Micro-Credit Project in Tram Kok District

Rice / Fertilizer Bank

In order to help villagers to prevent from shortage of rice seed for their production, IFDO has created Rice bank at the village community. Fertilizer will be loaned to the villagers, and they will pay back with rice after harvest, and keep at community rice bank to use when needed.

Community rice bank help to alleviate poverty reduction, villager will receive loan (Rice) with low interest rate (3%) compare to private loan, especially during raining season when villagers need rice seed for rice production. This project are running well and continuing to be self sustained.

Our Philosophy and Practices

Poverty can be reduced by different ways. One of the effective means of alleviating poverty is to generate and increase income of the people. IFDO strongly believes that under-privileged beneficiaries are able to move out of extreme poverty when they are able to generate and increase their income. And in order to generate income or start up income generating activities, these poor people need investment capital. Providing extremely poor families with access to micro-credit support has been one the main programs implemented by IFDO for several years.

Our Experiences in Micro-credit

The IFDO’s current micro-credit team is the former project team of an UK micro-credit project, Rabobank FUNDATION NGO, (E&D), which implemented an integrated program in Phnom Penh sub-urban areas since 1997. The Team has gained long experience in micro-credit support with extremely poor families in Phnom Penh relocated sub-Rural areas. At the mean time , in order to facilitate our integration project for people who relocated from urban area, IFDO also work to provide loan to rural poor families as well ( This is our original goal.)

Our Beneficiaries

Our beneficiaries of micro-credit and saving services are: Extremely poor, very poor, and poor families living in disadvantaged areas, including slum areas, squatter’s areas, dumping areas, and re-settled areas of sub-rural and rural areas of Takeo Province. Some of them migrated from rural poverty-stricken areas. This group represents 90% of the total beneficiaries; HIV/AIDS carriers and HIV/AIDS infected members (less than 10%); Those groups of people, regardless of sex, religious and political tendency: are physically and mentally able to conduct income generation activities, aged from 18 to 60 years; are running existing income generating activities; have some existing resources/capital for income generating activities; commit themselves to increasing their daily income; some of them, were unemployed and had no opportunity for income generating activities, but demonstrated high motivation, commitment and initiative to create a new income generating activity (with support from IFDO); are able to reimburse the loans and interests. (98%) and males (2%)

Assessment and Loan Allocation

IFDO has its own policies, procedures and guidelines on credit support and loan conditions which take into account such critical issues as the family background (including level of poverty), motivation, income generating activities, and capacity to generate income. Information from local authorities and the applicant’s neighbors is the key input into the assessment, and community credit agents and loan committees play a significant role in making decisions on who and how much should be supported.

Beneficiary Training

The successful applicants/families are normally trained at least one morning about IFDO’s policy on credit support, the right and wrong uses of loans, business plan development, basis of marketing, hygiene and some income generating activities.

Loans Disbursement and Collection

By July 1997, loans (small loans the majority) are disbursed two times per month, while loan collection is carried out on weekly basis. Normally, loan are disbursed to and collected from beneficiaries directly at home or places where partners run income generating activities.

Partners’ Savings as Sustainability Strategy

While receiving micro-credit support from IFDO, partners are encouraged to deposit some small amount of their money as savings in their individual accounts. The deposited savings will be returned to borrowers, once they have saved adequate amount of savings for capital or once they stop taking loans, with an offer of 2% interest per year. The amount of savings deposited by borrowers has increased steadily since the beginning of credit support activities. One of the main goals of having savings deposited by borrowers is to help poor beneficiaries save small money from their daily income to be the future sustainable capital for their income generating activities. Once they have saved considerable amount of savings, adequate for the capital for income generating activities, poor beneficiaries are able to withdraw the savings together with provided interest amount from IFDO. This is one of the sustainability strategies IFDO has used in micro-credit services with poor beneficiaries.

Follow-up Activities

Each beneficiary receives a weekly visit from IFDO micro-credit staff, especially during the loan collection. The staff observes and interviews the situation of beneficiary’s income generating activities, capacity to reimburse loans, as well as living conditions. In addition, difficulties encountered by beneficiaries and advice from the staff are discussed and exchanged for solutions and improvement.

Evaluation

IFDO conducts evaluation with all beneficiaries of micro-credit services on annual basis in order to measure the impacts of these services on poor families. In particular, the poverty movement/situation of beneficiaries is studied cautiously. It has its own poverty movement assessment tools and methodologies. Baseline and post-line data is collected through observations and interview questionnaires and from their personal records, and is analyzed by computerized-IFDO program.