While in Ho Chi Minh City, a group of voyagers spent a day learning about microfinance in Viet Nam on one of Semester at Sea’s Social EntrepreneurSHIP field programs. Microfinance refers to financial services, such as small loans, savings accounts, and insurance, offered to low-income people who do not have access to traditional forms of banking and are often the victims of high-interest loans. The concept of microfinance was pioneered by Mohammad Yunus in the 1970s in Bangladesh as a tool for empowering people to overcome poverty.
Former SAS alumna, Jessica Jackley co-founded Kiva, a microlending site, that allows people in developing countries to receive small loans funded by lenders throughout the world. Since Kiva’s founding in 2005, the non-profit has worked with over one million lenders and 242 field partners who aid in administering loans in 73 different countries across the globe.
Voyagers met with one of Kiva’s field partners, East Meets West (EMW), a non-profit based in the United States and Viet Nam that uses Kiva funding in their Clean Water and Sanitation Program. EMW works on a community hygiene output based aid (CHOBA) model in which small groups are given rebates as financial incentives to improve their sanitation conditions. EMW also works with the local Women’s Unions to educate communities about changing their hygiene behavior. After improved sanitation results are verified, financial incentives are awarded to go towards projects benefiting the entire community, such as bathrooms in schools. Kiva is directly involved in the CHOBA model in Hai Duong province in north Viet Nam by providing loans to groups of low-income women.
Kiva’s line of credit is also used to support private water enterprises in rural disadvantaged communities. “The purpose of this (partnership) is to support entrepreneurs in upgrading their operations and making them cleaner,” explained Van Li, Regional Communications and Development Manager for EMW. Access to clean water is a problem for many rural Vietnamese communities and 6,000 people die everyday worldwide due to lack of access to clean water. Without assistance, owners of water enterprises often turn to cheaper equipment which contributes to pollution rather than investment in cost-saving clean energy solutions.
The group visited the Hoang Thai Water Supply Enterprise, a private water enterprise outside of Ho Chi Minh City that had already benefited from a subsidy from EMW to buy two Grundfos water pumps and solar panels. The enterprise is now able to provide clean water to over 1,200 households in the Mekong Delta. Voyagers were able to meet the director, Mr. Tran Van Luom, visit the operation, and speak to local households that are benefiting from the clean water service.
Mr. Luom is now working with EMW in a pilot program to request another loan to buy three more sets of pumps and solar panels to expand his operation to more customers and reduce the electricity load on the local power supply system. EMW hopes that Mr. Luom’s request will be successful and his water enterprise will serve as a model for further expansion of private water enterprises in rural Vietnam.
