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Logo of Phnom Penh Post newspaper Phnom Penh Post - Striving to make finance accessible

Striving to make finance accessible

mfi will baxter
Yan Nari, a micro-finance loan recipient, works in her vegetable garden at her family’s home in Soriya village, a few kilometres outside of Poipet town, in Banteay Meanchey province. Photograph: Will Baxter/Phnom Penh Post

Access to finance could reduce viol-ence, empower the most vulnerable in society and improve the livelihoods of Cambodia’s poorest people, a conference on community-led funding heard on Wednesday.

Opening speaker Khem Chamroeun, secretary of state at the Ministry of Women’s Affairs, spoke of her experience of coming from poverty.

She linked the importance of saving to empowerment, gender roles, strengthening the family unit and reducing domestic violence.

“If women don’t increase their own livelihoods and rely on money from their husbands, they will never be empowered,” Chamroeun said.

She added that without economic empowerment, Cambodian society could not move on from the stereotypes of “strong” husbands and “submissive” wives.

Sarah Sitts, country manager of the international NGO Pact, introduced the funding model of savings-led micro-finance (SLMF).

In contrast to credit-led microfinancing, in which an organisation lends to smallholders, SLMF was a fund established by 20 to 25 voluntary members who lend within that fund, Sitts said.

Interest gained from the loans was used as interest acc-rued on savings, she said.

Sitts said such models provided access to small loans that might not be commercially viable for financial institutions, and self-governance and shared decision-making by members on policy and  interest rates empowered communities.

“A key principle that many organisations feel strongly about is that all of the funds remained sourced from the communities,” she said.

Brian Lund, the East Asia regional director of Oxfam, provided an overview of the accessibility of finance in Cambodia, positioning commercial and savings banks at the top of the pyramid and SLMF below credit-led fin-ance at the bottom.

“SLMF provides access to funding for those at the bottom end — below the poverty line,” he said.

Consistency in the principles of those institutions from top to bottom would allow people to climb above the poverty line, Lund said.

“It’s only when we work together that we have a common strategy and a common set of principles.

“We try to reach different parts of the market, realising we have different skills to do  that, and we start to position SLMF more strongly.”

Seng Takakneary, president of the Cambodia Women Entrepreneurs Association, knows all too well the chall-enges budding Cambodian businesswomen have in acc-essing finance from tradit-ional lenders.

“It is difficult because it requires a lot of paperwork, and without education women cannot borrow money from a bank. That is why we try to find appropriate courses for them, to learn about book-keeping, maintaining a fin-ancial report and business plans,” Takakneary told the Post yesterday.

According to Chanthavy Meas, program officer at a women’s empowerment project with PACT, SLMF has had a significant impact on the lives of more than 4,000 Cambodian women participating in the program.

About 30 per cent of them reported earning more than 12,000 riel ($3) a day before the project, rising to 59 per cent in this wage bracket after it.

“Some women have become deputy village chiefs, contributing to decision-making in their communes,” she said.

Care Cambodia assistant country director Bill Pennington estimates 45 per cent of loans from savings groups are for agricultural production.

Although there are only 100,000 members involved in the groups in Cambodia, he forecasts one  million members would equate to an expenditure of $30 million a year on agricultural inputs.

Pennington said access to affordable funding to enhance  agricultural production, borrowing for  down cycles and resilience to shocks such as flooding or family illness were critical to lifting the rural poor out of poverty.

“Being a member of a savings group won’t get you out of poverty, but it gives  you access to affordable finance that helps you make an investment in your productive resources for your children’s education and your health that will get you out of poverty.”

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