By: Kira Dubas, PlaNet Finance Director of Adminstration and Finance

After driving through the desert for about 2 hours down a “road” that was created by our car as we drove, we finally arrived in the village of Tian Si Wan. The village appeared out of nowhere, as most things do when you are driving through the desert, and you drive over a hill and then all of a sudden a town surfaces, where people have lived for centuries, away from civilization, the reason they are living there unclear. We went into one of the villager’s homes, which she “heated” at great expense with a single coal pot in the middle of the room. The desert winds nearly blew us inside, but once we came in she greeted us with a huge smile and large belly (which we later found she is known for amongst the villagers) and answered all of our questions with great enthusiasm. After a while about 10 villagers came into the room, 5 or 6 of which were borrowers from Ningxia CEPA. They were all women, and all of them used their loans to raise lambs, the main source of income in Ningxia.

A large portion of Ningxia is desert, which has been growing over the years because of compounded environmental destruction, both at the county and global level. The desertification has impacted the people living in these villages; the people of Tian Si Wan were moved here several years ago by the government because their previous village was too remote, and being taken over by the desert. Tian Si Wan is not the only such village, more than 370,000 people in Ningxia have been relocated by the government since 1983.¹ As part of initiatives to prevent desertification, the government has banned villagers from allowing lambs to eat grass, which has exacerbated their difficulties in making a living. Now villagers must either purchase lamb feed or grow it themselves. For some borrowers this presents a huge business opportunity, generating 40,000 RMB of income per year from growing corn feed. Other more unfortunate farmers barely survive on their 2,300 RMB per year.

Jiao Li is one of the women that borrows from Ningxia CEPA. She started borrowing from the organization in 2000, her first loan only 1,000 RMB. At that time her annual net income was 1,600 RMB, which she described as an extremely “bitter” [ku in Chinese] period in her life, her house was much smaller and she was unable to send her children to school. 8 years later, after continuing to borrow from the organization each year, she is making revenues of 90,000 RMB per year, and has about 240 lambs in her herd. She also grows corn and hay to supplement her income from the lambs. Her net income has reached 10-15,000 RMB, surpassing the local average. With her extra income she has been able to purchase a three-room home and sends her children to school in the province’s city. When I asked her what she would have done if the organization hadn’t lent her money, she said, “I would never have the freedom I do now. I am an independent woman, it is not just my husband that works. I also contribute and feel as though my position in society as a woman is much higher.” All of the women that were sitting in the room agreed emphatically, and the first woman we met, the one with the booming voice and huge belly started shouting excitedly. “We’re able to work now too! We feel so much stronger now that we have independence and freedom!” We asked them what they would do if they had larger loans, and were able to make more money, giving them examples such as saving up for retirement, or traveling, but they immediately replied, “A larger TV and nice clothes for my kid!”

Today we interviewed about 20 different borrowers, traveling to 5 different villages. Some of the borrowers were more somber than these first women we met. One woman who lived in a home that was made of mostly mud only made about 3000 RMB for her entire family. Her living situation was made worse because she had to send her children to school, as the village had just closed the local school a few years ago. Not only were her children about 2 hours away, but her husband was also working in the city. She was left alone with her lambs, borrowing what she could and trying to make ends meet. We asked her if her children would come back to the village to help support her after they graduate, to which she laughed. “Why would anyone come back?” she asked, “Life is so tiring and difficult here.” When I asked her why she doesn’t leave as well, she replied, “I don’t have the means. It’s hard to move out of here.” [So essentially the only people that remain here are the people that are too poor and old to move.]

Every borrower we asked said that they make a net income of about 40 RMB per lamb, and when we asked them what they would want from the MFI in the future, they emphatically replied, “larger loan sizes!” Most of them wanted at least 20,000 RMB, so that they could buy about 30 lambs.

Ningxia CEPA is making strides to meet these clients’ needs. They are “a few days away” from registering a microcredit company, a legal status that was only approved by the People’s Bank of China in 2006. This legal status will allow them to take on capital from commercial investors, both international and domestic.² They have been in the process of finding the 5 million RMB start up capital they need and finishing the registration since last year, and seem to be in the final steps of the process. Ningxia CEPA is one of China’s most innovative microfinance organizations, taking the risk of commercial debt in order to expand to more clients and increase loan sizes. Their efforts have had measurable impacts: after the organization started giving loans in Tian Si Wan the average per capita income has increased from 850 RMB per year in 2000 to 2,300 RMB per year in 2008. Unlike many Chinese microfinance organizations, they are unwilling to be limited to one county, and are planning on working with a local partner to recreate their business model in Tongxin county, a national poverty county (meaning annual income of I think 600 RMB per year).
 

¹http://www.china.org.cn/environment/news/2008-05/07/content_15105332.htm
²Their current status as an NGO microfinance organization is not officially approved by the government, and has been operating mainly off of UNDP funding since it was started in 1998. They are unable to take on foreign commercial investments, unable to take on savings from clients, which limits their already small funding pool.