LEARNING ROUTE ON RURAL MICROFINANCE INSTITUTIONS AND INNOVATIONS IN CAMBODIA ( and Cambodia exchange of good practices and innovations) 19 to 23 April, 2016 Cambodia

BACKGROUND

The role of rural people in development is viewed as a significant aspect in improving the condition of peoples’ lives especially in alleviating , enhancing education, ensuring health and nutrition, producing sustainable agricultural produce and securing stable livelihood. Specifically, women serve as the lifeblood of rural development particularly in agriculture, fisheries and other enterprises. Because of this, certain activities must be provided to them as a vehicle to enhance their skills and improve their capacity in acquiring latest and modern technologies based on their capacity, resources and needs.

The agriculture and natural landscape in Southeast Asia sub-region is an interesting arena of demonstration and application of knowledge acquisition and skills development. Technologies relevant to project operation and implementation contribute to women’s development. In view of this, a Learning Route on rural microfinance is proposed for Vietnamese rural women. The Learning Route combines best innovations and integrating practical cases/experiences which serve models for improving the performance of Women Funds in Vietnam..

1. What is this Learning Route about?

This Learning Route is an effective in-the-field training for rural development practitioners in Vietnam. Its objective is to strength the capacities of Women Development Fund Managers, Community Groups Leaders and Government Officials of IFAD supported projects in Vietnam by exchanging rural microfinance sector best practices and innovations with Cambodia´s public and private sector.

The Learning focuses on Cambodia´s rural finance Institutional Framework, the modernization of the Microfinance Institutions through Information and Communication Technologies (ICT) and the delivery of innovative products, services and methodologies to rural poor communities. Therefore it´s hosted by outstanding rural microfinance institutions, rural and agricultural development projects, and common interest groups (CIG), and other rural enterprises.

Vietnam delegations will be supported in the design of an Action Plan that support the adaptation of some of Cambodia´s best practices and innovations to their respective provinces and plans, in especial in the frame of rural finance components of IFAD supported projects in Vietnam.

1 This Learning Route is a partnership between the Kingdom of Cambodia and the Socialist Republic of Vietnam, the International Fund for Agricultural Development (IFAD), the Asia- Pacific Rural and Agricultural Credit Association (APRACA) and the PROCASUR Corporation.

2. Why a Learning Route between Vietnam and Cambodia

A learning route on rural development including microfinance and women empowerment is the best way in enhancing and strengthening the capacities and capability of key players and stakeholder between the two countries.

Cambodia’s rural landscape including its practices, technologies and initiatives are similar to the requirements of Vietnam in drumbeating its social and economic development. Based on several researches conducted, microfinance has been expanding to poor people in more remote areas and specifically women. Approximately 80% of MFI clients live in rural areas and 81% of clients are women with the repayment rate from clients almost up to 98% before the financial crisis in 2008. MFIs in Cambodia have been shown to empower women as the head of the family who often have good cash management skills.

Research has estimated that the provision of financial services has impacted 3,878,618 Cambodian people (average of 4.7 people per household). The same research has suggested that this is due to Cambodian poor now having access to credit loans to start new businesses and expand existing ones. Areas of investment have included businesses sectors such as agriculture, small and medium retailers, handicrafts, services, construction, transportation among others. This seems to support the theory of economic development that argues that people can be moved out of poverty through empowerment as business owners. This has led microfinance to be described as "the key to breaking the poverty cycle". (http://cma-network.org/drupal/MicrofinanceEnvironment)

3. What is this Learning Route for? a. Objective: To strengthen the capacities of Women Development Fund Managers, Community Groups Leaders and Government Officials of IFAD supported projects in Vietnam by exchanging rural microfinance sector best practices and innovations with Cambodia´s public and private sector. b. Outcomes: i. Strengthened understanding on rural microfinance system, structure and functioning, markets, products, players, services and impact. ii. Modernized management of microfinance institutions by use ICT solutions. iii. Improved cooperation between rural microfinance players at provincial level through the design of Action Plans.

2 iv. Build up the cooperation among countries, projects and grants in the South East Asia Hub. c. Outputs: i. 25 rural microfinance practitioners from Vietnam, of which at least 60% are women and under 35 years old, are trained in Cambodia´s best practices and innovations. ii. One Action Plan per each province participating in the Learning Route. iii. A comprehensive case study on the experience of Cambodia´s rural microfinance. iv. Learning Route technical report.

4. What are the institutions and projects hosting the Learning Route in Cambodia?

PRASAC Microfinance Institution

PRASAC is one of the top performing and stable microfinance institutions in Cambodia. As a member of APRACA, it has provided an array of financial experiences particularly on agricultural value chain finance, microfinance and green financing. PRASAC success is anchored on quality of service, strong management and team members, appropriate products and outstanding performance. These factors are all expressed through their newly acquired status on Customer Satisfaction and Clientele Certification.

