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A preliminary review undertaken by the Ford foundation in Vietnam included a list of good practices mentioned by microfinance practitioners:
Strong organization with clear organizational structure and policies.
Transparent management information and accounting systems, which easily show the current financial health of the program.
Start to establish solidarity groups and credit discipline training right from the beginning.
High repayment rates and compliance with discipline.
Poverty targeting- choosing the right people, who are the poor and the poorest.
Aim for sustainability right from the beginning. A good MF organization must be able to calculate when its program will break even.
Continuous internal control.
Strong management team with adequately paid, full time staff.
Policies and operational mechanisms must be clear at the beginning of program implementation.
From CARE International, lessons learned in implementing microfinance in Vietnam are as follow:
1. Credit and savings services must be demand-based.
Misuses of loans are seen as a consequence of un-match between supply and demand for financial services
It is critical to well understand the needs and demands of the poor in different geographic localities.
2. Credit and savings services must be accompanied by technical assistance and capacity building.
Information sharing and dissemination is key for success.
Non-farming activities should also be promoted.
Microfinance providers should follow a participatory process in designing and implementing credit and savings program, resulting in demand-driven products and involvement of the target population.
3. C&S programs must be accessible to & manageable by the most vulnerable:
Small sizes of saving/credit enable poor households to be involved
Collateral or guarantor requirement lead to discrimination
Service availability in remote communities makes financial services more accessible to the poor.
Application and appraisal procedures should be simplified to be suitable for the poor
Loan disbursement must be quick, appropriate and simple.
Selection criteria must be established in cooperation with target community
4. Joint liability groups make microfinance programs perform better:
Members of joint groups can offer mutual help and create group pressure resulting in high repayment rates.
Cohesion of community (among members of a group and between local implementation partners, e.g. VWU and groups) is seen as a success factor
CEP, the Capital Aid Fund for Employment of the Poor, aims to establish itself as a demonstration model of a successful and sustainable Vietnamese microfinance institution, and to encourage replication of this model. It is recognised as the leading organisation in Vietnam in terms of use of best practices.
Notes from preliminary Review on Micro-finance for Poverty Reduction in Vietnam. Nguyen Thanh An, Ford Foundation. September 2004.
CARE International in Vietnam's Experience in Microfinance - A focus on the Mekong delta region. Presentation made by Nguyen Ngoc Thuy, Senior Design Officer, CARE international in Vietnam, during the BWTP regional microfinance workshop, Phnom Penh, December 2004.
CEP website www.cep.org.vn