Debt and poverty in Cambodia

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The photo of offerings, above, is one I took during Pchum Benh in 2015 near Siem Reap. I’ve been fascinated time and again by how consumer goods are such a price in Cambodia, relative to incomes, that cigarettes are often sold individually, at least in rural markets, rather than in packs. When you choose to buy one cigarette at a time, there is a thin line between solvency and debt.

I’ve been considering lately how poor Cambodians can climb out of poverty. There is a universal desire to get ahead, but there are no easy avenues to wealth for the poor to travel. Lenders who might advance some capital, for example through a MFI or micro-finance institution are not just lending against the ability of a borrower to give their business venture their very all; they are also lending against the high tide of risks faced by lower income people who live, daily, on the precipice of disaster. A crop failure. A stolen motorbike. An illness. Westerners are well insulated from such set-backs, we have insurances or sufficient economic resilience to take these things in our stride.

MFIs also face another risk – and that is the prospect that the borrower, desperate to raise enough capital to start a thriving business, already has loans with other micro-finance organisations. The risk isn’t about dishonesty so much as about financial literacy. The hopeful entrepreneur can only see the upside without appreciating the very high risks they face.

This is causing concern for micro-finance institutions of which there are around 45 registered organisations that are signatories to a shared set of operating principles and are members of a well-respected industry association, the Cambodia Micro-finance Association.  Together these MFIs have lent to 1.8 million borrowers, which is around one in every five adults aged 22+ – a staggering number.

Or it may be less staggering, given that a significant proportion of borrowers appear to have loans from more than one MFI (which is a practice actively discouraged by the lenders themselves.) Some of these are savvy borrowers, calling into question the idea of ‘one client: one loan.’

But not all borrowers are in this boat. Some are taking out extra loans because they are having trouble meeting existing debts.

Just as troubling, a report cited in The Guardian in March 2015, conducted by the Institute of Development, found that half the borrowers had taken such measures as eating less, or eating poor quality food in order to meet their repayments. Talk about a thin line between solvency and debt.

MFIs are adapting to the changing marketplace, but a general conclusion drawn from a 2007 Stanford Social Innovation Review study, by Aneel Karnani, into the effectiveness of micro-finance concluded that the service works for those above the poverty line, but often fails – deeply – when it comes to serving the needs of those below the line.

If the MFIs are adjusting to the market, and serving a growing class of more financially savvy customers (only a 15 years ago banks were having trouble attracting retail customers who had lost everything under previous regimes,) there is another problem in the sector: the unregistered lenders of which, there are estimated to be 60 in operation, and that’s not counting the traditional pawn-brokers in Cambodia.

In fact the Government’s financial strategy blueprint Financial Sector Development Strategy 2011-2020 ,expressly tasks the Cambodian Micro-finance Association (CMA) with bringing rogue operators under their umbrella and developing stronger consumer-friendly rules with which to self-govern members as well as introducing financial literacy programs to help educate the public.

The regulation of pawn brokers and money lenders is a harder task, but the Financial Sector strategy has these operators in their sights. Again there will be a focus on developing rules that help protect borrowers from over-zealous lending, or the onerous penalties of repayment failure. A frequent practice right now is to use farmland as collateral, and if a borrower gets behind, well, they lose everything.

Getting ahead usually requires capital. Unfortunately for the very poor, the best lenders may be of some benefit, but the marketplace is full of dangers. I think Risk is a concept about which every student needs to be taught. Some education may help keep some more people on the right side of that thin line.

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I weep for Savong’s older brother – Savet.

I weep for Savong's older brother - Savet.

In 2009 when I took this photo I was captivated more by the picturesque quality of what I saw than by the true human story. The man in the picture – his blue shirt contrasting gloriously with the fluffy delicious white rice he is cooking for the children at SOC – is no longer alive, and his story nags me as a reminder of Cambodia’s recent history.

His name is Savet, and he was Savong’s older brother; a figure to whom Savong remains deeply attached.

In the years immediately after Pol Pot, Cambodia went through a terrible period of impoverishment, and families scratched out what living they could.

This is how bad it was: Savet left home at age seven to fend for himself. He survived on a diet that included tree bark, insects and whatever he could afford to buy from begging. Imagine making that decision as a 7-year-old.

In many respects it is understandable that Savet became emotionally rather detached from his family. As a teenager he came and went from the household, but he spent many years of his adult life living in Poipet. In is last years he came home to Siem Reap where he helped Savong at the SOC. He was the stoic father figure that many of the children looked up to.

This was not to last. In time Savet contracted cancer and after a brief and painful battle his life ended in the same home in which he had begun his life.

