PlaNet Finance Kicks Off Loan Program Under Second Tongwei Project in Gansu Province
Press Release
PlaNet Finance kicks off loan program under second Tongwei project in Gansu Province
On April 29, 2011, under the guidance of Tongwei Vice-County Director Li Jinxia, the PlaNet Finance China team oversaw the launch ceremony for the five-township loan program under the European Union-funded project entitled “From Rural Isolation to Market Integration”. An initial batch of 28 small business loans were approved and subsequently disbursed to this village nestled in a high and remote northern part of the poverty county. Appropriately for such a dry and dusty village the name of the village is Yongsheng, or “Forever Victorious”. This village is the first of the five to be served with renewable energy- and small business loans under the township of Yigang. The average annual income for this village is typically low, at around RMB 5,000 to RMB 10,000 (EUR 540 to EUR 1,080 at the rate at the time of writing of EUR 1 : RMB 9.26) for a household of four people, including any money brought back from migrant labor jobs.
Bird's-eye view of Yongsheng Village
Until this launch, most households have been relying on the informal sector lenders, or on family and friends, while a few better-connected individuals have been able to obtain loans from the local rural credit cooperative. The bulk of the loans will be used to start raising beef cattle and to buy feed to supplement their virtually cashless local economy; other uses for loans included small-scale catering operations and convenience shops. Business loans dominate in areas where biogas systems have already been installed in large numbers: clients can choose a sum between RMB 1,000 and RMB 5,000 (EUR 108 to EUR 540), depending on the nature of the economic activity that they want to start or to expand; they can also choose between 9-month and 12-month loan terms for loan products that have been customized to local cashflow conditions.
Many will use their loans to buy beef cattle to sell at maturity
As the project gradually moves to cover more and more villages, staff from implementing partner Tongwei Rural Development Association (TWRDA) will go through many cycles of market research, identification of a loan center director for each village, client education, client qualification, and loan application appraisal. Next in line for loan launches are Yigang township villages Lianhe and Gaozhuang.
By the time it ends in June 2013, the Tongwei II project will have reached 3,000 new loan clients who are living relatively far away from the economic and political center of the county, and thus tend to get less attention from the government. Planet Finance China has worked with implementing partner Tongwei Rural Development Association over the past year to strengthen risk management and to reduce delivery costs so that their staff can smoothly manage the scaling up and diversification of activity. Now that the loans have been launched, clients will be offered technical training programs to reinforce their capacities in their chosen lines of business.
Yongsheng Village Borrowers
Tongwei II was developed to promote and facilitate the adoption of alternate, sustainable and healthy development models at the rural household-level. The project expands upon the first two-year PlaNet Finance project “Microfinance and Renewable Energy”, which concluded in 2009. The Tongwei I project provided 430 Tongwei County households with micro-loans, allowing them to take advantage of the national subsidy program and install 3-in-1 biogas systems. (For more information on the Tongwei II project, click here: Tongwei II)
Farmer-entrepreneur Snapshot
Ms. He, pictured to the left, is one of the 28 recipients of the Tongwei II small business loan. Shortly after receiving the loan funds at the launch ceremony, Ms. He bought a fully grown beef cow that had not yet attained its full weight. The purchase price of the cow was RMB 5,800 (roughly EUR 626) which she hopes to sell later in the year at a potential profit of between RMB 2,000 and RMB 3,000 (EURO 216 and EUR 324). The profits will go to support her four-person household that survives on subsistence farming and the RMB 5,000 per year that her unskilled husband earns from working in construction in neighboring Huining County -- which lies 100 kilometers to the north of “Forever Victorious” village.
About PlaNet Finance China
PlaNet Finance China (PFC), the representative office of PlaNet Finance Group in China, was established in 2003. With a highly-motivated team of local and foreign staff, PFC offers technical assistance to microfinance players in China that seek to improve performance or extend their portfolios to microcredit and small-lending. PFC has implemented activities in rural and urban China, and has served local microfinance programs and institutions in over 20 provinces and cities nation-wide.
Press Relations
PlaNet Finance China
Gabrielle Harris
Executive Director
gharris@mfchina.cn
+86 10 8440-8458 ext. 18
Alison Schmidt
Deputy Project Manager
aschmidt@mfchina.cn
+86 10 8440-8458 ext. 16