Credit where credit’s due
Innovation in rural financial services
Farmers around the world need credit for their businesses, and Myanmar small-holders are no different. But, with no formalized banking system and limited micro-finance options, families will often take unofficial loans from private moneylenders at high interest rates. Most farmers are in debt for part of every year, and many are losing their profits to high interest. Proximity’s low-interest, fixed term loans offer two safer, more profitable alternatives that are increasing incomes by an average of $250 each.
Agricultural finance for the small-holder
Total loans to date: 95,000
Repayment rates on crop loans: 98%
Loan types offered: Crop Loans and Irrigation Equipment Financing
We know, and farmers know, that our products will boost their incomes. But, for the people who need them most, even $15-$45 can be a prohibitive amount, especially at the start of a growing season when cash is tied up in so many other things. For these farmers we offer small loans of about $100, enough to cover the price of a product, and some critical inputs like seeds and fertilizer. These product loans have a 4-7 month long term, and a super high repayment rate. They're offered through our loan service, Yetagon Credit.
In 2009 we began offering another type of finance through a new entity, Proximity Finance. These are crop loans offered in response to the farm recovery needs of those affected by Cyclone Nargis. A little higher at $120, these are tailored to the two planting seasons, monsoon and summer. Unlike traditional micro-finance, interest is paid with the principal at the end of the loan term, after the harvest.
Customers who take us up on these services reduce their borrowing costs from informal sources, and each loan leads to a $250 average increase in income, helping families to get out of debt and prepare for an even more successful season.
To meet the pressing needs of underserved rural families in Myanmar, we will be expanding our financial services in the coming months and years. Our overall mission is to develop a strong foundation for Proximity Finance to become the leading provider of financial services to the agricultural sector in Myanmar, offering innovative products, high quality customer service and customer-friendly distribution channels.
With such a low level of financial inclusion in rural Myanmar and few existing players, we believe there exists a unique opportunity to build a new local institution that references international best practice, adapted for the Myanmar environment, taking advantage of new technologies that have not been available to Myanmar in the past.
"I believe I used this loan wisely in investing the things most needed for my family business."
Pakkoku Kyun Village
"Enough credit and we're flying!"
"Without the loan option I would never have been able to buy the product that changed my life!"