Most of the microfinance for the poor programs in the Sichuan province of China are less than one year old but the 14 active counties have already reached more than 20,000 clients. A major reason for this rapid and effective growth is a non-government organization set up in June, 1997, called ARDPAS - the Association for Rural Development of poor areas in Sichuan. This Association, with a mission to work in the 63 poorest counties, absorbed nine existing Grameen-style microcredit projects run by the county Aid the Poor offices. It then encouraged five more counties to open programs under ARDPAS. In 1998 it plans to take in another ten counties.

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Mr Yang is a senior official in the Sichuan Aid the Poor office and Director of the Microfinance Training Institute. He has been involved in anti-poverty work for a decade, but only recently in Grameen Banking. 

Mr Yang lobbied the provincial Government and banks to set up ARDPAS and use it as a vehicle to spread the Grameen model to all the poor counties of Sichuan. 

In early 1997, the Sichuan government allocated US$1.5 million and the Agricultural Bank agreed to provide another $650,000 to spread the model in 14 counties. 

During the same period, '95-'97, UNDP was funding an experiment in Grameen Banking in Yilong county.UNDP funding has ended, but this is a successful program with 2,500 borrowers. By setting up an Association, Yang created an organization outside the provincial bureaucracy which can operate in relative autonomy. 

ARDPAS sets its own rules, recruits its own staff and has legal status to access loans and grants from both domestic banks and foreign donors. And it has political support at the highest level.

It has the ''special recognition'' of the Sichuan provincial Party Committee and the Provincial Government. Mr. Yang is Secretary General, but Chairman of his Board is number two in the Sichuan Political Congress and his Deputy Chairman  is the head of the provincial Poverty Alleviation office. 

In backing ARDPAS, the  Sichuan Government is following a directive from Beijing in 1996, when the Leading Group on Poverty Reduction of the State Council adopted microfinance as a major weapon in its effort  to eliminate poverty from China by the year 2000. 

The methodological glue that binds the county ARDPAS branches together are in two books by Yang, which compress the five basic training manuals in Mandarin. 

The first outlines the methodology of group formation, lending discipline and savings; the second is a detailed set of guidelines and formats for financial management and accounting. ARDPAS distributes its funds only to programs which follow these guidelines. 

This April, CASHPOR conducted a workshop on Audit and Financial Management in Jiange county in Sichuan , one of the 14 counties under ARDPAS. Executive Trustee, David Gibbons describes the place: 

“They are amazingly enthusiastic and hard working, even though their average monthly salary (around US$35 per month) is  barely enough to live on.Part of the reason is their loyalty to  the energetic and capable Zhang Gui Lin,who is Deputy Director of the County Poverty Alleviation office and Secretary of the county ARDPAS. When I first visited them last October they had 417 borrowers. By this April, they had 5,000! Zhang says that he could reach another 10,000 poor and attain financial sustainability within a year, if he could access sufficient funding . 

Of course, I was suspicious about the targeting , given the fast rate  of expansion, but although is some leakage to the non-poor because of the involvement of party cadres in recruiting the groups, I soon saw that many poor households were being reached.” 

How can they move so fast? The staff explained: 

“At the commune level we work through the party cadres, who know the poor families and can mobilize the women to join. And we get full support from ARDPAS for on-lending funds. The field staff are full-time. 

They get a bonus for each borrower they recruit and an additional bonus for getting 100% collection, so they are very motivated. 

However, few ARDPAS county branches seemed likely to reach even operational self sufficiency any time soon. The provincial government puts a cap on interest rates of a mere 8% and ARDPAS compounds the problem by collecting only half at disbursement and the other half with the last payment. As a result return on productive assets is very low, ranging from 11% to only 2%. Operational self sufficiency ranges from 88% to 23% despite the impressive  outreach and low staff costs. 

"When ARDPAS started charging 8% the government leaders thought the rate was very high and asked us to decrease it. However, if we get support from international organizations we can get rid of the government limit of the interest and set our own rate for those foreign funds.” 

Mr. Yang said ARDPAS is committed to reach a total of 350,000 poor families by the year 2005, a target that they seem capable of achieving, given current progress. 

Yang estimates they will need $43 million to reach and service that number, of which he plans to raise,” at least $16 million in foreign funds from international organizations.