[PHNOM PENH POST]
A SMALL community in Kampot province is one of thousands in the Kingdom
using its own savings to fund microfinance loans to members in need.
Twenty
people in the village of Trapaing Tnoat, in Kampot’s Angkor Chey
district, met this week to collect modest cash deposits for a communal
savings fund. The group members, most of them women, then decided
collectively how the money would be distributed in the coming week.
Throughout
Cambodia, approximately 4,380 community groups host similar meetings as
part of a savings-led microfinance program pioneered by Oxfam and
various local NGO partners, including CARE and PACT Cambodia.
“This
project is based on the idea that even the nation’s poorest need access
to finance,” said Soleak Seang, Oxfam’s regional communications
officer.
The project, dubbed Savings for Change, teaches people
in impoverished rural communities to form small savings cooperatives,
pooling their money and disbursing small loans to “address needs and
emergencies,” he said.
Regular meetings are held at which
members collect savings, pay back old loans with interest and apportion
new loans to individual community participants, he added. Introduced to
the Kingdom in 2005, the project now has 71,450 participants in 16
provinces.
“By the end of June 2012, the plan is to have 110,000 members,” said Savings for Change project officer Vanndeth Seng.
Traditional
microfinance schemes often experience difficulty reaching the poorest
rural demographic, requiring that clients pay collateral costs and high
interest rates, said Oxfam’s Soleak Seang.
“The savings-led
model is a very simple way of borrowing and saving,” he said, adding,
“[Members] don’t need to pay collateral, and interest collected on loans
comes back to the group instead of going to fund an external
microfinance firm.”
Chuon Bopheap, 35, is the group’s cashier,
responsible for counting the money saved each week and depositing it all
in a red lockbox she keeps in her home.
So far she has taken
out two loans of US$25 each, using some of the money to start a small
business selling traditional Vietnamese pancakes.
“My daily life
is a little bit better. I used to struggle a lot before joining the
microfinance project,” Chuon Bopheap said yesterday.
“If we didn’t join this group, we would have no savings left by the end of the year.”
The
group’s leader, 49-year-old Sim Soung, said the group had saved $36 at
yesterday’s meeting and almost $500 over the past two months.
After
undergoing an eight-week training period with NGO Save Cambodia’s
Wildlife, Oxfam’s community partner in the region, as well as several
months of less frequent monitoring, Sim Soung’s group is now considered
fully self-sustaining, Soleak Seang said. The project costs about $32
per person, with most of the money going toward conducting the initial
training, he said.
According to an Oxfam document from February
2009, the savings-led model has been criticized for “doing little to
encourage transformative change,” instead acting simply to mitigate
poverty.
Soleak Seang countered by saying the benefits of the model are apparent given how quickly it is spreading.
“For
people, seeing is believing,” he said. “When [people] see their
neighbours building up their livelihoods through savings-led loaning,
other community members are eager to participate.”
Since the
inception of Sim Soung’s community savings group in June 2010, Trapaing
Tnoat village has seen the creation of four more groups, each with about
20 members.
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