Bank loans for the poor lift farmers out of poverty
Print Edition
Ten years ago, most farmers in Caichuan, a village in western China, lived in caves carved out of the mountainside and owned almost nothing of value.
The village is in the Liupanshan mountain area of Ningxia Hui Autonomous Region, where residents have long been troubled by drought, barren land and few jobs.
But Caichuan no longer suffers from poverty, and it is being copied around the region after it discovered microfinance, the provision of micro loans to the poorest of the poor.
The Postal Savings Bank of China launched a pilot progam in 2008 and, since then, has loaned 112 million yuan (US$16 million) to farmers in the village, said Yu Shulan, vice chief of the bank.
The program has now spread to 302 other poor villages, where farmers earn less than 2,300 yuan a year.
“The problem with poor people is that they have little to mortgage and get loans. Using community ties and Party organizations as guarantees, we get people to start a business and rise out of poverty,” Yu said.
Until 2002, farmers in Caichuan raised sheep for a living, but herding on the mountains stopped to reduce environmental damage.
“We sold the sheep and went out to work as migrant workers, earning very little,” said Ma Jinguo, one of the main campaigners for the loan program.
“Each loan applicant was paired up with two other families, who were richer and had techniques to help the applicant. At first, only 13 families applied, and each one was given 10,000 yuan for a period of a year,” Ma said.
“All the loans were paid back after a year, and other villagers saw the success and were eager to join the program,” Ma said.
As the number of loan applicants grew, a cattle-raising cooperative was established.
Yang Zongren, 33, was one of the first to receive a loan and now owns 21 cattle. “I have had very good returns from raising the cows, so paying loans is not a problem at all. Life has become quite easy.”
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