| Small loans make big difference
2003-09-23
China Daily
"Microfinance" for the poor is an efficient way of fighting poverty,
but it needs stronger government backing to thrive, an international seminar was
told yesterday.
Government officials, bank regulators and researchers
called for further restructuring of State-owned or supported financial bodies to
expand and improve mini-loan services to the needy. Microfinance refers to
giving small loans to low-income individuals and households at affordable but
viable interest rates.
The concept has proven successful in many parts of
Asia, Africa and Latin America.
Seminar participants also asked the
government to adopt policies to encourage domestic and overseas non-governmental
organizations (NGOs) to take part in microfinance, while supervising their
operations.
Microfinance programmes surfaced in China 10 years ago, and
were brought into the government-regulated credit framework in the late
1990s.
With the main aim of creating jobs and increasing farmers' income,
Rural Credit Co-operatives, one of the main players in the field, have lent 84.2
billion yuan (US$10.2 billion) to rural households. The Agricultural Bank of
China, together with local governments, has lent 30 billion yuan (US$3.6
billion), according to Wu Xiaoling, vice-governor of the People's Bank of China,
the country's central bank.
Trial projects funded by international donors
and loans run by NGOs or community-based organizations, however, amount to only
1 billion yuan (US$120 million). They make up a tiny proportion of capital in
the country, said Professor Du Xiaoshan, deputy director of the Centre for
Poverty Research under the Chinese Academy of Social Sciences (CASS).
Liu
Fuhe, director of the State Council Poverty Relief Office, said microfinance has
run into difficulties in recent years as the government tightens control over
financial practices to minimize loan risks.
Liu said his office is
working with other departments on a set of policies to improve government-backed
mini-loan services to low income families in poverty-stricken
areas.
There are 28 million people living under the official poverty line
in China.
Both Du and Liu said NGOs could play a much more prominent role in
microfinance, as is the case in many countries. They said State-owned banks and
formal financial institutions will not ultimately target the poor during their
ongoing profit-oriented restructuring. |
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