PCWSDA Operations
Since inception, the PCWSDA (Pucheng County Women’s Sustainable Development Association) has given out over 10,000 loans, has had an 100% repayment rate, and has been operationally sustainable for the last three years. As of November 2011, it has 2500 outstanding loans, covering 60 villages in 10 townships. The current interest rate is 10.8 percent (17 percent APR).
Much of the success in the 100% repayment rate can be attributed to the policy of making borrowers form groups of 5, with members of the group counter-guaranteeing each other loans. As a rule, loans for the same group are all repaid at the same time, thus reducing work for the loan officer.
Loans are for one year terms, repaid in 4 equal installments. They now start from about $300, or RMB 2000 (was RMB 1000 in 2007) and can go up to $ 780 (RMB 5000) in increments of RMB 1000 a year after successful repayment. The average loan outstanding is around RMB 3000 today.
Majority of the businesses that the Association gives loans to are in agricultural production (e.g., cotton, fruit, vegetables). However, livestock
(e.g., chickens, pigs, sheep) raising is increasing becoming popular, and in most cases is used to supplement farming income. Value-added services (e.g., handicrafts, vending stalls) are also increasing.
Loans are given to people with families to support. This year, 98 percent of the borrowers are women.
With its sound management, operational processes and procedures, and transparency, the PCWSDA is increasingly being recognized as a model non-profit microfinance institution in China. The You Cheng Foundation in China, which was established to promote microfinance in China, made its very first loan of RMB 1 M to a microfinance institution in February 2011, and it was to the Pucheng Association.
All funds raised by the 1990 Institute's Microfinance Program go to PCWSDA. The funds will be used primarily to make loans, but a small portion will also be used to improve the capabilities of the PCWSDA itself. Joint supervision and oversight by the sponsors ensure that PCWSDA activities are fully accountable.
3/1/12
