Phnom Prek Community Bank - Project Wrap-up
Project Completed: 11 August 2011 By partnering with the Phnom Prek community, the Phnom Prek Community Bank – a branch of World Vision’s microfinance subsidiary Vision Fund (VF), has been able to provide much-needed financial services and support to the district.
Community savings groups have now been established for future sustainability, while World Vision’s VF will continue to support groups in the identification of opportunities and provision of access loans for groups.
In Cambodia, 70% of people have no access to formal banking and credit systems. As their only choice is informal money lenders who charge a high interest, acquiring savings and improving income can be difficult.
A particular need for microfinance was identified in the poor rural community of Phnom Prek where the agricultural industry was mainly made up of subsistence farming. Through access to loans, agricultural retailers, traders and producers were able to use funds to increase productivity and stimulate business and income generating activity.
Loans provided by Phnom Prek Community Bank were low-interest, with community peer pressure used as a powerful motivator to ensure loans were repaid on time and in full. Interest received was used to cover costs with any surplus used by VF Cambodia to increase loan capital or expand the project.
Project achievements include:
Access to financial services: > As of July 2011, loans have been provided to 243 community members with women making up 83% of beneficiaries. This in turn has benefited 700 indirect beneficiaries including children.
> The low-interest model has allowed clients to pay back loans whilst still accumulating savings; with these savings families are able to better regulate cash flow as well as capitalise on revenue generating business opportunities.
> Perhaps most importantly however, with these savings, families are now more able to mitigate financial shock in times of unexpected misfortune such as illness, injury or downturn in business.
Integrating financial support with relief and development:
> The project took a holistic approach to implementing long-term solutions for the community, combining financial services with relief and development work.
> Clients received basic financial education around cash flow and savings, as well as non-financial support including basic HIV/AIDS awareness and prevention education and child rights and domestic violence awareness. Anecdotally there has been a decrease in domestic violence incidents in the community.
> Every client also received further safety nets in the form of micro life insurance, an additional benefit attached to VF loans.
Improving standards of living:
> Low-interest loans mean that people have been able to move away from traditional problematic high interest and informal money borrowing habits. Overall there has been a shift towards microfinance options, whether through the Phnom Prek Community Bank or otherwise.
> Loan size over the duration of the project has increased with business expansion and ability to repay larger loans. This reflects significant progress in raising of living standards. An increase in financial autonomy has also been reflected through group loan clients graduating to taking out individual loans.
> The positive effects of this project on the Phnom Prek community have been widespread; however perhaps most significantly, the ability to better afford everyday basics (whether this be food, household items or schooling) as well as invest in long-term plans, has given the community a renewed confidence and sense of hope for the future.