With the COVID-19 crisis, access to timely input financing for smallholder farmers will be critical to safeguard global and local food security. To enable smallholder farmers to obtain credit faster and at lower cost, Financial Access launched together a new smallholder lending program in Vietnam with consortium partners Lien Viet Post Bank, VietED and the Gender Responsive Equitable Agriculture & Tourism (GREAT) program, sponsored by the Australian government. The main objective of the GREAT program is to improve the economic livelihoods of women belonging to ethnic minority groups in Northwest Vietnam through private sector development and better access to markets and finance.

In an earlier phase of the GREAT program, Financial Access collected, validated and analyzed large data sets across a number of agri supply chains to develop individual cash flow-based credit profiles of farmers, allowing financial institutions to taker better informed credit decisions. This will improve financial inclusion of credit-deprived women smallholders in remote rural areas in Vietnam.  As part of the program, Financial Access presented the business case to several financial institutions and selected Lien Viet Post Bank as the partner bank in the lending program.

This lending scheme will include the development of a number of financial products specifically tailored to requirements and cash flow capacity of targeted smallholder farmers in the Son La region in Vietnam. A credit risk guarantee will be provided by GREAT to reduce the credit risk for the bank in the first loan cycle, allowing them to widely test their new financial services in practice, apply the lessons learned in subsequent loan cycles to more smallholders and to scale their rural lending operations.

The GREAT partnership fits well with the Financial Access strategy to reduce the large gap between the supply and demand in smallholder finance by connecting smallholder farmers in agri supply chains in a scalable manner to affordable, formal finance.  Vietnam, with its large rural population and financially underserved agricultural sector, is a key focus country for Financial Access. The GREAT program offers us the opportunity to expand our activities in Vietnam and to deepen our impact in smallholder finance in Southeast Asia.