The Pucheng County Women's Sustainable Development Association (PCWSDA) was formed in 2005 to provide loans and business training to poor residents so that they could establish and develop small businesses.  To date it has disbursed over 4,000 loans totaling more than RMB 5.3 million (US $760,000) to over 1,800 households.  It has experienced a 100 percent repayment record.  These efforts have increased household income by up to 50 percent, which has led to increased childhood education, better nutrition, health care, and housing, and fostered a greater sense of hope, self-esteem, and independence. 

Pucheng County is located in Shaanxi Province, in north-central China, and has one of the lowest per capita income levels in China.  The county is in an arid, drought-prone region, but the predominant source of income is still agriculture, which helps to explain the peoples’ subsistence standard of living.  (see Map). 

The 1990 Institute and its partners have chosen to focus on the Pucheng Development Association not only because of its high level of poverty, but because it has already developed a strong business foundation and track record and because the Institute has already established an excellent six-year working relationship with the Shaanxi Provincial Women’s Federation. This trusting relationship, developed through the Institute’s successful Spring Bud Program, will contribute greatly to the success of the microfinance program.

PCWSDA’s competent management and strong operations has been developed through the leadership and seed capital provided by Plan International (China), a UK-headquartered social service organization focused on helping women and children. Plan China, together with the local Pucheng County Women’s Federation, has worked with PCWSDA to develop a business plan and operations handbook, as well as computerized loan systems and data bases.

Despite the excellent track record of the PCWSDA, it is not yet self-sustaining and it is only covering about 4 percent of the loan demand in the county. With a population of 760,000, the demand for loans far exceeds PCWSDA's staff and funding capabilities. Only nine out of 360 villages are currently being covered by PCWSDA. 

Consequently, the two overarching objectives of PCWSDA and its sponsors are to:

• Expand its scope of operations by attracting additional capital in order to make more loans and thus reduce poverty to a greater extent; and
• To become a self-sustaining MFI by generating sufficient revenues to earn annual surpluses, building a strong and deep management and staff, and developing good governance to ensure effectiveness and accountability

In order to achieve these objectives, the 1990 Institute will provide additional capital through international fund raising as well as international business management training. Plan China will provide a wide range of social and technical services as well as local management and supervision. The provincial and county Women's Federations will provide local management and supervision, social services to women and children, and manage relationships with local and regional organizations and government authorities (see Sponsors for additional information).

The mission of the PCWSDA is to lend only to impoverished county residents who have the desire and capability to establish small businesses but do not have access to capital.   To date, 99 percent of the borrowers have been women, as they make up almost 80 percent of the labor force in Pucheng County. They are also the heads of many households because the men have left the county to seek better employment opportunities elsewhere in China. Tasked with caring for the children and the elderly, the women of Pucheng are hard pressed to live above the Chinese poverty level of about $100 a year. 

Borrowers form groups of four to six individuals who cross-guarantee one another. This system provides a strong support network and also a self-supervising mechanism for loan repayment. Non-payment of a loan by one individual will result in the forfeiture of receiving future loans by the entire group; therefore there is strong motivation for each borrower to ensure that all group members meet their loan obligations. Ten borrower groups are further organized into loan centers and monthly meetings are held to provide advice, training, and encouragement. (See Borrowers).

PCWSDA's current loan portfolio is divided as follows: 61 percent of loans go to borrowers with agricultural businesses (cotton, apples, pears, and vegetables), 20 percent for raising livestock (chickens, sheep, and pigs), and 19 percent in handicrafts (weaving, sculpture). Loans are made for one year and range from RMB 1,000 to 5,000 (approximately US $140 to $700) and are repaid in monthly installments. The effective current interest rate is 14 percent, which is significantly lower than the 18-20 percent interest rates charged by other microfinancing institutions in China (see Funding Goals and Benefits).

The hallmarks of the Pucheng Program are efficiency and accountability.  All funds raised for the Program will 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 PCWSDA itself.  Joint supervision and oversight by the sponsors, will ensure that PCWSDA activities are fully accountable.