This project consisted of a survey of microfinance in Vietnam as a follow-up to a similar UNDP survey in 1996. The need was not simply due to the time lapse, but also because larger multilateral donors were showing greater interest in funding microfinance activity. It was, therefore, a good time to survey the sector and identify strategic issues and “lessons learned” for their benefit. The results of the survey were presented to more than 100 representatives in Vietnam and overseas. The survey and report focused on rural microfinance schemes, particularly those aimed at improving the lives of the poor.

In order to better inform its Southeast Asia grantmaking, the McKnight Foundation required research and preparation of a paper on the changing microfinance environment in Cambodia and Vietnam. One of the Foundation’s themes in the region has been support for projects addressing poverty and the lack of economic and/or employment opportunities. McKnight has supported and continues to support several microfinance projects in Cambodia and Vietnam to address this issue but wanted to learn more about the changes taking place to determine how effective microfinance schemes have been in addressing poverty and the lack of economic opportunities, which approaches are most effective in the current environment, and what resources are necessary to support the field. In particular, McKnight wanted to know whether continued Foundation investments make sense, and if so, what was the best way to target the program’s modest resources for greatest impact.

The Vietnam-Finland Forestry Sector Cooperation Programme has implemented a Credit Scheme since 1996 in Bac Kan Province covering two districts and nine communes. The Credit Scheme has evolved over the years since 1999 and in recent years has been managed by four separate operators: the Vietnam Bank for Poor in Cho Don and Ba Be, and the Women’s Union in Cho Don and Ba Be.

This study was undertaken as part of the ILO project “Extension of Micro-insurance and Microfinance to Informal sector Women Workers”. This project was part of an inter-regional programme, funded by the French government, whose objective was to develop a variety of innovative mechanisms to expand social protection to excluded groups. The other participating countries were Burkina Faso and Ethiopia. The lessons learnt from these three experiences were intended to contribute to national and international debate on poverty reduction and the extension of social protection.

Economic Reform and Development of the Market Economy (WiRAM)” is one of the three priority sectors of Vietnam-German Development Cooperation. The overall framework for the cooperation in this sector was set by the official WiRAM Strategy Paper, which – after consultations with the Vietnamese Government – was officially approved by both sides in October 2002. The paper defined SME promotion and financial services development as a key priority, together with economic reform and vocational training. A mission to “Elaborate an Implementation Strategy for the focal area Economic Reform and Market Development” was carried out in March 2003. The mission confirmed that the area of SME Promotion and Financial Systems Development is a priority field under “WiRAM”, which is the centre of the cooperation activities. In the context of this mission, the option was considered to work in close coopera­tion/part­ner­ship with a planned EU-Vietnam Private Sector Support Program (sub-component to create an enabling environment for private sector growth at provincial/municipal level).

Since April 1998, SC/US had been executing a microfinance program with its implementing partner, the Women’s Union (WU), in the Nong Cong District of Thanh Hoa Province. At the end of October 2003, the program counted 4,012 active clients in 11 communes, with US$151,536 in outstanding loans. Ninety-nine percent of the active clients were women. After five years of operation, SC/US decided to conduct a comprehensive program evaluation and impact assessment to determine whether the program achieved its goals and objectives, and whether the program had its desired socio-economic impact on the targeted beneficiaries and their community.

This research project had two objectives. Firstly, it surveyed the private consulting companies in Hanoi and identified their capacities to deliver specialized services for the Danish Embassy and Danish projects. This was due to little comprehensive information having been available about the consulting companies currently operating in Hanoi and their capacity to provide different consulting services. During 2005, the Royal Danish Embassy in Hanoi commissioned Mekong Economics Ltd. to survey the leading private consulting companies in Hanoi to identify their capacities for providing specialized services for Danish projects in Vietnam. Secondly, to estimate appropriate rates for Vietnamese consultants in Hanoi working for foreign donors and to develop a framework that can be used to estimate consultant wages into the future for both donors and the Government of Vietnam.

At the time of this project, DANIDA had three sector programs in Vietnam, including water (WSPS), fisheries (FSPS) and agriculture (ASPS). These three sectors had a cross-cutting sub-component of microcredit. The approach chosen for establishing credit lines within the different sector programs is apparently quite different. Due to the differences in the three sectors in providing credit, the supervision and working mechanisms were not consistent and unclear.

The WB has focused on expanding access to finance in Vietnam through two inter-related approaches: top-down (macro-level focused on policies and regulations) and bottom-up (micro-level focused on institutions and operations). However, there had been no comprehensive analytical assessment of the microfinance landscape in Vietnam, nor was there a strategy to transform the regulatory framework and all of the institutions involved in the provision of microfinance.

The Policy Briefing Kit on Small and Medium Sized Enterprises in Vietnam provided an overall picture of the current situation of SME development in Vietnam. Included in the kit was information on the performance of SMEs, relevant legislation, donor projects (closed, current and pipeline), and key officials and academics relevant to the sector. A file of media clippings with over 60 relevant articles from English language newspapers and journals was also included, along with a small number of library and internet addresses where information on SME development in Vietnam can be found. The Policy Briefing Kit was intended to be a helpful document for researchers, policy makers and potential donors with an interest in SME and private sector development in Vietnam