As one of the largest global development institutions, International Finance Corporation (IFC), a member of the World Bank Group, has been focusing on sustainable and inclusive growth in developing countries through financing and improving the private sector’s capacity.
IFC Vice President Dorothy Berry shared with DTiNews on IFC’s plan to help Vietnam handle the social and environment issues of industrialization on the way to a middle-income country in a recent visit to Vietnam.
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| IFC Vice President Dorothy Berry |
How do you see about the benefits that microfinance can bring to the poor?
Microfinance brings about access to finance for the poor, especially those who live in rural areas and are underserved by commercial banks. It empowers borrowers to take responsibility for their lives through self-employment, future savings, and investing according to their own priorities.
What do you think about the potential for microfinance industry development in Vietnam?
There is a huge potential for micro finance industry development in Vietnam. For years, in Vietnam, mass organizations have been successful in attracting project funding for microfinance, mainly from international non-governmental organizations and programs wishing to provide microfinance in the country. However, comparatively less attention has been paid to the quality of the debt finance provided, the sustainability of the institutions providing the service, and the repayment capacity of borrowers. It is critical now to scale up and sustain the microfinance providers to reach out to more households, for whom credit, savings and other payments services can help them grow their businesses and create wealth and employment.
Is IFC planning to help promote microfinance industry in Vietnam?
IFC has implemented numerous successful microfinance programs in 68 countries around the world with focus on emerging markets. Our engagement is in both advisory services and investment in microfinance institutions. IFC’s global microfinance clients at the end of 2009 served over 8.4 million borrowers, providing some $11 billion in loans to support microenterprise growth and investment.
IFC is interested in helping Vietnam to develop and build up microfinance industry, with an aim to increase access to finance for women and poor families in the rural areas, which in turn will increase rural incomes and promote sustainable urbanization in Vietnam. The Government has encouraged us to help build up the sector by improving the legal framework and building capacity of microfinance institutions in Vietnam.
Pollution and energy shortage are of serious issues Vietnam is facing now. How do you see to address environment issues in Vietnam?
Vietnam’s industrialization and economic growth places an increasing burden on the country’s environment and natural resources. Industrial water pollution is one of the concerns because it affects major river basins, and thus impacting agribusiness production and people's livelihood.
Similarly, Vietnam primary energy demand is estimated to double while GHG emission will be triple over the next two decades. Currently, Vietnam’s industry already uses about 40% more energy per unit of manufactured output than Thailand – which indicates that there is room for energy efficiency improvement. This is especially important given that Vietnam has constraints in investing more resources for new power generation capacity.
IFC’s international experience shows that the Public-Private Partnership approach can be used effectively in various areas including those that are traditionally taken care of by the government, such as utilities and public services (water supply or waste treatment).
IFC is currently exploring a PPP model for waste water treatment and cleaner production in craft villages of Bac Ninh province. The craft villages are an important part of the local rural economy and culture. We need to find a better way to manage their growth and their environmental issues.
If this pilot works in Bac Ninh, it can serve as a model to tackle environmental problems in many other craft villages throughout the country.
At the enterprise level, how can a company contribute to address environment issues?
The private sector has a key role to play in addressing these challenges. Companies can deploy better technologies and improve their production processes to increase efficiency, productivity, and reduce waste discharges. Private investors can be mobilized to build and operate waste treatment facilities using appropriate revenue models that transfer fully the cost of pollution treatment to the polluters. If we can do this, Vietnam will be able to save tremendous public resources which could be used for other needs. Similarly, Vietnam could try to attract private sector investment to develop renewable & clean energy sector. We realize that lack of long-term finance and quality technical advice are some of the barriers companies face in investing for energy efficiency & cleaner production and this is an area IFC is focusing on.
What can IFC offer the enterprises in energy efficiency and cleaner production?
IFC has been working with many financial institutions in different countries to offer specialized lending products for energy efficiency investments. IFC’s sustainable energy financing program now has more than 25 partner banks in the world, and every year we commit about US$500m to support more than twice that level of lending by our partner banks.
