Impressions of Pucheng
by Lucille Lee, Director, The 1990 Institute
I realized how the PCWSDA microfinance program was able to succeed when I met the women borrowers from the Yue Xin and Xi Cao villages. All the women were happy, out-spoken, full of energy, and full of stories on how the micro loans have changed them. It has built up their self-confidence, increased their feeling of independence, improved their standing in the community, gave them the opportunity to work as a team, expanded their capabilities, and provided opportunities for leadership.
The villages we visited are in the flatter area of Shaanxi province, with farming as the primary industry. Each village has it's own residential area, surrounded by farmland. The residential area consists of individual rectangular courtyards for each family, separated by brick walls and reached by dirt roads. Usually, each courtyard has only one completely enclosed room with a dirt floor, where the whole family sleeps, eats, and conducts business. (Unlike urban China, most rural families have two or three children.)
A large percent of covered area in the courtyard is used for produce storage, with produce spilling into the family's room during harvest. In addition, the streets are used generously for drying and airing corn and other farm products, at times blocking traffic. There is electricity and running water, but no modern plumbing and no electrical appliances. The government assigns/leases each family the farm land, usually less than an acre in size, and the residential courtyard. A lease can be passed from parents to children, as long as the land is farmed. In order to increase production, a number of our borrowers lease additional unused land from neighbors.
With few exceptions, the borrowers we visited - women, predominantly subsistence farmers - have had little education. While they may not understand the nuances of financial accounting, they nevertheless have an understanding of their own family business. They realize that markets fluctuate and water is always a problem in their arid region. So they practice crop diversification by simultaneously planting corn, cotton, fruit trees, wheat, vegetables, etc. Even people raising live stock still back up their businesses with agriculture.
The tangible benefit of the loans is, of course, the increase in family income. In cases of families with school age children, the money is used to keep children in school longer. For those with older, unmarried children, the money maybe saved for building another room in the courtyard so the young man, or young woman, can get married and continue to live with the family. The additional income can also go to pay for medical expenses, as these people do not have free medical care or medical insurance. For someone from U.S., the lack of desire to use the money for material comforts, which they have none, was astonishing.
Two of the visits/interviews stood out most vividly in my mind:
The Team of Five
About 8-9 visitors, together with the five group members, squeezed into Zhang's (the group leader) family room. (PCWSDA requires borrowers to form groups of five where the members in each group serve as collateral for each other.) A number of us sat on the large bed, others sat on benches, boxes, and other items in the room. Sun Lei, of Plan China, moderated the interview in a most professional but also very friendly and courteous way. Zhang, at an animated and clip pace, told us how much each member was borrowing, what they used the loans for (buy fertilizers and increase planting acreage), how the group was formed (they all live in the same village, all knew each other, and all doing similar farming business.), whether they've had problems collecting repayments (none), etc.
Other members of the group had no problem piping in to add stories of their own – One woman said that she no longer needs to do what her husband orders her to do, another mentioned that she is now able to pay back money she has borrowed from her sister. One complained about the government sponsored rural banks that would only lend to the head-of-household, which is assumed to be the husband, and her husband was not trustworthy. They described how difficult it was to keep children in school, how market fluctuations can make last year's star crop this year's dismal failure, how a family member's (including parents) illness can wipe out an entire year's income and more, how they would like to borrow higher amounts, etc. When I remarked to Sun Lei after the meeting on how articulate these women were, Sun Lei told me that two years ago, when these women first came to borrow the money, they would hardly open their mouths.
Daughter Taking Over Gao Xiaojing came back to Yue Sin to take care of her father's farm when he became ill. In her courtyard, there is a room for her family of 4 (husband and two children), and a separate small room for her father. In the rural areas, while a wife is expected to live with the husband's parents, having a husband living with the wife's parents is still a rarity and somewhat degrading in others eyes. As a result, Gao had trouble finding a group that would accept her as a member. Finally she was able to form a group by herself. Right now, the government provides free tuition for her 14 year old daughter, but she must pay 25 RMB per week for boarding, as the school is too far away to commute. She also has a 3 year old son in a day-care where she pays 150 RMB a month. Her husband is working in an urban area and is able to help her with some expenses. Right now she is farming 2 mu (about 1/3 acre) of pears and 5 mu of corn. Next year, with her second loan, she would like to add several mus of apples and wheat and asked the Plan China people where she could get some training on these crops. So far, she has saved about 4000 RMB, but is worried that it would still not be enough for her father's upcoming medical costs.
My first reaction after visiting the borrowers was that they were not as poor as I had expected. They were not wearing tattered clothes, they did not live in huts, their homes had the bare minimum furnishing but nevertheless neat and clean, their children were in school, and they did not appeared to be mal-nourished. However, the success of PCWSDA relys on giving loans to people that don't have the collateral to obtain loans from traditional financial institutions, but nevertheless have ideas on how to improve their current business or have good ideas for new businesses, who are willing to work hard, and who are conscientious in making their commitments.
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