In 2015, PRASAC earned grade “A & Stable” from Planet Rating, and PRASAC also received 3 outstanding awards from IDG on Security Initiative, Financial Performance and Retail Banking. PRASAC just increased its registered capital up to KHR 288 billion or equivalent to USD 72 million. By the end of the year, PRASAC earns total assets with amount of more than US$ 1 billion. PRASAC also earned Client Protection Certification from Smart Campaign in the response to the meeting adequate standards of care in how they treat clients. It enables financial institutions to demonstrate adherence to the microfinance industry’s Client Protection Principles. In addition, PRASAC is undergoing operational enhancement on the application of information and communication technology (ICT) that will propel its delivery of excellent financial service to the rural people and communities. Given this support, it will have greater reach to potential and expanding markets and clientele.

Hattha Kaksekar Limited (HKL)

As competition escalate in Cambodia for effective and efficient microfinance operation, the Hattha Kaksekar Limited responded and step-up to a level in making the competition exciting and excellent. This is shown in HKL’s performance in 2014/15 on efforts in supporting their clientele to be vibrant, viable, versatile, productive and profitable.

Specifically, competition amongst the top four MFIs in Cambodia is increasing which is good news both for clients and the public. Furthermore competitive pressure is coming from aggressive expansion of two banks that recently entered the market. In spite of this HKL have increased its portfolio growth much

3 more than industry growth and improved their share in taking deposit from 18% to 20.0%. By the end of 2014 HKL moved to second place in terms of deposit portfolio among top four MFIs (fourth in 2013). To support the rapid growth and invest in new technology to align with the growth, the shareholders decided to pay in more capital USD 6 million in early 2014. This has enabled us to fully exploit the opportunities presented by this favorable economic climate.

The decision to boost investment in system and product development and the growth of mobile banking services enable us to serve clients. HKL’s on-line IT system is now proving its capacity to handle HKL’s expanding volumes effectively. All sub-branch and branch offices of HKL are on-line that can serve customers much faster, conveniently and securely.

In addition, in 2014 HKL network grew to 142 offices from 136 offices in 2013, bringing its financial services to new areas of population and substantially increasing our catchment area. In addition we installed 37 more ATMs in 2014, bringing our total number of ATMs by the end of 2014 to 72 ATMs within 25 provinces and capital city, which can serve customers 24 hours per day, seven days per week and 365 days a year, including on national holidays and public holidays. With HKL ATMs customers can do the transactions at any time, such as balance inquiries, mini statements, inter account transfers, remittance/transfers, loan payments, collection services and mobile phone top-ups.

IFAD-supported Investment Projects with the Cambodia Ministry of Agriculture, Forestry and Fishery (IFAD-MAFF) Projects

The International Fund for Agricultural Development (IFAD) is one of the active supporters and funders of Cambodian rural and agricultural development through the Ministry of Agriculture, Forestry and Fisheries (MAFF).

One of the projects that supports the rural people and communities In Cambodia is the Project for Agricultural Development and Economic Empowerment (PADEE). Its goal is to improve the livelihoods for poor people in the targeted communes in the project area of Kampot, Kandal, Prey Veng, Svay Rieng and Takeo. The Project Development Objective (PDO) is to improve agricultural productivity and to diversify income sources for rural households living in poverty in the project area. The project aims to reach 246 communes in 33 districts in the five provinces and 90,000 beneficiary households in total (approx. 450 000 people) of which 49,000 households that are expected to benefit from all project key interventions as part of the IGRF groups.

PADEE is also a multi-institution supported project relying on collaborative activities to address and to attain its goal and implement its project activities. One of the institutions supporting PADEE is the Food and Agriculture Organization of the (UN-FAO) of Asia-Pacific Region based in Bangkok. Through its affiliate organization, the FAO-Microbanker, is implementing an ICT-based solution of project recordkeeping, data analysis and field recording. These features via the ICT platform are interesting areas for learning-teaching of various groups. This platform will be good for the Vietnam group to acquire the basic operation in local financial operation and management. Aside from this, the support extended by the government of Cambodia through the Ministry of Agriculture, Forestry and Fisheries (MAFF) leads to the improvement of the living condition of rural people and their communities with latest and modern technologies to increase productivity and profitability.

4 5. Who is invited to participate in the Learning Route to Cambodia?

The Learning Route invites all provinces of Vietnam working with IFAD to postulate/nominate their representatives from women development fund, rural finance specialist of IFAD supported project and community leader. Gender and age balance are encouraged. The Learning Route can accommodate up to 28 participants from Vietnam.

To ensure maximum participation and active involvement, the Vietnamese groups should be nominated based on their role and interest in sharing and exchanging lessons learnt relevant to the development of rural areas especially those which require mobilization, coordination and empowerment initiatives suited for the people.

6. What are the conditions to participate in the Learning Route?

In order to join the Learning Route, each provincial team needs to fulfill the following requirements: 1. Submit a timely, correct application form and institutional endorsement letter to PROCASUR in Vietnam (PHUNG Xuan, [email protected]) . 2. Cover the travel expenses from the province of origin in Vietnam to Phnom Penh and return. 3. Cover travel insurance during the 5 days of the Learning Route’s implementation. 4. Pay a Training Fee of USD 600.00 per person in a team of at last three people per province, to fully cover his/her logistical services as described in the “services section” below.* Based on the payment of the fee, the organizers will provide technical and operational services as follows: 1. Technical and operational assistance during the Learning Route. 2. Service payment of hosting institutions, resource persons, and interpreter. 3. Simultaneous interpretation between Vietnamese and Khmer 4. Accommodation in two-star hotels. 5. Three daily meals and two coffee breaks. 6. Domestic transport in Cambodia.

