Poverty, Credit and CIDSE

CIDSE is a working group of 13 Catholic development agencies. In 1977, it began a programme in Vietnam, which was extended to Cambodia in 1979 and Laos in 1981. The programme initially provided emergency aid and supported national reconstruction programmes. However,political and ecnomic changes in the three countries have allowed CIDSE to increasingly focus on community based development, supporting local people's efforts to eliminate poverty and bring about a just society. The programme promotes integrated development. It supports projects which help people attain their economic well-being, social and political rightsand spiritual aspirations. CIDSE wrks in partnership with local groups, strengthening their ability to become self-sufficient in developmental work. It also works with local authorities where approrpiate and has built up a good relationship with government bodies based on openness, frankness and a mutual desire to improve the lives of poor people in the region.

Poverty, Credit and CIDSE

In 1992, CIDSE initiated a credit and savings project in Vietnam. It was focused particularly on the needs of many of Vietnam's poorest women. Through focussing on this group, CIDSE intended not only to improve income and production but also family nutrition and well-being generally.

At first sight, given the nature and scale of the problems of the poor, a credit scheme might not be a prority but, as has been demonstrated in many similar situations, it is a micro scheme with macro implications. Credit and savings schemes address not only the immediate and direct needs of the poor but also many of the indirect, longer-term needs beyond material assistance alone. These include group formation, skills training, the challenge of attitudes and the building up of confidence and solidarity at both group and community levels. Such an approach is indicative of the general philosophhy and trategy of NGOs in general and CIDSE in particular.

Most of the most effective credit and savings schemes are based in some way on the now famous Grameen Bank model. Moreover, the Grameen Bank is now assisting others to replicate the model in over 40 other countries from Malaysia to Vietnam to te Philippines. It now has a vision of reaching out to one-third of the world's poor by the year 2005 with its focuson proviing credit for women.

The liberalisation of the financial market in Vietnam in recent years has witnessed the expansion of the role of non-public financial institutions. However, a review of such institutions reveals an urban bias as well as a preference for large and well secured loans to the disadvantage of small savers and borrowers. This has, in turn, led to the emergence of a large and dynamic informal credit market charging higher interest rates to those charged by official institutions.There are also a great variety of credit programmes which focus on the poor (defined in various and often conflicting ways) but which exhibit a number of drawbacks. These include a bias towards urban centres and the main trading routes, a ficus on individuals rather than groups, a lack of stable and adequate funding support (experimental projects, high staff turnover, lack of institutional support), a belief that the poor are incapable of generating savings and a lack of locally based control decision making.

Direct results for the individual members immediately inolved.
These are measured most obviously in the range of income generating activities for which loans are accessed. Such access has led to significant success in a range of activities from pig and poultry raising to small scale trading to the purchase of engines for boats to rice paper making. Such activities have not only helped job creation but have also helped stabilize or expand income earning opportunities amongst the poor.
Indirect Results

in terms of the many social and community benefits of direct targeting and, on the basis of such targetting, more accurate information gathering and analyses. Such information will prove invaluable when planning and supporting future programmes in a variety of areas.

Indirect Results

measured in terms of local group skills and solidarity as well as in capacity building and skills training amongst the Vietnamese partner organizations especially at local and regional levels.

Indirect results at household and family levels.

as measured in terms of improvements in nutrition, the quality of housing, improved social relations within the family and broader group solidarity. This is a level of impact frequently commented upon by the membership themselves.

Eight Key Principles

Bearing such issues in mind and in adapting and developing the Grameen Bankmodel for the circumstances of Vietnam, the CIDSE Credit and Savings Acheme has highlighted eight key principles:

  • Very clear targetting of the poor
  • A special focus on poor women
  • Adequate and stable financing over time
  • A built-in savings component which mobilizes local capital
  • Eight Key Principles
  • Appropriately small loans and regular small repayments
  • No interest rate subsidy for members
  • The formation and strengthening of members into locally choosen solidarity groups.
  • Adequate and appropriate training and technical support.

    To date, the programme has assisted over 6,700 participants in 32 areas; has loaned 2,534 million VD (USD 253,400) and, most importantly ofall, has achieved a repayment rate of 95%.

    CIDSE's Vietnamese Partners have included -

    "Alternative Banking for and by the Poor - A CIDSE Case Study from Vietnam. Brussels: CIDSE, 1996.

    Contact Addresses
    CIDSE CLV Programme
    Huidevetterstraat, 165
    1000 Brussels
    Tel: 32-2-502.58.58
    Fax: 32-2-502.51.27
    Email: clvprog@eunet.be
    CIDSE Vietnam Field Office
    GPO Box 110,
    Hanoi, Vietnam
    Tel: 84-4-825.4834 or 0265
    Fax: 84-4-825.0266
    Email: cidsehan@netnam.org.vn
    CIDSE Vietnam Liaison Office
    214/19/18 Nguyen Huu Canh Street,
    Tan Dnh Ward,
    District 1, Ho Chi Minh City, Vietnam.
    Tel: 84-4-844.5287
    Fax: 84-4-843.6866
    Email: cidsehcm@netnam2.org.vn and

    Hari Srinivas - hsrinivas@gdrc.org
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