Joint Collaboration Programs

Hainan Microcredit Program in Grameen BankModel (HMPGBM), China




Despite falling poverty rates, still about 10% of the population of 1.3 billion people lives below the poverty level in China. In order to meet the growing demand for microfinance in China, Grameen Trust and Hainan Rural Credit Union, China, signed a Memorandum of Understanding in the presence of Nobel Laureate Professor Muhammad Yunus, the honorable Executive Trustee of GT, in December 2007. Following this agreement, Grameen Trust has started implementing Hainan Microcredit Program in Grameen Bank Model (HMPGBM) with the financial assistance from Hainan Rural Credit Union.

Grameen Trust sent an experienced Grameen staff to work as the Project Director of HMPGBM and implement the project on the ground. The Project Director recruited and trained the local staff on Grameen methodology in order to ensure smooth project implementation. The first branch of HMPGBM has been opened in Qiongzhong area in April 2008. In order to serve the poor in Tunchang area, HMPGBM opened its second branch in Tunchang in November 2008.



Starting up a microcredit program in a place where government provides long term (two / three years) loans for which the rate of interest is very low (5%) or sometimes free and where almost all the households are dependant on agricultural activities, was a highly challenging task for the staff of HMPGBM.
Starting up a microcredit program in a place where government provides long term (two / three years) loans for which the rate of interest is very low (5%) or sometimes free and where almost all the households are dependant on agricultural activities, was a highly challenging task for the staff of HMPGBM. Moreover, the staff needs to maintain very good rapport with the "Village Leaders", as it gets very difficult to motivate people to join the program if the leaders are not convinced well. Another challenge was to make the members realize about the positive aspects of fortnightly repayments, which they were reluctant to follow, in order to make them used to with the credit discipline.

However, the dedicated staff of HMPGBM could kick-start the program overcoming all the challenges. The staff had been cautious in avoiding providing loans to those who have taken loans from the government. In order to keep the members remain engaged in income generating activities, the staff motivated them to grow vegetables, rearing poultries or starting up small businesses. Now that the members have started realizing the positive impact of this program, they are utilizing the loan money by engaging themselves in vairous income generating activities.

In 2008, HMPGBM disbursed loans amounting to US$ 94,070 to 204 borrowers. Total loan repayment by the borrowers is US$ 12,963. The repayment rate of this project has been 100%. Savings is not collected from the members, as it is not allowed by the Central Bank of China.