MICROCREDIT AND FAMILY MONITORING
Mekong Plus operates exclusively in rural areas, where poor households are excluded from traditional finance, as agriculture is perceived as a high-risk sector, with a high proportion of production losses due to disease and increasing climatic disasters (drought, floods, etc.).
Today, we support over 7,500 households, and our aim is to increase access to microcredit for the poorest with innovative training and support solutions, and the sharing of best agricultural practices.
In Vietnam, over 10% of villagers struggle to live on less than €1 a day. In Cambodia, the figure is 15-20%. With microcredit, Mékong Plus manages to get them out of this situation within 4 to 5 years, thanks to targeted training, microcredit and good follow-up.
Initially, loans are generally for €80, repaid after 6 months. A new, slightly larger loan soon follows. Because the beneficiaries are extremely poor, the interest rate is 0% for the first few years (or first 6 loans), then increases to 6% per year. Non-repayments are extremely rare (1/1000).
On average, incomes increase by 25% a year, or €228 per household, doubling in 4 to 5 years. Except in special situations, Mékong Plus stops its support when income exceeds €1 to €1.5. It continues, however, to provide spaced follow-up to avoid any relapse – which happens in less than 10% of cases.
More than 7,000 households, i.e. some 35,000 people, have benefited from the program and have been lifted out of extreme poverty. Today, 7,500 new households are receiving loans.
Poverty doesn’t stop at the €1 / €1.5 a day threshold, of course. Mekong Plus helps households that are confident and have acquired good agricultural and other techniques to borrow from banks. There is no competition or duplication with official services, as the latter take over from Mekong Plus and ensure a lasting impact.
The microcredit process
Why microcredit? Loan sharks lend at exorbitant rates: up to 240% a year! Banks don’t lend small amounts. But for the poorest, borrowing €1,000 is far too risky: they risk losing their land and their house! Mekong Plus lends from €50 up to €400.
1. Visiting the poorest households
Open and patient discussion to build trust and identify the main problems; this takes time. On average, 1/2 of all cases involve mothers who find themselves on their own following a death, domestic violence, etc.
2. Working together to find solutions
Before supporting the family with training and microcredit, we make sure that the children don’t drop out of school and that there are no health problems, as health costs are often what push villagers into extreme poverty. In fact, poorly guided, they spend too much and in the wrong way.
3. Ways to increase revenue
– a small vegetable garden requires little investment and pays for itself every day,
– a farm of 30 to 50 hens, properly monitored (vaccinations, cleanliness, nutrition), will produce a good yield in 3 to 4 months. Farmers need to be explained and convinced, as they are not used to good techniques, and chick mortality can be as high as 80%.
Mekong Plus offers low-cost, low-risk investments with rapid returns (less than 5 to 6 months). The profits aren’t huge, but it’s the small successes that count. People regain confidence and courage. In 96% of cases, we achieve a clear improvement in the household, and in over 60% of cases, a doubling or more of income.
What are the results of microcredit?
Initially, loans are usually for €80, repaid after 6 months. A new, slightly larger loan soon follows. Because the beneficiaries are extremely poor, the interest rate is 0% for the first few years (or first 6 loans), then increases to 6% per year. Non-repayments are extremely rare (1/1000).
We can see that, on average, income increases by 25%/year, i.e. an increase of €228 per household, after one year and more thereafter. As we spend an average of €80/year/household, this gives a yield of 285%!
Every year, after 2 loans, a new assessment is made with the household. We count everything and review the family’s overall situation: income, assets, whether the children are still at school, everyone’s health, and so on.
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