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Creating Opportunity Through Micro-Credit in Rural China
At first glance, the prospects for Zhangfeng Township’s 38,000 residents appear to be bleak. Located in southwest China on the border with Myanmar, it has long suffered from severe poverty, with a population composed primarily of ethnic minority groups that face entrenched discrimination. Most residents survive on subsistence farming, but farmland is limited, water quality is poor and there are few other ways to earn an income. Making matters worse, Zhangfeng Township is located close to one of the world’s main growing and distribution centers for opium, and as a result, the population is afflicted with high rates of drug addiction and HIV/AIDS.
Yet today there is a ray of hope for those who have been suffering the most, thanks to Episcopal Relief & Development’s partnership with the Amity Foundation — an independent, faith-based Chinese voluntary organization with strong roots in the community — to provide micro-credit to individuals with HIV/AIDS and their families.
Micro-credit loans enable people with few options and opportunities to become financially independent by improving their farming methods, animal care or business opportunities. Loans can finance raising chickens, cows or pigs more productively; cultivating more crops from the same plot of soil; setting up small shops to serve community residents; or purchasing equipment, such as rice noodle machines, to help launch food production businesses.
What’s key is that this assistance involves much more than credit. First, groups of four to five households must band together to receive loans. All are jointly responsible for repayment. This improves cooperation and community dynamics, creates economies of scale, and results in far greater “bang for the buck” than when individuals operate on their own. Second, no one receives a loan without first being trained on how to put their investment to the best possible use.
Micro-credit loans cannot exceed 2,000 Renminbi (approximately $293) and the interest rate is 4.7 percent annually, far less than local banks charge. When the interest is repaid, part of it covers materials needed for training and the remainder goes back into the fund to finance additional loans. This makes the micro-credit program self-sufficient and ensures its continual growth to meet new demand, which rises as neighboring communities see its transformative impact.
The micro-credit program is fully integrated into the overall effort to help the people of Zhangfeng Township. Episcopal Relief & Development and the Amity Foundation are helping many of its 78 villages establish associations for women, youth and men in order to strengthen HIV/AIDS prevention, community cohesion and economic development. There are a variety of educational events and performances, and everything is done with great sensitivity to each ethnic group’s indigenous culture. In addition, efforts have been made to utilize government resources, such as agricultural extension services, and above all to show local government officials how they can fight poverty and promote economic growth more effectively.
The results so far are promising. Loans are being repaid. Recipients are generating new income and are being empowered to shape their own future, while people living with HIV/AIDS and individuals suffering from drug addiction are getting new support. Zhangfeng Township’s future is suddenly looking a whole lot brighter.
