Entrepreneurship and Value Chains

Stimulating Entrepreneurship among vulnerable groups

BACKGROUND

Entrepreneurship is about leadership, innovatively, creativity and about envisioning and exploiting possibilities. Several programs have shown the positive influence of entrepreneurship on poor and marginalised people. When they find ways of earning money they feel respected, it helps them to get into daily routines, and it makes them proud to be able to contribute money to their families and communities. The development of different types of Community managed Development Funds combined with entrepreneurship trainings and trainings on financial literacy, have already assisted thousands of people to improve their living conditions. MCNV plans to increase activities in the field of entrepreneurship especially in Vietnam.

MCNV’S RESPONSES

The market economy offers a proportion of marginalized people chances to escape their poverty. However, many face barriers of access, lack necessary capabilities or do not recognize, or even believe, that they have chances. For this reason it is important for MCNV to study and take into account how local market systems work and identify barriers and facilitators for access by marginalized groups. The work with market systems takes various forms in different programs/projects, and at different levels of development.

Almost all ethnic minorities were dependent on self-subsistence farming and have increasingly come into contact with ‘the markets’. First the traders came via the new roads (opened for ‘development’) to them from elsewhere to buy agricultural products at the farm gate. But after that these traders established shops right in the farmers’ communities and used their knowledge and networks to become ‘middlemen’ between the local producers and outside markets. The impact of these middlemen is manifold: on the one hand they help poor farmers creating new sources of income, new crops and agricultural knowledge, but on the other hand it is in their interest to keep the farmers dependent on them, for instance via debt traps and protecting their local monopolies. In the Community-Managed Health and Livelihood Development project in Khanh Hoa province (2004-2016), MCNV has worked long with ethnic minority communities to help them increase their aspiration, self-confidence and knowledge and to gradually reduce their dependencies on the middlemen, as well as on the local government.

A next step in ‘working with the market to alleviate marginalisation and poverty’ is best illustrated by MCNV’s Microfinance projects, such as that managed by the Women’s Union in Ben Tre, where poor women groups learn to save and invest money to set up and grow small businesses. Basic “financial literacy” is often lacking among the marginalised target groups and therefore MCNV is building this capacity among many groups, like for Disabled People’s Organisations to know how they could act best to maintain and gradually grow their Revolving Funds.

Future plan

Many further steps are needed to make the market work best for the poor. A large majority of Vietnamese farmers are small-holder farmers who certainly do not lack entrepreneurship or financial literacy, but they are poorly organised, which significantly decreases the influence and the “Value Chains” of their products. In Quang Tri province, Vietnam, MCNV is developing relationships with farmer’s cooperatives, and agricultural producer groups. In the near future, MCNV intends to link these initiatives to farmer groups and value chain development in neighbouring area’s in Lao PDR, thus enhancing cross-border value chain development.

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Microcredit and income insurance

Microfinance – A sustainable engine for development

Background

Impacts of microfinance to the poor

Impacts of microfinance to the poor

At the heart of the Sustainable Development Goals (SDGs) is a commitment “to eradicate poverty everywhere, in all its forms and dimensions by 2030”. Inspired from this goal, all MCNV programs in Vietnam are committed to contribute to poverty alleviation efforts by integrating microfinance tools to support marginalized groups who are normally the poorest in their community. Over the past 10 years, MCNV has disbursed micro finance services including loans for production and water retention, savings, and health insurance, to more than 7000 households with the total value of more than 650,000Euro in programs in Vietnam.

Microfinance has proved to be one of the most powerful engines in the global effort to end the crushing poverty that deprives hundreds of millions of the world’s people of sustenance and hope. Microfinance gives poor people the opportunity to establish an existence and to create a future with prospects.

MCNV loan allow her to build water containers to save rain water to prepare for draught and salinity

MCNV loan allow her to build water containers to save rain water to prepare for draught and salinity

Micro loans, saving and other financial services in combination with financial literacy trainings could greatly help the poor start-up their micro-businesses to generate income . This would provide the clients and their families with greater qua
ntities and more nutritious foods, education for their children and to the opportunity to improve their houses. Consequently, microfinance has an impact on the future generations.

Microfinance has a positive impact far beyond the individual household. Jobs are created, knowledge is shared, civic participation increases, and women are recognized as valuable members of their families and communities. Microfinance could also improve the community solidarity and connection between people.

An equally important part of microfinance is the revolving mechanism in using funds from donors so if microfinance is managed well, it could allow a certain amount of funding to serve more and more poor families. These funds would be more beneficial longer term so the impacts will be multiplied in comparison with other kind of development grants.

An extreme poor old lady received a friendship house built from MCNV microfinance projects in Ben Tre 2015

An extreme poor old lady received a friendship house built from MCNV microfinance projects in Ben Tre 2015

Micro-entrepreneurship is the key for the poor’s self-empowerment. It turns the poor from a passive and weak role in the development process to active agents of change. The personal talents and community support are fully mobilized for business development and this process is the best capacity building for those who are poor. Microfinance directly impacts and benefits women’s empowerment since microfinance particularly focus on women and gradually consolidates the role and capacity of women in family and in the community.

Future plan

In recent decades, the microfinance crises have showed that microfinance could harm the development if being used in an extreme way. So MCNV is making its effort to balance the social and financial performance of microfinance projects by using Social Performance Management (SPM) system. Applying the SPM permits microfinance assist the poor to escape poverty while ensuring the whole microfinance system runs as healthy as a double bottom-line financial institute.

MCNV also wants to share and expand the best practice in microfinance and social performance management to other organizations and communities. We look forward to like-minded partners and donors to promote the real microfinance with focus on social performance and sustainability.

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