PROCASUR and APRACA through respective agreements with IFAD are contributing with the necessary human resources for the technical and operational success of the Learning Route. Including the design of the Learning Route, systematization of Cambodia best practices, organization of field visits, facilitation of the Action Plan design, evaluation and reporting.

5 7. Who are the main organizers of this Learning Route? a. IFAD Vietnam. IFAD works for and with the poorest people in Vietnam, including ethnic minorities, small-scale farmers and households headed by women. Strategies to reduce poverty and improve living conditions include building partnerships, strengthening institutional capacity and promoting participation. IFAD works with the government and other partners to empower poor rural people so they can have a role in decision-making. To do this, IFAD finances programmes and projects that focus on developing and testing innovative approaches to that can be replicated and scaled up by the government and other agencies. Interventions are area-based and multisectoral. They target regions where poverty reduction is a priority. b. IFAD Cambodia. Since 1996, IFAD has invested US$140.4 million in eight projects in Cambodia, which have mobilized overall investments for a total of US$283.6 million, benefiting 1,204,300 households. IFAD loans support rural and agricultural development and improvement of the livestock subsector. Reducing rural poverty by improving rural livelihoods is the objective of IFAD's efforts to empower Cambodia's poor people to raise their incomes and standards of living. c. APRACA. APRACA is an international non-government organization (NGO) working on rural and agricultural finance and development that helps promote productivity, inclusive growth, self-reliance, and welfare of the rural poor in the Asia-Pacific region. Its mission is to promote the efficiency and effectiveness of rural finance and improve access to financial services through a network of knowledge sharing and learning, capacity-building, research and exchange of expertise. Through the lessons learnt, experiences, strategies, practices, and tools including and technical capability of its members, APRACA has continuously contributed in the development of the financial institutions and their clientele especially the rural people and communities. d. PROCASUR. PROCASUR Corporation is a global organization specialized in harvesting and scaling-up homegrown innovations. The Organisation’s mission is to foster local knowledge exchange to end rural poverty. By sharing innovations through customized local knowledge- management tools and methodologies, we connect global institutions with local champions, providing the structured learning platforms necessary to spread innovation. PROCASUR has facilitated innovations initiatives in over 30 countries in Africa, Asia, and Latin America and the Caribbean, affecting the lives and livelihoods of thousands of rural people across the globe. For more information visit: www.asia.procasur.org

6 ANNEXES

Annex 1: Learning Route Agenda (19 to 23 June 2016)

Day Time Activities Responsible Sunday Travel to Phnom Penh Xuan 19 June Airport/Bus pickup and hotel check in Sary and Xuan Travel City tour in Phnom Penh Sary and Xuan Monday 8:00 – 8:30 Registration Sary 20 June 8:30 – 9:00 Opening Remarks Sary Seng, PROCASUR KH PRASAC APRACA representative MFI Mr. Meng Sakpouseth, IFAD H.E. Mom Amnot, PD PADEE 9:00 – 9:30 Program Overview: objectives, Xuan schedule, house rules, introductions 9:30 – 10:15 Situation of Rural Microfinance in APRACA? Cambodia 10:15 – 10:30 Refreshment 10:30-16:30 Travel to PRASAC MFI Sary Introduction about case 1 PRASAC c/o Mr. Sim, Mr. Say Visit to branch Sny, Mr. Ry Vanna and Mr. Pen Field visit to clients Sitha Lunch in the field 16:30 - 18:30 Experience Fair Xuan 18:30 – 19:30 Dinner Sary Tuesday 08:00 – 11:30 Travel to Hattha Kaksekar MFI Sary 21 June Introduction about Hattha Kaksekar Mr. Hout, Mr. Mech, Mr. Ly or Hattha Field visit to branch Mr. Lina… we will follow-up Kaksekar Field visit to clients of MFI MFI Lunch in the field 13:00 – 16:00 Field visit to clients of MFI APRACA Mr. Hout, Mr. Mech, Mr. Ly or Mr. Lina. 17:30 – 19:00 Dinner Sary Wednesday 07:30 – 09:30 Return to Phnom Penh Sary 22 June 09:30 – 14:00 Practical Workshop with PADEE and Sary and PADEE Use of TSSD on “Use of Tablet” in the Tablet management of financial services. 14:30 – 17:00 Practical Workshop on the Lessons Xuan Learned practice in Vietnam 17:30 Dinner Thursday 08:00 – 11:00 Action Plan Workshop: Planning the Xuan 23 June changes for Vietnam Action Plan 11:00 – 12:30 Closure Ceremony PROCASUR, IFAD, APRACA 12:30 – 13:30 Lunch Sary 13:30 Start return to Vietnam Xuan and Sary

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