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Snapshots of Myanmar’s flourishing microfinance market

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August 6, 2017 12:31 pm JST

Low-income female entrepreneurs are using small loans to build a better future

YUICHI NITTA, Nikkei staff writer

An employee counts a roughly 60 million kyat pile of bank notes at a branch of Socio Lite Foundation, a microfinance institution, on the outskirts of Yangon. About half of the money will be loaned to customers that day. (Photo by Ken Kobayashi)

YANGON — Ever since Myanmar began transitioning to civilian rule in 2011 and opening up its borders, investor money and advanced technology has been flooding in. One of the big changes accompanying this wave has been the spread of microfinance, or loan services designed to help low-income families start businesses.

A Socio Lite Foundation employee rides a motorcycle to a village to meet with customers. The foundation extends loans to about 26,000 people in seven municipalities near Yangon. (Photo by Ken Kobayashi)

Take, for example, a 51-year-old woman who runs a restaurant in north of Yangon. She applied to a microfinance institution for a 400,000 kyat ($295) loan, aiming to use the money to buy fresh mutton from relatives. Her plan is to use the proceeds from the meat sales to purchase more meat and make her weekly loan payments.

Women receive loans of 100,000 kyat each near Yangon. They break into groups of five to co-sign for each loan they receive. (Photo by Ken Kobayashi)

Nu Yi Win, 47, strokes her pig in Bago, north of Yangon. She raises the animals with the help of a loan from microfinance institution MJI Enterprise. Since receiving the loan, which requires a weekly payment of 8,500 kyat, her household income has increased by about 50%. (Photo by Ken Kobayashi)

The government is a big supporter of microfinance. In 2011, it enacted laws to allow foreign companies and nongovernmental institutions to enter the market. Last year, it relaxed regulations to enable the number of such lenders to grow rapidly.

A microfinance worker demonstrates JBrain, a customer management app jointly developed by Japanese software developer Japan Brain and Japanese microfinance consultancy Linklusion, near Yangon. (Photo by Ken Kobayashi)

An employee hands out copies of Mango! Social Magazine, a free microfinance newspaper created to improve financial literacy in Bago, north of Yangon. (Photo by Ken Kobayashi)

The practice is not without its problems, however. Some borrowers get buried under multiple debts. A woman in a rural area of Mandalay, in central Myanmar, took out loans from three microfinance institutions. But after two years, her new rice business flopped, just as she found out about her unplanned pregnancy.

The woman seated at right was forced to dip into the joint deposit of her village in Mandalay, in central Myanmar, after becoming unable to pay off her microfinance debt due to her husband’s illness. She may get sued by the other four members of her loan co-signing group. (Photo by Ken Kobayashi)

With no source of income, she makes ends meet by borrowing money from a loan shark. The four other people who belong to her loan co-signing group — required for receiving money from microlenders — have grown distrustful of her and no longer want her as a member.

This woman in Mandalay is saddled with multiple debts after taking out loans from different microfinance institutions. She is expecting her eighth child and has no prospects of paying off her debts. (Photo by Ken Kobayashi)

For those turning to microfinance, the line between success and failure can be alarmingly thin. But even the most beleaguered women I met tended to share the belief that tomorrow will bring better things.

The line between success and failure is extremely fine for entrepreneurs using microfinance services in Myanmar, but more than 99% of small loans are paid off. Hidenori Kuroyanagi, managing director of microfinance consultancy Linklusion, said he thinks microfinance can shore up the economy if the country makes full use of its hardworking people to build a healthy, customer-oriented financial market. (Photo by Ken Kobayashi)

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