Introduction
In the chapter 2 and 3 showed that, micro-finance, micro-credit as the main part, and other micro financial services such as insurance and savings vehicles…, has become a popular tool in poverty alleviation programs in developing countries such as Viet Nam, especially HCMC….The poor households have inadequate access to formal credit resources because of barriers imposed by lenders and relatively high transaction costs for small-size loans that discourage lending to the poor. So, a
sizeable proportion of poor households are almost certain to borrow from the informal credit sector. In the chapter 2 and 3 showed that in Ho Chi Minh City, the poor households typically fail to meet the formal credit requirements, and so find it difficult to access formal credit in Ho Chi Minh City,
According to (IFC, 2006; VDR, 2004), recently the research showed that in 2002 the informal credit sector provided approximately 50% of the total credit to the poor and low income households.
First, the success of micro-credit in alleviating poverty depends on credit participation and credit constraints. The existing empirical evidence on determinants of credit participation and credit constraints is well established for rural areas. In contrast, investigation into determinants of credit participation and credit constraints for peri-urban households, in Vietnam such as Ho Chi Minh City (HCMC) and elsewhere is rare.
However the concept of credit access and participation has been used
Interchangeably in the literature, but access to credit differs from credit participation. Access to credit means a household is both able to borrow, thanks to credit availability, and can satisfy lending standard, including interest rate levels, established by lenders; and whether they do not care to borrow or not. On the other hand, credit participation means that a household has chosen to borrow and has already borrowed, even the borrowed amounts may be at the market clearance point (or optimal point) or any points below the below the market clearance point if without interest subsidies. A household that has participated in borrowing activities has, of course, access to particular credit resources, whereas a household having access to credit may choose whether or not to participate in borrowing activities.
Theoretical background
The qualitative criteria contribute to elucidate the diversity and heterogeneity of the cause and the situation of the poor group. Understanding this will be a useful basis for the proposed poverty reduction strategy of the poor. This is the reason for the research method that combines qualitative and quantitative should pay attention.
Besides the quantitative criteria reflect the characteristics of the poor economy, many researchers have conceived the poverty line according to the qualitative criteria for a comprehensive strategy .Poverty in families show different although these families have the same income level. The vulnerability of the poor are often expressed in the poor groups such as: the poor immigrants without number of inhabitants in Ho Chi Minh City ,the poor with many children; vendors ; lonely elderly …With a little income source, there is just a risk of an accident in their life suddenly. This can pull back the groups in which had fallen into:
The poor groups living into the poor inner city area
The poor groups living in urbanization and peri-urban areas
The poor groups come from the flow of immigrants
Analysis of the effect of household credit on the poor Table 4.1: Yearly GDP per capita over years
Unit: 1000VNĐ
Year GDP(billion VNĐ) Population (1000 person)
GDP per capita (million VNĐ)
Viet nam HCMC Viet nam HCMC Viet nam HCMC
1996 272.
036
45.
545
73.157,6 4.74
9
3, 7
9 ,6
2000 441.
646
75.
863
77.635,4 5.24
9
5, 7
1 4,5
2004 713.
071
13 6.488
82.032,3 6.06
3
8, 6
2 2,5
Resource: Statistical yearbook of Ho Chi Minh City
If you compare GDP per capita in 2004 with GDP of Ho Chi Minh City, then HCMC is nearly 3 times whole country(see table at 2.1).The growth of this indicator in Ho Chi Minh City is very fast compared to this whole country. This is fully consistent with the economic growth of the large urban. Because the circumstances, economic condition of the poor living in Ho Chi Minh City is certainly not the poor in the other local .The quality of the poor is relatively and dependent on the local
characteristics
Table 4.2: Monthly income per capita by (urban, rural, region, sex of household head) income quintile
Unit: 1.000 VNĐ
2002 2004 2006 2008
Whole country
HCMC Whole
country
HCMC Whole
country
Whole country
Total 356,1 904 484,4 1.164,8 636,6 995,2
Urban 622,1 987 815,4 1.479,9 1058,4 1605,2
Rural 275,1 549 378,1 717 505,7 762,2
The income gap is between urban and rural
2,3 1,8 2,2 2,1 2,1 2,1
Resource: Statistical yearbook of Ho Chi Minh City
Along with GDP per capita, average income of a household per month in Ho Chi Minh City is 2 times the criterion of the general level of the country. A point to note is the difference between urban and Peri-urban as well as whole country and Ho Chi Minh City tend to decrease during economic growth, but differences in Ho Chi Minh City is also less national level .This speaks to a disparity in income, living standards between rural and urban areas are more likely to narrow in Ho Chi Minh City. Peri-urban areas of Ho Chi Minh City have the characteristics of a peri-urban areas, a big city is in the process of urbanization.
