In Cambodia, nearly 90% of the population under the poverty line lives in rural areas, where lack of basic infrastructure, education, and productive skills in the countryside have been major causes of the unequitable distribution of Cambodia’s recent economic prosperity. Kredit, an Oikocredit partner, is one of the many Cambodian MFIs working to help combat rural poverty.
Yin Boeut is a client of Kredit, a leading microfinance institution in Cambodia. In her first loan cycle she used the $100 she borrowed to buy a pig and begin rice farming. The family’s new pig has piglets about three times a year, and the sale of those piglets generates around $500 in revenue, in addition to what the family earns through rice production. Talk about a return on your investment! Today, Yin is on her third loan cycle, with plans to build a new pig enclosure and purchase a motorcycle.
Yin is one of 63,000 borrowers to access Kredit’s wide variety of services, and one of 1.7 million borrowers reached by Cambodia’s microfinance industry as a whole. Since 2005, the Cambodian microfinance industry has witnessed substantial growth: between 2006 and 2008, total MFI lending increased at a rate of 55% per year (see chart below).
Alongside the growth of microfinance in Cambodia has been an impressive decrease in poverty. According to the World Bank, the rate of people living below the national poverty line decreased from 34.7% in 2004 to 20% in 2011. And the outlook for the future is promising. If Cambodia continues to reduce its poverty rate at this pace, then the United Nations Development Program projects they will easily achieve the Millennium Development Goal benchmark of reducing by half the proportion of people keep living on less than a dollar a day.
But there is still a great deal to do, especially to combat rural poverty. Nearly 90% of the population under the poverty line lives in rural areas. Lack of basic infrastructure, education, and productive skills in the countryside have been major causes of the unequitable distribution of Cambodia’s recent economic prosperity. This wealth gap is reflected in the distribution of microfinance clients - across the country, about 80% of MFI clients live in rural areas.
Kredit, an Oikocredit partner and one of the many Cambodian MFIs working to help combat rural poverty, offers a range of financial services, namely loans, savings, and local money transfer. Additionally, Kredit offers a variety of non-financial services alongside its financial offerings, such as financial-literacy training, child education, and agricultural training.
One of the classes included in the agricultural training focuses on raising chickens, and covers making low cost feed, effective feeding, preventing escape, and breeding. One of the many tips participants learn is to grow melons around the chicken enclosure. Doing so provides a natural barrier to prevent chickens from escaping, as well as providing shade. Additionally, the melons can be eaten by the farmer and/or sold for supplementary income.
Kredit also offers more specialized agricultural training, where the topic is selected by village banking group members, and expert trainers are provided by Kredit’s development partners. These two day courses involve both theory and practice, with the possibility of follow up sessions with the trainers to allow clients the ability to discuss issues faced when implementing strategies learned.
To date, Kredit has offered agricultural training to 3,180 clients.
It is for their commitment to helping clients with both financial and capacity-building needs that in October of this year Kredit was named “Most Innovative Non-Profit/Social Enterprise” by Singapore Venture Capital and Private Equity Association. This award recognizes Kredit for “the highest change in social impact made by a non-profit organization or socially conscious enterprise”.
And Kredit’s commitment to social impact is recognized by its clients as well:
Oikocredit invests in MFIs like Kredit as part of our mission to target rural populations. Today, 56% of clients reached by Oikocredit’s partners live in rural areas. You can read more about why Oikocredit focuses on rural areas here.