Cambodia now has one of the highest disparities between rich and poor in Asia. It emerged from the week socio-economic system in decade long civil war and wealth distribution inequality between rural and urban areas. Its economy felt the impact of the global financial crisis more acutely than any neighboring country, with GDP growth contracting by up to 2.5 percent in 2009. The downturn caused job losses and falls in incomes and remittances to rural areas, adversely affecting the 30 percent of the population who live below the national poverty line.
Coming on top of high food and gasoline prices in 2008, the downturn reversed gains achieved in the past 10 years and strained Cambodia’s ability to achieve its MDG of reducing poverty to 19.5 percent by 2015.
Responses of Muslim Aid Cambodia
Muslim Aid, being a British charity, always strives to contribute hugely in alleviating poverty and extreme hunger over 70 countries worldwide with sustainable solutions that are culturally sensitive, practical and owned by the beneficiaries. In Cambodia, MAC attempted this effort with the following three key projects.
- Micro-credit, a unique Interest-free Group financing and SME investment.
- Livelihood development through small grant and skills training.
- Food relief for aid in extreme hunger situation
The beneficiaries, especially the vulnerable poor women, are selected and empowered so that they become confident enough to ensure their own long tern socio-economic security. Besides the financial and food assistance, action research, skills training and counseling support for the poor suburb or rural communities to get out from the bad-debt or poverty trap.
These services are contributing directly to reducing extreme poverty by improving the income of poor people (CMDG 1). With higher and more stable income, parents can also invest in giving their children school education (CMDG 2) and pay for health services (CMDG 4 – 6).
The majority beneficiaries of MAC microfinance are women, and they are contributing to women’s empowerment and gender equality (CMDG 3).
Community Based Livestock Value Chain for Sustainable Livelihood Project (SLP): The SLP programme was initiated by Muslim Aid Cambodia in July 2018, to promote inclusive economic and social growth through community-driven sustainable livestock value chain in the selected villages of Kampong Chhnang province in Cambodia. Initially targeting 450 households the project aimed to strengthen smallholder farmers’ capacity in advancing livestock production and sustainable livelihoods; enhance farmers’ capacity to access to the market and best utilize rural finance and available extension services; and ensure community driven livestock value chain at village level for better quality productions, processing, sales, income and family consumption. Side by side, the SLP is working to contribute to the malnutrition challenges in the target areas by increasing awareness about the financial as well as health benefits of milk production and consumption. The project supports the farmers through trainings to increase their skills on improved cattle-raising on business approach. Majority of our beneficiaries are now able to identify and control various diseases of their cattle and provide better feed and approaching VAHW and District Animal Health Officer to receive services such as vaccination, disease control, nutrient deficiency and parasite control. In addition, the farmers are also showing interest about Artificial Insemination (AI or inject semen) to improve the breed rather than traditional bull-mating. They are now aware about the use and benefits of cattle manure for producing biogas and fertilizer. The supply of beef in the local market is gradually increasing and local people are consuming more meat than they used to do before. The challenge on getting optimize benefits from the cattle raising such as stop wastage of skin and bones, save drying-out milking cows and start of household level milk production, distribution, sale and fresh-milk consumption for add nutrition for healthy family, specially children.
Principles of Muslim Aid Interest-free Microfinance
In Cambodia, we follow mainly two Islamic Micro-financing models
- Quard Hasana (benevolent loan), loans are given to a group of people for income generating activities that are safe, Islamically permissible and would yield quick returns. Each borrower is required to be a member of group which is based on their own choice. All the group members trustfully join and complete a single loan application form to guaranty each other. If in case, a member can not repay the principal amount, other group members have to help him/her. Normally, this loan is small sized (less than $500 to each member) and given without any interest and collateral.
- Murabaha – Mutually agreed fixed profit sharing partnership through which both the individual borrower and the lender, MAC makes a financial investment for a Small and or Medium scale Entrepreneurship (SME). This investment is bigger than group loan size that ranging from $500 to $1,000 and also without any physical collateral.
