Entrepreneurial spirit is flourishing in Cambodia, thanks to a travelling bank where most of the customers are women. Una McCaffrey reports
Lay Heang sits proudly on the makeshift porch of her tiny shop, carefully eyeing the villagers who are crowding around, just to make sure she's not missing any business. The chances of this are slim, as hers is the only snack shop in this settlement of 300 people, but, as Heang knows, success requires constant effort and attention to detail. She is 53, a ripe old age for Cambodia, where the life expectancy for women is 59, and has seen so many hard days that she is taking no risks when things are getting better. Her display of just six packs of cheap cigarettes and a handful of bags of sweets is all that stands between her and the poverty that threatens 13 million Cambodians.
Heang is one of about 20,000 people in the grandly named but underdeveloped Kingdom of Cambodia who, over the past decade, have begun to borrow money from Angkor Microfinance Kampuchea, a new kind of institution that has come about through the efforts of Concern. The Irish charity has been working with Cambodians since 1979, when the brutal Khmer Rouge regime was overthrown and hundreds of thousands of the country's people spilled into refugee camps in Thailand. Little by little, Concern's work led it into the kingdom itself, where the charity's offerings are constantly adapting to the ravaged country's developing needs. Angkor Microfinance Kampuchea (AMK), which lends cash to economically active poor people, is the latest stage in this progression.
"Economically active", in rural Cambodian terms, tends to have some connection with rice or pig farming, with more canny villagers branching out into small service businesses such as farm-machinery rental or, as in Heang's case, opening small shops. In settlements with no running water, no electricity and, in many cases, no toilets, such activities require huge ambition and drive. Over the past 10 years Heang's economically active career in her village of Beng has progressed from shopkeeper to pig farmer to rice-wine maker. She has borrowed from AMK twice to facilitate her expansion. The most recent loan reaching the grand total of 250,000 Cambodian riels, or about €50. Her first loan was about €30. Before AMK came to her village, she says, she had no idea how to find money.
AMK is also active in the settlement of Rohal, close to the Thai border in northeastern Cambodia, where the Khmer Rouge enjoyed its last stand. Here 63-year-old Tuy Yen has even more lofty ambitions than Heang, whose biggest source of pride is that her daughter works in a garment factory.
Yen clutches her blue savings book with a fierce protectiveness, her finger tracing the AMK logo as she attempts to read the words with her failing eyesight. She is by now a veteran borrower, having just taken her sixth loan from AMK. This time she has borrowed 3,000 Thai baht (this part of Cambodia uses the Thai currency), or about €60. She plans to use the cash to buy fertiliser for her rice field and to rent a plough. Before AMK, she ploughed by hand and used cow dung to help the rice to grow.
For Yen, the real benefit from AMK has come in the way it has changed her family's life. By borrowing tiny sums of money, she has been able to raise her output by enough to fund English lessons for her bright-as-a-button 10-year-old grandchild. It seems to be paying off, with Srey Muy repeating, parrot-like, many of the English phrases she overheard during the most recent AMK visit to her area. Her grandmother, who has only ever left the village to visit her children, wants her to be a doctor.
Just three decades ago in Cambodia, to harbour such ambition would have been the equivalent of planning sedition against the Khmer Rouge dictatorship. The dictator in question, Pol Pot, was educated in France, where, despite not finishing his degree, he excelled in learning the rules of extreme communism.
By his definition, these rules needed to be implemented in the severest possible form. Thirty years ago, his tanks rolled into Cambodia's elegant capital, Phnom Penh, declaring victory in a brutal civil war against government forces. The Khmer Rouge soldiers, clad in the black pyjamas they would soon force on the rest of the population, ordered the city's 2.5 million residents to leave their homes and make for the countryside. The Americans are preparing to bomb, they told them. You will be able to return after a few days, they lied. In reality, Pol Pot was perfecting his plans for Year Zero, the point at which Cambodia would cleanse itself of the corrupting influences of the past and move forward as a unified and equal agrarian society. For this to be a success, all vestiges of the previous era needed to be destroyed - cars, television, watches and clothing were confiscated or destroyed. And just as the most basic material trappings suddenly became immoral, so did the more precious intangibles of everyday life - family ties were severed and education was stamped out.
