Cô VN - Creating Opportunities in Vietnam

FAQ

• What does the name Cô VN mean?
• What does your logo signify?
• How does your program work?
• Why is Cô VN targeting women?
• How will your model help to improve women's conditions in Vietnam?
• How do you select recipients?
• How much is the average loan and what are the repayment terms?
• What types of training do you provide?
• How do you ensure repayment?
• What are your operating costs?
• Do you think you will be able to raise enough funds to be successful?
• Is this the right time to implement an economic-development program in Vietnam?

What does the name Cô VN mean?
Cô (Ko-), n. Miss Cô VN means Creating Opportunities in Vietnam a signifies the people we serve.

What does your logo signify?
Conical straw hats are quintessentially Vietnamese. Vietnamese women of all ages and in all walks of life wear them. You see them in the fields, in the markets, and on the city streets throughout Vietnam. The three cone hats symbolize our devotion to the women in all three regions of Vietnam - North, Central and South.

How does your program work?
Cô VN's services incorporate two proven models for the entrepreneurs: the microfinance model and the venture capital model of the Silicon Valley. Under the microfinance model, capital is made available to the economically disadvantaged in small amounts. Under the venture capital model, high tech start-up companies are selected for funding based on their business plans and potential to succeed. Cô VN will also utilize the group lending model. Cô VN will select female Recipients who demonstrate entrepreneurial spirit, capability and strong work ethics, and who have no meaningful access to capital. These selected Recipients will receive business education and training and loans to start or expand their businesses. Cô VN will closely monitor the Recipients' progress and offers information and consultation to ensure that they become successful. In addition to the direct benefits derived from the loans offered by Cô VN's, the Recipients will receive long-term benefits from the training and information that Cô VN's will provide. This business knowledge is an invaluable asset that may be applied in a variety of circumstances and that would be useful to maintain their businesses even after the term of the loan. Furthermore, such knowledge may be shared without losing its value; thus, a Recipient trained by Cô VN's may teach others what they have learned.

Why is Cô VN targeting women?
First, studies have shown that poor women have excellent repayment rates, sometimes exceeding that of the formal financial sectors. Second, making loans to women lessens systemic gender inequities. Many qualitative and quantitative studies have documented how access to financial services has improved the status of women within the family and the community. Women have become more assertive and confident. When women are empowered with financial opportunities, they can own assets, including land and housing, and are encouraged to play a stronger role in decision-making in their families and societies. Additionally, in some micro-finance programs that have been active over many years, there are reports of declining levels of violence against women. Third, giving women financial control and independence is often the most efficient way to impact an entire family, as women typically put their children's needs before their own and this phenomenon generally leads to improved lives for their children and subsequent generations.

How will your model help to improve women's conditions in Vietnam?
It has been proven worldwide that providing poor people with the capital necessary to start and maintain a business is an effective way to increase their economic security and standard of living. Access to capital allows poor people to take advantage of economic opportunities. By reducing vulnerability and increasing earnings and savings, financial services allow poor households to make the transformation from "every-day survival" to "planning for the future." Households are able to send more children to school for longer periods and to make greater investments in their children's education. Increased earnings from financial services lead to better nutrition and better living conditions, which results in a lower incidence of illness. Increased earnings also mean that individuals may seek out and pay for health care services when needed, rather than go without or wait until their health seriously deteriorates. Unfortunately, the poor cannot use the traditional banking system to borrow capital due to the collateral requirement. In this regard, the poor often do not have such collateral and must turn to informal sources for loans, which charge exorbitant, interest rates (from 100% to 3,000% per annum). Because they must use a large portion of the profit to pay interest on these loans, these individuals cannot break out of the poverty cycle. Cô VN's will be responsive to this need by providing affordable loans to the poor to help them increase their economic security, which leads to an overall improvement in their standard of living.

By targeting Recipients who have good business acumen, Cô VN's also creates collateral benefits. As the Recipients' businesses grow, they will hire and train others to work in their businesses, thereby creating jobs and transferring knowledge. Accordingly, Cô VN's's programs will not only have a direct positive impact on the Recipients but it is expected that these programs will improve the lives of those in the Recipients' communities.

How do you select recipients?
Cô VN will work with local Vietnamese organizations such as trade associations, the Women's Union, the Youths Federation, the Farmer's Union, religious organizations and colleges (the "Local Partners") to recruit and select Recipients who have good business ideas, strong work ethics and potential to succeed. Examples of potential Recipients include women in rural areas who work in agricultural and animal husbandry industries, unemployed and unskilled women in the cities, and women selling wares in the open markets.

How much is the average loan and what are the repayment terms?
Recipients with compelling business plans will receive loans ranging from $200 to $500 as seed money to implement their business plans. The loan repayment schedule, ranging from one to three years, will be tailored to the specific business in a manner that would allow the Recipients with sufficient capital to start and grow the business, and also to demonstrate accountability. To avoid the erosion of the loan funds, Cô VN's will charge interest and fees that are sufficient (at 12% to 20%) to cover the costs of the loans, which include defaults and transaction costs. The fees charged by Cô VN's may seem high compared to current U.S. interest rates, but such fees are not high relative to the loan transaction cost since the loan transaction cost is not proportional to the loan size. Specifically, whether the loan is for $200 or $200,000, the loan requires roughly the same amount of staff time for meeting with the borrower to appraise the loan, processing the loan disbursement and repayments, and follow-up monitoring. Accordingly, Cô VN's elects to charge interest and fees at a rate that is sufficient to cover its expenses in administering the loans but that will be competitive and affordable to the Recipients.