A Sustainable Solution for Economic Development following the Principles of Islam.
A poor but active mother fulfilled her dream of having a good house
Mrs. Toulors Raymas (53) lives with her physically impaired husband and five children at Chrang Chamres, Russey Keo. Her husband, Mr. Sen, was a dry fish seller and became paralyzed in full left-part of his body in 2004 out of heart-attack. Since then he couldn’t earn money to support the family. Muslim Aid group loan and SME investment had brought back the hope to their family.
“We were so poor and used to buy fishes from a middle-man with high price on credit. We had to pay-back him by next day and had to continue borrowing from him for every purchase. As the credit purchasing price was high, our profit margin was too low and even sometimes zero. So I could not bring the daily bread for my family and medicine for my husband in those days” Mrs. Raymas recalled with sad face and continued “I keen to increase my capital to run my family business profitably and I was afraid of taking loan from any person or bank as they charge very high interest and if I can’t pay-back on-time, I will loose all whatever little I had”.
In 2007, a neighbor introduced her with MAC staff. She formed a group of at five members whom they know each other and if one failed to pay any installment, other members will pay for him/her. No collateral was taken to deposit and no interest was charged except a small service fee for covering the training and collection cost. She worked hard with the 1st cycle loan money to improve her business. Earlier she used to sell dry-fishes walking door-to-door within her village only. When she got the money, she bought an old motorcycle and also bought more fishes. Then she started selling dry- fish in other neighboring villages and started earning more than previous. She repaid the loan to MAC before the end of her schedule in the year 2008. She continued with smile: “I always dreamed for a better house because in every rainy season, the river becomes full to the brim and flooded into my house. I had to shift my family to another place and spent lot of money for house rent.
In 2008, she took 2nd cycle loan from MAC for more business as well as family condition improvement and could paid back the entire loan amount by the year 2009. Now she is considering herself as self-reliant and needs no more credit. “Now I got my new and strong house and many items in my house. My husband also became little better with good treatments. He can even ride a automobile and all my daughters got married. Without MAC’s support, I might never get a chance to regain my family happiness and to fulfill my dream of a good house” she said and further requested to the other organizations and to Cambodian Government to make the small loan system easy and helpful for the poor people like her.
They all overcame their extreme poverty
MAC started it’s micro-finance operation on 12 April 2007 with only 10 dried-fish sellers, and as of December 2009, more than six hundred Khmer and Cham families have been served with both financial and non-financial services.
Initially few impoverished suburb and rural areas of Phnom Penh, Kandal and Kampong Cham provinces had been brought into the coverage. MAC stands out as the only interest free and highly acceptable micro-finance provider among the Muslim minority in Cambodia. MAC is bringing a great opportunity for the disadvantaged Cambodian communities to improve their business and family conditions. 2009 impact monitoring study revealed that MA microfinance has curved positive changes in almost all the key areas of it’s beneficiary life within 2-3 years:
In next 2-3 years MAC planned to
– Increase the total number of beneficiaries to 2,100; including 580 SME beneficiaries and 1,520 microcredit beneficiaries.
– Increase the level of support to Small and Medium Enterprises (SMEs) using profit-sharing models, in order to deliver more services to very poor and destitute people.
– Consolidate and professionalize current micro-finance operation, including placing of dedicated sub-offices and trained staff in at least three provincial locations.
Livelihood Development from Zakah
MAC emphasizes not only on proper distribution but also utilization of the Zakah fund in sustainable income generation so that the beneficiaries can eventually transform from aid-recipient to aid-giver. In 2008-09, MAC supported a dozen of destitute and hard-core poor families in different provinces with seed amount ranging from $50 to $500 out of Zakah fund for starting a business to earn their family livelihood. 35 families at Kg Cham that started homestead poultry rearing in 2007 from the same scheme, they all kept running their trade profitably.