Cambodia entered a four-year period of terror, punishment and death that left at least 1.5 million people dead. Educated people (often marked out because they wore glasses) were routinely executed, with the Khmer Rouge soldiers showing no sympathy for the young or elderly. Those who escaped death did not escape suffering, however. Pol Pot's vision for his perfect society involved back-breaking work from daybreak until sunset in the country's over-farmed fields, with poor rations and poor sanitation. Those who survived the purges were left with a battle to survive amid rampant disease and non-existent medical facilities. Many died from simple diarrhoea, while many others suffered from a serious condition linked to malnourishment.
Those dark days have now become history, albeit history of a raw and recent type. Cambodia remains a strongly rural country, with 84 per cent of its 13.4 million people living in the countryside. Slightly more than a third exist below the poverty line, in a country where this "line" starts anywhere below an income of 36c a day.
AMK does not concern itself directly with the most destitute people in Cambodian society - that would be the work of a charity, whereas AMK is a bank that hopes to be financially independent of donors within the next year or so. The basic tenet of the bank's mission is to offer finance only to poor people who have the capacity to repay with interest. And the interest is hefty, by western standards - three per cent a month. To put this into context, most Irish people pay about three per cent a year on their mortgages - and often find it difficult to meet the cost. Cambodia's financial system is very different, with the AMK interest rate related not only to the bank's costs but also to the interest levied by its competitors.
Many of these competitors are moneylenders, who previously dominated the world of credit in rural Cambodia. Interest rates charged by these individuals can be punitive - rising as high as 15 per cent a month - and can result in multiple generations of one family becoming seriously indebted as nobody quite manages to repay. The attraction of AMK is that it is not in the business of self-enrichment.
The bank is currently supported by Concern and funded through a combination of three sources. It receives funds from the Irish Government through the Ireland Aid programme. This is coupled with a contribution from the US government through USAID. And for the past couple of years, AMK has also received a €600,000 annual injection from Depfa Bank, a public-sector lender with German roots and a base in Dublin's IFSC. Depfa's chief executive, Gerhard Bruckermann, joined AMK's board last year, and its chief of internal audit, Hajo Leucht, sits on AMK's audit committee.
The importance of this support goes well beyond the financial, with AMK also gaining from Depfa's financial expertise. The nature of microfinance in countries such as Cambodia is that it tends to involve dealing with clients who have a reasonably low level of education. This may mean that they cannot read or write to any great degree, making it difficult to satisfy the high compliance standards AMK has set for itself. The bank must ensure that its back-room systems and support structures can compensate for this.
The involvement of Depfa, one of Europe's largest banks, is crucial. And Bruckermann is certainly a hands-on director - he watches the workings of AMK with fascination. The simplicity of the operation is indeed absorbing. AMK representatives based in one of the bank's three regional branches travel to remote villages to meet their customers, rather than the other way round. This means that borrowers do not have to spend a day away from their work to deal with financial matters and do not have to support the financial outlay that such journeys involve in a country of rough roads and poor transport networks.
When he or she arrives in a village, the AMK representative is met by the head of the village bank, and all borrowers gather together to receive the visitor. They wait patiently in the shade of the village's covered communal area, nursing children and chatting with their neighbours. Then, one by one, they are called to the table in the centre of the shady hut to pay interest, or borrow or deposit money, depending on their requirements. Their identity is established with a thumbprint and they are given a bank book to take away and keep until the next AMK visit.
They are grass-roots financial services at their best, becoming even more striking because the vast majority of the borrowers are female. The justification for this is that women are more reliable when it comes to repaying the loans, which average slightly more than €45 a year. The average annual income in Cambodia is less than €250. There is a resourcefulness among AMK's clients that would put the western world to shame. They are patient but watchful, ready to seize any opportunity that comes along. Their desires include basics such as electricity and a well for drinking water. One woman who used an AMK loan to introduce a second shop in her village, so injecting competition, yearns for a fence. She wants the fence to keep her animals from drinking precious water out of her pond.
More telling again are the questions the Cambodian villagers have for this group of westerners who have descended in air-conditioned jeeps on their tranquil lives for a few hours. Some of the queries come out of politeness ("How do you like Cambodia? How long is your stay?"), but others are alarming in their shrewdness. As if he has been saving them up for years, one man machine-guns three fundamental questions in succession about Ireland: "What is the rain like in your country? Are your people healthy? Is the legal system just?" In a country where the coming of the monsoon can be a matter of life or death, where medical care is a privilege and where corruption is said to penetrate society, such considerations are of premium importance.