In HCMC; income groups: Almost all households were divided into five groups with average per capita income a month from low to high (Group 1: the poorest, group 2: near the poorest, group 3: average, group 4: near the richest, group 5: richest). Each group accounts for 20% of households
Average income per capita for a household per month by income group, the difference between groups 1 and 5 in Ho Chi Minh City is lower than the difference between whole country and tended to decrease from 6.17 times in 2002 to 5.98 times in 2004. This speaks to the divide between rich and poor in Ho Chi Minh City is going down. However, we note that does not exclude a group in which are
individuals, households are rich, but this is not great significance in the inequality of society.
Table 4.3 : Monthly average income per capita by (urban, rural , region, sex of household head )income quintile in Ho Chi Minh City(HCMC).
Unit: 1.000 VNĐ
Quintile 2002 HCMC 2002
Whole country
2004 Whole country
2004 HCMC
2006 Whole country
2008 Whole country
Quintile 1 316 107,07 141,8 412 184,3 275
Quintile 2 525 178,3 140,7 633 318,9 477,2
Quintile 3 721 251,01 347 854 458,9 699,9
Quintile 4 1.008 370,5 514,2 1.148 678,6 1067,4
Quintile 5 1.952 872,9 1182,3 2.462 1541,7 458,2
The income gap is between quintile 5 and quintile 1
6,17 8,11 8,34 5,98 8,37 8,93
Resource: Statistical yearbook of Ho Chi Minh City
As the income is increased, physical and culture life of people was greatly improved. Within two years from 2002 to 2004, consumption expenditure increased over 20% of whole country and in Ho Chi Minh City (see table at 4.2). However, to pay attention to this increased section in which are the consumption expenditures which will be analyzed later.
Table 4.4: Monthly average consumption expenditure per capita Unit: 1.000 VNĐ
Year of 2002 Year of 2004 Whole country Ho Chi Minh City Whole country Ho Chi Minh City
269,1 674,6 359,7 822,8
Resource: Statistical yearbook
Not only an average consumption expenditure increases that expenditure structure had also changed the direction of decreased expenditures for food but also increased for clothing, travelling, education and entertainment .... Specifically, in 2002 consumption expenditure on food in urban areas is 51.6% and in rural areas is 60% ,and then, in 2004 fell to 48,9%; the structure of people's consumption
expenditure in urban and peri-urban areas is 56,7%. The reduction of the proportion for foods have increased truly and the remainder of people were spent on other necessary things.
Table 4.5:Monthly structure of average consumption expenditure per capita Unit: %
Year of 2002 Year of 2004 Urb
an
Peri-urban U
rban
Peri-urban
Food & drink 51,
6
60 4
8,9
56,7
Electric,water & rent for house 8,2 6,9 7
,8
7,4
Furniture equipment 6,1 5,0 6
,3
6,7
,6
Travelling 10,
2
10,3 1
0,8
10,7
School fee 7,5 5,8 7
,8
6,7
Health care 5,5 5,7 6
,0
5,8
Entertaiment 3,2 3,3 4
,0
3,5
Others 2,1 2,3 3
,0
3,1
Total 100
,0
100,0 1
00,0
100, 0
Resource: Statistical yearbook
In chapter 3: both quantitative and qualitative criteria are required to be considered as an important basis for determining the poverty line in Ho Chi Minh City. Therefore, I based on the research results of the poor groups in the areas: Go Vap District (representing for the inner district), District 12 (representing for the new district and urbanization) and Binh Chanh district (rural districts), it is the reality basis to help better visualize about features and characteristics of poverty at urban areas, and it is the important databases to discuss and to study.
In addition, while observing the relationship between poverty (per capita income in the poor households) and an average consumption expenditure of people’s HCMC City can also offer a number of hypotheses for the future. Because it dose not have full dataset, especially the dataset an average consumption expenditure per capita of the poor in whole city; So this thesis should use an average consumption expenditure data of the city. With the principle that, if the an average consumption expenditure per capita is close to the poverty line (the poor income),and then the
Although the new poverty line is 6 millions VND that has been applied in this period.By 2010, with growth forecasts of expenditure in the two regions are in urban areas, this relationship was extended up to 3.17, peri-urban areas (rural) is 1.42 times.
Then, Poverty becomes low and people are above the poverty in which level of consumption expenditure will be many times lower than an average consumption expenditure level and so, the fact they are still poor.
Table 4.6:The relationship between the poor standard and monthly consumption expenditure in Ho Chi Minh City.
