Learning Route on Rural Microfinance
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LEARNING ROUTE ON RURAL MICROFINANCE INSTITUTIONS AND INNOVATIONS IN CAMBODIA (Vietnam 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 poverty, 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), Cooperatives 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