France to grant EUR1 million for microfinance project

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Báo Dân Trí English - 74 month(s) ago 12 readings

France to grant EUR1 million for microfinance project

The French Development Agency (AFD) has signed a EUR1 million (USD1.34 million) grant agreement to support the State Bank of Vietnam (SBV) in sustainable microfinance development.

Microfinance plays an important role in poverty reduction
The financing agreement was signed on December 13 between SBV Deputy Governor Le Minh Hung and Jean-Marc Gravellini, Country Director of AFD Vietnam, in presence of French Ambassador Jean-François Girault.

The funding will support the SBV in the technical assistance project to promote the microfinance sector in Vietnam among the disadvantaged, micro-entrepreneurs and small enterprises.

The AFD’s objective is to promote a financially and institutionally sustainable sector, in order to broaden access to financial services for more Vietnamese people. Through the project, AFD will contribute to support the Vietnamese government’s effort to implement reforms that foster the development of the microfinance sector in Vietnam.

The SBV is committed to improving its performance as a regulatory and supervisory entity for Microfinance Institutions (MFI). In this context, the project will enable an analysis of Vietnam’s legal and regulatory microfinance environment and provide capacity building to the SBV to regulate and supervise the sector via training for bank executives and to concerned parties in the microfinance industry.

The AFD has been involved in the microfinance sector through a project with the People’s Credit Funds (PCF), signed in 2009, which included a EUR30 million credit line and EUR500,000 euro grant. It also co-financed two other microfinance projects set up by Planet Finance and by the French NGO Entrepreneurs du Monde.

To date, AFD’s commitments for development in Vietnam have totalled EUR1.07 billion.

Microfinance in Vietnam

Nguyen Ngoc Tuan, CEO of the Vietnam Microfinance Working Group, said that microfinance in the country currently only meets some 40% of the demand among poor people.

He attributed the modest development of the microfinance sector in the country to the small size and lack of microfinance institutions.

According to Tuan, several foreign investors are interested in the microfinance sector in Vietnam. However, most of them found it difficult to enter the market due to the unfavourable legal environment. There remained a lack of detailed regulations to support domestic microfinance development.

In order to foster the development of the sector, the Government should introduce more incentives and improve the legal environment, he added.

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