Five Myanmar-based civil society organisations will soon begin lending more than $3 million to farmers and women in rural and isolated communities, US-based microfinance NGO Pact said.
LIFT, a multi-donor fund managed by the United Nations Office for Project Services is providing financial assistance for the initiative, while the training and counsel for the project is provided by Pact Global Microfinance Fund (PGMF), Myanmar’s largest nonprofit lender.
“This may be the largest launch of microfinance lending by local nonprofit organisations to date in Myanmar,” said Fahmid Bhuiya, PGMF’s chief operating officer.
“We’re proud to be working with our new partners and LIFT to improve the livelihoods and food security of as many as 45,000 families in places where there is no access to credit but an abundance of need for it.”
The project – Myanmar Access to Rural Credit (MARC) – will enable nine new microfinance institutions to make about 27,000 agricultural loans and nearly 18,000 additional loans specifically targeted to women to let them expand non-agricultural activities or start new enterprises, Pact said. It will cover about 900 villages in the Delta and Dry Zone regions.
On December 24, the first two of the five new local lenders formalised documents that allowed Pact to transfer funds to them. Next year, Pact will work with another four community groups to qualify them as microfinance lenders under Myanmar’s new microfinance regulations, the lender said.
“We know the hard-working people in these communities well,” said U Cin Khan Lian, director of Ar Yone Oo, Social Development Association, an organisation that has helped the poor in Myanmar’s Delta region since 2008 and one of dozens that applied to Pact to become a microfinance lender.
“We have always wanted to help them with small, affordable loans that could be used to grow their incomes and better feed their families, but we never knew how or had the funds.”
For the past several months, PGMF worked with each of the lenders-to-be to improve their technical and organisational capacity to offer microcredit services, to ensure their sustainability as they grow their loan portfolios, Pact said.
“These are five very strong organisations who are no strangers to the communities they’ll be serving with microloans,” said MARC project manager U Kyi Thar.
“We’re all anxious to see them help transform the villages they are a part of.”
Pact Global Microfinance’s parent organisation, Pact, is the longest-serving international NGO still active in Myanmar today, serving its first borrowers in the country in 1997. In 2012, after Myanmar passed its first law addressing microfinance, Pact formed PGMF to allow it to expand its services. Currently, the lender serves more than 500,000 borrowers – 99 percent of them women – throughout Myanmar.
The demand for small business loans in Myanmar is booming as the country’s economy grows. The United Nations Development Program (UNDP) estimates only 10 percent of as much as a $600 million microfinance market in Myanmar is being satisfied. Pact said it aims to fill the gap with the MARC project.
Fund Director Andrew Kirkwood said: “We have an opportunity for Myanmar-based organisations to help Myanmar’s rural poor help themselves and enjoy a brighter future.”
Administered by the United National Nations Office of Project Services, LIFT was established in Myanmar in 2009 by donors that include Australia, Denmark, the European Union, France, the Netherlands, Sweden, New Zealand, Switzerland, the United Kingdom and the United States of America.
With access to credit, farmers will be able to buy higher quality seeds, fertilisers and additional labour that improve harvests and increase incomes, Pact said. Small loans on average of $100 help women either expand or start microbusinesses preparing or selling foodstuffs or other goods, it added.
“We can help teach farmers more efficient agricultural practices to increase their yields, but unless they have capital to invest in the cultivation of their plants, they can’t take advantage of what they’ve learned,” said U Maung Maung Soe Tint of Border Areas Development Authority, one of the five new local lenders.