Microcredit schemes struggling to aid China's rural poor
Providing small loans to help reduce poverty has been widely successful globally, but various problems hamper similar moves on the mainland
The first investments by a long-awaited fund dedicated to helping the poor through financial services has helped shed light on the huge hurdles still facing microcredit organisations in rural China.
Such non-governmental organisations, which now number about 100 on the mainland, aim to support entrepreneurship and fight poverty by providing small loans to individuals and businesses who would normally have trouble accessing credit. But they have long been starved of funding because Beijing has been reluctant to categorise them as bona fide financial institutions, banning them from receiving deposits.
The Inclusive Finance Wholesale Fund, established last year by Beijing-based wealth-management firm CreditEase, was designed to change that.
The fund - the first of its kind on the mainland - is modelled after one by Palli Karma-Sahayak Foundation's (PKSF) in Bangladesh, which provides financial assistance to various microcredit organisations. Like the PKSF, the Inclusive fund raises large sums from corporate or individual investors and redistributes the money in smaller portions to the NGOs.
So far, it has raised 10 million yuan (HK$12.3 million) in the capital and, on Thursday, delivered the first 5 million yuan to five selected microcredit NGOs.
Du Xiaoshan, deputy director of the Chinese Academy of Social Sciences' Rural Development Institute, said China, unlike other developing nations, has failed to support microcredit NGOs and allow them a free hand to help fight poverty.