Promoting Sustainable Poverty Reduction Through Microfinance
- poverty reduction approaches
- endogenous poverty alleviation
- vulnerable groups
- targeted poverty alleviation components
- supporting policies
Promoting Sustainable Poverty Reduction Through Microfinance
Title : Promoting Sustainable Poverty Reduction Through Microfinance
Commencement Date : Mon Jan 01 1996--Wed Dec 31 2014
Implementing Agencies : Association for Rural Development of Yilong
Support Organizations : County civil affairs bureau
Actuator : Association for Rural Development of Yilong
Members of The : the farmers
CASE PROVIDER :
Sources of Funds :
Catalogue and Index :
Abstract Summary :
Located in the northeast part of Sichuan Basin, at the transition zone between the southern hills of Micang Mountain and the foothills of Sichuan, Yilong County is high in the northeast and low in the southwest, full of low mountains and hills, 500-700 meters above sea level, with a relative height of 200 to 400 meters, and is in the northeast of Nanchong City, Sichuan Province. By the end of 2008, the city had a total of 337,798 households, of which 260,238 were rural households and 77,560 were urban households, and had a total population of 1,101,273, including an agricultural population of 944,400 and a non-agricultural of 156,900. In the humid subtropical climate zone, Yilong County has four distinctive seasons, vulnerable to droughts, floods, hails and other natural disasters and covers a land area of 1767 square kilometers, of which 630,000 mu is arable land, 0.68 mu per farmer. Yilong is a traditional agricultural county engaged in planting and breeding.
Poor natural conditions, lack of resources, inconvenient traffic and inadequate information
At the watershed of Jujiang River and Jialing River, without any rivers, Yilong County is always dry and often hit by wind, hail and other natural disasters. Water for agriculture and living use is mainly rainfall, so the agriculture develops slowly and the drinking water problem of human and livestock is prominent. More than 80 percent of the arable land is barren with low quality and can hardly hold water, soil and fertilizer. The grain yield per hectare is only about 6,000 kg.
Irrational industrial structure of agriculture
Since the founding of New China, the traditional "grain pig" breeding accounts for a large proportion of the agricultural industry. Due to the low technology content and single species, the cost has been high and the yield has been low, so people have benefited little from pig breeding. It is very common for “farmers to feed themselves relying on farming and support farming by pig breeding” in the rural areas
Backward education and health status, low quality of the population and difficulty in technology application
The average years of education of the residents in this county are less than five years. Among each 1000 people, 74 are college students, 19395 are middle school students and 24.9% are illiterates and semi-literates. The farmers generally lack science and technology education, are unresponsive to new things, have no development and investment ideas, can hardly understand science and technology, and are still in the primitive farming state of "sunrise and sunset".
Poor infrastructure restricts economic development
Due to financial difficulties, the county cannot afford infrastructure construction. More than half of the township highroads cannot be used in rainy days and 70 villages do not have highroads; the water conservancy facilities have not been repaired for years, the drainage channels are unsmooth and water runs here and there in the event of a flood, causing series damages to houses, farmland, trees and people’s living.
Fund shortage for poverty reduction and development
Located in the inland area with local level of economic development and little fiscal revenue, restricted by the traffic, energy, resources and other natural factors, the secondary and tertiary industries lag behind and it is difficult for Yilong County to provide financial resources for poverty reduction. Even if the central government provides financial aid, the funding size is small.
Association for Rural Development of Yilong is a non-profitable NGO registered in the county civil affairs bureau in March 1996 with the purpose to promote the people-oriented poverty alleviation and sustainable development in rural areas. Its main activity areas: Construction of farmers’ organizations, microfinance services, rural poverty reduction and women's participation, community capacity building and promoting rural sustainable development. The Association has now 23 employees, equipped with three departments and one division office, and has seven branches. Its main activities include: poverty-relief microfinance; the construction of farmers’ mutual-aid societies in poor communities and promoting industrial development; community volunteer service organization and volunteer service activities; assistance for rural destitute children, etc. Through years of efforts, the Association has established six community service branches in local poor rural areas, organized local volunteer service team (with 40 registered members now) to carry out social volunteer services focusing on environmental protection, care for left-behind children and left-behind elderly people; mobilized, organized and promoted more than 2000 rural households of 22 poor villages to participate the establishment of 22 mutual fund-based village-level poverty-relief mutual-aid societies and provided support and guidance for these organizations.
Yilong’s microcredit project is implemented by the county’s rural development association, a private agency registered in the civil affairs department. The county head is the chairman of the Association, the County Project Office director acts as the Secretary-General and is responsible for the daily operations and management. The Association Office and the County Project Office share the working staff despite two names. The project office is responsible for the daily work of the Association Office and has three registered workers and the other staffs are all employees; all the community workers and village liaison officers are workers employed by the Association, under the leadership of the Association’s Secretary-General; the farmers receiving the micro-credit loans are the Association’s members. With support of the county’s leadership and the integrated management of the projects and Association, the Association for Rural Development of Yilong is in a good relationship with the government and can not only independently implement microcredit loan projects and have independent funds, personnel, wage and business management rights, but also have properly handled its relations with the county and township governments and got support from the government.
The lending objects of the Association for Rural Development of Yilong are mainly the people engaged in agricultural production, family aquaculture, small processing, services and small business operation in the areas where the branches are located. They usually do not need to provide any pledge for the petty loans of no more than 3000 yuan, and the loan period is usually one year, half a year or three months. The farmers with good credit and without any illegal record may continue to apply for loans after three months. The loan interest rate is 9% and the loans can be repaid in installments based on 15 days, and all the loans need to be repaid.
In terms of credit loan issuance, the Association learned from GB mode. The "Regulations on Revolving Fund Management and Operation" launched in 1996 had provisions on the credit loans’ regulatory agency, operating personnel, operation procedures, target selection and fund operation mode and use conditions, requirements and rules. The "Internal Financial Management System of the Association" implemented in 1997 and the "Rules on Financial Accounting of Microcredit of Yilong County" launched in 1998 had detailed provisions. To establish the employment mechanism and incentive mechanism needed for modern operation and management and effectively promote the sound development of the Association and its work, approved by the Association Management Commissions, it decided to allow two-way selection of the staff for competition for working positions, and formulated the "Competition for Working Positions through Two-way Selection", which had provisions on the principles, scope, conditions, procedures and methods of competition. On the reform of the Association’s governance structure and employment mechanism in accordance with the "Accounting Manual" and "Management Reporting Guidelines", it formulated the "Management Approach for Microcredit Work" to facilitate the implementation of the work, which includes the Association’s governance structure, microcredit operation rules and financial system. Specific contents include: Branch setting mechanism and responsibilities; lending policies; credit operation process; credit information management; financial management system; credit record management, financial monitoring, etc.