In Australia (where I'm from), we start learning about money early. From lessons about compound interest in mathematics to budgeting for a meal in home economics, financial "know-how" is considered a survival skill.
The hope, it seems, is that when we start earning money we’ll be able to spend it wisely, save it and even invest it.
Some of us are more successful than others.
The point is that handling personal finances is not intuitive. It’s a skill that we learn.
In rural Cambodia, the stakes couldn't be higher when it comes to managing your money.
[caption]Subsistence farming is the main source of income for rural Cambodians and traditional farming methods are still used[/caption]
Saving money for a rainy day is a luxury that most people just can’t afford.
In 2008, KREDIT Microfinance and its international partners decided to do something about the situation. When they spoke to the people, it was clear what they wanted. Rural Cambodians did not just need access to money and financial services. They needed the tools and knowledge to leverage money effectively.
Enter, the Vulnerable Service Unit (VSU), a microloan with education attached.
The conditions of the VSU loan itself speak to the harsh realities of life in rural Cambodia.
Collateral is not a requirement (because the people have very little in the way of valuable possessions), the loan is cancelled if a client dies (because the mortality rate in rural Cambodia is high) and borrowers are grouped into Community Banks of 30 or 40 people (because social cohesion is paramount in the villages where they live).
The VSU loan is extra special because on top of these conditions, borrowers can also participate in financial literacy sessions, agricultural workshops and child protection training.
On a humid Tuesday morning in July, I visited KREDIT’s Branch in Kampong Trabek near the Vietnamese border. From there I journeyed to many far-flung villages in the area, eager to see the VSU in action.
Later that day I meet a shining example of the success of the VSU program.
As we approach a traditional wooden house propped up on stilts, it is clear that we are about to interrupt a meeting. A short, animated woman is standing in front of a large gathering of people, talking in rapid Khmer and creating ripples of laughter as she speaks.
This is Sarin, the leader of the Rusey Prey Village Community Bank. As leader, she is responsible for collecting monthly repayments from eight different borrower groups.
It’s a big responsiblity but she laughs when I ask her what she likes about leadership, “the 4% commission is pretty good!”.
Sarin has been a VSU borrower for two years. She’s obviously an astute businesswoman and farmer, equipped with a wry sense of humour and a quick wit. With an enviable vegetable patch, free-range chickens and several fertile rice paddy fields, Sarin attributes her success to hard-work, good investments and the Vulnerable Service Unit.
Sarin used her VSU loans from KREDIT to purchase seeds and fertilizers. After participating in financial literacy training, she decided to keep track of her income and re-invest small amounts of money into her business each month. “Before I learnt about managing money, it seemed to just disappear. Now when the cash flows in, I save it”.
As the members of her Community Bank start to disperse, Sarin stands up and carefully stashes the notebook she was using to record their repayments in her pocket, “I started off with a few chickens but it’s a seasonal business in Cambodia so I decided to grow cucumbers, broad beans and rice too.” Sarin participated in a two-day poultry workshop during her loan term. “They used to get sick a lot”, she advises as she guides us through her impressive, 20m² aviary, “but during the training I learned how to house my chickens properly and protect them from disease and predators”. She now has more than 100 birds.
The Vulnerable Service Unit is making an incredible impact to the lives of some of the poorest people in Cambodia. The chance to help VSU borrowers like Sarin will soon be an option for Kiva lenders! KREDIT Microfinance has been awarded a new loan theme and an extended credit limit to fund the VSU program. With Kiva’s help, KREDIT can continue to open the doors of opportunity to rural Cambodians.
Before we leave, Sarin is eager to show us her crops. As I wander through the rows of bean trees that tower above my head, I can see Sarin. She is walking a little further ahead. Every now and again she bends down to pluck an unsuspecting insect from a leaf or plunges her hand into the soil and rubs it between her thumb and forefinger. She glances up at us, “I think I will use my next loan to hire some people to harvest my rice for me.” She grins mischeviously and mutters something else. My translator laughs before he tells me what she said. “Sarin says she deserves a rest!”. Looking around at her accomplishments, I couldn’t help but agree with her.