Danida’s Loan Program Pays Off

The Credit component in the Danida supported agricultural sector programme has successfully provided loan facilities for rural households which are valuable for the agricultural and rural development in Vietnam.
Limited access to credit is one of the main constraints rural households are facing as it hinders investment in technologies and facilities used in improving their production, income and living standards. 
The Credit component in the Danida supported agricultural sector programme has started the loan opportunities for rural households to improve the credit access of farmers and post harvest service providers. On one side, comprehensive training of potential borrowers and on the other side, credit staff from the Vietnam Bank for Agriculture and Rural Development (VBARD) was supported by the programme.
The lending has come from VBARD’s own capital, but with a 50/50 risk sharing between VBARD and a Loan Guarantee Fund of 23,2 million DKK provided by Danida. The arrangement has proven very successful.
During the programme activities from 2000-2007 more than 2,200 loans have been granted (equal to 34 million DKK) with only four default cases reported. In addition the component has supported VBARD to train more than 10,000 farmers and service providers in household financial management.
Investment in post-harvest technologies has shown to provide an internal rate of return of 10-15% and at the same time, the credit activities has created one job for every 10 million VND loans provided.
With the end of the programme this year, the Danida support to the credit activities also comes to an end. However, VBARD will continue the small-scale loan activities. This will benefit the provinces supported by the old programme so far, as well as 5 new target provinces in the new Danida supported agricultural and rural development programme that will be launched by the end of 2007.

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