Thailand's Grand Experiment In Microcredit Is Paying Off

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Photo: Paula Bronstein/Getty Images

10 years after Thailand launched an ambitious microcredit scheme, the World Bank has weighed in on the success of the program.The Thailand Village and Urban Revolving Fund (VF) earns a “pass,” though with plenty of recommendations for improvement.

The World Bank found in a survey of 3,000 locally appointed VF committees that the scheme was overly altruistic. The microcredit scheme was not chasing profit nor innovating, and consequently it has not kept pace with the growth of the Thai economy. 

When it first launched by the Thailand government in 2001 with the purpose of stimulating rural economy, the VF was to provide a million baht working capital for locally run rotating credit associations.

According to the report, the VF committees lent a total of 259 billion baht by 2005 becoming the largest micro finance scheme in the world. At this point, the VF is second only to Vietnam Bank for Social Policy and “administers loans that reach 30 per cent of” all Thailand households—with 40 per cent of rural and 10 per cent of urban households borrowing from the VF annually.

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