Paper

The Nature of NGO Microfinance in Vietnam and Stakeholders' Perceptions of Effectiveness

Studying the growth of microfinance in Vietnem

This paper argues that the rapid expansion of the microfinance programs in Vietnam, particularly those sponsored by non-government organizations (NGOs), have not been systematically analyzed for their contribution to poverty. The paper:

  • Reports on data obtained during a survey of various stakeholders, including donors, NGO-sponsored microfinance institutions (NMPs), village leaders, NMP members and non-members;
  • Describes the nature of NMPs their objectives, target groups and financial products;
  • Discuses perceptions of NMP effectiveness from the standpoint of various stakeholders.

The paper provides:

  • A brief overview of rural finance in Vietnam;
  • An outline of the survey process;
  • A list of the findings with relation to the nature of NMP operations.

The paper finds that:

  • NMPs are at a critical juncture;
  • Their activities are perceived to contribute to poverty alleviation,
  • Their future viability is clouded by donor requirements that they become financially self-sufficient;
  • Certain government policies, such as subsidizing interest rates and instituting high minimum legal capital requirements, make achieving this goal very difficult.

The paper concludes that two scenarios are likely to eventuate in the future:

  • Donors might pull the plug on programs that fail to reach self-sufficiency or they will be forced to close by the Government for failing to reach minimum capital requirements;
  • NMPs might switch from their current development orientation to more commercial objectives in order to survive.

About this Publication

By Nghiem, H., Laurenceson, J.
Published