For the past few weeks I have been doing a lot of data entry. Panith, the AMK Kiva coordinator, and I have been going through all the Kiva business descriptions so that we could enter their account numbers into an excel worksheet. This will allow us to easily track payments of all the Kiva loans. (AMK just got out of pilot stage with Kiva, so they’re still incorporating it into their business.) If I had been doing this for another job I probably would have been bored out of my mind, but going through all the data for three of AMK’s provinces turned out to be quite interesting. It gave me a chance to do a very, very basic analysis of the impact of microfinance by looking at the loan histories of many clients. Many clients have paid off one, two, or even three loans, taking out a higher balance each time. Some clients started out with loans as low as 10,000 KHR (less than $2.50). I was actually very surprised to see the number of loans that were less than $10. Through village banks and group loans, AMK has allowed their “poorest-of-the-poor” clients to build up their credit history so that they can eventually take out larger individual loans.
Since I’m on the topic of numbers, I should share this wonderful story with you guys. While I was out in Kandal province for a Kiva-specific training, I heard an interesting story about interest rates. AMRET is the largest MFI organization in Cambodia. They offer loans at a 4% monthly-rate. AMK started offering loans in one of the villages that AMRET operates in. AMK offered loans at a 3%-monthly interest rate, so AMRET had to lower its interest rate in that village. 1% may seem very small, but over the year that adds up to 12%. If you’re a client who can only take out 10,000 KHR, that interest rate difference is huge. If microfinance institutions are going to really make an impact in fighting poverty, they need to lower their interest rates by improving their efficiency. Kiva is helping MFIs improve their efficiency by offering 0% loans, versus the 12% loans that other institutions offer MFIs. Paul Luchtenberg, the CEO of AMK, believes Kiva will truly help AMK achieve its social mission. He just hopes that Kiva funds will account for a larger percentage of AMK’s total portfolio (right now it accounts for less than 3%).
I’m sorry because I haven’t gone out into the field in the past week, so I don’t have any pictures of microfinance in action. I did stop by Angkor Wat this weekend so enjoy these pictures of Ta Prohm Temple: