MACDI vs. Bloom

So I have eased my way into a pretty decent schedule. I teach full time on Saturday and Sunday from 8 AM to 6 PM and I have a Monday, Wednesday, Friday class in the evening, I volunteer at MACDI in the mornings Tuesday to Friday, and I meet with three different Vietnamese ladies (trust me it’s all very innocent) throughout the week to practice my Vietnamese. I wake up at 6 AM every day except for Monday which I can sleep in to 7. All in all it’s a pretty busy schedule and I spend most of my time trucking around the city. As I continue teaching I will inevitably take on more classes and I will get even busier which unfortunately will probably interfere with my studying of Vietnamese. I really enjoy this life style. The challenge and stress of each day inspires me. Melancholy no longer hangs over me as it did during the month where I had literally nothing to do. I have to continuously stay busy to escape my history of depression.

Anyway, I have been volunteering at this microfinance organization known as MACDI (Microfinance and Community Development Institute). I have been brought in to help MACDI set up a tourism program. I’ve been doing some research and apparently the government of Vietnam has been actively pushing rural tourism as an important tool to alleviate poverty in rural areas of Vietnam. Anyone who has travelled around Vietnam can attest to the stark disparity between the quality of life in the rural provinces and the city centers. Vietnam is developing fast but the wealth creation has been concentrated in larger cities such as Hanoi and Saigon. I believe this phenomenon is quite common in developing countries.

Microfinance has an important role in helping the economic development of rural Vietnam. MACDI operates in provinces surrounding Hanoi. Last year MACDI commissioned a small charity known as Bloom Microventures to set up a tour to some of the villages in which MACDI operates. The tour is a day trip out to the Vietnamese countryside. Bloom organized the itinerary of the tour and it consisted of picking up tourists in Hanoi, busing them out to a small idyllic village where they met with a woman (98% of MACDI’s clients are women) who is an example of microfinance success story. The tourists can hear her story via translators and then they are guided around to points of interest in the surrounding area. Then they enjoy a traditional Vietnamese lunch and lastly visit a person in need of a microloan. This microloan in theory comes from the money the tourist paid for the tour itself.

It is a very nice idea and is definitely a good attempt at sustainable tourism. The tour was going great for about a year but Bloom let their success go to their head. At the beginning of the tourism program, the tours usually consisted of about 10-12 people and the customers only had to pay $40 per person. The deal was that Bloom had to pay MACDI $100 for each tour (this money would go directly to the microfinance operation) and the rest of the money should just cover their expenses. Bloom is a registered UK charity after all and not supposed to be in the business of making money. Bloom itself is not a microfinance institution and is only granted access to the rural commune because of their contribution to MACDI which is the actual microfinance institution. The tour was so successful and the popularity of the tour grew so much that they even will get a mention in the next Lonely Planet Vietnam. They have subsequently raised the price to $75 dollars per person and run tours 1-2 times a week with 15-20 people each. The problem is that the cost of running the tours has only marginally increased because of the increased volume of tourists but they still only pay MACDI $100 per tour. This means that there is a great deal of money that is unaccounted for. The director of MACDI has asked Bloom to renegotiate their agreement and she asked for more transparency about Bloom financial status. The head of Bloom refused both and thus MACDI has formally cut them off. There are two scenarios which initially come to my mind. Either they are merely pocketing the money which would be highly unethical or they could be raising capital with the profit in order to become an actual microfinance institution which is less bad but still is taking advantage of MACDI. I am very puzzled by the decision of the guys at Bloom. It seems to me that either they let their success get to their head and disregarded the danger of biting the hand that feeds them or I am only getting one side of the story. I am leaning towards the latter because I don’t think the people at Bloom can be that irrational or unethical.

This is where I come in. MACDI wants to set up a tourism program independent of Bloom and I am part of this effort. At this point I have only drafted some brochures and other fact sheets and flyers to post around. I am going to help them create and promote this tour. It will be pretty much the same tour as what Bloom had so it shouldn’t really be difficult to set up. It’ll just take some legwork. I haven’t really done all that much since I have started volunteering there so I have used my idle time there to do further research about microfinance in Vietnam and around the world. I found the microfinance crisis of Andhra Pradesh very interesting and I think you should check it out.

Microfinance is not yet a mature market and is developing around the world very differently. Some people view it as a tool to empower women, others see it as mainly a tool to alleviate poverty, and plenty of others see it as a new market to make money in. I have my own ideas about microfinance but I try to avoid being dogmatic. I do believe that microfinance has had a positive impact of the world and has raised millions of people out of poverty already. There have also been market failures, such as Andhra Pradesh, and other abuses of the system. I am so happy to be able to see how microfinance works from inside an actual microfinance institute. My real reason for coming to Vietnam was to understand how microfinance works which is kind of funny since Vietnam is one of the worst markets for microfinance. I’ll tell you about that later.