Unit : 1.000 VNĐ Y
Year
Urban Peri-urban
the poor standard
consumption expenditure
The relation’s between consumption expenditure /the poor standard
the poor standard
Consumption expenditure
The relation’s between consumption expenditure/the poor standard
2000 3.000 7.000 2,33 2500 4200 1,68
2002 3.000 8.900 2,97 2500 4435 1,77
2004 6.000 10.764 1,79 6000 5700 0,95
2010 6.000 19.000 3,17 6.000 8.500 1,42
Resource: Statistical yearbook
A critical factor is the increase on consumer prices over the years. Throughout the survey areas; the statistics on consumer prices announced in late 2005 showed that goods and services were increasing too high. Compared to the period of 2000 years, while overall consumer prices rose 29.5%, the food price increased in 44%, the price of pharmaceutical and health services increased by 40.5%, the price of housing and
only refer to the relative value because the reality can rise higher, especially during the holidays of Viet Nam Traditional ‘Tet’. The poorer who have to focus spending on essential goods items, they will lose some ability to pay essential consumer goods .That do not include the other items that have more indirect effects such as: gasoline prices, steel and other raw materials were imported. Increasing consumer prices with a high speed is a possibility in the next few years.
This impact directed on the poor. Predictable, if within six years (2004-2010), consumption expenditure on foods had increased by 50%,people with income <6 million in 2006 is regarded as poor, then to 2010, the standard of new poor would of course have raised to 9 million. People with incomes> $ 6 million / year (nominal) at the time in 2010, can only rest at 3 million (essentially) as at present, and in the future how would it be like for the poor?
Consumption expenditure of households and members of the following items:
food, housing, electrical and water, transportation, education, entertainment; total of consumption expenditure of households. In addition to the regular consumption expenditure, other expenses in the last year for apparel, furniture of appliances, medical, health care ....how much are total of irregular expenses in the years? how much per month? and how much is total of consumption expenditure of the whole household?
Overview of the poor households in HCMC
In the total households were surveyed, the number of the poor households per capita income less than 4 million / year with the highest proportion of 43.5%
(according to 2010 survey results of total the city, and then, this rate is about 60%);
average income from 4 to 5 millions / year accounts for 37.1% (ratio of total the city is 27.8%) and average income from 5 to 6 millions / year accounts for 19.4% (ratio of
total the city is 11.7%). It is possible that the surveyed sample was selected in this study are typical for the general poverty of Ho Chi Minh City. This also indicated that a large proportion of the poor (estimated at over 50%) are living in situations of poverty, deficiency and annual income levels are very low(less than 4 million) and very far the new poor standard is under 6 million/year. Their life is very difficult, most the income is just enough for food needs every day. Struggling to escape poverty of the poor is not easy without the impact of poverty reducing and deleted program and other programs.
At the surveyed district; Binh Chanh district where has the amount of the most poor people, total of average income is below 4 million / year accounts for 33.5% and under 4 million all the survey areas. This is a suburban district, new changes in administrative boundaries and in the process of rapid urbanization. Even many people who lived here a long time in the area of agricultural land for crops but rice yield and the crops are not high, the majority of subsistence is enough the need.
Due to bad soil conditions, there are still salinity and some cases of wild left land or cultivated, small livestock and for the daily food needs. Besides, there is a part of population to change other occupations such as workers, small business ... with the income rather than from agriculture but there has also no improved considerably. It showed that despite of the long-term stable living at home (over 98% of people with permanent residence ), the house stable condition, but the poor still do not have in place as well as the ability to accumulate out of poverty, especially in poor in rural areas with the agricultural industry
The survey results show that most people have a stable residence status, some people have permanent majority with 98.54%. They are long lived people on the grounds of Mr. and Mrs. his parents left, have stable housing conditions .About 1.45%
of households with immigration. According to their homeland, with 86.7% of people surveyed born in HCM city, 12.7% peoples were born outside Ho Chi Minh City and 0.6% is overseas to live in HCM City.
Factors impact on the poor household The ages
The number of children age from 10 to 15 years accounted for 19.1% of the total members. People of working age from 16 to 60 years is 746, accounting for 45.1%. People over 60 years old accounted for 10.2%. Thus, the total of children and the elderly, those under working age and no longer working capacity, occupancy rate is quite high and then the burden of household expenditures .So, this child would have been to school to learn, have fun. However, due to family difficult situations, their parents can not afford to care for them with a basic education, even many children left school with a grade level 1.The child are not in school ,do not contribute to the economy of the family because of the aged, leading to the context of continuing poverty and illiterate.
