Giving people a chance

Some positive news from Concern Worldwide, who I hooked up with quite a few years ago in Phnom Penh for a party after visiting their offices. Its good to know they are still making a difference to the lives of so many.

Breaking out of poverty with $50

In what started as a small savings and loan program for the rural poor in Cambodia just fourteen years ago, today has grown into an independent microfinance bank reaching nearly 68,000 people. In villages where people were living from day to day, access to credit was virtually non-existent for millions caught in the poverty trap because they had no way to improve their economic productivity. Now, with a loan portfolio of more than $5 million, one bank dedicated to the poor is helping families throughout Cambodia change their lives. In a country like Cambodia, still recovering from a difficult history, the poorest people are the ones struggling to turn their lives around. The bank was started by Concern Worldwide, an international humanitarian relief and development organization, and it is called Angkor Mikroheranhvatho Kampuchea (AMK) bank. It was a bold step for Concern and widely seen as risky, but now it is an independent banking institution helping poor villagers realize their potential.

With 85 percent of loans going to women, AMK endeavours to issue loans to mothers who are often in charge of finances for the home and maximize the benefit. AMK says the figures speak for themselves - women borrowers generally put the money to the best use for the household."We target these loans to women, usually about $50 on average," Chetan said. AMK is unique because it engages communities from the bottom up. Communities fully understand that the repayment process is crucial and that one default impacts everyone. Credit is often issued to groups who are collectively responsible for paying back the loan, known as "solidarity lending." AMK's success is largely due to the remarkable level of responsibility of borrowers who make their loan payments on-time - an impressive record for any lender. "The scale up of the microfinance program is enormous and the level of growth and success of programs both in spread and depth was not expected a decade ago," Tanmay Chetan, Board member of AMK, said.

Loan sizes are smaller than they would be in the United States, but the concept is fundamentally the same. Businesses borrow money for overhead until they achieve net income. Large banking institutions like DEPFA Bank see the effective, if not crucial, role AMK plays in Cambodia. DEPFA's CEO, Gerhard Bruckermann, has deployed personnel from his bank to assist in the growth and development of AMK. "When you see what they are doing and what kind of change it makes on peoples lives, it's probably the best money spent by DEPFA - ever," Bruckermann said. "We couldn't do any better with our money." Once poverty-stricken, families are able to pay for school and access health resources if a medical emergency arises, rather than sell off animals or other collateral. Loans carry an interest rate of one percent, which further legitimizes the credit for what it is - not a handout. Moreover, that interest is immediately used to finance more loans so the economic stimulus is direct and fast. And the success of Concern's AMK Bank has not gone unnoticed. Earning recognition from the World Bank subsidiary, the Consultative Group to Assist the Poor (CGAP), Concern received their prestigious award for the past two years for financial transparency and progress, ranking above more than 200 other microfinance institutions. "AMK has demonstrated that when you give people the tools and resources to help themselves, they are able and eager to do so," Chetan said. Chetan is in New York October 29 - 31 meeting with Concern's microfinance personnel from 10 countries around Africa, Asia and the Caribbean. "It's part of Concern's way - to share the learning so that successful models that help us to tackle poverty are shared with others," Tanmay added. "We still have a long way to go to help the poorest break out of poverty but, with innovations like AMK, we can help transform a family's life with $50. We've reached 68,000 so far - we still have a long way to go."

About Concern Worldwide: Concern Worldwide is a non-denominational, not-for-profit humanitarian organization that has more than 3,000 personnel working in 28 of the poorest countries throughout the world. Concern Worldwide focuses on health, education, microfinance, HIV&AIDS and emergency response programs, directly reaching more than five million people each year.