For someone stuck in the cycle of poverty, getting a loan can be the first step toward creating a brighter future. 

But accessing a bank loan is difficult, if not impossible, for someone who doesn’t own a house or anything more than a small sliver of land. 

“Around 2000 the Vietnamese government gave almost everyone access to banks, but this didn’t include poor people who had no land or skills,” said Bernard Kervyn, co-founder of the NGO Mekong Plus. “They were considered high-risk by banks, who are reluctant to lend to people who make less than US$1 per day.”

In certain provinces, up to 10% of the population can fall into that category. 

As a result, people in this demographic can’t take out a loan to start a business or attempt to grow a crop and improve their income. Instead, they have to approach money lenders, who can charge very high interest rates of over 10% per month. 

To address this situation, Mekong Plus has been providing microcredit loans to poor households in Vietnam since the 1990s. This process begins with the Mekong Plus team asking a local People’s Committee for a list of disadvantaged households.

“Then we visit these individuals and talk with them to understand their needs and priorities,” Kervyn said. “If they want to raise chickens or grow vegetables, we’ll help them up to a certain percentage of the cost with a microloan. It’s not meant to cover the whole investment, as we expect the rest to be sourced from family or the community.”

These loans generally range from VND2-2.5 million, and they also come with moral support, technical training, and follow-up by the Mekong Plus team. 

“We want to make sure they don’t fail, because they’ve failed many times before and they might not have confidence,” Kervyn explained. “Quite often we are dealing with single mothers, where the husband went to the city to work and never came back, so they have a lot to worry about.”

Before a loan is disbursed, recipients receive a short set of practical training, and after a loan is given, Mekong Plus follows up on a weekly basis to make sure things are going well.

Diversification is a focal point of the microcredit program. If a person only raises chickens, a disease could quickly wipe out their entire income. 

And the results have spoken for themselves: Mekong Plus boasts a loan repayment rate of 99%, and the average loan recipient increases their income by 25% on an annual basis. 

“Usually after five to seven years they are out of poverty and we can accompany them to the bank to say, ‘I’m breeding pigs successfully and I want to do it on a larger scale,’” Kervyn said.

Thus far, Mekong Plus has provided microcredit to over 11,000 people in three Mekong Delta provinces who have escaped poverty, and they are currently working with another 6,000 households.

The current capital in their portfolio comes out to about US$600,000.

This capital comes from partners like Dragon Capital who provide the financing for loans.

“Bernard is very passionate about what he does,” said Dominic Scriven, Dragon Capital’s chairman. “Microfinance hasn’t always worked well in Vietnam, and there are concerns about high-interest lending which have been borne out in neighbouring countries, but it’s a great concept.”

“Mekong Plus is an example of a grassroots-led initiative,” he went on. “It’s not the big donors showing up in fancy cars, it’s on the ground, and I recommend other people to support organisations like it.” 

According to Kervyn, partnering with the business sector is key to long-term success.

“Many companies have their ESG/CSR budget, but they do not have connections, so what we say is that if you want to do something in the social field, instead of just donating charity money that isn’t sustainable, why not give it to organisations with a proven track record showing their impact? That’s the only way we can really have a significant impact on society.”

Other private-sector supporters include BNP Paribas, Scancom, DIROX, Unifiedpost, Beluxcham, Mercedes-Benz and JLL.

Never miss an update about our events and articles
Tim Burrill
Membership Manager & Executive Assistant
If you would like to learn more about our events and membership, or have other questions, don’t hesitate to reach out to me.