Articles

"Searching In The Dark" For The Credit Switch

Rural Credit Cooperatives in China should give access to the farmers, but they often can’t help the poorest communities. Therefore, a lot of local and international organisations have tried to create micro-finance institutions (MFI), such as they would finance rural development projects through the interest on loans. Unfortunately they are not able to reach the international standards required, because of the challenges that NGOs have to face: too many ethnic minorities to support with a big lack of training for micro-finance, difficult re-payment of the loans after the migration out of the village, but sometimes NGO staff themselves don’t want to charge interest. Among the difficulties there are achievements too. A good example comes form Heifer International that, as NGO located in Yunnan, has many projects with micro credit components in order to increase the income of farmers and to improve the position of women. Heifer uses the “passing on the gift” method as a form of interest reinvested into the projects; in fact, the farmers have to give one of the offspring cows to another farmer as a present and the village government guarantees the loans.

Source: http://www.chinadevelopmentbrief.com/node/814

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