Cambodia: Stories

Micro-credit in Cambodia - a Sustainable Future

In the photograph, Poch and her fellow Self-Help-Group members gather for an important day.

After several months of training on managing their finances, literacy in some cases, understanding accountability and creating business proposals, they are receiving their first micro-credit loans from HOPE International Development Agency. Slowly but surely, Poch, who never finished elementary school, reads the contract aloud to the other members. One by one, they then approach HOPE Cambodia staff, Leat, to receive their loans, signing their contracts and sealing it with their thumb prints. The women move forward.

For these women, this is a step forward that they never thought was possible. As they are first time borrowers, the loans are approximately USD 50, and for some, this is the first time that they’ve ever held so much money in their lives. While they will have to return the loans in full within a year and pay a monthly interest of 1.5%, they are free from the crippling effect of loan sharks, and they smile. Carefully putting their money away, they reflect on what they are about to invest in. Some will buy pigs to fatten up and sell in the market, others will start a shop or buy necessary tools for their business. The ideas are diverse in their variety, but all have been carefully reviewed by themselves and HOPE Cambodia staff, to ensure that investments are realistic.

Training the women to create viable business proposals and understand saving and accounting is as important as extending the loan itself. Without training, participants would simply be subjugated to large debts once again, and the capital would never be leveraged effectively. To further mitigate risks of default and empower participants, our Micro-Credit model at HOPE also requires participants to join an accountability group (Self-Help Group/ SHGs). Participants train and meet with HOPE Cambodia staff on a monthly basis with their SHG, and as a group, they also form a savings for emergencies fund. Each participant makes a small, monthly contribution of USD 3 to the fund, and should a participant default on the loan or need capital urgently to take a relative to the hospital, the fund provides the necessary collateral.

As the meeting adjourns, Pich Perr, the leader and book keeper of this particular Self Help Group, reviews the books and announces how much has been saved in groups bank. Again, the women smile over their united effort to save and be prepared for unforeseen events. It is another indication of a firm step towards self-reliance.

Over the years, HOPE Cambodia has formed more than 300 SHGs and extended loans to more than 1,000 families. There has never been a case of default so far. More women are literate; families are able to sustainably generate income; they are saving for the future, and children are attending school beyond the elementary level. We will be continuing to expand our micro-finance program in Cambodia, and look forward to keeping you updated.

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