policy for people with difficult circumstances”.

Bui Van Tuan in Vinh Hoa commune has escaped poverty with the model of raising goats

The family of Bui Van Soan in Tam Lap commune also rose out of poverty from preferential loans by investing in cows. Previously, his family belonged to a poor household with many children and no land for production. In 2017, he was considered to get VND 50 million in loan from the locality. And he used the loan to buy a pair of cows. After more than 1 year, his family had a pair of calves. The number of cows increased gradually. So far, Mr. Soan's herd of cows has been worth hundreds of millions of dong. Thanks to the loan, his family escaped poverty, was able to repay the loan and was considered for VND 120 million in loan to continue investing in animal husbandry.

Another example in using loans from the VBSP to get out of poverty in Phu Giao district is the family of Nguyen Quoc Thoai in An Thai commune. Receiving us in a solid four-level house, Mr. Thoai boasted that this was the result of him and his wife from loans by the VBSP and savings by his family over the past 7 years. “In 2010, I and my wife lived with our parents in a makeshift house. I got VND 10 million in loan from the district’s VBSP branch for job creation. Then, in 2017, I was approved for VND 50 million from preferential loans for poor households. Having money, I and my wife decided to invest in raising cows. Thanks to raising cows, till 2018, we accumulated and borrowed more money to buy a land of 1,000 square meters worth VND 125 million. Without the support of the VBSP, my family's life would still be difficult and I don't know when I will get out of poverty”, said he.

Improving operational efficiency

After 20 years of operation, Phu Giao district’s VBSP transaction office has created favorable conditions for the local people to get loans for economic development, contributing to reducing poverty and ensuring the local social welfare. As of late June 2022, the total credit capital of the district’s VBSP transaction office was more than VND610billion, including more than VND346 billion from central capital or 56.79% of total, VND204 billion from entrusted capital from the local State budget, or 30% of total; VND 59.7 billion from local capital or 10% of total. From preferential credit sources, up to now, the bank’s branch has facilitated 51,000 households to get loans. These loans have helped the local poor households to rise out of poverty. They have also supported more than 5,000 pupils and students from poor, near-poor families to cover school fees and create conditions for 21,935 households to invest in building clean water works, toilets…

Pham Quoc Du, Director of Phu Giao district’s VBSP transaction office shared that over the past years, the unit's management and disbursement of policy credits achieved high efficiency. Although loan sources were not really large, the local borrowers knew how to effective use them with economic models suitable to their capacity and conditions. Thank to effective business models, borrowers paid interest rates, loans on time, helping the bank's capital to grow with the low ratio of bad debts. “In order to further improve the effectiveness of credit policy, in the coming time, Phu Giao district’s VBSP transaction office will further strengthen the task of handling and collecting overdue debts to create revolving capital for credit programs; improve the efficiency of entrustment service activities of socio-political organizations; promote propaganda and mobilization of savings deposits among people to create preferential loans", said Mr. Du.

Reported by Quang Tam-Translated by Kim Tin