Savong speaks admiringly of his brother who as a youngster took Savong under his wing and taught him the skills of begging. Together when the UN troops arrived in Cambodia, the two boys would sell banana cake and it was from Savet that Savong learned his first word in English which was something like: “Misterdollar.”

When Savet was on his deathbed, hooked up to a drip, he chastised Savong for not being by his bedside often enough. “In Cambodia,” Savong explained to me, “when you are on your deathbed then you have the right to insist that others gather around.”

Savong felt the sting of the rebuke, but what could he do? He was so busy running the school and the children’s home out in Bakong and he was unable to be in two places at once.

Savet’s death marked a change in Savong. I noticed almost immediately that my friend was much more serious in life, and that the grand adventure he was on – a young man who has started a school! – had now become a mission.

Perhaps Savong does everything in the name of his brother these days. I wouldn’t blame him. Savet was a victim of everything that went wrong in Cambodia in the 1970s and 80s, and ultimately he gave the last days of his life, as we see in the photo, preparing food and serving the needs of a younger hopefully luckier generation.

A recent story of a girl with an awful decision.

Let’s not forget the costs of poverty – and the pressure it puts on young people

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I have been in two minds about writing this particular post. I’m uneasy about portraying individual children as poster examples of poverty or hardship, and don’t mean to tread on the privacy and interior life of these individuals. On the other hand there is a role for photojournalism to share stories about the human condition and to provoke action from those who read the stories and see the photos. So I hope you’ll forgive the story. I’m not going to name or identify the girl in the photo except to say that she lives in Cambodia and that she is 15 years old.

Her life has been unimaginably hard. When she was an infant, she was more or less abandoned by her mother who has alcohol problems of her own. For this girl, the only family she knew was her grandmother who raised her, cared for her and gave her the love that every child deserves. They lived in the house you see pictured above. Last week the grandmother died, leaving this 15-year-old girl virtually alone in the world.

Well not quite. At the funeral a few members of the extended family showed up, and so did the mother – still with her severe alcohol problems. She offered to take up care of the girl, but it was pretty obvious to Savong, who visited the family, that the mother neither has the resources or the reliability required to raise a teenage daughter.

The girl has a sponsor, and he has offered to underwrite whatever it costs to ensure that the girl receives a good education. She is a good student. Savong has openly offered her a place to stay with other high school students, and to provide the food shelter and funding to ensure that she fulfils her potential.

But if you were this 15-year-old girl, what would you do? if you had nobody else in this world other than the mother who abandoned you, and now she was back in your life, would you now turn your back on her or would you choose to live with her and see if things work out?

These are the horrible dilemmas faced by impoverished children. Rather than growing up in a world that is for them safe, caring, and geared to providing support; this girl has grown up in a world where support has been a scarce commodity at best. For most children in the situation, there is no government agency stepping in to help here. There is no extended family with the capacity to take the girl in to be cared for.

In this girl’s case, it is only luck – the luck that an NGO happens to work within her village – that has provided the girl with the option and choice she now faces even as she suffers the grief of having lost the one close person in her life.

Savong is not pressuring this girl. She knows she is welcome to stay with him; just as he knows that she has every motivation in the world to see if she can work things out with her mother. What an emotional dilemma.

Working in Cambodia often blinds people like me to what I call the romance of poverty. We are beguiled by the elegant simplicity of rural lives, and warmed by the egalitarian welcome we receive when we are invited into the homes of those we hope to assist. But occasionally, stories like the one about this girl remind us that poverty takes young people to the edge of an abyss. There is no romance about that. You can see the reality of poverty etched on her grief stricken face.

The sad story of Savong’s older brother. Click here.

By the way, if you don’t know me, my name is Duncan Stuart and I’m a New Zealand based writer and researcher and supporter of Savong’s School in Cambodia. I love to write and would love your company – how about clicking the “follow button.”  Thanks!

 

The Cambodian Primary School droupout rate – 39% don’t complete primary school

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Here’s another sad statistic that reflects on the underinvestment in education for young Cambodians. For every hundred who start primary school, 39 do not complete their studies at primary school according to the latest available figures. “Oh but we’re a poor country,” might be the argument of the government – but poorer than Myanmar or Laos? The fact is, Cambodia spends a smaller percentage of the annual government expenditure on education than does its neighboring nations.

The result: 4 in ten do not make it to middle or high school.

Reasons include:

  1. Insufficient provision of primary schools especially in remote regions.
  2. Distance and transport. Many children live too far away from school and do not have transport.
  3. Financial – the fact that state schools charge money to attend. This is extremely widespread, and penalises the poor.
  4. Children required to work on farms to help the family income.
  5. Sickness. Child health is still far from ideal in Cambodia.

