Nghean Vy

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Greetings from Cambodia!

My name is Gemma North, and for the past four months, I have had the privilege of serving as a Kiva Fellow with CREDIT MFI, one of Kiva's oldest field partners. Thanks to your strong support, the organization has been able to raise over $4 million on Kiva.org and is currently serving over 1,750 Kiva clients.

In the last couple of years, CREDIT has enjoyed tremendous growth, expanding its client base to over 40,000 individuals (93% of which are women), through 34 sub-branch offices. Despite this expansion, the organization has not eschewed its social mission. In 2007, CREDIT chose to develop and begin offering a product that would reach more economically and socially at-risk populations (such as the extreme poor or those affected by HIV/AIDS or sex-trafficking) through a new program called the Vulnerable Services Unit (VSU).

Unlike the majority of CREDIT's loans, which are geared towards individuals who can afford borrowing sums exceeding $50, Vulnerable Services Unit borrowers can get loans starting at a mere $12.50 for a period of up to a year. The VSU program is tailored towards rural clients and individuals with no collateral, therefore borrowers can access credit by forming solidarity groups of four to six people who commit to guaranteeing each other for the entirety of the loan term. As another level of security, four to six village groups then join together to form a village bank, which is directed by an elected leader who will provide mediation if any issues arise.

CREDIT's efforts to best serve its clients are further reflected in the tailoring of this loan product. Since the majority of the clients earn a living through farming, raising animals, or processing local foods, CREDIT has designed repayments to coincide with the harvest season. This way, when farmers need to pay for a large expense prior to the planting season, such as purchasing fertilizer or seeds, they have access to financing. Yet for the next 10-12 months, while they are working in their fields and not earning a large income, clients only repay the interest on the loan, which can be as low as thirty cents or a few dollars a month. The borrowers only repay the loan principal once the harvest is finished and when they have additional income from selling crops. Additionally, CREDIT MFI provides three trainings for all of its clients during the loan cycle: one on debt management, another on budgeting and a third on building and using savings. When possible, the organization partners with local nonprofits to address a community's needs by providing education on other topics such as maternal or child health. While visiting the field, one client told us that although another MFI operates in his area, he and others in the village joined VSU because of these non-financial services.

Recently, I accompanied CREDIT's Kiva Coordinator to a loan disbursement meeting for a VSU village bank. After traveling for nearly forty five minutes by motorbike on a punishing dirt road, we reached a small village and took the first turn into a dirt courtyard where a couple of men, including the village bank leader, were waiting for us. Two staff members from CREDIT spent the next two hours reviewing proper loan use, guarantees, repayments, interest, late fees, the role of the group and village bank leaders and other items, all the while making sure that every person understood the process. Eventually, the Branch Manager for the province arrived to meet the new village bank members and offer them encouragement. Finally, each group was called up to review their loan documents and receive their funds. The credit officer verified the identity of every person and carefully went through their contract and repayment information, finishing by having each client stamp their fingerprints on the documents. Once they received their funds, every member counted their money before returning home.

As I observed this process and received a running translation of what was being said, I was impressed by the contrast between the informality of our surroundings and the business-like atmosphere of the meeting. Here we were, in a remote town where the majority of the villagers live off of what they farm or raise. We were gathered under a thatch-roof shelter; under the awning a chicken sat in a hanging basket and occasionally poked her head out to look at the crowd. Some of the women were sitting on single bricks or their flip-flops, a couple of men had settled in the hammock. Two mothers had their children; one bounced her naked son on her knees while the other had a metal bowl for her daughter to play with. The reviews of the loan documents and disbursement of funds was done over a low bamboo platform covered by a reed mat. Yet the entire meeting had taken nearly three hours to thoroughly cover every item and ensure that all participants clearly understood the engagement. Four staff members from CREDIT had come to participate in the process following a week's worth of prior preparations. Every client had taken off nearly a half day of work to join this meeting--all of this, for loans between $12.50 and $100.

All of the preparation, commitment and professionalism on the part of the CREDIT staff and the organization's efforts to create a valuable service for their clients reminded me yet again that microfinance organizations, while working with and targeting "the poor," consider and treat individuals as clients. This development tool offers people the responsibility and trust to enter into a business relationship which encourages and requires independence, reliability and, in cases like VSU, social cohesion. On behalf of CREDIT MFI we thank you for your continued support and confidence in our work and our clients' commitment to support themselves.

Please check out our currently fundraising loans here: http://www.kiva.org/lend?partner_id=9&status=fundRaising&sortBy=New+to+Old or join the CREDIT lending team here: http://www.kiva.org/community/teams/view?team_id=5064

Best regards,

Gemma North

Kiva Fellow, 9th Class

Nghean Vy is a farmer and her husband is a construction worker. She told the Credit Officer that her loan is doing well and has no problems paying it back. The initial idea she wants to use this loan to purchase a plot of land, seed and insecticides to use in her field but it was cancelled. The loan helped repair her leaking roof instead of buying those things. Now she has a stable house and it is so easy for her children to more concentrate in studying.

Finally, she would like to say thanks to all lenders for interest helping Cambodian entrepreneurs like her family.

Thank you for your loan. It has been disbursed to Nghean Vy by CREDIT MFI -- World Relief in Cambodia. We are excited to watch this business grow. Over the next 18 - 21 months, CREDIT MFI -- World Relief will be collecting repayments from this entrepreneur and posting progress updates on the Kiva website.