What types of training do you provide?
Examples of Cô VN's training programs include:
• business training such as business administration, accounting, and marketing;
• agricultural production skills such as vegetable, fruit, dairy, beef, pork, poultry, and fish production;
• handicraft training such as tailoring, embroidery, and knitting.

How do you ensure repayment?
Where feasible, the loans will be made in groups of approximately five Recipients. Although each recipient may use her loan independently for her own business, each Recipient must get approval on her business plan by the other members of the group. Group members are severally and jointly liable for any loan default. The group-lending concept has proved to be very successful and is widely used by most microfinance institutions including FINCA and the Grameen Bank.

In addition to the group lending concept, Cô VN's will promote repayment by capitalizing on the cultural importance placed on "face" and personal character, history and reputation in the Vietnamese communities. Cô VN's will take advantage of the fact that most traditional Vietnamese communities are close knit; each member's personality, character, history, and reputation are known to the other members of the community. Culturally, it is very important to the Vietnamese to maintain a good reputation as the Vietnamese communities remain quite static, with everyone knowing everyone else. Additionally, Cô VN's will work with trusted local grass root organizations such as the Farmers' Union, the Women's Union, the Youth Federation, and religious organizations whose members are well acquainted with the people in their communities. These local organizations will recommend to Cô VN's Recipients whose character, history and reputation indicate that they will most likely repay the loans. Additionally, Cô VN's will actively observe and assess the Recipients' propensity for non-payment during the training sessions, which can be as long as three months. Cô VN's rigorous selection process will thus ensure that the Recipients' character is evaluated before the Recipients receive any funding.

What are your operating costs?
Although Cô VN's offers a much more comprehensive program than a typical microfinance project, Cô VN's will strive to keep it's operating costs under 20% of its funds. The operating costs for typical microfinance programs can run as high as 50% to 60% of the total loan amounts. Cô VN's will maintain its operating costs low by working closely with its Local Partners. Instead of building the administrative infrastructure in Vietnam, Cô VN's will utilize its Local Partners' existing network and resources and will compensate the Local Partners only for the incremental cost of running Cô VN's projects. Instead of establishing projects from scratch, Cô VN's mission, and provide funding for such projects. For example, a typical microfinance organization desiring to work in Vietnam would open an office in Vietnam and hire loan administrators and auditors to recruit borrowers and administer the loans. Cô VN's, on the other hand, is currently searching for existing projects and will partner with the projects administrators who will then act as Cô VN's representatives in Vietnam. Cô VN's has identified a university program, which provides agricultural training to youths at risk and seed funding to start a farming-related businesses in their home villages. In this situation, Cô VN's would work with the university as its Local Partner to operate a similar program primarily for women. By working with Local Partners on shared projects, Cô VN's avoids the start-up costs. Working with Local Partners also increases the likelihood of success of Cô VN's programs since the Local Partners would feel compelled to make the project successful since they have partial ownership of the projects.

While many organizations find it difficult to partner with local Vietnamese agencies and organizations due to their unwillingness to provide transparency, Cô VN's will overcome this problem by only working with time-tested and well-trusted people in local agencies and organizations. Because Cô VN's's board and executive officers consist mainly of Vietnamese Americans, Cô VN's uses its network of friends and families here in the United States and in Vietnam as references in seeking potential partners and opportunities of need in Vietnam. Furthermore, because we understand the culture and speak the language, it is easier to forge a good working relationship with the Local Partners.

Do you think you will be able to raise enough funds to be successful?
Cô VN's feels confident that it can raise sufficient funds to finance the projects in Vietnam. Cô VN's obtains funding from three sources: individual appeals, fund raising events and grants. We plan to raise a friends-and-family round of funding, and have our first fund raising events by the third quarter of 2004 to support the 2004-2005 pilot projects. Cô VN's anticipates that grants and corporate sponsorship will help finance the program on an on-going basis. Cô VN's will target the Vietnamese American communities, the Vietnam veterans, and the Silicon Valley companies and firms for donations. We are confident that we have a compelling mission, sound program plan, and the talent to successfully appeal to corporate donors and private foundations for funding.

Is this the right time to implement an economic-development program in Vietnam?
Cô VN's's focus and services are being offering at a key time in Vietnam's development. For many years, the Vietnamese lacked the basic necessities such as food, medicine and clothing. With the improved Vietnamese economy, these basic necessities are increasingly being met. The next step is to improve the living conditions of the Vietnamese on a permanent and sustainable basis. We believe that the most effective way to accomplish this next step is to empower these individuals to help themselves. Given the newly open economy and the readiness of the Vietnamese people to become self-reliant, Cô VN's plays a role in generating long term economic sufficiency by giving entrepreneurs a helping hand through access to capital and business training.