I have heard of “microfinance”, but I don’t really understand how it is operating and what makes it so special that it was mentioned again and again. This Wednesday, I got an opportunity to visit Laishui County, Beijing, to experience the life of people who join microfinance program.
Microfinance refers to organize a specific institution that lend very small amount of money to very poor people so that the needy families can take advantage of this money to improve life. It was first invented by Professor Muhammad Yunus, who organized the well-known Grameen Bank of Bangladesh to execute this experiment and who has been awarded to the Nobel Peace Prize for 2006 because of his contributions on those effective methods to solve the poor problems, and implemented in Bangladesh. The unique characteristics of microfinance is that this method is not donation, because it asks the needy residents to return the principal on time, but a lasting mechanism to support the poor to get out of miserable situations by charging a much higher interest rate from the borrowers than the rate of commercial bank to maintain the organizer’s operation and by providing repeated loans to these who are poor but have credit.
In most cases, the institutions which execute the microfinance not only can lend money, but also can receive savings from its customers, the needy, so that the institutions can have enough capital to keep lending the money, making the effects of microfinance bigger and bigger. In China, however, the organizer is forbidden to receiving savings by the regulations, a reason rendering microfinance not so influential in China, compared to that implemented in other countries, such as Bangladesh, Cambodia and so on. The researchers from Chinese Academy of Social Sciences, which arrange our tour to Laishui, also express their concerns about the sources of capital.
In my opinions, the regulations to limit these institutions should be lifted as soon as possible so that microfinance can become an effective way to solve the poor problems of China. The situations in China is that almost all of the banks in China abandoned the market of rural areas many years ago because of low commercial benefits, and focused their business only in big cities, causing people in rural areas without any resorts to develop themselves. This trend makes more and more people in rural areas leave for big cities and produces many problems about not only rural areas, but also big cities, which suffer from migrant labors’ movement.
We visited several families who join the microfinance programs in Laishui. Here, 5 women- yes, only women can borrow money from the institutions, organized a team to borrow money. Those money almost has been invented in the cultivation of tomatoes.
This is a weathy family in Laisi. You can tell from it by the decoratons of its gate, an uncommon scenery in Laishui county.
PS. I still cannot visit my own blog. This is very frustrated!
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