REDUCTION OF EXTREME POVERTY: MICROCREDIT AND COACHING THE POOREST
Where we work in Vietnam, 5 to 10% of the villagers live on less than ½ € / person / day; Cambodia, they are 15 to 20%.
Mekong Plus manages to get them out of this situation through 4 to 5 years of training, microcredit and close coaching. On average, revenues increase by 25% per year, they double in 4 to 5 years. Unless special circumstances, Mekong Plus stops its support when income exceeds € 1 to 1.5. It continues, however, to ensure a less intense follow-up to prevent a relapse into poverty- which happens in less than 10% of cases.
MORE THAN 7000 HOUSEHOLDS, APPROXIMATELY 35,000 PEOPLE, HAVE BENEFITED FROM THE PROGRAM AND HAVE ESCAPED ACUTE POVERTY. TODAY, ANOTHER 6500 NEW HOUSEHOLDS ARE IN THE PROGRAM.
A. LE PROCESS :
- Visit the poorest households, hold an open and patient discussion to build trust and clearly identify the main problems; this takes time and several visits. In 1/3 cases they are single mothers who have to take care of the children alone due to the death of their husband, or because of domestic violence, etc.
2. Solutions envisaged together. Before supporting the family with training and a microcredit, we ensure that the children do not drop out of school and that there are no serious health problems. Because health treatments are often what precipitates villagers in extreme poverty. Indeed, misguided, they spend too much and not in an effective manner
3. How to increase income? There are many ways. For example a small vegetable garden requires little investment and generates some cash daily. 30 to 50 chicken, to start with, with proper care (vaccinations, cleanliness, and nutrition) will give a good return in 3 to 4 months. Much effort is needed to explain and train the villagers, to build confidence. Because they have lost confidence after many failures, they do not use good techniques, thus chick mortality can reach 80%.
MEKONG PLUS ALWAYS SUGGESTS MODEST INVESTMENTS FIRST, WITH LOW RISK AND QUICK RETURNS (LESS THAN 5 TO 6 MONTHS). PROFITS ARE NOT HUGE BUT EVERY SMALL SUCCESS MATTERS. PEOPLE GAIN TRUST AND COURAGE. IN 96% OF CASES WE OBTAIN A CLEAR IMPROVEMENT IN HOUSEHOLD’ LIVING CONDITIONS AND IN MORE THAN 60% OF CASES, INCOMES DOUBLE.
Initially, loans are usually 80 €, refunded after 6 months. A new loan quickly follows, slightly larger. Because the beneficiaries are extremely poor, the interest rate is 0% for the first 3 years (or 6 first loans), then it goes to 6% per annum. Defaulters are extremely rare (1/1000).
We observe that on the average incomes increase by 25% / year; this is an increase of € 228 per household, after a year and then more. As we spend on average 76 €/year/household the return on “investment” is really impressive! Every year, i.e. after two loans, a new assessment is made. We look again at the overall situation of the family: income, assets, do children still go to school, everyone’s health, etc.
AN INCOME OF € 1-1.5 / DAY IS NOT THE END OF POVERTY, OF COURSE.
BUT PEOPLE HAVE GAINED CONFIDENCE, HAVE LEARNED GOOD AGRICULTURAL TECHNIQUES, ETC. THEY DARE TO BORROW FROM THE BANK AND THEY CAN CONVINCE THE BANK FOR BIGGER LOANS.
THERE IS NO DUPLICATION WITH GOVERNMENT PROGRAMS OR WITH THE BANKS. ONCE THE BENEFICIARY HOUSEHOLD GRADUATES OUT OF POVERTY THEY QUALIFY FOR BANK LOANS. MEKONG PLUS IS THUS COMPLEMENTARY.