Eighty percent of the families in Cambodia live in rural areas. Most are subsistence farmers, trying to grow enough rice on a small plot of land to feed their family for a year. When there is a flood or drought, the rice crop fails and they have no choice but to borrow money from private lenders to buy food. The interest rate is 100%, which means they must pay back double what they borrowed. This sends many families into a hopeless cycle of debt. A medical emergency in the family may also put them debt.
Micro-credit programs have evolved over the years to become more effective and more empowering. Friendship with Cambodia supports Women’s Self-Help and Savings Groups through our partner organization Southeast Asia Development Program.
Each Self-Help group has 15 to 20 women. The women share information about improving health care, support each other emotionally, and they address the prevalent problem of domestic violence.
We have found that it is not enough to just provide loans. These poorest women need to change the way they use money. This program helps the women dream of a better life and achieve it through their own ability.
We help the women set small goals, for example, buying a bicycle so her daughter can attend school. Then they start saving a small amount money each week — maybe 25 cents or a dollar. They give their savings to the bookkeepers in the group who keep careful records.
After the group builds up their fund and demonstrates their commitment, Friendship with Cambodia supplements the fund, contributing $250 or more. The women start taking out small loans for their income generation projects, such as raising a piglet. Once the woman earns enough money to achieve her goal (sell the pig and buy the bicycle, for example) and is able to pay back her loan, she is eligible for taking out a larger loan. Within 4-7 years, the women have transformed their lives.
This is a wonderful way to help families out of poverty with dignity and it is a long-term solution. The women use their new income to repair their house, send their children to school, improve their nutrition, and buy medicine when someone is sick. The whole family benefits. The women are empowered.