Bringing Student Loans to Cambodia

AMK Headquarters, Phnom Penh

Since I started working in microfinance early last year, I’ve met with and interviewed dozens of borrowers and their families.  I’ve conducted visits in all sorts of ways: sitting in a chair (or falling out of one), standing at a store counter, talking through a gate, leaning on the hood of a car, or side stepping through a pig sty.  What I hadn’t done, however, was sit on the floor.

That changed last week in Phnom Penh, Cambodia, where I came to work with the Product Development Team at Angkor Mikroheranhvatho Kampuchea (AMK), Vittana’s newest partner.  Lots of work goes on behind the scenes before an MFI begins disbursing loans and uploading student profiles to the Vittana website–a product description must be drafted, evaluation criteria must be agreed upon, operational procedures must be approved, etc. One of the most important elements of this process is researching and defining the program’s target market.  That market is, of course, made up of real people, and when two AMK staff members and I pulled up in front of a row of whitewashed, box-like one and two-room homes near the city’s garment factories, a 40-something mother of five smiled warmly, unrolled a large floor mat, and motioned for us to sit.

The woman works as a vendor at a local market.  Her husband drives a taxi.  Together they bring in enough income to meet the family’s basic needs, but not enough to keep all five children in school.  My colleagues translated the conversation for me as we went, but when our host heard about the student loan product currently in development at AMK, her eyes alone told me that she was interested.  She told us that since leaving high school, her son, now 24, has been making ends meet by repairing cell phones and motorcycles.  But there’s more money to be made in computer repair, and he has asked her multiple times for the $350.00 it would cost to attend a 6-month course.  This loan, she said, would be perfect for him.

A few houses away, we sat with another client who borrows from AMK to buy supplies for her work as a seamstress.  She and her husband, who is a soldier in the Cambodian army, have been able to keep their three children in school, but she’s uncertain what will happen after they finish high school.  Her daughter will graduate from grade 12 this fall and has expressed an interest in receiving additional training in computers and English.  Her uncle has even offered to help her find work at one of the larger banks in the area, but she knows that it will be nearly impossible to qualify for a position without more schooling.  When I asked the client if she thought her daughter would be ready to take on the responsibility of being the primary signatory on a student loan, she didn’t hesitate: “Absolutely.”

After chatting with the second client’s next-door-neighbors, who said they had never even considered that a student loan might be a possibility for their three high-school aged sons, we drove three blocks to meet our fourth and final client of the afternoon.  AMK’s loan officer described the woman as a strong community leader.  If anyone could give me a good sense of the community’s interest in loans for vocational training, he said, it would be her.

When we arrived, she was sitting on a bench in front of her home, a tall stack of khaki pants to her right, a smaller stack to her left.  Settling in for our chat, I saw she held a pair of scissors in her lap.  One by one, she took the pants from the left hand pile, trimmed the excess threads from the inseams, cuffs, and belt loops, and stacked them on her right.  Only a few pairs had to cross her lap before I recognized the blue Dockers label.  Before I could even ask, an AMK staffer leaned over:  “For 10 pants, she earns 500 Riels.”  That’s an eighth of a dollar.  10 pairs of pants.  12 cents.

Without an education, she tells us, the options for young people in this community are limited.  Some might find jobs at the garment factories, others might work in construction or as moto-taxi drivers.  Her own son will be finishing high school in the fall, and has expressed an interest in learning computers, English, and accounting.  But like the rest of her neighbors, she doesn’t think she will be able to pay for her son to continue his education.  Out of the approximately 1,000 families in the area, she estimated that at least 100 would be able to benefit from a student loan from AMK.  There are few more steps to complete before AMK makes its first Vittana loan.  When it does, the market will be ready.

AMK staff discussing Vittana and student loans.