by Dan Chao, Director, The 1990 Institute

In late October 2008, The 1990 Institute led an 8-person delegation to Xian and Pucheng to visit the Pucheng County Women’s Sustainable Development Association (PCWSDA), which celebrated its third year of operations this past July. Executive Committee member and Program Director, Dan Chao, and Board member Lucille Lee, took a group of interested women from Canada, Hong Kong, and the U.S. to visit borrowers, our partner sponsors, and local government officials (see Lucille’s “Notes and Impressions”).

We were fortunate to have Patricia Chang and Denise Albano, CEO and President, respectively, of the Feed the Hunger Foundation join us. We also greatly enjoyed the company of Vivi Zao, an enthusiastic donor and volunteer from Hong Kong, Ji Xiaoyue (Sophie) who works with the law firm DLA Piper in Shanghai, Cai Jianling (Jenny), a former Citibanker and graduate of the Stanford Business School, and Sheila Weicke, a supporter of children’s programs in Shaanxi, from Canada.

We visited the villages of Yue Xin and Xi Cai in Chun Lin township, Pucheng County and met with a dozen borrowers who have established successful micro businesses. We were greeted by Zhang Xiuhua, a second-time borrower from PCWSDA, who used her RMB 2,000 loan to buy fertilizer and seeds to plant corn, cotton, and to grow pears. She would like to be able to borrow twice as much, to generate additional income to pay for education fees for her three children, but PCWSDA must ration its limited loan capital. In 2007, the cost of a 50 kg bag of fertilizer was RMB 180, but this year inflation has increased this cost to RMB 230, a 28% increase. Consequently, there is significant pressure on PCWSDA to increase the size of their loans.

We also visited Gao Chunwa’s pig farm consisting of 3 mother pigs and 12 piglets. (The father pigs only have visiting privileges from a neighboring farm.) Last year, Mrs. Gao made an additional RMB 1500 to supplement her income from growing 10 mou of apples and 3 mou of cotton. However, this year, the price of pork has dropped so that she is barely able to break even. She must support a household of 3 children and her husband who is disabled. Interestingly, Mrs. Gao’s home had a newly installed biogas latrine which enables her to utilize the methane from pig and human waste as cooking fuel. This high-tech, but low cost latrine was introduced by Plan China, one of our local sponsor/partners.

In addition to our highly interesting and informative visit to our Pucheng clients, our delegation was graciously met by Chairwoman Liu Li Ge of the Shaanxi Provincial Women’s Federation, even though she left the next day to represent the province at the All China Women’s Federation annual meeting in Beijing. In Pucheng, we were greeted by the County’s government officials. Following a lunch featuring local vegetables cooked in a variety of hot spices, (Shaanxi neighbors Sichuan province and shares an affinity for spicy food), we received a detailed briefing of the operations of PCWSDA from General Secretary Xi Yue Hong and her able staff.

Prior to our visit to the countryside, PCWSDA held a Board meeting attended by the newly elected Board of ten members, two each from Plan China, the two Women’s Federations, and The 1990 Institute. This new Board was duly elected by PCWSDA’s Member Congress at its meeting a few days earlier. We discussed the next important steps to raising additional capital, expanding our scope of activities, and potentially establishing a Micro Credit Company (MCC) as a sister entity to PCWSDA. Following this meeting, Sun Lei and Dan Chao met with officials of the People’s Bank of China (Shaanxi branch) to learn more about the regulations for establishing an MCC.

Our trip confirmed that PCWSDA continues on a highly efficient and effective operational path; that our borrowers are pulling themselves out of poverty with income generated from their micro businesses; that they are using these funds to improve their standard of living for their entire household; and that micro finance in Pucheng is indeed alleviating poverty in its rural villages.

In just over three years, PCWSDA has made over RMB 5.5 million in loans to over 3,600 poor villagers, 99% of which are women. It currently has over 1,260 borrowers with almost RMB 2 million in loans outstanding. While 2008 saw a global economic crisis, we are very proud that PCWSDA maintained a 100% repayment rate from its diligent borrowers. This is real evidence that poor rural villagers are excellent credit risks. The Association also established a mandatory savings program for its borrowers to encourage savings for special occasions.

In 2009, we will focus on continuing to educate the borrowers on how to be successful entrepreneurs, expanding the capabilities of PCWSDA and its staff, establishing broader conduits for generating loan capital for PCWSDA in the form of equity, debt, and donations, and in forming an investment fund for Chinese microfinance in the US and an MCC in China.