Microfinance Programs in Vietnam

Habitat for Humanity (hereafter HFH), with their experiences in housing, holds a unique position as an organization focusing on partner capacity development in a microfinance housing program and technical support. The following is from an example of HFH Vietnam.
HFH Vietnam began testing this microfinance housing program in 2005, when it embarked on a collaborative project with the Women’s Union of Kien Giang province. Over a period of approximately 10 months, the pilot project offered housing loans to 800 families in four countries. The loans were provided for financing physical repairs as well as water and sanitation improvements. The loan size range of US$75 to US$280 offered repayment terms of up to 36 months. HFH Vietnam provided technical assistance and training to the Women’s Union which was responsible for the ongoing management of the revolving loan fund.
A key factor in achieving this type of scale is to choose the right partner. The Women’s Union, which HFH Vietnam selected as a partner, is dedicated to working with the poor, and had an established network of women’s groups and a history of development finance. The women’s groups also had knowledge of livelihood strategies and income and expenditure cycles of the families. In addition, the Women’s Union ensures long-term and sustainable operations, since it was one of the Vietnamese government’s mass organizations, working in each province at every political level down to the village.
On a collaborated project with the characteristics mentioned above, Habitat’s roll was to help the women’s groups think through the issues of how to establish housing products and provided training and oversight for the technical aspects of providing such a loan. HFH Vietnam also aimed to help the partner to develop capacity to manage a revolving fund and attract new (non-HFH) capital.
In July 2006, the pilot project was audited in respect to the fund management and performance of the pilot project. The result of the audit was that loans had been issued of a size that met each family’s requirement and with the capacity of clients to repay. This outside audit verified the benefit to so many families in such a shot time.
The audit also documented some important issues when HFH Vietnam considered expanding the program to the other communities and working with other partners. The first is that due to the limited capacity of the Women’s Union in accounting and financial reporting, HFH’s monitoring played an important role for the financial control and systems.
The second is that staffing of the Women’s Union was not sufficient for the implementation on a larger scale, which required additional staffing. It resulted in an increase in the interest rate and/or continued investment from HFHI in order to maintain operational sustainability.
HFH Vietnam has begun a new pilot program in Tien Giang for improving sanitation and housing. The organization that HFH Vietnam collaborates with has never before partnered with an international nongovernmental organization. HFH Vietnam will support the development of financial and project management systems, and housing products for the loan program.
HFH fills the inevitable void between government subsidy and commercial lenders. By collaborating and encouraging the participation of other important players, HFH can help many more families than they could on our own.