Rural finance and credit receive Jack Ma's 1 trillion yuan funding support
How difficult is it for farmers to get loans? Bank loans related to agriculture account for only 20% of total loans, yet out of China's 1.3 billion people, more than 900 million are farmers. This severely disproportionate figure perhaps illustrates the problem. According to a survey by the Chinese Academy of Social Sciences, 56.8% of people in rural areas are financially strapped, and as many as 70% believe rural loans are difficult to obtain. To date, the rural financial gap has exceeded 3 trillion yuan, and this grim reality is hindering the economic and social development of rural China.
Village banks have been established in 1,083 counties nationwide, with a coverage rate of 57.6%, but why is it still so difficult for farmers to get loans? Because banks have high lending thresholds, looking at qualifications and collateral, and farmers are often seen by banks as "subprime customers" with meager incomes and a lack of collateral.
This predicament is expected to change soon!
On December 20, Jack Ma announced an investment in the rural microcredit company Zhonghe Nongxin, and the establishment of a joint venture with China United Insurance called "Nonglian Zhongxin Technology Co., Ltd.", fully launching a rural finance strategy.
Zhonghe Nongxin's full name is Zhonghe Nongxin Project Management Co., Ltd., established by the China Foundation for Poverty Alleviation at the end of 2008, specifically responsible for managing and implementing wholly-owned establishments, and focused on the management and expansion of microcredit poverty alleviation projects. The company is dedicated to providing collateral-free microcredit to the hard-to-reach rural poor who cannot obtain loan support from formal financial services or commercial financial institutions, and is committed to helping poor and disadvantaged groups improve their self-reliance and stabilize so they can escape poverty. As of November, Zhonghe Nongxin had disbursed a cumulative 18.4 billion yuan, helping 3 million poor households obtain funding.
After taking a stake in Zhonghe Nongxin, Jack Ma will become the second-largest shareholder after the China Foundation for Poverty Alleviation, and will also greatly reduce Zhonghe Nongxin's loan costs and accelerate inclusive finance. Before Jack Ma's investment, its source of funds was bank loans, with costs as high as 12%, whereas funds from Jack Ma will cost much less.
Not only that, Jack Ma's side also stated that in the next three years, it will unite 100 leading enterprises to provide financial services to large-scale crop and livestock farmers; together with partners, provide comprehensive financial services to 1,000 counties, including payments, credit, and insurance; and facing all "three rural" users in China, mobilize partners and social forces to provide a cumulative 1 trillion yuan in credit!
In the exploration of rural finance, Jack Ma has never stopped, and has achieved modest results. Its Ant Financial has successively launched Wonong Dai, targeted poverty alleviation, supply chain finance and other business practices, and formed three major business models to meet the pyramid-style financial service needs of different "three rural" users. Official data shows that as of mid-December 2016, the number of agriculture-related users served by Ant Financial in payments, insurance, and credit reached 150 million, 130 million, and 33 million respectively.
Jack Ma's move is not only to respond to the national call for "targeted poverty alleviation", but also out of consideration for promoting business development. As of now, Rural Taobao has covered nearly 18,000 village points in more than 300 counties across 29 provinces nationwide, and among Rural Taobao partners nationwide, 75% are returning entrepreneurs. The vitality of rural finance will undoubtedly provide the most powerful support and the strongest momentum for his "rural e-commerce" market!