by James Han, KF9 Cambodia (AMK)
We typically measure the impact of microfinance through financial measures. What interest rates are the microfinance institutions (MFIs) charging? Has the client’s business experienced increased profits? Has a population increased its household income? These are all valid questions and are at the center of measuring the effectiveness of microfinance.
But, I was recently inspired by the broader social impact that microfinance can have. While the “social bottom line” may not be as quantifiable as interest rates or household income, MFIs such as AMK are proving that an MFI with a strong social mission can have a truly profound impact on a local community.
AMK is Cambodia’s fifth largest MFI and more importantly, one of Cambodia’s most socially focused MFIs. Back in June 2009 with the help of Katie Davis (KF7), AMK started SIGU (Special Interest Group Unit), an internal team that focuses on assisting “vulnerable groups” that are currently under-served by microfinance services. These vulnerable groups include women who are victims of human trafficking, domestic violence, and other gender-based traumas, as well as people living with HIV/AIDS, street children, and the disabled. Last Thursday was a special day for Katie and the SIGU team as they disbursed their first loan to a group of young women who will use the loan to start a sewing cooperative in Phnom Penh.
I had a chance to interview Katie to further dig into how AMK is using microfinance to combat issues such as human trafficking.
What is your position and how did you end up at AMK?
I am the Special Interest Group Unit Coordinator and ended up at AMK because of my Kiva Fellowship, which I completed earlier this year. After my 4-month placement, I wanted to get a deeper understanding of microfinance and also contribute something unique to the industry. AMK had already started the research for SIGU and the opportunity naturally came up for me to lead this initiative so I decided to stay with AMK.
Last Thursday was a big day for you, can you tell us more about it?
We recently partnered with a small sewing co-operative comprised of 5 young women who previously worked under exploitative conditions. These young women had all come to Phnom Penh from rural provinces to escape vulnerable family situations which put them at risk of being trafficked. The women attended a vocational training program that taught them how to sew. The tailor who had employed these girls was very indebted, so she stopped paying the girls’ salaries. Because the tailor had housed the girls, they had nowhere to go and consequently worked in this exploitative situation for over a year. They finally broke free when a sympathetic client realized the injustice of the situation and facilitated a way out. Last Thursday, AMK/SIGU extended each woman a loan of $145 to buy a sewing machine. The 5 girls will work for the co-operative and receive a salary, but if they ever want to leave to start their own businesses, they have their own sewing machine to do so.
The loan disbursement was a special day for me. I had been to inspiring loan disbursements before through my Kiva Fellowship but to see the smiles on the girls’ faces, knowing the adversity they had been through was an amazing thing. My experience at AMK has come full circle in that SIGU has been able to designate this first loan as a Kiva loan because these 5 brave ladies want their story told.
Why are these “vulnerable group” underserved in the microfinance community?
There are different vulnerable groups, for example people with HIV/AIDS, people who have become handicapped due to land mines, and human trafficking victims; and in Cambodia they all seem to fall through the cracks of microfinance. Due to some element of past trauma, they are perceived as a “too risky” poor. Moreover, NGOs usually become the default supporters for these individuals, and if dependency results, individuals are less exposed to microfinance as a viable economic option for self sufficiency.
What else is SIGU working on?
A big part of my job is to be an ambassador for AMK and microfinance to the NGO community. The NGOs that assist vulnerable groups are great at implementing after-care programs and supporting victims emotionally but we also recognize they need to be supported financially. I don’t believe NGOs in Cambodia should spread themselves thin by trying to create a credit program from scratch, just as we as a bank should not try to develop after-care programs in a field where we have no expertise. Collaboration which draws on the core strengths of both MFIs and NGO, in the form of a partnership, can help ensure that clients are supported both emotionally and economically.
We currently have formal partnerships with two well known after-care organizations in Phnom Penh, Hagar International and Daughters of Cambodia. Hagar operates as a residential shelter and community outreach program. SIGU is designing a microfinance-specific financial education curriculum which will be incorporated into Hagar’s existing vocational programs as a credit pilot gets underway. Daughters of Cambodia operates as a day center in an area of brothels, offering programs and activities designed to empower victims of sexual exploitation through a range of social, psychological, and alternative employment opportunities. Clients receive a salary once they acquire new skills and begin contributing to the many social businesses run out of the Daughters center. Some of the women who have worked at the center for a prolonged period have expressed a desire to start their own business. So, we have recently conducted trainings for the women interested in obtaining a loan, and we expect to make at least one loan to a Daughter’s client this month.
SIGU will continue reach out to additional NGO’s in the anti-trafficking arena and open the door for further partnerships. Also, the financial education is something unique to the market in Cambodia and is crucial to the mission of SIGU. We want the financial literacy training to precede credit discussions.SIGU loans are similar to AMK’s regular loans, but they do differ in collateral requirements. AMK does not expect to profit on SIGU loans, but we do believe in the capacity of these people to repay, and we believe that these “socially focused” loans can be self sustaining.
After thanking Katie for her time and for her inspiring work, I began to see a theme in Katie’s work.
She is facilitating cooperation and collaboration between the NGO community and the MF community to alleviate all facets of poverty. Poverty is being in a state of lack rather than abundance and this can be the case not just from an economical sense, but from an emotional one as well. With reportedly over 1,000 NGOs in Cambodia addressing needs in education, healthcare, and various human rights issues, there are significant and noble efforts being done to restore “the emotional wealth” of the marginalized. At the same time, Cambodia’s 18 licensed MFIs have reached close to a million borrowers to provide economic opportunity. Although both movements have made significant strides individually, only with collaboration will all facets of poverty be alleviated in Cambodia. And thanks to the efforts of people like Katie, that is becoming a reality.
James Han is a Kiva Fellow working for Angkor Mikroheranhvatho Kampuchea (AMK) in Cambodia.
AMK’s mission is to help large numbers of the poor in Cambodia improve their livelihood options through the sustainable delivery of appropriate and viable microfinance services. To view their current fundraising loan, click here./>