However, people created the main incoming source of the household in the total of family members is relatively high, but they have no professional, low-skilled with a sense of escaping from poverty is not high; so even though doing much ,but their income is very low. All of them feel hard problems and due to the poor situation and its limited level, but they do not still have a strong will to escape from the poverty and are not afraid to change the traditional way of doing things mainly use their strength. Number of working over age accounted for 10.2%. These people have an old, the lost labor, some with the disease do not always get the hard work and often live depending on the pension. However, there still have a few old people do simple works such as: cutting, selling some goods at home ... but their income are very low
and just enough for them. Almost they do homework and look after their children, this work also requires much time and efforts. This is the reason why the poor households are getting more and more the poor when all people can not work again with fairly large proportion.
Table 4.7: Age group of the household members by region and by income Unit: % D
istrict
Aged group Type of household Total
<4 millions < 5 millions < 6 millions
District 12 10-14 20,1 22,4 6,3 16,3
15-18 9,2 4,4 9,8 7,8
19-60 61,8 63,4 78,3 67,8
Over 60 8,9 9,8 5,6 8,1
Total 100,0 100,0 100,0 100,0
148 123 102 373
Binh Chanh District
10-14 19,0 15,9 15,0 16,6
15-18 12,9 14,6 11,4 12,9
19-60 60,4 62,8 65,7 63,2
Over 60 7,7 6,7 7,9 7.3
Total 100,0 100,0 100,0 100,0
249 86 80 415
District 3 10-14 18,9 19,2 13,4 17,1
15-18 7,6 4,7 7,5 4,8
19-60 62,2 64,4 69,5 64,3
Over 60 14,7 11,9 9,6 13,8
Total 100,0 100,0 100,0 100,0
201 144 80 425
Go Vap Distrct
10-14 18,3 15,9 13,8 16
15-18 9,9 11,8 7,6 9,5
19-60 62,2 60,5 64,8 62,8
Over 60 9,6 11,8 13,8 11,7
Total 100,0 100,0 100,0 100,0
148 262 29 439
Total 10-14 19,1 18,3 12,1 16,5
15-18 9,9 8,9 8,8 8,8
19-60 61,6 62,8 69,3 64,5
Over 60 10,2 10,0 9,8 10,2
Total 100,0 100,0 100,0 100,0
746 603 303 1.652
Resource: the survey of the poor household, 2012
The number of men of working age from 19 to 60 accounted for 32.12%
while the number of women is 34.46%. In the poor households, men are the main labor force make the income .Women are often the housewife or does some works that does not make more income. The rate for working men aged less labor than women the same age is also a cause for the economic conditions of these households hardly be improved. At the age of 60, it was found that the difference between the number of men and women. Men over 60 accounted for 3.9% and women over 60 accounted for 7.4% of the total. This suggests that men have lower life expectancy than women and more and show more pronounced in poor households, where male labor force major and hard work to feed the whole family.
Table 4.8: Age group of the household members by sex and by income Unit : %
G ender
Ag ed
Type of household
Total
< 4 millions
< 5 millions
< 6 millions
M ale
10-14 17,9 15,7 4,7 12,6
15-18 12,8 9,7 9.1 9,8
19-60 63,1 64,8 78,5 69,4
Over 60 6,2 9,8 7,7 8,2
Tot al
100, 0
100,0 100,0 100,0
345 298 147 790
F emale
10-14 14,7 12,9 10,2 13,6
15-18 9,4 9,8 9,6 9,6
19-60 61,1 63,6 69,1 62,2
Over 60 14,8 13,7 11,1 14,6
Tot al
100, 0
100,0 100,0 100,0
402 305 155 862
T otal
10-14 16,3 20,6 14,5 13,1
15-18 11,1 8,3 8,6 9,7
19-60 62,1 60,5 69,2 65,4
Over 60 10,5 10,6 7,7 11,4
al 0
747 603 302 1652
Resource: the survey of the poor household, 2012
Health status: Because the economic situation of the poor households are very lack of health care conditions; so, illness reduced labor productivity and life.
Survey shows that 61 people are suffering from incurable diseases, accounting for 5.3% of people in the survey household. Number of disabled people is 29 people and the number of loss of working capacity is 88 people . Total number of people with the disease is 178 people .These people have no working capacity and a burden to the remaining members of the family,to provide money,food, medicine for them.
Educational level: Educational level of the poor people should be a great concerned matter, because education is the key to take human beings to reach civilizations and progress of humanity and the way to escape from poor.Low education level also limits the poor calculation and uses funds effectively; a number of the poor households did not use the capital purposes. Besides, the training and vocational training for the poorer have also some difficulties because of their low accepting ability.
The percentage of illiterates in the total number of surveyed people was 11%. Number of level of primary accounted for 26.8%, junior high school accounted for 37.1%; high school accounted for 25.1%. In particular, the poorest households with average income below 4 million / year and less than 5 million / year with rate of highest illiteracy ; beside, a number of people with primary and junior high school level are also more than the group of income households under 5 millions and less than 6 millions. This shows that the role of family economic conditions with education level of members.