Microfinance Program:
Vinh Phu and Quang Phuoc , Hue City
sponsored by VESAF

Vinh Phu and Quang Phuoc are rural communes near to Hue City.

With an initial budget of US $20,000, this Program is sponsored by VESAF (Vietnam Educational and Social Assistance Foundation) a 501(c)(3) nonprofit charitable organization, founded in 2014 in the US. VESAF aims to provide educational and social assistance to marginalized communities in Vietnam.


Reduce poverty and help fishing households achieve sustainable financial independence through the provision of loans for small enterprises.

Develop the capacity of marginalised members of the community to improve their livelihoods with training and education programs.

The interest rate charged in Vinh Phu and Quang Phuoc is just 0.4% per month, reflecting the fact that Vinh Phu is the poorest of the communities served by the microfinance programme. In Huong Van, the interest rate charged is 0.7% per month, this is much lower than commercial rates.


During 2019, H4H conducted a comprehensive review of our microfinance programmes, using best practice evaluation in the microfinance industry, as developed by the World Bank (see here for the World Bank’s technical guide).

We are proud of the results which show that our programmes are highly effective by global standards and that they have continued in their mission to serve the poorest. Moving forward, we will update and publish the results of this evaluation process every six months.

This evaluation is correct as of September 2019.

Case Studies:

Default Rate

Since the beginning of the program in January 2017, there have been zero instances of default.


Portfolio at Risk (30 Days)

Our PAR(30) is 0%. No borrower is more than a month in arrears in repayment.


Financial Self-Sufficiency

While the VESAF microfinance programme only began in 2017, H4H has been serving microfinance borrowers since 2011 and we are committed to serving borrowers for many years to come. For this reason, the program cannot be making a loss.

To assess the financial self-sufficiency of the program, we take the ratio of the total program income to total program costs, including inflation costs. A ratio of above 100% indicates the program is self-sufficient.

The programme’s self-sufficiency rating is lowest in the poorest community, Vinh Phu. This shows the programme is successfully subsidising the most marginalised. 

Over the past year, the program has been self-sufficient.


Retention Rate

For microfinance programs with very low default rates, like ours, an important indicator of the health of the program is the retention rate of borrowers. That is, the per cent of borrowers who decide to take a new loan with us after repaying their current loan.

Our first borrower from VESAF finished her first round loan and transitioned to the second round in January of this year. Our retention rate in this program is very high, currently 92%, with 65 borrowers having chosen to continue in the project after finishing round 1.


Number of Borrowers

The number of program beneficiaries is capped by the available finances for the program. There is a waiting list for new borrowers, and these will be served when funds become available.

As is usual for a healthy, young microfinance programme, the number of clients is growing quickly.


Client Poverty Level

At H4H, we have strict screening mechanisms to ensure that we are serving the poorest clients. Nevertheless, “mission drift” (when a microfinance institution drifts from serving the poor to profiting from the poor) is something we must avoid. Therefore, we look at the average outstanding balance per client over time.


Furthermore, the average outstanding loan balance per client, is just 9% of Vietnam’s per capita GNI. This is very low compared to industry standards internationally, even after controlling for differences in average incomes across countries. These two indicators strongly suggest that we have not drifted from our mission to serve the poorest. 

Cost Per Client

The cost per client is calculated as the total personnel and administrative expenses incurred by H4H divided by the total number of clients.

It is currently 290,530 VND per client per year (or 13 USD per client per year).

This translates to an annual operating expense ratio (calculated as the total personnel and administrative expenses divided by the period-average gross loan portfolio) of just 6%. This is very low compared to the international standards for microfinance programmes which is around 19%.


Hearts for Hue believes in complete transparency. Please contact us for a copy of the de-identified repayment history of every loan given in either of our programmes. For the benefit of microfinance clients, H4H encourages other microfinance providers to provide the same.