VietNamNet Bridge – HCM City has more than 400 billion dong of idle capital for the poor but many still have to borrow money at exorbitant interest rates.

A poor family in HCM City’s District 4.

There are 2712 needed families in District 7 but last year only 732 had access to loans from the Fund for Hunger Eradication and Poverty Reduction. Similarly, merely 1000 out of 11,000 poor families in Hoc Mon district and 2000 out of 11,000 needy families in Binh Chanh district could borrow capital from funds for the poor.

By the end of 2009, funds for poor people in the city had a total cash balance of over 440 billion dong, including nearly 27 billion dong of the Fund for Hunger Eradication and Poverty Reduction, over 86 billion dong at the National Fund for Employment, 282 billion dong from credit funds of social associations and over 47 billion dong from the Fund for the Poor of the municipal Fatherland Front Committee.

Mrs. Trang’s family is listed as poor in District 7 but she couldn’t borrow capital from funds for the poor to do business. Trang recalled: “I needed money to open a small bun rieu (noodle in crab chowder) restaurant at home. I asked for loan from the Fund for Hunger Eradication and Poverty Reduction but they refused. They said that I couldn’t borrow from their fund because I didn’t pay out my debt at the women’s association fund yet.” (she borrowed some money from the fund of the local Women’s Association several years ago.)

Trang had to borrow 2 million dong at monthly interest rate of 20 percent to have capital to sell bun rieu. However, profit from this service was not enough to pay interest money so she stopped selling bun rieu to sell cigarettes on the street with her daughter, who had to quit school at the age of 14.

Mr. Le Thanh Le in Binh Chanh district said he needed to borrow 3-5 million dong to do business, but local officials said they had to “consider his case”. He has been waiting for news of the loan for a year.

Mrs. Dang Thi Truyen in Hoc Mon district is listed as poor. However, she had to borrow 5 million dong from usurers to do small business. She incurred losses and her debt is now 12 million dong.

Truyen said she didn’t know about the fund for the poor. She has applied to borrow money from this fund and she has been waiting nearly one month, but the local officials have not summoned her yet.

Pham Thi Diep, an official in charge of hunger eradication and poverty alleviation in Hoc Mon district, said that many poor families don’t know that they can borrow money from funds for the poor at soft interest rates so they borrow from usurers. Diep explained that local authorities didn’t widely tell local people about these funds.

Le Van Y, chief of Hoc Mon district’s division for labor, war invalids and social affairs, said that the poor’s need for capital is huge and capital at funds for needy people is abundant. However, poor people can’t have access to this source of capital because commune and ward-level officials don’t fulfill their responsibility. They are afraid of lending poor people because they are afraid of retrieving capital.

The paper work related to soft loans from state funds is also the hindrance. Mrs. Cuong from Hoc Mon district said in his village, the village chief invited all people to a meeting, where they voted to define which families are allowed to borrow capital from the fund for hunger eradication and poverty reduction. These families had to submit their forms to the village chief, who then sent the forms to the commune government for consideration. If the loans are over 10 million dong, the forms must be approved by the district-level government.

Meanwhile, usurers have wide networks to approach poor people.

Explaining about this situation, deputy director of HCM City Department of Labor, War Invalids and Social Affairs cum vice chief of the steering board for hunger eradication and poverty reduction and job creation blamed the poor capability of grassroots officials.

Xe said that some unnecessary formalities set by commune governments will be abolished to enable poor people’s access to capital. The Department of Labor, War Invalids and Social Affairs will propose HCM City authorities to permit commune governments to approve loans of less than 20 million dong.

Source: Tuoi Tre