The Profit-People-Planet connection
It is often claimed that a lack of financial resources, poor access to financing and lack of knowledge are the major causes of rural poverty.
Standard Chartered Bank (Thai) can now say it has a case study that proves that assertion.
Working for three years with the Population and Community Development Association (PDA) in a village called Ban Nongphruek, in Nakhon Ratchasima's Chakkarat district, the bank has made extraordinary success from a microfinance experiment.
Ban Nongphruek has 114 households. After three years, villagers' income has risen by 11 per cent while their debts have declined by 12 per cent. Villagers now earn a living by growing mushrooms and raising crickets. They grow sugar cane using a waterdripping irrigation method.
The village was a pilot project for a microfinance experiment designed to widen the villagers' access to funding and lower their debts in a bid to achieve sustainability.
"We have shared our financial-management knowledge with villagers. They are encouraged to reduce their debts to unorganised lenders and to save for sustainableincome generation," said Standard Chartered Bank (Thai)'s president Lyn Kok. "The heart of a good and happy life for people in all communities lies in three components: profit (the ability to create profit), people (their cooperation in improving their community), and planet (the ability to preserve natural resources). All these elements are here at this pilot village."
In 2007, the bank put up Bt400,000 for the village on the condition that the villagers planted 40,000 trees. It was seed money for a village bank, managed by the villagers themselves. The bank keeps the lending rate at a minimum, but offers depositors a rate higher that commercial banks. To ensure that their loan scheme works efficiently, the borrowers need to submit a business plan and they must deposit at least Bt50 a month for six months before asking for a loan. Each loan must not exceed Bt30,000, to match their ability to pay.
To ease the effects of drought, the bank constructed a large water tank. Solar cells were installed to power water pumps that channelled water from the tank to the village for consumption and agricultural purposes. Water now costs villagers Bt2 per unit, down from Bt5 they used to pay to a public-water utility.
Another interesting activity is the toy library, designed to raise environmental awareness among children. To borrow a book, the children need to pay a fee - in household waste.
"Before - like other men here - I had to go and find a job in Bangkok to support my family," said one villager, Watchara Kulchim. He returned home three years ago and started growing vegetables with funding from the village bank.
"I'm a happy man now. I learned how to plan my new career and embrace new ideas. The living standards are better and now I'm talking with friends about selling our produce in the market," he said.
Through one of its partners, Chulalongkorn University's Faculty of Commerce and Accounting, the Standard Chartered Bank also takes students to the village and they compete with community development models for the village.
