world bank – FEBRUARY 07, 2022
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Three years ago, Dinh Thi Huyen had a vision: her cooperative farm in Van Ho district, Son La Province, could improve living standards for her Muong ethnic minority community—if only their local specialty rice could reach more customers in Hanoi and tourist locations. Today, holding a beautifully packaged box of Seng Cu rice, she reports that there has been a doubling in the number of farmers working with the cooperative and a 20-percent-increase in their incomes.
“Our product has better quality, a recognized brand name, and a stronger position in the national market,” she says.
Be Phuong Nga, from the Nung ethnic group, also saw the potential for her business to grow, building on an existing value chain of medicinal plants cultivated locally in Vo Nhai District, Thai Nguyen Province. Today, one can purchase herbal shampoos, baby body washes and herbal materials for medicinal uses from her shiny new website. Her revenues increased fourfold in the last two years, which translated into boosted incomes for her staff and suppliers.
How did these two ethnic minority entrepreneurs from remote areas in Vietnam deliver on the promise of improving their communities’ living standards in only a couple of years?
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As Vietnam’s economic success in the last decades has improved lives for most, the challenge of including ethnic minority populations from remote and mountainous areas in the benefits of growth has remained daunting. In 2018, ethnic minorities represented 15 percent of the population in Vietnam, but as much as 85 percent of the poor. Gaps have widened, as one-size-fits-all programs did not effectively reach pockets of poverty and opportunities to diversify livelihoods remained limited. The 2019 World Bank study — “Drivers of Socio-Economic Development Among Ethnic Minority Groups in Vietnam” — documents the challenge and need for change in initiatives targeting ethnic minorities.
The evidence calls for a shift in approach: a move towards market-based solutions to livelihoods development that capitalize on promising local value chains. The World Bank, in partnership with the Committee for Ethnic Minorities Affairs (CEMA) and with the support of Australia’s Department of Foreign Affairs and Trade (DFAT), set out to test new models of support to ethnic minority entrepreneurs, particularly women, in Vietnam.
In late 2018, an initiative called Value Chain Ideas Contest (VCIC) was launched to crowd source and support proposals on social entrepreneurship. Businesses and cooperatives , like those of Be Phuong Nga and Dinh Thi Huyen, could pitch their ideas. Ten ethnic minority entrepreneurs including six women were selected, based on two criteria: the strength of their business plans and the potential to generate lessons. This pilot initiative covered a range of high-potential value chains—from lemongrass to beef, from rice and bananas to handicrafts. For a year and a half, these ten “ideas” received technical advice and contractual services for the implementation of their business plans.
These ten entrepreneurs faced similar challenges. “I lacked knowledge and experience in business management” and “I did not know how to access new customers and reach new markets,” were some of the common concerns participants expressed. Based on their needs, they received training that covered many essential skills, from product development and certification to contract management, market research and marketing strategies.
Thanks to this tailored and intensive support, all ten pilots have now grown into successful businesses, at least doubling revenues and the number of full-time jobs associated with them and having a transformational impact on local communities.
“The project has also created a network of products of the mountainous areas,” said Dinh Thi Huyen, who has taken every opportunity to share lessons she learned with other local entrepreneurs.
The initiative also showed the vast potential of making greater use of digital solutions to support ethnic minority entrepreneurs and farmers in advertising their products and reaching customers beyond their provinces and overcoming the specific institutional, infrastructural, and knowledge challenges they face. To unleash the potential of digital solutions for ethnic minority entrepreneurs, it will be critical to step up investments in basic digital infrastructure in remote communities , and tailor digital literacy training and products to different ethnic minority contexts, for example based on language and type of products. While doing this, local institutions will need to build their own digital capacity for planning and monitoring, and support existing cooperative ecosystems in e-commerce efforts.
While the VCIC activities have come to an end, the journey for these and other ethnic minority entrepreneurs is only starting. The Government of Vietnam’s National Target Program for Socio-Economic Development in Ethnic Minority and Mountainous Areas (NTP-SEDEMA) for 2021-2030 offers a unique opportunity to bring the approach to scale. Seeing what worked encouraged the government to fund the expansion of market-based value chain approaches under the NTP.
“So now, everyone living in the mountainous region can apply for the sort of support the VCIC provided because we know it is effective,” said Director General of the NTP-SEDEMA Coordinating Office of the Government of Vietnam Ha Viet Quan.
The context for the VCIC’s success was unique, but the lessons about capitalizing on market-based solutions and e-commerce opportunities for ethnic minority entrepreneurs have global reach.
Senior Social Development Specialist, East Asia and PacificSusan Shen
Practice Manager, Social Sustainability and Inclusion, East Asia and Pacific, World Bank