As I have indicated in a number of previous posts, there is a lot of hysteria about the one million baht village fund in Thailand. For many of the critics of Thaksin this program is typical of his government’s profligate populism. There is much talk of the money being misspent, mismanaged and misused. The so-called pro-democracy elitists seem offended that rural people are being given resources that they can manage themselves. Much of this discussion takes place in the absence of any detailed knowledge about how the scheme works at a local level.With a view to encouraging some more informed discussion, here are some facts and figures about one village fund (in Chiang Mai province) that I am a little familiar with.
- The scheme has 91 members (there are about 130 households in the village). The scheme is managed by a locally elected committee and has formal operating rules and regulations. Operational matters are overseen by an official in the District Office and financial matters are overseen by the local branch of the Bank of Agriculture and Cooperatives.
- In 2005 the scheme had a total capital of about 1.3 million baht. An initial one million was provided by the government (as it was to all villages in Thailand). The additional funds have been accumulated as a result of compulsory monthly “savings” of 30 baht per member; purchase by members of 10 baht “shares”; and reinvestment of a portion of the interest collected.
- At the beginning of 2005 there were 84 active loans. The average loan was about 15,000 baht. This is a modest loan in a village where household debts of 100,000 baht are relatively commonplace.
- During 2005 33 loans were fully repaid and 37 new loans were issued. About half of these new loans involved the direct purchase of agricultural inputs (seed) by the village fund itself.
- Interest collected during the year amounted to almost 60,000 baht (at a rate of 5 percent). This was used to cover the scheme’s operating costs, to reimburse committee members for expenses, to fund small scale local welfare initiatives (such as modest education scholarships) and to pay a dividend to shareholders. The balance was put back into the fund.
Of course, this brief snapshot does not amount to a detailed evaluation of the scheme (either in this village or anywhere else) but the figures certainly don’t paint a picture of unsustainable indebtedness or rampant profligacy. Instead the picture is of a rotating fund that is gradually increasing its capital. Perhaps they may encourage some critics to pause before condemning a scheme that they know little about. The scheme is not without its problems. There were real concerns in this village about how a previous committee managed some aspects of the scheme. But that committee was encouraged to resign and a new committee put in place. There are still grumblings about some aspects of the scheme’s management, but such grumblings strike me as a natural and desirable aspect of democratic local resource management.