Small loans change lives in China

Mennonite Central Committee
Friday, 8 June 2001

WINNIPEG, Man.--The first time Ms Ma Fangtumai came to hear about a new microcredit finance project in her remote Chinese village, she timidly hid around the corner of a nearby building with other women.

With much persuasion, she and her friends eventually crept forward - just to the back of the courtyard where the meeting was being held - to hear how they could receive small loans to invest in a small business.

Now, more than a year later, Ma Fangtumai, 49, has new confidence and a small but healthy business raising sheep. She can also write her name and complete a simple business record.

"To an educated person, this may not be very impressive, but for a rural, illiterate minority woman (Hui Muslim), this achievement took much concentration and hard work," reports Paul Wang, an Amity Foundation staff member.

The microcredit finance project in Ma Fangtumai's village in Gansu Province, in north west China, is part of a larger poverty alleviation project. Mennonite Central Committee (MCC) is halfway through the five year project, conducted in conjunction with the Chinese and Canadian governments, Mennonite Economic Development Associates, and Amity Foundation, a Chinese agency with Christian roots.

The project is active in two counties in each of four of the poorest provinces, with a range of projects designed to increase agricultural production and ecological sustainability, improve basic health care services, increase access to basic education and increase economic diversification.

In Gansu Province, the focus has so far been on increasing economic diversification, using microcredit finance. "Economic diversification was seen as perhaps the quickest way to bring improvement to the lives of people there," said Tony Enns, director of the China Poverty Alleviation Program. "These are people with very little income, with very limited access to capital. They had ideas about how to improve their situation with access to a little more capital."

The first loan disbursement took place in October, 1999. More than 1,200 people are currently participating in the micro credit finance project in this predominantly Muslim area. The majority are women.

Most women, who come from subsistence farming backgrounds, invested their money in animal husbandry, such as raising cattle, sheep, or pigs.

More than 80 percent of loan recipients made at least 100 yuan ($19 Cdn./$12 U.S.) profit in the first year, in an area where annual income is approximately 750 yuan ($139 Cdn./$91 U.S.).

"The other benefit is that these women have been encouraged to try things on their own. Those who have been successful - which has been most of them - have increased their self-confidence and increased their initiative," said Enns.

That's certainly true for Ma Fangtumai. She has participated regularly in literacy training classes as part of the project. "Your loan project is very interesting; my wife and grandson sit together on the floor doing their homework as soon as they finish their supper," her husband told Wang. "You'd think they are competing against each other to enter university," he joked.

Ma Fangtumai also attended training on animal husbandry. And over the first year she received two small loans, and now has six sheep. She has paid back her loans and plans to buy a cow with her third loan. Looking back over the year, she said, "There were pressures, sadness, worrying but also happiness. And to sum up, I have more confidence."

For more information, or to contact Mennonite Central Committee, see their website at: www.mcc.org