Since the beginning of the ImAgE programme (Improving Agricultural Extension), we asked ourselves how to achieve sustainability when the Khmer government is not able to increase the extension workers’ salaries, which keeps them, the direct target group of the programme, from performing their job?
So when we went to one of our pilot districts last week to monitor 2 farmer groups and noticed that their saving and credit system (S&C system) is flourishing and starting to look more and more valuable and amazingly well organized, we were very pleased!
From farmer group (FG) to saving and credit group (S&C group)
One of the first activities in our programme’s pilot phase was to set up farmer groups. This happened in March 2009 to be exact. The 15 farmer groups, spread over 3 districts, started out with approximately 40 to 45 members. They were trained in a number of technical farming topics, received quality assistance from the EWs and their management capacity was increased.
One of the aspects of FG management is the start-up of a S&C system: we brought in a consultant to train the FG members on how to start a saving system based on monthly membership contributions, keep track of the savings in accounting books, turn the savings into loans for individual FG members and monitor the payback of the loans with interest. The programme contributed some starting-up capital per group and all members eagerly started saving.
Two years later: the successful S&C of 2 pilot groups
As our programme entered its mainstreaming phase this year, we are not cooperating closely with the pilot FGs anymore. The only thing we still assist them with is running their S&C system. Once a month, an EW is present during their S&C meetings in case of any problems or questions and they also discuss possible enterprise ideas.
Thus far, we visited 2 out of the 15 pilot groups and both of them were very successful in S&C. Consider these results:
- Both groups increased their membership numbers, one up to 63 and the other up to 66 farmers
- They are contributing a monthly amount of 2,000 to 10,000 riel (0,5 USD to 2,5 USD) per farmer
- One group saved a total of 1,550 USD and the other one 2,650 USD
- All savings are constantly being used to give loans to individual members, which means there is an incredible rotation of money and many farmers are now able to set up new initiatives
- Applications for loans are received on a monthly basis, the FG management team decides who can have a loan and the money is provided the next month
- Usually there is enough money to provide several people with a loan
- The members have developed their own rules to run the S&C system: in both groups there have not yet been any incidents such as late or non-payback or other problems
At the end of the meeting a total of 780,000 riel (195 USD) was collected from the contributions and from payback of the interest.
The farmers who were selected to receive loans were a lady who will buy a cow (the total amount is 500 USD and she lacked 125 USD) and a young man who will buy chemical fertilizer for 70 USD.
Conclusion
All farmers were clearly very happy with this system. It means an opening of doors for this group of people who never before had access to a saving system or bank. None of them has a bank account and nobody seems to be able to start personal savings.
One by one they were benefiting from this system and buying something bigger: a cow, a pig, a piece of land, a new roof, agricultural assets etc.). They could not have afforded this without the possibility of obtaining a loan.
The way it looks now, it seems very likely they will continue doing this. The involvement of the EW has become so minor it can be done without him/her. Although most of the times the EWs are members themselves of the S&C group and thus permanently linked to it.
The 2 groups started discussing potential business ideas: opening a shop with livestock products, building and managing a water tower to provide drinking water for the village, buying and storing early rice and selling it with profit in a low-rice season. These ideas are still young and need further elaboration, but the seed is sown! Let’s hope it continues growing.
