Devil does finance?

Scrolling down the list of working groups in the NGO Resource Centre Vietnam’s website, the Microfinance Working Group (MFWG) drew my attention at first sight. With the goal of enhancing the impact of microfinance on poverty alleviation by promoting the quality and sustainability of microfinance in Vietnam, MFWG is obviously the NGO I’m looking for. My friend who follows humanism views business and finance as a devil to social equity and I totally object to that. Positive changes made by institutions such as MFWG are undeniable evidences.

Microfinance has so far been a strongly effective tool to attain sustainable poverty reduction in developing countries like Vietnam thus narrows the gap between the rich and the poor and reduces the negative impact of economic integration. Beginning at the early 80’s, microfinancing in Vietnam actually contributes a lot to Vietnam’s economic development, especially in the rural areas. Through loans for income-generation or microenterprises, microfinance enables the poor to increase, or at least stabilise, household income. Furthermore, mmicrofinance practioners can approach people living in remote regions, where banks have not made their appearance, provide funding and technical instruction to individuals and households, ensure that the marketing channels work well for agrarian products, improve gender equity through capital lending to women workers, assist related associations in implementing microfinance projects.

Despite the fact that many improvements have been made, microfinance funding does not meet the demand yet. In the future, more microfinance practices should be implemented simultaneously with propagandization of efficient economic models of utilizing capital. In the past decade, the government has allocated significant funds for the rural banking system. Nonetheless, it cannot make microfinance services available to all citizens. Therefore, the role of NGOs like MFWG is increasingly essential in funding for the poor. Additionally, the donor community in general has relatively neglected microfinance but thanks to NGOs’ participation, the multi-lateral and some bilateral donors are showing renewed interest in recent years; and farmers are now more actively seeking for working capital support. We hope that more and more microfinance groups will be established and pro-active microfinance solutions will be made for the sake of social development.