With the majority of garment and low-income workers ineligible for traditional financial services to purchase daily products like mobile phones and cooking stoves, iCare Benefits Cambodia hopes to fill in the gap by getting products to end consumers. With the Cambodian operations having recently been given a boost from a private equity fund, The Post’s Kali Kotoski sat down with Country Director Molika Meas to talk about the company’s expansion plans.
What is the history of iCare Benefits?
The company started four years ago with the mission to provide workers with immediate access to essential products and services. We try to enable workers to improve their quality of life without the burden of onerous interest payments. By being based in Singapore, our activities now reach over 3 million workers in Vietnam, Cambodia, Laos and Indonesia.
As for Cambodia, we launched in March 2015. About three-quarters of the workers we work with are women. For these workers, the ability to purchase essential items such as refrigerators, cooking stoves, household furnishings and mobile phones provides them with more work incentives and helps companies to have fewer turnovers. The programme does not involve onerous financing burdens in addition to basic costs of the products we sell.
Since iCare Benefits Cambodia launched, how have operations been going?
In the last two years, the company has been able to establish several distribution centres to reduce transportation costs in some of the provinces further away from Phnom Penh. We have become the main source of purchasing products for many of these workers that tend to be employed in garment factories. Actually, from our own internal surveys, 93 percent of the workers who have used our platform claim that iCare has saved them money.
How many firms have partnered with the programme?
At the moment, there are more than 100 companies in Cambodia signed up across Phnom Penh, Takeo, Kandal and Kampong Chhnang provinces.
However, given that is only a fraction of the country. We plan to expand to all 25 provinces in the next two years. This expansion will ensure that we have a higher impact given that the garment
factory sector employs around 700,000 workers.
How does a member-based programme operate and what is the business model?
We operate as a social impact membership-based retailer service model for blue collar workers in industrial zones that make the basic minimum wage or have a middle-class life. As a retailer, we provide products and services at competitive prices by purchasing in bulk and we have two payment methods for our clients. The first is with a cash payment. And the second is a deferred repayment with up to six months installments with no interest. In order to protect workers from overspending on our retail platform, and to reinforce responsible spending habits, we only allow purchases that are no higher than 30 percent of their monthly salary.
Another benefit of our business model is that we estimate that it decreases the consumers total cost of access by 20 to 50 percent. This is because there are no extra fees, zero interest, and we deliver the products directly to the factories.
How will the partnership with Emerging Markets Investment Advisers (EMIA) help the firm grow in Cambodia?
Their investment provides us with the capital required to continue to grow and expand operations more widely into Cambodia. EMIA’s experience and broad network of relationships will be valuable to us in the future. Also, because our investors are European development financial institutions and the International Finance Corporation (IFC), it helps us to maintain transparency and corporate governance.
Where does the company fit in compared to traditional forms of leasing or lending activities?
We are not a leasing or financing firm, but we are a retailer. But most workers earning a minimum wage do not qualify for formal consumer finance. And the typical alternative to cash payments is informal loans from friends or family or loan shark lending with very high interest rates.
In order to bridge the financing and retail gap, we have deferred payments that help disrupt the poverty cycle and reliance on informal lending. We have seen great pick-up in the factories where the programme is deployed and substantial growth in the number of workers entering iCare’s debt-reducing cycle. Additionally, we estimate that by using the programme, workers save an average of two months of disposable income per year because of the drastic reduction in interest payments and other related costs.
This interview has been edited for length and clarity.