Techcombank is the first bank IFC works with in Vietnam to launch energy efficiency and cleaner production lending program, which will help accelerate the modernization process in enterprises, and move the local economy towards low-carbon growth path. With the aim to build a portfolio of $50 million in energy efficiency & cleaner production lending over two years, this collaboration will be the first step to opening up the energy efficiency financing market in Vietnam. Going forward, we will continue to work more in this sustainable finance area together with other local banks.
Microfinance brings about access to finance for the poor, especially those who live in rural areas and are underserved by commercial banks. It empowers borrowers to take responsibility for their lives through self-employment, future savings, and investing according to their own priorities.
What do you think about the potential for microfinance industry development in Vietnam?
There is a huge potential for micro finance industry development in Vietnam. For years, in Vietnam, mass organizations have been successful in attracting project funding for microfinance, mainly from international non-governmental organizations and programs wishing to provide microfinance in the country. However, comparatively less attention has been paid to the quality of the debt finance provided, the sustainability of the institutions providing the service, and the repayment capacity of borrowers. It is critical now to scale up and sustain the microfinance providers to reach out to more households, for whom credit, savings and other payments services can help them grow their businesses and create wealth and employment.
Is IFC planning to help promote microfinance industry in Vietnam?
IFC has implemented numerous successful microfinance programs in 68 countries around the world with focus on emerging markets. Our engagement is in both advisory services and investment in microfinance institutions. IFC’s global microfinance clients at the end of 2009 served over 8.4 million borrowers, providing some $11 billion in loans to support microenterprise growth and investment.
IFC is interested in helping Vietnam to develop and build up microfinance industry, with an aim to increase access to finance for women and poor families in the rural areas, which in turn will increase rural incomes and promote sustainable urbanization in Vietnam. The Government has encouraged us to help build up the sector by improving the legal framework and building capacity of microfinance institutions in Vietnam.
Pollution and energy shortage are of serious issues Vietnam is facing now. How do you see to address environment issues in Vietnam?
Vietnam’s industrialization and economic growth places an increasing burden on the country’s environment and natural resources. Industrial water pollution is one of the concerns because it affects major river basins, and thus impacting agribusiness production and people's livelihood.
Similarly, Vietnam primary energy demand is estimated to double while GHG emission will be triple over the next two decades. Currently, Vietnam’s industry already uses about 40% more energy per unit of manufactured output than Thailand – which indicates that there is room for energy efficiency improvement. This is especially important given that Vietnam has constraints in investing more resources for new power generation capacity.
IFC’s international experience shows that the Public-Private Partnership approach can be used effectively in various areas including those that are traditionally taken care of by the government, such as utilities and public services (water supply or waste treatment).
IFC is currently exploring a PPP model for waste water treatment and cleaner production in craft villages of Bac Ninh province. The craft villages are an important part of the local rural economy and culture. We need to find a better way to manage their growth and their environmental issues.
If this pilot works in Bac Ninh, it can serve as a model to tackle environmental problems in many other craft villages throughout the country.
At the enterprise level, how can a company contribute to address environment issues?
The private sector has a key role to play in addressing these challenges. Companies can deploy better technologies and improve their production processes to increase efficiency, productivity, and reduce waste discharges. Private investors can be mobilized to build and operate waste treatment facilities using appropriate revenue models that transfer fully the cost of pollution treatment to the polluters. If we can do this, Vietnam will be able to save tremendous public resources which could be used for other needs. Similarly, Vietnam could try to attract private sector investment to develop renewable & clean energy sector. We realize that lack of long-term finance and quality technical advice are some of the barriers companies face in investing for energy efficiency & cleaner production and this is an area IFC is focusing on.
What can IFC offer the enterprises in energy efficiency and cleaner production?
IFC has been working with many financial institutions in different countries to offer specialized lending products for energy efficiency investments. IFC’s sustainable energy financing program now has more than 25 partner banks in the world, and every year we commit about US$500m to support more than twice that level of lending by our partner banks.
Techcombank is the first bank IFC works with in Vietnam to launch energy efficiency and cleaner production lending program, which will help accelerate the modernization process in enterprises, and move the local economy towards low-carbon growth path. With the aim to build a portfolio of $50 million in energy efficiency & cleaner production lending over two years, this collaboration will be the first step to opening up the energy efficiency financing market in Vietnam. Going forward, we will continue to work more in this sustainable finance area together with other local banks.
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