By all accounts, Vietnam’s poverty reduction is a staggering achievement. Extreme poverty fell from 49% in 1992 to about 4% in 2021, and according to the new multidimensional poverty (MDP) index, multidimensional poverty is now close to 9%.
Vietnam was the first country in the Asia-Pacific region to adopt MDP measures, using them since 2015 to monitor poverty and formulate and implement policy.
According to the World Bank, the MDP index captures the percentage of households in a country deprived along three dimensions of well-being – monetary poverty, education, and basic infrastructure services
Among those experiencing chronic poverty, ethnic minority populations are disproportionately over-represented. Comprising about 15% of the population, they account for 90% of the country’s extreme poor, and more than 50% of people suffering from multidimensional poverty. Their average income is only 40-50% of the national average.
Tackling chronic poverty is never simple, but new ideas and digital technology can be a game-changer in transforming the lives of minorities, while also helping boost Vietnam’s economy.
Recently, Vietnam adjusted the multidimensional poverty line for 2021-2025, raising the rate from US$2 a day to around $3. This had the effect of adding 10 million people to government social-assistance rolls.
Providers of basic social services such as health care and education – sectors that fall under multidimensional poverty – have also changed how they measure progress, not just looking at activities but also measuring results.
For minorities, access to basic social services falls below the national average. More than 30% of minority students do not enter school at the right age, and for some minorities access to services and jobs is challenging, as they are not fluent in Vietnamese.
Other emerging challenges to development and poverty reduction include the slow global economic recovery from the Covid-19 pandemic, rising risks from climate change, and an aging population.
Innovative solutions
To overcome these hurdles, Vietnam needs to innovate and quickly incorporate digital technologies at the grassroots level. Four years ago, the United Nations Development Program (UNDP) initiated a project called the 4M Solution (meet, match, mentor, move) to support female ethnic-minority micro-entrepreneurs.
The project helps them meet businesspeople, match up with e-commerce partners, and receive mentorship from partners, so they can grow their businesses.
The 4M Solution has been tested and replicated in four provinces, Bac Kan, Dak Nong, Lao Cai and Son La. It has established a network of stakeholders, which includes local enterprises, government officials, and technical assistance providers, to support cooperatives led by these women.
Now, equipped with new knowledge of production and business methods, many of them have expanded their enterprises, as well as their access to markets. As a result, 100 cooperatives have increased revenue by at least 30%, benefiting more than 13,000 women.
Vi Thuy Duong, of the Nung community in the northern province of Bac Kan, led her cooperative in making the shift to selling its products online. The move resulted in a big jump in both profits and productivity. The cooperative sustained its revenues through the Covid-19 pandemic and has expanded, hiring even more women.
The success of the 4M model has informed the design and guidelines of two national programs for socio-economic development, as well as a sustainable poverty reduction progam, for ethnic minorities and people living in mountainous areas.
Along with the 4M Solution, local governments are digitizing poverty-reduction services targeting these remote communities, resulting in a significant reduction of administrative costs, and faster delivery of services.
Capitalizing on information-technology (IT) applications and promoting digital transformation in the management and implementation of policies and programs for ethnic minorities is critical to advancing prosperity, not just in minority communities but also for Vietnam’s economy.
Digitizing self-registration, verification, and management systems that address multi-dimensional poverty, as well as strengthening e-commerce and e-payment systems, will help sustain progress.
Many of the products produced by cooperatives run by ethnic minorities can be found online, giving them access to customers across Vietnam. And their ambitions are growing. These cooperatives are now taking aim at the global market and are looking at placing their products on Alibaba and Amazon.
These successes speak not only to innovation and digitization but also to the resilience, power, and skills of women who live and work in marginalized communities.