Effective and efficient model of credit and savings group

We came back Trung Tap hamlet, On Luong commune (Phu Luong district – Thai Nguyen province) on a sunny and hot day. We were so surprised at the new appearance of the area in front of an immense green fields with our own eyes.

The role of the Youth Union

One year ago, Trung Tap hamlet was newly founded with 52 households, mainly Tay ethnic groups, with so many difficulties. Mr. Nguyen Van Thuong, the secretary of On Luong commune’s Youth Union, explained for the new appearance in the area: “In addition to the efforts of the local authorities and people, lending from VBSP has given people with financial support to invest in production development, stabilize new life and sustainably escape from poverty. Noticeably the local Youth union has played a very important role in bridging VBSP and the borrowers, increasing their access to policy credit and ensuring the effective and efficient utilization of loans”.

 The credit and savings group (CSG) of Trung Tap commune which is the last one established and managed by the Youth Union is entrusted to implement six steps in the lending procedures.   Following the directions of the commune authority, the local Youth Union has collaborated with the executive committee of the party and the authority at hamlet level to introduce the policy lending of the Government in disadvantaged areas, establish the management board of CSG, formulate the operation regulations of CSG, admit new members, carry out the public selection of eligible applicants, prepare the list of selected applicants to submit the commune People’s Committee for certification… Mr. Thuong said that “My CSG has 33 members who are policy beneficiaries of the lending programme to the poor, programme to disadvantaged students and programme for job creation with the total outstanding loans of VND 514 million. The management and supervision, collation and interest collection are performed under the regulations. The Youth Union at commune level collaborates closely with CSG management board  to manage, remind and instruct CSG members to use the loans for committed purpose, to give advices and perform the monthly shifts. When new lending programme is launched, the Youth Union will collaborate with VBSP staff to introduce it to CSG members. Successfully, no overdue debt and no loan at risk have been recorded so far. Our CSG members borrow money from VBSP mainly for investment on production and business and their children’s study”.

“Majority of VND 514 million outstanding loans has been used for forestation for materials production, pigs, buffalos  and cows raising, services provision…As a result, many successful models of  production and business such as the model of Ms. Lai Ngoc Thuy, the model of Mr. Nguyen Van Thao and the model of Mr. Vu Van Phuong are recognized as the best practices  for  a short time…Upon the achievements over the past time, it is mostly likely to have more and more households escape form poverty and become better-off”.  

Besides many advantages, on his opinion the funding still has not met fully the demand of the Youth Union members. If the funding, particularly funding for lending to enterprises in disadvantaged areas for services development and forestation for materials production, was increased, the economic situation in the area would be much more improved.

Mr. Pham Huu Hoan – the secretary of the Youth Union of Phu Luong district said that “the funding for job creation is still limited and when a job creation project of the borrower is ended, only small amount in the total repayments is revolved among CSG members. In addition, only small number of CSGs are managed by the Youth Union as in many areas the Poverty Alleviation Board still does not feel fully confident to allocate funds to the YouthUnion for management and supervision. Additionally the Youth Union is the later to receive the entrusted funds,  the amount managed and supervised by us is still low”.

In fact, the number of CSGs managed by the Youth Union of Phu Luong district has been increasing noticeably over the past time. At the beginning days of six CSGs with 316 members and the total outstanding loans of VND 2.286 billion, the Youth Union of Phu Luong district currently has managed and supervised 14 CSGs with 469 members and the total outstanding loans of VND 4.970 billion.

Mr. Hoan is so excited that”the entrusted lending to the poor and other policy beneficiaries satisfies the expectation of the youth and other people. Under the lending programme, the youth are financially supported to develop their household’s economy, create jobs, increase the income, lessen the pressure of leaving the villages. In the other hand, the capacity in collaboration, organization and fund management of the Youth Union staff is therefore improved. The policy lending also makes a remarkable contribution to the poverty reduction in the district”.

After leaving Trung Tap hamlet, local people’s pleasure on their development still stays with us. Hopefully in our next visit to the area, more households will escape from poverty and become better-off and their living standards will be much more improved.