During the 2013 election the Government announced a 20% lift in education budget (a move I’d rate as a shift from totally inadequate to merely inadequate,) but the Government has not released any plans or policies to indicate where the additional money will be spent.

The annual education spend works out to around $50 per child in Cambodia up to age 18.

For more education statistics click here.

Six winners of Savong School university scholarships announced – can you help?

Six winners of Savong School university scholarships announced - can you help?

I support a school in rural Cambodia that serves more than 500 high-school students. The focus is to help their employability and to give them the opportunities they lack due to the poverty gap. Following recent examinations at Savong’s School six university scholarships have been announced. Winners receive at least 4 years support through university (1 year intermediate followed by 3 years Bachelors degree) in the form of their annual fees being covered, a laptop computer presented – to enable study – as well as daily transport from Bakong to Angkor University (14 kms away) and a modest living allowance to cover the costs of being a student. For westerners this works out at $US1,000 per annum over four years. For these students the opportunity is a golden ticket out of poor rural conditions, and a chance to reach their potential. Contact me if in some way you’d like to support one, or some of these students. $20 a week, coffee money, can totally change a life and that of their family. duncan@kudos-dynamics.com

More details: click here.

An ethics question for volunteers.

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Any volunteer to Cambodia goes in with their eyes wide open, I hope. Our radar is on and we’re monitoring what we see and hear in order to answer two questions.

  1. Am I doing the right thing here? Am I making a positive or a negative impact?
  2. Is the program I’m involved in a good one: is it making good use of its human and capital resources?

As a part time co-ordinator of volunteers to Savong’s project I get to hear feedback from visitors, though never as much as I’d hope. Many volunteers move on and their busy lives consume them. However most feedback is very positive and the number of referrals from one volunteer to others is testimony to how those two questions are being answered.

However I do hear criticisms as well and they are a reminder to me of how every conversation, everything we hear and everything we witness goes into our evidence gathering in order to ask those two questions. I pass on criticisms to Savong in order that any issues might be dealt with.

When criticism is negative and somebody’s had a less than stellar experience the feedback also comes framed with other criticisms. For example once a volunteer told me: “did you see Savong’s watch? Is this where the donations go?”  (Yes, I’ve seen the watch – a mid-priced Olympic – because I bought it for him as a gift of friendship. He calls it an “old man’s watch.” Another kind group bought him a practical G-Shock watch,) Others have said: “Have you seen what he drives? It’s a Lexus 4WD – is this where the donations go?”

The green Nissan Tundra semi-pick-up. Sometimes he drives his father’s second-hand Lexus. In Cambodia the nation is crawling with highly paid officials and NGO heads driving around in shiny new Lexus vehicles. I suspect that these were donated by Japan en-masse, as part of an aid program that also sorted out Toyota’s vehicle surplus. I might be wrong. But they’ve become a symbol of misdirected funds. Administrators who drive up to a village, measure the poverty and then drive away in air-conditioned comfort. You can imagine.

But when I asked Savong about the vehicle he was quite curt with me.  He asked me if I felt he needed a vehicle to do his job which involves daily commutes 14kms each way between Siem Reap and the school. “Yes,” I replied.

“So why do you mind that I drive a Nissan.”

“I guess it’s the look,” I said. “It looks like the school money goes towards your vehicle.”

“The money came from my work as a tour guide. It came from the business I run to earn an income. So why do people judge me? Do they want me to drive an even older car? Would they be happier if I walked?”

I think he has a point. Westerners are happy to volunteer, but we seem much happier – much less judgmental – if what we witness is poverty. Poor students without pens even, and without paper.  Barefoot teachers who do the best with what little they have.

Yet the moment we build-up the resources, and equip the local people (which is surely what we’re trying to do) we become much more judgmental. Schools, have come a long way from being without stationery. They have computers, and broadband. Savong’s School was given, very generously, a video projector.  So these thing… or the watch?  We don’t mind progress but THIS much progress?? We’d be happier, it seems, if the school was poorer, or the watch was a nasty throw-away: one that – to be honest – we’d not want to wear ourselves.

I think we tread a fine line when we ask ourselves whether programs are making good and fair use of human resources and capital in order to do the job they’re designed to do.  The question is a perfectly fair one, and it needs constant asking.  But we have to be careful that we apply consistent yardsticks when we assess the evidence. If a program director needs a car, then for goodness sakes, equip him or her with a car that goes. A second-hand 4WD shouldn’t get us steamed up. (A stretch Hummer, well that would be another question.) We shouldn’t wish for two standards: a standard we apply to programs in our own countries, versus a “lower” standard in Cambodia.  And we shouldn’t assume that what we see – the watches or vehicles – come out the mouths of the hungry. In this case they haven’t. We need to be vigilant, for sure, but not too quick to judge.

More on volunteering.